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.

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  • Corel (NASDAQ:CREL)
  • Nero AG
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  • Apple (NASDAQ:AAPL)

Related Foolishness:

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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.