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Company Profile of Sonic Solutions

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Company Profile of Sonic Solutions
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Pratik Kukreja
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Company Profile of Sonic Solutions - May 13th, 2011

Sonic Solutions was a computer software company headquartered in Novato, California. In addition to having a number of offices in the U.S., the company also maintained offices in Europe and Asia.
Sonic Innovations Inc. makes and sells advanced digital hearing aids. The company was launched with digital signal processing (DSP) technology developed by a handful of professors in Utah and California. Sonic has five product lines; four of these--the Natura, Altair, Tribute, and Quartet--are available in a variety of models: behind-the-ear (BTE), in-the-ear (ITE), in-the-canal (ITC), mini-canal (MC), and completely-in-the-canal (CIC). The Adesso, the smallest digital hearing aid on the market, is an instant-fit CIC model. Sonic moved into international markets quickly. Europe ($14.2 million) and the rest of the world ($13.2 million) outside of North America accounted for a significant portion of the company's 2002 revenues of $68 million.
Sonic Solutions (Sonic) is a developer of products and services that enable the creation, management and enjoyment of digital media content across a variety of technology platforms. The Company’s products and services offers technologies to consumers, original equipment manufacturers (OEMs), enterprises, high-end professional digital versatile disc (DVD) authoring experts and developers. The Company distributes its products and services through retailers and distributors, personal computer (PC) and consumer electronics (CE) OEMs, Internet Websites, including www.roxio.com and other channels. The Company organizes its business into two segments: the Roxio Consumer Products segment, which offers products and services related to personal content and the Premium Content segment, which offers products and services related to premium content. In October 2010, the Company completed the acquisition of DivX, Inc.

Sonic Solutions was created in 1986 by former Lucasfilm employees who developed the SoundDroid digital audio editing system as part of the Droidworks project. (Another notable spinoff of the project is Pixar.)
Sonic developed and marketed The Sonic System, a professional non-linear digital audio workstation for music editing, restoration and CD preparation.
Sonic's technology for professional audio noise reduction, NoNOISE, received an Emmy Award for technical achievement in 1996[1]. On the same year the company introduced the first commercial DVD production system in partnership with Daikin. Sonic extended its business to the areas of DVD authoring systems for professional use (Sonic Scenarist and Sonic DVD Producer) as well as retail and PC OEM DVD software applications for home use (DVDit, MyDVD, and RecordNow).
In 2002, Sonic spun off their entire audio division as Sonic Studio, LLC, to concentrate solely on the DVD marketplace.
Sonic’s major acquisitions include the Desktop and Mobile Division (DMD) of VERITAS Software Corporation in 2002, Roxio in 2003 (consumer applications for Windows and Mac OS), and Simple Star (online slideshow creation) and CinemaNow in 2008 (digital movie delivery).
In October 2010, the Company acquired DivX Inc. in a $326 million stock and cash deal as the digital-media provider moves to enhance online video offerings.
On December 23, 2010, Rovi Corporation announced its intention to acquire the company for its DivX digital video player software. The acquisition was completed early the next year.

Sonic Innovations Inc. listed shares on the NASDAQ stock exchange in May 2000. The fall-off in tech stocks at the time made it an unwelcoming market. However, Sonic's shares rose 50 percent from the original price of $14 in the first day of trading. One of the company's backers attributed this to the fact that the company had "real revenue and real products," uncommon commodities during the dot-com boom and bust. Sonic raised $54 million in the initial public offering.
By this time, the company had 225 employees and had just introduced a second hearing aid line, the Conforma. The Conforma was unique in that its soft foam shell allowed users to be fitted with the hearing aid in a single visit to an audiologist. Others required multiple visits for impressions to be made and the fit of acrylic shells checked over a period of one to two weeks. Sonic likened the convenience to that of the soft contact lens, which had tripled the contact lens market over three decades.
Another innovation introduced during 2000 was noise reduction, first available in the Natura 2SE model. By the end of the year, Sonic had introduced another hearing aid line, the mid-priced Altair.
Sonic also sold components to rival manufacturer Starkey Laboratories Inc. of Minneapolis. Starkey accounted for $7.3 million of Sonic's 1999 revenues. Sales of Sonic's own brands became more important when Starkey announced it was scaling back its orders in late 2000.
Net sales rose 80 percent to $51.7 million in 2000, while gross profit increased 119 percent to $25.5 million. The company posted a net loss of $2.2 million. It had lost $14.4 million the year before.
Sonic continued to acquire international hearing aid companies with distribution networks in 2001 and 2002. Sonic's Australian distributor M-E Hearing Systems had been created by the optometry company Laubman & Pank. After acquiring Laubman & Pank, new owner OPSM Protector sold M-E Hearing Systems and Hearing Aid Specialists Pty. Ltd. to Sonic for $5 million in July 2001. The acquisitions took the Sonic Innovations name. This added about $10 million a year to Sonic's revenues. M-E Hearing had 110 employees at the time of the purchase and produced 15,000 hearing aids a year. Sonic was planning to expand its operations as a supplier for markets in Australia, Southeast Asia, South America, and South Africa.
Sonic acquired seven international businesses in all in 2002; five of these were existing Sonic distributors. Sonic acquired its Danish hearing aid distributor, Omni-ReSound, in February 2002. It instantly gained a significant share of the Canadian market with the October acquisition of Ontario's Sentech Systems and Orsonique of Quebec. Sonic also acquired companies in Switzerland, Austria, the United Kingdom, and the Netherlands in 2002.

