About Sonic Solutions

Sonic Solutions(R) (NASDAQ: SNIC) is powering the digital media ecosystem through its complete range of Hollywood to Home(TM) applications, services, and technologies. Sonic's Roxio(R) products enable consumers to easily manage and enjoy personal digital media content and, through Roxio CinemaNow(TM), access premium Hollywood entertainment on a broad range of connected devices. A wide array of leading technology firms, professionals, and developers rely on Sonic to bring innovative digital media functionality to next-generation devices and platforms. Sonic Solutions is headquartered in Marin County, California.

Forward-Looking Statements

This release may contain forward looking statements that are based upon current expectations, including the market acceptance and success of the alliance between Blockbuster and Sonic Solutions. Actual results could differ materially from those projected in the forward looking statements as a result of various risks and uncertainties. This press release should be read in conjunction with Blockbuster's and Sonic Solutions' most recent annual reports on Form 10-K, quarterly Forms 10-Q and other reports on file with the Securities and Exchange Commission, which contain a more detailed discussion of each company's business including risks and uncertainties that may affect future results. Neither Blockbuster nor Sonic Solutions undertakes to update any forward looking statements.

Sonic, the Sonic logo, Sonic Solutions, Roxio, Roxio CinemaNow, and Hollywood to Home, are trademarks or registered trademarks owned by Sonic Solutions in the United States and/or other countries. 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.

SOURCE Sonic Solutions

http://www.sonic.com

                   Summary Financial Results
            (in thousands, except per share amounts)

                           (unaudited)

                                   Three Months Ended September 30,
                                --------------------------------------
                                  2009      2009      2008      2008
                                 (GAAP)  (Non-GAAP)  (GAAP)  (Non-GAAP)
                                -------- ---------- -------- ----------

 Net revenue                    $ 26,056  $ 26,056  $ 31,076  $ 31,076

 Gross profit                   $ 17,980  $ 18,069  $ 21,726  $ 23,061

 Net income (loss)              $  (206)  $    419  $(3,694)  $(1,238)

 Net income (loss) per
  diluted share                 $ (0.01)  $   0.01  $ (0.14)  $ (0.05)

                                   Six Months Ended September 30,
                                --------------------------------------
                                  2009      2009      2008      2008
                                 (GAAP)  (Non-GAAP)  (GAAP)  (Non-GAAP)
                                -------- ---------- -------- ----------

 Net revenue                    $ 51,583  $ 51,583  $ 61,189  $ 61,189

 Gross profit                   $ 35,622  $ 35,825  $ 44,134  $ 46,655

 Net income (loss)              $(2,037)  $    339  $(7,333)  $(3,491)

 Net income (loss) per
  diluted share                 $ (0.08)  $   0.01  $ (0.28)  $ (0.13)

Non-GAAP Presentation

To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles ("GAAP"), we report the following non-GAAP financial measures in presenting results and giving guidance: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income (loss) per share. We also provide guidance regarding our projected earnings before interest, taxes, depreciation and amortization, excluding impairment charges, restructuring expense, stock option review expense and share-based compensation ("Adjusted EBITDA"). Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, but should be considered in addition to and in conjunction with results presented in accordance with GAAP. The non-GAAP financial measures are intended to provide additional insight into our operations that, when viewed with our GAAP results and the accompanying reconciliations to the most directly comparable GAAP financial measures, offer a more complete understanding of factors and trends affecting our business. Our non-GAAP presentations should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics we use in our financial and operational decision-making and (2) they are used by some of our investors and the analyst community to help them analyze our operating results and budget planning decisions. We use these non-GAAP measures internally to plan and forecast future periods, to establish operational goals, to compare with our business plan and individual operating budgets and to allocate resources. As illustrated by the above table, the effect of calculating these financial measures on a non-GAAP basis is to increase our gross profit and decrease our net loss and net loss per fully diluted share for the second fiscal quarter and the six months ended September 30, 2009 and 2008, respectively. Material limitations associated with the use of the non-GAAP financial measures versus the comparable GAAP measures and guidance are (a) the non-GAAP measures provide a view of our results that does not take into account certain GAAP expenses that would otherwise reduce our profits or increase our losses for the period in question, and (b) because other companies may not present non-GAAP results utilizing similar assumptions, it may be difficult or impossible to meaningfully compare our non-GAAP results with those of such other companies. We compensate for these limitations by providing full disclosure of the effects of our non-GAAP measures and guidance. Additionally, we present reconciliations between non-GAAP measures and their most directly comparable GAAP measures for non-GAAP historical information and, to the extent available without unreasonable efforts, for non-GAAP forward-looking information, so that investors can use the information to perform their own analysis.

