Roxio Reports Fourth Quarter and Fiscal 2003 Results

Fourth Quarter Revenues Rise to $34 Million Based on Successful Launch of Roxio's Digital Media Suite

Recent Acquisition of Pressplay Paves the Way for Re-Launch of Napster

Santa Clara, California - (May 21, 2003) - Roxio, Inc. (Nasdaq: ROXI), The Digital Media Company™, provider of the best selling digital media software in the world, today reported financial results for its fourth quarter and year ended March 31, 2003. Net revenue for the fourth quarter grew 28% sequentially to $33.8 million from $26.4 million in the preceding third quarter. Pro forma net income, which excludes non-cash charges related to the amortization of intangible assets and deferred stock-based compensation, was $3.8 million, or $0.19 per basic and diluted share, and therefore approximately the same as pro forma net income of $3.8 million, or $0.21 per basic and $0.19 per diluted share, for the fourth quarter of the prior fiscal year.

Roxio's reported GAAP net income for the fourth quarter of fiscal 2003 was $2.3 million, or $0.12 per basic and diluted share, as compared with net income in the fourth quarter of the prior fiscal year of $340,000, or $0.02 per basic and diluted share.

Net revenue for the fiscal year ended March 31, 2003 was $120.4 million, as compared to net revenue of $142.5 million for fiscal 2002. Pro forma net loss excluding non-cash charges was $3.1 million, or $0.16 per basic and diluted share, as compared to pro forma net income of $16.5 million, or $0.96 per basic and $0.94 per diluted share for the prior fiscal year.

Roxio's GAAP net loss for fiscal 2003 was $9.9 million, or $0.51 per basic and diluted share, compared to GAAP net income of $2.3 million, or $0.14 per basic and $0.13 per diluted share, in fiscal 2002. A reconciliation of pro forma results described in this press release with the reported GAAP results is included in the attached table.

"Our fourth quarter financial results reflect a solid launch of Easy CD & DVD Creator 6, the Digital Media Suite," said Chris Gorog, Roxio's President and Chief Executive Officer. "Other notable achievements include the launch in late March of our PhotoSuite 5 Platinum digital photo editing software and our first major DVD OEM win for Creator 6 on TDK's new Indi DVD Multiformat burner. With the sale of our GoBack software assets to Symantec, Roxio is now focused exclusively on its core digital media business. Additionally, our recent acquisition of Pressplay, as the foundation for the re-launch of Napster should allow us to capitalize on the tremendous opportunity in online music and is an important step toward diversifying our revenues for the long-term growth of the company."

Elliot Carpenter, Roxio's Chief Financial Officer, commented, "We are pleased with the response to our recent product launch and execution on our fourth quarter financial objectives. At the same time, we are forecasting that the combined effects of a difficult retail environment, the sale of the GoBack product line to Symantec and our previously issued guidance that OEM revenues will continue to decline, will result in a June quarter outlook for our software business of approximately $23.0 million in revenue and GAAP net income of $0.05 per fully diluted share. These estimates do not include the accounting impact of the Pressplay acquisition for the remainder of the June quarter, which has not yet been fully determined. Roxio's cash and short-term investments were $58.0 million as of April 30, 2003. Taking into account the $12.5 million in cash consideration paid for the Pressplay acquisition and the approximately $20.0 million currently expected to be spent to re-launch Napster, we believe that we have sufficient cash to drive our software business and support our online music initiative."

Earnings Call Information

The Roxio Fourth Quarter and Fiscal 2003 teleconference and webcast is scheduled to begin at 1:30 p.m., Pacific Time, on Wednesday, May 21, 2003. To participate on the live call, analysts and investors should dial 800-216-6962 at least ten minutes prior to the call and reference conference ID: 9730870. Roxio will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the company's Web site at A telephonic replay of the conference call will also be available for 48 hours by dialing 800-642-1687 and entering the passcode: 9730870.

Non-GAAP Financial Measures

Roxio discloses pro forma or non-GAAP measures of net income and earnings per share. Roxio believes that this pro forma information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States ("U.S. GAAP"), such as net income and earnings per share. These pro forma measures are unlikely to be comparable to pro forma information provided by other companies. In accordance with SEC regulations, reconciliation of the Roxio U.S. GAAP information to the pro forma information is provided in the table attached. We will also make available on the investor relations page of our web site at this press release, a replay of the Webcast, and a reconciliation of the difference between the GAAP and non-GAAP financial measures.

Safe Harbor Statement

Except for historical information, the matters discussed in this press release, in particular matters related to Roxio's future revenue, net income (loss), cash flow, the re-launch of Napster, OEM relationships, upgrades by existing users and product development, are forward-looking statements that are subject to certain risks and uncertainties such as decreased demand for our products, increased competition, failure to successfully integrate Pressplay, failure to develop new products or improvements to existing products, general economic conditions and third party claims, that could cause actual results to differ materially from those projected. Additional information on these and other factors are contained in Roxio's reports filed with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q as filed with the SEC on July 1, 2002 and February 14, 2003, respectively, copies of which are available at the website maintained by the SEC at Roxio assumes no obligation to update the forward-looking statements included in this press release.

