Avid Announces Second Quarter 2010 Results


Burlington, MA, 2010-07-22

Reports Revenue Growth of 8% Year-on-Year

BURLINGTON, Mass., July 22, 2010 — Avid® (NASDAQ: AVID) today reported revenues of $162.2 million for the three-month period ended June 30, 2010, compared to $150.5 million for the same period in 2009. The GAAP net loss for the quarter was $12.9 million, or $0.34 per share, compared to a GAAP net loss of $15.9 million, or $0.43 per share, in the second quarter of 2009.

The GAAP net loss for the second quarter of 2010 included amortization of intangibles, stock-based compensation, restructuring and other charges, acquisition-related costs and related tax adjustments collectively totaling $10.9 million. Excluding these items, the non-GAAP net loss was $2.0 million for the second quarter, or $0.05 per share.  The GAAP net loss for the second quarter of 2009 included $10.4 million of amortization of intangibles, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share for the second quarter of 2009 was $0.15 per share.  A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

“We’re encouraged with the year-over-year revenue growth and are optimistic about the second half as we continue to track towards profitability,” said Gary Greenfield, Chairman and CEO at Avid.  “The success of our broadcast and live sound segments this quarter is a good indication of how our ongoing engagement with audio and video customers continues to result in solutions that both anticipate their technology needs and solve business problems.”

Revenues for the six-month period ended June 30, 2010 were $318.1 million, compared to revenues of $302.2 million for the same period in 2009. GAAP net loss for the first six months of 2010 was $26.4 million, or $0.70 per share, compared to GAAP net loss of $33.2 million, or $0.89 per share, for the same period in 2009. GAAP net loss for the six-month period ended June 30, 2010 included $19.8 million of amortization, stock-based compensation, restructuring and other charges, acquisition-related costs and related tax adjustments. Excluding these items, the non-GAAP net loss was $6.6 million for the first half of 2010 or $0.17 per share.  GAAP net loss for the six-month period ended June 30, 2009 was $33.2 million and included $22.1 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $0.30 for the first half of 2009.

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-GAAP information 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 also 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 second quarter 2010 financial results will be held today, July 22, 2010 at 4:30 p.m. EDT. 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   Six Months Ended
      June 30,   June 30,
      2010   2009   2010   2009
Net revenues:  

 

 

 

 

 

 

 

  Products   $134,134   $121,912   $262,813   $245,553
  Services     28,026     28,631     55,303     56,619
      Total net revenues   162,160   150,543   318,116   302,172
                   
Cost of revenues:                
  Products     65,837     58,429   129,106   119,677
  Services     13,139     14,090     27,179     29,929
  Amortization of intangible assets    946   426     1,912   946
  Restructuring costs   -   -   -   799
      Total cost of revenues   79,922   72,945   158,197   151,351
                   
Gross profit     82,238     77,598   159,919   150,821
                   
Operating expenses:                
  Research and development     30,268     30,661     60,419     61,712
  Marketing and selling     44,474     41,994     86,220     82,775
  General and administrative     13,879     12,559     28,481     27,672
  Amortization of intangible assets     2,417     2,622     5,274     4,997
  Restructuring and other costs, net     4,007     5,019     5,347     9,241
      Total operating expenses   95,045   92,855   185,741   186,397
                   
Operating loss   (12,807)   (15,257)   (25,822)   (35,576)
                   
Interest and other income (expense), net     (102)   58     (102)   211
Loss before income taxes   (12,909)   (15,199)   (25,924)   (35,365)
                   
(Benefit from) provision for income taxes, net   (3)   750   464   (2,139)
                   
Net loss   ($12,906)   ($15,949)   ($26,388)   ($33,226)
                   
Net loss per common share - basic and diluted   ($0.34)   ($0.43)   ($0.70)   ($0.89)
                   
Weighted-average common shares outstanding - basic and diluted   37,909   37,282   37,714   37,206

 

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 June 30, 2010
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   Provision   Loss
GAAP   $82,238   $95,045   ($12,807)   ($3)   ($12,906)
                       
  Amortization of intangible assets 946   (2,417)     3,363         3,363
  Restructuring and other costs, net (a)     (4,007)     4,007         4,007
  Acquisition-related costs (b)       (83)   83         83
  Tax adjustment             171   (171)
  Stock-based compensation included in:                  
    Cost of products revenues 197       197       197
    Cost of services revenues 282       282       282
    Research and development expenses       (547)   547       547
    Marketing and selling expenses     (1,107)     1,107         1,107
    General and administrative expenses     (1,531)     1,531         1,531
                       
Non-GAAP $83,663   $85,353   ($1,690)   $168   ($1,960)
                       
Weighted-average shares outstanding - diluted                 37,909
                       
Non-GAAP net loss per share - diluted                 ($0.05)
                       
