Avid Announces First Quarter 2010 Results


TEWKSBURY, Mass., 2010-04-22

Avid® (NASDAQ: AVID) today reported revenues of $156.0 million for the three-month period ended March 31, 2010, compared to $151.6 million for the same period in 2009. The GAAP net loss for the quarter was $13.5 million, or $0.36 per share, compared to a GAAP net loss of $17.3 million, or $0.47 per share, in the first quarter of 2009.

The GAAP net loss for the first quarter of 2010 included amortization of intangibles, stock-based compensation, restructuring charges, acquisition-related costs and related tax adjustments, collectively totaling $8.9 million. Excluding these items, the non-GAAP net loss was $4.6 million for the first quarter, or $0.12 per share. A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

The GAAP operating loss for the first quarter was $13.0 million, including amortization of intangibles, stock-based compensation, restructuring charges and acquisition-related costs, collectively totaling $9.2 million. Excluding these items, the non-GAAP operating loss was $3.8 million for the first quarter. For the first quarter of 2009 the GAAP operating loss was $20.3 million, including stock-based compensation, amortization of intangibles and restructuring charges totaling $12.1 million. Excluding these items, the non-GAAP operating loss was $8.3 million.

“Our year-on-year first quarter revenue increase is a positive sign not only for the growth of Avid’s business, but the industry-at-large,” said Gary Greenfield, chairman and CEO at Avid. “We saw some positive momentum at NAB and are excited about the possibilities our new products and the acquisition of Euphonix will play in the future success of our business and our customers’ businesses.”

The company’s cash balance on March 31, 2010 was $74.2 million, or almost $2.00 per share.

Use of Non-GAAP Financial Measures

This press release contains “non-GAAP financial measures” under the rules of the U.S. Securities and Exchange Commission.Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAPinformation supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The reconciliation of the GAAP to non-GAAP financial measures that we provide is in the tables attached to this press release.

We consider both GAAP and non-GAAP financial results in managing our business. Non-GAAP financial measures are used internally, for example, in establishing annual operating budgets, in assessing operating performance and for measuring performance under incentive compensation plans. Non-GAAP financial measures are also used in operating and financial decision-making because we believe these measures reflect our ongoing business and allow meaningful period-to-period comparisons. We believe it is useful for investors and others to review both GAAP and non-GAAP measures in order to understand and evaluate our current operating performance and future prospects in the same manner as management, and to compare in a consistent manner the company’s current financial results with past financial performance. The primary limitations associated with our use of non-GAAP financial measures are that they may not include all items of income and expense that affect our operations and that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this press release, non-GAAP operating net loss and non-GAAP operating loss, do not have standardized meanings. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for this limitation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.

Conference Call

A conference call to discuss Avid’s first quarter 2010 financial results will be held today, April 22, 2010 at 4:30 p.m. ET. The call will be open to the public and can be accessed by dialing 719.457.2617 and referencing confirmation code 4569475. The call and subsequent replay will also be available on Avid’s website. To listen via this alternative, go to the Investors tab at www.avid.com for complete details prior to the start of the conference call.

Use of Forward-Looking Statements

The above release is subject to the completion and filing of our Quarterly Report on Form 10-Q. This release includes forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. This release also makes forward-looking statements about Avid’s performance. There are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, such as Avid’s ability to execute on its corporate strategy and meet customer needs, general economic conditions, competitive factors, pricing pressures, delays in product shipments and other important events and factors disclosed previously and from time to time in Avid’s filings with the U.S. Securities and Exchange Commission. In addition, the forward-looking statements contained herein represent Avid’s estimates only as of today and should not be relied upon as representing the company’s estimates as of any subsequent date. While Avid may elect to update these forward-looking statements at some point in the future, Avid specifically disclaims any obligation to do so, even if the estimates change.

About Avid

Avid creates the digital audio and video technology used to make the most listened to, most watched and most loved media in the world – from the most prestigious and award-winning feature films, music recordings, television shows, live concert tours and news broadcasts, to music and movies made at home. Some of Avid’s most influential and pioneering solutions include Media Composer®, Pro Tools®, Avid Unity™, Interplay®, Oxygen 8, Sibelius® and Pinnacle Studio™. For more information about Avid solutions and services, visit www.avid.com, del.icio.us, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2010 Avid Technology, Inc. All rights reserved. Avid, the Avid Logo, Avid Unity, Interplay, Media Composer, Pinnacle Studio, Pro Tools and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of Interplay Entertainment Corp., which bears no responsibility for Avid products. All other trademarks are the property of their respective owners.