Additional information regarding our non-GAAP financial measures and adjustments is as follows:

Restructuring Expense Adjustment. We have excluded the effect of our restructuring expense from our calculation of the following: non-GAAP operating expense, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share and Adjusted EBITDA. These expenses are primarily associated with the restructuring actions commenced in June and October 2008, and January and June 2009. As these expenses are directly related to such restructurings, we believe that providing non-GAAP financial measures that exclude these expenses allows investors and analysts to make meaningful comparisons of our ongoing core business operating results over different periods of time.

Share-Based Compensation Expense Adjustment. We have excluded the effect of our share-based compensation expense from our calculation of the following: non-GAAP operating expense, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share and Adjusted EBITDA, as this provides our management with an important tool for financial and operational decision-making and for evaluating our own recurring core business operating results over different periods of time. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies may use, as well as the impact of non-operational factors such as our share price and events such as tender offers on the magnitude of this expense. We believe that providing non-GAAP financial measures that exclude share-based compensation expense allows investors and analysts to make meaningful comparisons between our ongoing core business operating results and those of other companies. Share-based compensation expense will recur in future periods for GAAP purposes.

Acquisition-Related Intangible Amortization. Under purchase accounting rules, some portion of an acquisition purchase price is generally allocated to intangibles, such as core and developed technology and customer contracts, which are then amortized over various periods of time. Our GAAP presentations include amortization on certain acquired intangibles from prior consummated transactions. We have excluded the effect of amortization of acquired intangibles from our calculation of the following: non-GAAP gross margin, non-GAAP gross profit, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share and Adjusted EBITDA. Amortization of acquired intangible assets expense is inconsistent in amount and frequency and is significantly affected by the timing and size of our various acquisitions. Further, the amortization expense on acquired intangibles does not result in ongoing cash expenditures, and, in our view, does not otherwise have a material impact on our ongoing business operations. Investors should note that the use of acquired intangible assets contributed to revenues earned during the periods presented and will continue to contribute to future period revenues. This amortization expense will recur in future periods for GAAP purposes.

Stock Option Review Expense Adjustment. As we originally announced in February 2007, we conducted a voluntary review of our historical stock option grant practices and related accounting. We have excluded the effect of our stock option review expenses from our calculation of the following: non-GAAP operating expense, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share and Adjusted EBITDA, as this provides our management with an important tool for financial and operations decision making and for evaluating our own recurring core business operating results over different periods of time. We believe that providing non-GAAP financial measures that exclude this stock option review expense allows investors and analysts to make meaningful comparisons of our ongoing core business operating results. We did not incur any option review expense during the three and six months ended September 30, 2009, but it is possible that certain option review expenses could be incurred in future periods as matters associated with the review are completed.

Adjusted EBITDA. We provide guidance regarding our Adjusted EBITDA. We believe this performance measure is useful to investors because (a) it corresponds closely to the cash operating income generated from our core operations by excluding significant non-cash operating expenses such as impairment charges, restructuring expenses, stock option review expenses and share-based compensation expenses, as well as certain other expenses, that do not arise out of our core ongoing operating activities, and (b) it provides greater insight into management decision-making, as Adjusted EBITDA is one of our primary internal metrics for evaluating the performance of our business.

