Get It Together, Sonic: Fool by Numbers

On Feb. 15, digital video editing expert Sonic Solutions (Nasdaq: SNIC  ) released preliminary results for the third quarter of 2007, a period ending Dec. 31, 2006.

• An internal accounting review prevents the company from giving us a full slate of earnings, cash flows, and current balances. Yep, it's more of those darn backdated options shenanigans, or at least poorly documented ones.
• The scarcity of data in this report makes for a short Fool By Numbers, partly based on piecing together clues from the past, like a tendency to pay very little to the tax man in the third fiscal quarter. But it's nice to see Sonic spending $10.9 million on R&D, up from $10.1 million a year ago.
• Without a $1.2 million acquisition-related charge against cost of revenues, gross margins would have topped 80%. This company is clearly doing something right when you look under the covers.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q3 2007	Q3 2006	Change
Sales	$39.1	$40.8	(4.1%)
Net Profit*	$3.5	$8.2	(57.1%)
EPS*	$0.13	$0.30	(56.7%)
Diluted Shares	27.5	27.1	1.4%

*Educated guesses based on a combination of reported operational costs and historical trends in tax expenses.

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2007	Q3 2006	Change*
Gross Margin	77.4%	76.9%	0.6
Operating Margin	8.2%	22.8%	(14.6)
Net Margin**	9.0%	20.1%	(11.1)

*Expressed in percentage points.
**Another educated guess -- see above.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2007	Q3 2006	Change
Cash + ST Invest.	$56.0	$49.7	12.8%

Liabilities	Q3 2007	Q3 2006	Change
Long-Term Debt	$20.0	$30.0	(33.3%)

Learn the ways of the balance sheet.

Related Companies:

• Adobe Systems (Nasdaq: ADBE  )
• Avid Technology (Nasdaq: AVID  )
• Corel (Nasdaq: CREL  )
• Nero AG
• Sony (NYSE: SNE  )
• Apple (Nasdaq: AAPL  )

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.