 

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)

      Three Months Ended
      March 31,
      2010   2009
Net revenues:        
  Products   $ 128,679   $ 123,641
  Services   27,277   27,988
 

Total net revenues

  155,956   151,629
           
Cost of revenues:        
  Products   63,269   61,248
  Services   14,040   15,839
  Amortization of intangible assets   966   520
  Restructuring costs   -   799
 

   Total cost of revenues

  78,275   78,406
           
Gross profit   77,681   73,223
           
Operating expenses:        
  Research and development   30,151   31,051
  Marketing and selling   41,746   40,781
  General and administrative   14,602   15,113
  Amortization of intangible assets   2,857   2,375
  Restructuring costs, net   1,340   4,222
 

   Total operating expenses

  90,696   93,542
           
Operating loss   (13,015)   (20,319)
           
Interest and other income (expense), net   -   153
Loss before income taxes   (13,015)   (20,166)
           
Provision for (benefit from) income taxes, net   467   (2,889)
           
Net loss   $ (13,482)   $ (17,277)
           
Net loss per common share - basic and diluted   $ (0.36)   $ (0.47)
           
Weighted-average common shares outstanding - basic and diluted   37,516   37,130

 

AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)

Change in Financial Presentation
Beginning January 1, 2010, we are reporting based on a single reporting segment. Comparative results for the 2009 period have been updated to reflect this new business structure.

Reconciliations of GAAP financial measures to Non-GAAP financial measures:

Three Months Ended March 31, 2010
               
      Gross Operating Operating Tax Net
      Profit Expenses Loss Provision Loss
GAAP   $77,681 $90,696 ($13,015) $467 ($13,482)
               
  Amortization of intangible assets 966 (2,857) 3,823   3,823
  Restructuring costs, net   (1,340) 1,340   1,340
  Other costs (a)   (686) 686   686
  Tax adjustment       284 (284)
  Stock-based compensation included in:          
    Cost of products revenues 189   189   189
    Cost of services revenues 253   253   253
    Research and development expenses   (651) 651   651
    Marketing and selling expenses   (968) 968   968
    General and administrative expenses   (1,261) 1,261   1,261
Non-GAAP $79,089 $82,933 ($3,844) $751 ($4,595)
           
Weighted-average shares outstanding - diluted         37,516
               
Non-GAAP net loss per share - diluted ($0.12)
               
  (a)Amount represents M&A costs included in general and administrative expenses.  
               
 
 
Three Months Ended March 31, 2009
               
      Gross Operating Operating Tax Net
      Profit Expenses Loss Benefit Loss
GAAP   $73,223 $93,542 ($20,319) ($2,889) ($17,277)
               
  Amortization of intangible assets 520 (2,375) 2,895   2,895
  Restructuring costs, net 799 (4,222) 5,021   5,021
  Tax adjustment       354 (354)
  Stock-based compensation included in:          
    Cost of products revenues 350   350   350
    Cost of services revenues 390   390   390
    Research and development expenses   (470) 470   470
    Marketing and selling expenses   (821) 821   821
    General and administrative expenses   (2,117) 2,117   2,117
               
Non-GAAP $75,282 $83,537 ($8,255) ($2,535) ($5,567)
               
Weighted-average shares outstanding - diluted 37,130
               
Non-GAAP net loss per share - diluted ($0.15)
               
           
Revenue Summary:          
      Three Months Ended March 31,    
      2010   2009    
  Video revenues $ 84,353   $ 87,502    
  Audio revenues 71,603   64,127    
    Total net revenues $ 155,956   $ 151,629    

 

AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

   
March 31,
 
December 31,
   
2010
 
2009
ASSETS:        
Current assets:        
   Cash, cash equivalents and marketable securities  
$ 74,235
 
$ 108,877
   Accounts receivable, net of allowances of $14,498 and $16,347        
      at March 31, 2010 and December 31, 2009, respectively  
84,257
 
79,741
   Inventories  
71,794
 
77,243
   Prepaid and other current assets  
32,957
 
31,075
      Total current assets  
263,243
 
296,936
         
Property and equipment, net  
52,708
 
37,217
Intangible assets, net  
36,585
 
29,235
Goodwill  
230,777
 
227,195
Other assets  
9,640
 
20,455
         
      Total assets  
$ 592,953
 
$ 611,038
         
LIABILITIES AND STOCKHOLDERS' EQUITY:        
Current liabilities:        
Accounts payable  
$ 33,431
 
$ 30,230
   Accrued expenses and other current liabilities  
69,626
 
84,100
   Deferred revenues  
45,621
 
39,107
      Total current liabilities  
148,678
 
153,437
         
Long-term liabilities  
16,282
 
14,483
      Total liabilities  
164,960
 
167,920
         
Stockholders' equity:        
   Common stock  
423
 
423
   Additional paid-in capital  
994,700
 
992,489
   Accumulated deficit  
(464,048)
 
(444,661)
   Treasury stock at cost, net of reissuances  
(106,099)
 
(112,389)
   Accumulated other comprehensive income  
3,017
 
7,256
      Total stockholders' equity  
427,993
 
443,118
         
      Total liabilities and stockholders' equity  
$ 592,953
 
$ 611,038