Non-GAAP Reconciliations

As noted above and as reflected in the reconciliation tables contained in this release, we have provided reconciliations between the historical non-GAAP measures that we have disclosed and the most directly comparable GAAP measures. We have not provided a reconciliation of forward-looking non-GAAP financial measures to the directly comparable GAAP measures because, due primarily to variability and difficulty in making accurate forecasts and projections, not all of the information necessary for a quantitative reconciliation is available to us without unreasonable efforts. Although we cannot provide a full quantitative reconciliation of these forward-looking measures, we have provided certain projections and other information that is available to us at this time (see "Guidance" below in this release). Certain of this information (for example, our expectations regarding non-GAAP operating expense for the quarter ending December 31, 2009) is non-quantitative in nature, and other information (for example our expectations regarding non-GAAP operating expense and Adjusted EBITDA for the quarter ending December 31, 2009) describes potential quantitative results. In addition, we do not currently have sufficient information regarding future activities to provide accurate reconciling information to our operating margins for the quarter ending December 31, 2009. We believe the probable significance of our providing forward-looking non-GAAP financial measures without full reconciliation to the most directly comparable projected GAAP financial measures is that investors and analysts will have certain information that we believe to be useful and meaningful regarding our future projected results and opportunities, but that they will not have a complete picture of all of our projected financial results on a GAAP basis and they may be unable to accurately compare our projected results to projected results of other companies who may have treated such matters differently. We believe that, given the inherent uncertainty always present for forward-looking projections, our investors will be able to understand and appropriately take into account the limitations in the information we have provided. Investors are cautioned that, while we cannot predict the occurrence, timing or amount of all non-GAAP items that we exclude from our non-GAAP financial measures, the actual effect of these items, when determined, could potentially be significant to the calculation of our GAAP financial measures for future calendar periods.

Guidance

For the third quarter of fiscal 2010 ending December 31, 2009, the Company anticipates net revenue of at least $25.0 million. Based upon the retail launch and marketing of Creator 2010 this fall, the company estimates that gross margins for the third quarter of fiscal 2010 will be slightly lower and operating expenses will be up incrementally on a sequential basis. Accordingly, the Company estimates an Adjusted EBITDA loss of approximately $1.0 million in the third quarter of fiscal 2010 and positive Adjusted EBITDA in the upcoming fourth quarter of fiscal 2010.

Call Details

Members of Sonic's management team will lead a conference call today at 4:30 p.m. EST (1:30 p.m. PST). To participate in the conference call, interested parties may dial-in at 877-795-3649 (domestic) or 719-325-4791 (international).

A telephone replay will also be available shortly following the call on Thursday, November 5, 2009 through midnight PST on Tuesday, November 10, 2009. The replay can be accessed by dialing 888-203-1112 (domestic) or 719-457-0820 (international) and entering the passcode: 3394768.

To listen to a live audio broadcast of the conference call via the Internet, visit the Investor Relations section of the Sonic Solutions website at http://www.sonic.com. An archived version of the webcast will also be available through this site.

                      Sonic Solutions
      Condensed Consolidated Statements of Operations
     (In thousands, except per share amounts - unaudited)

                                Three Months Ended   Six Months Ended
                                   September 30,       September 30,
                                ------------------  ------------------
                                  2009      2008      2009      2008
                                --------  --------  --------  --------


 Net revenue                    $ 26,056  $ 31,076  $ 51,583  $ 61,189
 Cost of revenue                   8,076     9,350    15,961    17,055
                                --------  --------  --------  --------
 Gross profit                     17,980    21,726    35,622    44,134
                                --------  --------  --------  --------

 Operating expenses:
  Marketing and sales              7,002     9,645    13,756    19,446
  Research and development         6,126    10,575    13,240    22,256
  General and administrative       4,264     5,177     9,016    11,897
  Restructuring                       46       267       566     1,541
                                --------  --------  --------  --------
                                  17,438    25,664    36,578    55,140
                                --------  --------  --------  --------
 Operating income (loss)             542   (3,938)     (956)  (11,006)