                                   ROXIO INC.
                      (In thousands, except per share data)

                                                  March 31,         March 31,
                                                    2003              2002

    Current assets:
     Cash and cash equivalents                     $36,820           $47,280
     Short-term investments                         16,677             4,700
     Accounts receivable, net of allowance
      for doubtful accounts of
      $850 at March 31, 2003 and
      $775 at March 31, 2002                        12,637            24,260
     Inventories                                       460               363
     Prepaid expenses and other current
      assets                                         3,366             3,409
     Income taxes receivable                            --             2,378
     Deferred income taxes                           4,709             3,880
      Total current assets                          74,669            86,270

    Long-term investment                             3,059                --
    Property and equipment, net                      9,058             7,122
    Goodwill, net                                   55,247            51,447
    Other intangibles assets, net                   10,314            11,248
    Other assets                                       589               545

      Total assets                                $152,936          $156,632

    Current liabilities:
     Accounts payable                              $11,952            $9,563
     Income taxes payable                            1,353                --
     Accrued liabilities                            16,153            21,972
     Current portion of long-term debt                 606               526
      Total current liabilities                     30,064            32,061

    Long term liabilities:
     Long term debt                                  5,490               921
     Deferred income taxes                           1,190             1,922

      Total liabilities                             36,744            34,904

    Stockholders' equity:
     Preferred stock, $0.001 par value;
      Authorized: 10,000 shares;
       Issued and outstanding: none at
          March 31, 2003 and 2002                       --                --
     Common stock, $0.001 par value;
      Authorized: 100,000 shares;
         Issued and outstanding: 19,574
          shares at March 31, 2003 and
         19,474 shares at March 31, 2002                20                20
     Additional paid-in capital                    127,804           129,804
     Deferred stock-based compensation              (2,886)           (7,487)
     Accumulated deficit                           (10,675)             (731)
     Accumulated other comprehensive
      income                                         1,929               122
      Total stockholders' equity                   116,192           121,728

      Total liabilities and stockholders'
       equity                                     $152,936          $156,632

                                    ROXIO INC.
                      (In thousands, except per share data)

                                          Three Months            Year
                                         Ended March 31,     Ended March 31,
                                          2003     2002      2003     2002

    Net revenues                        $33,756  $38,894  $120,408  $142,521
     Cost of revenues (excluding stock-
      compensation charges of $10, $14,
      $49 and $103, respectively)         8,523    8,084    31,410    29,154
      Gross profit                        25,233   30,810    88,998   113,367

    Operating expenses:
     Research and development (excludes
     compensation charges of $142, $208
     $715 and $1,515, respectively)       5,886    5,679    21,623    21,637
     Sales and marketing (excludes stock-
      compensation charges of $127,
      $113 and $4,158, respectively)      9,282   14,098    41,553    49,247
     General and administrative (excludes
      compensation charges of $210,
      $1,059 and $3,443 respectively.)    5,777    6,178    26,990    19,327
    Amortization of intangible assets     1,637    1,849     6,401     6,146
    Stock-based compensation charges        489    1,726     1,936     8,110
    In-process research and development      --    1,110        --     1,110
      Total operating expenses           23,071   30,640    98,503   105,577

    Income (loss) from operations         2,162      170    (9,505)    7,790
    Other income (loss), net                (94)     292       471     1,285

    Income (loss) before provision for
     income taxes                         2,068      462    (9,034)    9,075
    Provision (benefit) for income taxes   (256)     122       910     6,726

    Net income (loss)                    $2,324     $340   $(9,944)   $2,349
    Other comprehensive gain (loss) :
     Foreign currency translation
      adjustment                             --       --     1,785      (280)
     Unrealized gain on short-term
      investment                                      --        24        --
    Comprehensive income (loss)           $2,324     $340   $(8,135)   $2,069

    Earnings per share:
     Basic                                 $0.12    $0.02    $(0.51)    $0.14
     Diluted                               $0.12    $0.02    $(0.51)    $0.13

    Weighted average shares used in
     computing basic and
     diluted net income per share
     Basic                                19,498   18,568    19,477    17,216
     Diluted                              19,783   19,767    19,477    17,518

    Reconciliation of Reported Earnings (Loss) to Pro Forma Earnings (Loss):

                          Three Months Ended          Three Months Ended
                             March 31,                    March 31,
                               2003                         2002

                       Net       Basic    Diluted     Net     Basic Diluted
                      Income      EPS       EPS      Income    EPS    EPS

     earnings         $2,324     $0.12     $0.12     $340     $0.02   $0.02

       of intangible
       assets          1,637      0.08      0.08    1,849      0.10    0.09
       charges           489      0.02      0.02    1,726      0.09    0.09
       of in-process
       and development    --        --        --    1,110      0.06    0.06
     Tax effect of pro
      forma entries    (682)    (0.03)    (0.03)  (1,180)    (0.06)  (0.06)

    Pro forma
     earnings         $3,768     $0.19     $0.19   $3,845     $0.21   $0.19

                               Year Ended                   Year Ended
                               March 31,                    March 31,
                                 2003                          2002