The "adesso" instant-fit hearing aid was introduced in March 2002. The adesso was a completely-in-the-canal device that was virtually invisible when worn. It was aimed at first-time hearing aid wearers with mild to moderate hearing loss.
Net sales rose 19 percent in 2002, to $68 million. North American sales accounted for $39.7 million of the total, with the remainder divided between Europe and the rest of the world. The company logged its first profitable year with a net income of $32,000. However, demand in the global hearing aid market had begun to decline significantly.
Sonic countered sales declines by announcing product improvements at an industry convention in April 2003. The company continued to bolster its global distribution network through acquisitions. In May, it agreed to acquire German hearing aid distributor Sanomed Handelsgesellschaft mbH for an initial price of $13 million, plus another $4 million to $5 million based on financial performance. Sanomed's 2002 revenues were about $20 million. Germany was the world's second largest hearing aid market.
Principal Subsidiaries: Audifon U.K. Ltd.; Hearing Aid Specialists Pty Limited (Australia); Hoorcomfort Nederland B.V. (Netherlands); Hoortoestelcentrum Sneek B.V. (Netherlands); Omni ApS (Denmark); Omni Otoplast ApS (Denmark); Sonic Innovations AG (Switzerland); Sonic Innovations A/S (Denmark); Sonic Innovations Canada Ltd.; Sonic Innovations GmbH (Austria); Sonic Innovations Pty Ltd. (Australia); Star Medical Europe B.V. (Netherlands).
Principal Competitors: Phonak S.A.; Siemens GmbH; Starkey Laboratories Inc.; Widex A/S; William Demant Holding A/S.

Key stats and ratios
Q4 (Dec '10) 2010
Net profit margin 16.03% -1.16%
Operating margin -83.29% -0.35%
EBITD margin - 1.88%
Return on average assets 7.79% -1.50%
Return on average equity 9.80% -2.72%
Employees 490 -
Carbon Disclosure Rating - -

Public Company
Incorporated: 1991 as Sonix Technologies, Inc.
Employees: 331
Sales: $68.02 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: SNCI
NAIC: 334510 Electromedical and Electrotherapeutic Apparatus Manufacturing

Key Dates:
1991: Sonix Technologies, Inc. is formed to market BYU hearing aid technology.
1996: Sonix becomes Sonic Innovations.
1998: The company's first product, the Natura hearing aid, is introduced.
1999: Sonic begins doing business internationally.
2000: Shares begin trading on the NASDAQ exchange; Conforma is introduced.
2002: The Adesso instant-fit hearing aid is introduced.

Officers and directors
David C. Habiger President, CEO, and Director
Robert J. (Bob) Doris Chairman
A. Clay Leighton COO
Robert J. Doris Chairman of the Board
David C. Habiger President, Chief Executive Officer, Director
Paul F. Norris Chief Financial Officer, Executive Vice President, General Counsel
A. Clay Leighton Chief Operating Officer
Mark Ely Executive Vice President - Strategy
Matthew S. DiMaria Executive Vice President, General Manager - Roxio Products Group
Mary C. Sauer Secretary, Director

2795 East Cottonwood Parkway, Suite 660
Salt Lake City, Utah 84117-7261

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