 Other income (expense), net       (501)     (476)     (350)     (609)
                                --------  --------  --------  --------
 Income (loss) before income
  taxes                               41   (4,414)   (1,306)  (11,615)

 Provision for (benefit from)
  income taxes                       247     (720)       731   (4,282)
                                --------  --------  --------  --------
 Net Loss                       $  (206)  $(3,694)  $(2,037)  $(7,333)
                                ========  ========  ========  ========

 Net loss per share:
  Basic                         $ (0.01)  $ (0.14)  $ (0.08)  $ (0.28)
                                ========  ========  ========  ========
 Shares used in computing net
  loss per share:
  Basic                           26,686    26,533    26,649    26,474
                                ========  ========  ========  ========

                         Sonic Solutions
               Condensed Consolidated Balance Sheets
                (In thousands, except share amounts)

                            (unaudited)

                                                   Sept. 30, March 31,
                                                     2009      2009
                                                   --------- ---------

                           ASSETS

 Current assets:
  Cash and cash equivalents                         $ 21,745  $ 19,408
  Restricted cash and cash equivalents                    --       456
  Accounts receivable, net of allowances of $3,138
   and $2,072 at September 30, 2009 and
   March 31, 2009, respectively                       12,150    14,874
  Inventory                                            1,690     1,086
  Prepaid expenses and other current assets            3,616     4,504
  Deferred tax benefits                                   41        41
                                                   --------- ---------
   Total current assets                               39,242    40,369
 Fixed assets, net                                     2,266     2,851
 Purchased and internally developed software
  costs, net                                             290       448
 Goodwill                                              4,628     4,628
 Acquired intangibles, net                            16,353    16,556
 Deferred tax benefit, net of current portion             30        21
 Other assets                                          1,376     1,864
                                                   --------- ---------
   Total assets                                     $ 64,185  $ 66,737
                                                   ========= =========

        LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:
  Accounts payable                                  $  4,872  $  5,042
  Accrued expenses and other current liabilities      26,154    27,026
  Deferred revenue, current portion                    6,034     6,875
  Obligations under capital leases, current
   portion                                               129       130
                                                   --------- ---------
   Total current liabilities                          37,189    39,073

  Other long term liabilities, net of
   current portion                                       777       724
  Deferred revenue, net of current portion               137       135
  Obligations under capital leases, net of
   current portion                                        97       161
                                                   --------- ---------
   Total liabilities                                  38,200    40,093
                                                   --------- ---------

 Commitments and contingencies
 Shareholders' equity:

  Common stock, no par value, 100,000,000 shares
   authorized; 26,743,539 and 26,593,647 shares
   issued and outstanding at March 31, 2009
   and 2008, respectively                            164,535   163,121
  Accumulated deficit                              (137,114) (135,076)
  Accumulated other comprehensive loss               (1,436)   (1,401)
                                                   --------- ---------
   Total shareholders' equity                         25,985    26,644
                                                   --------- ---------
   Total liabilities and shareholders' equity       $ 64,185  $ 66,737
                                                   ========= =========

                                           Sonic Solutions
                                      Reconciliation of GAAP to
                                     Non-GAAP Financial Measures
                                 (in thousands, except per share data)
                                              (unaudited)

                                Three Months Ended   Six Months Ended
                                   September 30,      September 30,
                                ------------------  ------------------
                                  2009      2008      2009      2008
                                --------  --------  --------  --------

  Net revenue                   $ 26,056  $ 31,076  $ 51,583  $ 61,189
  GAAP cost of revenue          $  8,076  $  9,350  $ 15,961  $ 17,055
                                --------  --------  --------  --------
  GAAP gross profit             $ 17,980  $ 21,726  $ 35,622  $ 44,134

  GAAP cost of revenue          $  8,076  $  9,350  $ 15,961  $ 17,055
   Acquisition-related
    intangible amortization
    expense                         (89)   (1,335)     (203)   (2,521)
                                --------  --------  --------  --------
  Non-GAAP cost of revenue      $  7,987  $  8,015  $ 15,758  $ 14,534