                       Net      Basic    Diluted     Net     Basic   Diluted
                      Income     EPS       EPS      Income     EPS      EPS

     (loss)         $(9,944)   $(0.51)   $(0.51)   $2,349     $0.14   $0.13

     Amortization of
      assets           6,401      0.33      0.33    6,146      0.36    0.35
      charges          1,936      0.10      0.10    8,110      0.47    0.46
     Write-off of
      and development     --        --        --    1,110      0.06    0.06
     Tax effect of
      pro forma
      entries        (1,517)    (0.08)    (0.08)  (1,180)    (0.07)  (0.07)

    Pro forma
      (loss)        $(3,124)   $(0.16)   $(0.16)  $16,535     $0.96   $0.94

                                   ROXIO, INC.
                                  (in thousands)

                                                           Years Ended
                                                            March 31,
                                                      2003            2002
    Cash flows from operating activities:
     Net income                                     $(9,944)          2,349
     Adjustments to reconcile net income to
       net cash provided by operating  activities:
      Depreciation and amortization                    9,742          7,439
      Stock-based compensation charges                 1,936          8,110
      Provision for doubtful accounts                    649            790
      Write-off of acquired in-process technology         --          1,110
      Deferred income taxes                          (1,549)        (1,076)
     Change in operating assets and liabilities:
      Accounts receivable                             12,356          8,544
      Inventories                                      (172)            875
      Prepaid expenses and other assets                (199)        (2,160)
      Accounts payable                                 2,162       (10,189)
      Income taxes payable (receivable)                4,065            363
      Accrued liabilities                            (9,926)          7,921
      Net cash provided by operating activities        9,120         24,076

    Cash flows from investing activities:
     Purchases of property and equipment             (4,235)        (3,839)
     Proceeds from sale of property and equipment         --             --

     Purchases of other intangible assets            (5,667)          (251)
     Purchases of short-term investments            (27,578)        (4,700)
     Proceeds from sale of short-term investments     11,075             --

     Maturities of short-term investments              4,526             --

     Investment in nonconsolidated companies         (3,059)             --

     Acquisition of MGI Software Corp,
      net of acquired cash of $770                        --        (1,988)
      Net cash used in investing activities         (24,938)       (10,778)

    Cash flows from financing activities:
     Net cash transfers from Adaptec                      --         27,446
     Principal payment of capital lease obligation     (557)          (199)
     Proceeds from line of credit                      5,000             --

     Issuance of common stock to strategic partner        --          1,999
     Issuance of common stock under employee
      stock plan                                       1,367          4,740
     Repurchase of common stock                      (1,064)             --

       Net cash provided by financing activities       4,746         33,986

    Effect of exchange rates on cash                     612            (4)

    Change in cash and cash equivalents             (10,460)         47,280
    Cash and cash equivalents at beginning
     of period                                        47,280             --

    Cash and cash equivalents at end of period       $36,820        $47,280

    Supplemental cash flow information:
     Cash paid for interest                             $220            $47
     Cash paid for income taxes                       $1,832         $5,258

    Non-cash disclosure of financing and
     investing activities:
     Transfer of other assets from Adaptec upon
      legal separation                                   $--         $4,608
     Adjustment to the purchase price allocation
      of MGI Software Corp                            $3,802            $--

     Issuance of stock for acquisition of
      MGI Software Corp.                                 $--        $31,421
     Deferred stock compensation                         $--        $12,880
     Issuance and remeasurement of warrants
      for services                                    $(705)            $--

     Issuance of warrant for services                   $329         $1,840
     Assets acquired under capital leases               $203         $1,624

About Roxio

Roxio, a division of Sonic Solutions, develops and markets the best-selling digital media software in the world. Roxio offers award-winning software products for CD/DVD burning, photo editing and video editing and has an installed base of over 150 million users. Roxio distributes its products globally through strategic partnerships with major hardware manufacturers, through leading retailers, through Internet partnerships and through direct sales at Roxio's parent company, Sonic Solutions (NASDAQ: SNIC; is the leader in digital media software and provides a broad range of software tools and applications for creative professionals, business and home users and technology partners. Sonic's products range from professional DVD authoring systems and interactive content delivery technologies that are used to produce the majority of Hollywood movies released on DVD, to the award-winning Roxio- and Sonic-branded CD and DVD creation, playback and backup applications that have become the premiere solutions for consumers and business users worldwide. Sonic's AuthorScript® is the de facto standard for CD and DVD burning and formatting and has been licensed by major software and hardware manufacturers, including Adobe, Broadcom, Microsoft, Scientific-Atlanta, Sony, and many others. Sonic Solutions is headquartered in Marin County, California.

Sonic, the Sonic logo, Sonic Solutions, Roxio, MyDVD, CineMagic, Plug & Burn, LiveShare, Roxio Easy Media Creator, and AuthorScript are trademarks or registered trademarks of Sonic Solutions or its subsidiaries in the United States and/or other countries. Dolby is a trademark of Dolby Laboratories. All other company or product names are trademarks of their respective owners and, in some cases, are used by Sonic Solutions under license. Specifications, pricing and delivery schedules are subject to change without notice.