  (a) Includes costs of $3.8 million related to exiting our former Tewksbury, Massachusetts headquarters lease
  (b) Represents M&A costs included in general and administrative expenses
                       
Three Months Ended June 30, 2009
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   Benefit   Loss
GAAP   $77,598   $92,855   ($15,257)   $750   ($15,949)
                       
  Amortization of intangible assets 426   (2,622)     3,048         3,048
  Restructuring and other costs, net -   (5,019)     5,019         5,019
  Tax adjustment             540   (540)
  Stock-based compensation included in:                  
    Cost of products revenues 153       153       153
    Cost of services revenues 231       231       231
    Research and development expenses       (612)   612       612
    Marketing and selling expenses       (806)   806       806
    General and administrative expenses     (1,092)     1,092         1,092
                       
Non-GAAP $78,408   $82,704   ($4,296)   $1,290   ($5,528)
                       
Weighted-average shares outstanding - diluted                 37,282
                       
Non-GAAP net loss per share - diluted                 ($0.15)

 

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

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

Six Months Ended June 30, 2010
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   Provision   Loss
GAAP   $159,919   $185,741   ($25,822)   $464   ($26,388)
                       
  Amortization of intangible assets   1,912   (5,274)     7,186         7,186
  Restructuring and other costs, net (a)     (5,347)     5,347         5,347
  Acquisition-related costs (b)       (769)   769       769
  Tax adjustment             455   (455)
  Stock-based compensation included in:                  
    Cost of products revenues 386       386       386
    Cost of services revenues 535       535       535
    Research and development expenses     (1,198)     1,198         1,198
    Marketing and selling expenses     (2,075)     2,075         2,075
    General and administrative expenses     (2,792)     2,792         2,792
                       
Non-GAAP $162,752   $168,286   ($5,534)   $919   ($6,555)
                       
Weighted-average shares outstanding - diluted                 37,714
                       
Non-GAAP net loss per share - diluted                 ($0.17)
                       
  (a) Includes costs of $3.8 million related to exiting our former Tewksbury, Massachusetts headquarters lease
  (b) Represents M&A costs included in general and administrative expenses
                       
Six Months Ended June 30, 2009
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   Benefit   Loss
GAAP   $150,821   $186,397   ($35,576)   ($2,139)   ($33,226)
                       
  Amortization of intangible assets 946   (4,997)     5,943         5,943
  Restructuring and other costs, net 799   (9,241)     10,040         10,040
  Tax adjustment             894   (894)
  Stock-based compensation included in:                  
    Cost of products revenues 503       503       503
    Cost of services revenues 621       621       621
    Research and development expenses     (1,082)     1,082         1,082
    Marketing and selling expenses     (1,627)     1,627         1,627
    General and administrative expenses     (3,209)     3,209         3,209
                       
Non-GAAP $153,690   $166,241   ($12,551)   ($1,245)   ($11,095)
                       
Weighted-average shares outstanding - diluted                 37,206
                       
Non-GAAP net loss per share - diluted                 ($0.30)
                       
Revenue Summary:                  
      Three Months Ended   Six Months Ended    
      June 30,   June 30,    
      2010   2009   2010   2009    
Video revenues $93,521   $88,699   $177,874   $176,201    
Audio revenues 68,639   61,844   140,242   125,971    
  Total net revenues $162,160   $150,543   $318,116   $302,172    

 

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

    June 30,   December 31,
    2010   2009
ASSETS:        
Current assets:        
    Cash, cash equivalents and marketable securities   $46,793   $108,877
    Accounts receivable, net of allowances of $13,876 and $16,347        
      at June 30, 2010 and December 31, 2009, respectively   100,202   79,741
    Inventories   79,146   77,243
    Prepaid and other current assets   27,514   31,075
      Total current assets   253,655   296,936
         
Property and equipment, net   66,427   37,217
Intangible assets, net   34,012   29,235
Goodwill   243,192   227,195
Other assets   9,522   20,455
         
      Total assets   $606,808   $611,038
         
LIABILITIES AND STOCKHOLDERS' EQUITY:        
Current liabilities:        
    Accounts payable   52,187   $30,230
    Accrued expenses and other current liabilities   66,407   84,100
    Deferred revenues   47,881   39,107
      Total current liabilities   166,475   153,437
         
Long-term liabilities   22,196   14,483
      Total liabilities   188,671   167,920
         
Stockholders' equity:        
    Common stock   423   423
    Additional paid-in capital   998,336   992,489
    Accumulated deficit   (484,009)   (444,661)
    Treasury stock at cost, net of reissuances   (93,612)   (112,389)
    Accumulated other comprehensive income   (3,001)   7,256
      Total stockholders' equity   418,137   443,118
         
      Total liabilities and stockholders' equity   $606,808   $611,038