                                --------  --------  --------  --------
  Non-GAAP gross profit (loss)  $ 18,069  $ 23,061  $ 35,825  $ 46,655
                                ========  ========  ========  ========

  GAAP total operating expense  $ 17,438  $ 25,664  $ 36,578  $ 55,140
   Share-based compensation
    expense (1)                    (522)     (706)   (1,102)   (1,228)
   Stock option review
    expense (2)                       --      (43)        --     (506)
   Restructuring expense (3)        (46)     (267)     (566)   (1,541)
                                --------  --------  --------  --------
  Non-GAAP total operating
   expense                      $ 16,870  $ 24,648  $ 34,910  $ 51,865

                                --------  --------  --------  --------
  Non-GAAP operating income
   (loss)                        $ 1,199  $(1,587)  $    915  $(5,210)
                                ========  ========  ========  ========

  Other income (expense), net      (501)     (476)     (350)     (609)

   Non-GAAP income (loss) from
    operations before income
    taxes                            698   (2,063)       565   (5,819)

   Non-GAAP provision for
    (benefit from) income
    taxes (4)                        279     (825)       226   (2,328)

                                --------  --------  --------  --------
  Non-GAAP income (loss)
   from operations                 $ 419  $(1,238)  $    339  $(3,491)
                                ========  ========  ========  ========

  GAAP net income (loss)
   per share
   Basic                        $ (0.01)  $ (0.14)  $ (0.08)  $ (0.28)

  Non-GAAP net income (loss)
   per share
   Basic                        $   0.02  $ (0.05)  $   0.01  $ (0.13)
   Diluted                      $   0.01  $ (0.05)  $   0.01  $ (0.13)

  Shares used in computing GAAP
   net income (loss) per share
   Basic                          26,686    26,533    26,649    26,474

  Shares used in computing
   Non-GAAP net income (loss)
   per share
   Basic                          26,686    26,533    26,649    26,474
   Diluted                        28,080    26,533    27,792    26,474

 (1) Share-based compensation
      expense consists of:
     Marketing and sales        $    162  $    291  $    336  $    605
     Research and development         84        62       167       119
     General and administrative      276       353       599       504
                                --------  --------  --------  --------
                                $    522  $    706  $  1,102  $  1,228
                                ========  ========  ========  ========

 (2) Stock option review expense is included in General and
     Administrative expense on a GAAP basis.
 (3) Restructuring expense is included as a separate line item in
     operating expense on a GAAP basis.
 (4) Tax adjusted by applying an effective tax rate of 40%.

                           Sonic Solutions
                Reconciliation of Project Adjusted EBITDA
                   to Projected GAAP Operating Income
                       (In thousands - Unaudited)

                                Three Months Ended   Six Months Ended
                                ------------------  ------------------
                                Sept. 30, Sept. 30, Sept. 30, Sept. 30,
                                  2009      2008      2009      2008
                                --------- --------- --------- ---------


 Adjusted EBITDA                $  1,684  $   (984) $  1,946  $ (4,010)
  Depreciation                      (485)     (603)   (1,031)   (1,200)
                                --------- --------- --------- ---------
 Non-GAAP Operating Income         1,199    (1,587)      915    (5,210)
  Purchase technology
   amortization                      (89)   (1,335)     (203)   (2,521)
  Restructuring                      (46)     (267)     (566)   (1,541)
  Stock option review expenses        --       (43)       --      (506)
  Share-based compensation          (522)     (706)   (1,102)   (1,228)
                                --------- --------- --------- ---------
 GAAP Operating Income          $    542  $ (3,938) $   (956) $(11,006)
  Provision for (benefit from)
   income taxes                      247      (720)      731    (4,282)
  Other income (expense)            (501)     (476)     (350)     (609)
                                --------- --------- --------- ---------
 GAAP Net Income (loss)         $   (206) $ (3,694) $ (2,037) $ (7,333)
                                ========= ========= ========= =========

About Sonic Solutions

Sonic Solutions(R) (Nasdaq:SNIC) is a leading developer of products and services that enable the creation, management, and enjoyment of digital media content across a wide variety of technology platforms. Our products and services offer innovative technologies to consumers, original equipment manufacturers ("OEMs"), enterprises, high-end professional DVD authoring experts and developers. We distribute our products and services through retailers and distributors, personal computer ("PC") and consumer electronics ("CE") OEMs, Internet websites including www.roxio.com, and other channels. We also licenses core technology and intellectual property to other software companies and technology manufacturers for integration into their own products and services. Sonic software is intended for use with Microsoft Windows and Apple Mac operating systems, as well as some Linux environments and proprietary platforms.

The Sonic Solutions logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6157

Forward-Looking Statements

This press release and our earnings conference call for the second quarter ended September 30, 2009 contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are made as of the date of this press release based upon our current expectations. All statements, other than statements of historical fact, regarding our strategy, future operations, financial position, estimated revenue, projected costs, projected savings, prospects, plans, opportunities, and objectives constitute "forward-looking statements." The words "may," "will," "expect," "intend," "plan," "anticipate," "believe," "estimate," "potential" or "continue" and similar types of expressions identify such statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements include expectations regarding revenue, income, expenses, and other guidance for the fiscal quarter ending December 31, 2009. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause such differences include, but are not limited to:

 * the continuing negative impact of current macroeconomic
   conditions on consumers and associated impact on their ability
   and inclination to spend on leisure and entertainment related
   activities and related software and electronics;

 * the timely introduction and acceptance of new products and
   services, including but not limited to the rate of acceptance of
   our CinemaNow and Qflix initiative, online services and high-
   definition products by content owners, original equipment
   manufacturers and consumers;

 * competing products and services that may, now or in the future,
   be available to consumers;

 * pricing pressures associated with products or services offered
   by current or future competitors;

 * our ability to maintain sufficient liquidity and continue to
   fund our capital needs;

 * the costs associated with new product and service introductions
   and the possible adverse effects on gross margins;

 * fluctuations in demand for our products and services;

 * unforeseen increases in operating expenses;

 * reliance on and the possible loss of significant customers,
   major distributors or key suppliers;

 * risks associated with international operations;

 * the loss of key management personnel;

 * risks related to acquisition and the integration of acquired
   business assets, personnel and systems.

 * costs associated with litigation, patent prosecution,
   intellectual property claims, litigation related to stock option
   grant practices or any restatement of financials;

 * changes in effective tax rates;

 * tax issues or liability that relate to adjustments to the
   measurement dates associated with stock options issued by us;

 * unforeseen issues resulting from the restatement of our fiscal
   year 2005 financial statements and related matters; and

 * the impact of litigation related to our stock options grant
   practices or any restatement of its financial statements.

This press release should be read in conjunction with our most recent annual report on Form 10-K filed on June 1, 2009, our Form 10-Q filed on August 4, 2009, and our other reports currently on file with the Securities and Exchange Commission, which contain more detailed discussion of risks and uncertainties that may affect future results. Sonic does not undertake to update any forward-looking statements unless otherwise required by law.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Sonic Solutions

CONTACT: Sonic Solutions
Investor Relations
Nils Erdmann
Corporate Communications
Chris Taylor
415.893.8000
Fax: 415.893.8008

Along with the agreement, Best Buy will purchase an undisclosed amount of Sonic common stock, the company said.

"Our relationship with Sonic Solutions allows Best Buy to quickly establish a strong position in the digital delivery of video entertainment," said Brian Dunn, the retail chain's chief executive officer.

In a statement, President and CEO of Sonic Solutions Dave Habiger said, "with Best Buy's focus, we expect on-demand entertainment to quickly grow into a mass market activity, with digital sell-through and rental becoming a significant new revenue stream for content owners."

www.upi.com