Avid Announces First Quarter 2009 Results


Tewksbury, Mass, 2009-04-23 Avid® (NASDAQ: AVID) today reported revenues of $151.6 million for the three-month period ended March 31, 2009, compared to $198.3 million for the same period in 2008. The GAAP net loss for the quarter was $17.3 million, or $.47 per share, compared to a GAAP net loss of $21.1 million, or $.54 per share, in the first quarter of 2008.

The GAAP net loss for the first quarter of 2009 included amortization of intangibles, stock-based compensation, restructuring costs and related tax adjustments, collectively totaling $11.7 million. Excluding these items, the non-GAAP net loss was $5.6 million for the first quarter, or $.15 per share.

“The economic climate continues to be a challenge; however, we are making solid progress executing our strategy to transform Avid,” said Gary Greenfield, Avid’s chairman and CEO. “The steps we’ve taken to integrate our business have enabled us to begin cultivating deeper partnerships with our customers – from home enthusiasts to large media enterprises – helping us to better understand their needs in terms of interoperability, openness, collaborative production and workflow. When the economy enters a period of recovery, we will be well positioned to take advantage of the many opportunities that exist in our markets.”

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. 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. The reconciliation for net income and earnings per share for the three-month periods ended March 31, 2009 and 2008 are in the tables attached to this press release.

The company uses non-GAAP financial measures internally to manage its business, for example, in establishing its annual operating budget, in assessing segment operating performance and for measuring performance under employee incentive compensation plans. Non-GAAP financial measures are used by management in its operating and financial decision-making because management believes these measures reflect the company’s ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate the company’s current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company’s current financial results with past financial results. The primary limitations associated with the company’s use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect the company’s operations. The company’s management compensates for these limitations by considering the company’s financial results as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in this press release.

Conference Call

A conference call to discuss Avid’s first quarter 2009 financial results will be held today, April 23, 2009 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 http://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, 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 http://www.avid.com/, del.icio.us, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2009 Avid Technology, Inc. All rights reserved. Product features, specifications, systems requirements and availability are subject to change without notice.  Avid, Pinnacle Studio, Avid Unity, Interplay, Media Composer, Pro Tools, Symphony, Nitris, ISIS 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,
2009
2008
Net revenues:
Products
$ 123,641
$ 168,176
Services
27,988
30,090
Total net revenues
151,629
198,266
Cost of revenues:
Products
61,248
85,073
Services
15,839
17,387
Amortization of intangible assets
520
3,254
Restructuring costs
799
-
Total cost of revenues
78,406
105,714
Gross profit
73,223
92,552
Operating expenses:
Research and development
31,051
38,510
Marketing and selling
40,781
50,327
General and administrative
15,113
21,943
Amortization of intangible assets
2,375
3,387
Restructuring costs, net
4,222
1,063
Total operating expenses
93,542
115,230
Operating loss
(20,319)
(22,678)
Interest and other income (expense), net
153
1,481
Loss before income taxes
(20,166)
(21,197)
Benefit from income taxes, net
(2,889)
(49)
Net loss
$ (17,277)
$ (21,148)
Net loss per common share - basic and diluted
$ (0.47)
$ (0.54)
Weighted-average common shares outstanding - basic and diluted
37,130
39,362

 

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

Change in Financial Presentation

Beginning this quarter, we have combined our professional video and consumer video businesses into a single reporting segment. We will now consequently report on two business segments: Audio and Video. Please note that the segment contribution margin calculation has also changed from last year. Segment contribution margin is now calculated as segment gross margin less the research and development and product management expenses directly attributable to the segment. Our 2008 comparative results have been updated to reflect our new business structure.

Summary of the Company's revenues and contribution margin by reportable segment and a reconciliation of segment contribution margin to consolidated operating loss:

Three Months Ended
March 31,
2009
2008
Revenues:
Video
$ 87,502
$ 125,027
Audio
64,127
73,239
Total revenues (a)
$ 151,629
$ 198,266
Contribution Margin:
Video
$ 21,280
$ 28,470
Audio
22,730
26,325
Segment contribution margin
44,010
54,795
Less unallocated costs and expenses:
Research and development expenses
(1,754)
(1,770)
Marketing and selling expenses
(37,515)
(46,468)
General and administrative expenses
(12,996)
(19,386)
Amortization of acquisition-related intangible assets
(2,895)
(6,641)
Stock-based compensation
(4,148)
(2,145)
Restructuring costs, net
(5,021)
(1,063)
Consolidated operating loss
$ (20,319)
$ (22,678)
(a) Includes revenues from non-core product lines of:
$ 949
$ 18,452
Reconciliation of GAAP net loss to Non-GAAP net loss:
Three Months Ended
March 31,
2009
2008
GAAP net loss
$ (17,277)
$ (21,148)
Adjustments to reconcile to Non-GAAP net loss:
Amortization of intangible assets
2,895
6,641
Stock-based compensation
4,148
2,145
Restructuring costs, net
5,021
1,063
Related tax adjustments
(354)
(434)
Non-GAAP net loss
$ (5,567)
$ (11,733)
Weighted-average common shares outstanding - diluted
37,130
39,362
Non-GAAP net loss per common share - diluted
$ (0.15)
$ (0.30)
Three Months Ended
Stock-based compensation included in:
March 31,
2009
2008
Cost of products revenues
$ 350
$ 132
Cost of services revenues
390
98
Research and development expenses
470
363
Marketing and selling expenses
821
529
General and administrative expenses
2,117
1,023
$ 4,148
$ 2,145

 

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

March 31,
December 31,
2009
2008
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities
$ 131,666
$ 147,694
Accounts receivable, net of allowances of $18,414 and $23,182
at March 31, 2009 and December 31, 2008, respectively
80,253
103,527
Inventories
95,284
95,755
Prepaid and other current assets
35,748
43,969
Total current assets
342,951
390,945
Property and equipment, net
36,985
38,321
Intangible assets, net
35,248
38,143
Goodwill
225,375
225,375
Other assets
10,732
10,801
Total assets
$ 651,291
$ 703,585
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable
$ 23,931
$ 29,419
Accrued expenses and other current liabilities
76,567
101,107
Deferred revenues
64,512
68,581
Total current liabilities
165,010
199,107
Long-term liabilities
11,318
11,823
Total liabilities
176,328
210,930
Stockholders' equity:
Common stock
423
423
Additional paid-in capital
983,859
980,563
Accumulated deficit
(389,432)
(365,431)
Treasury stock at cost, net of reissuances
(117,877)
(124,852)
Accumulated other comprehensive income
(2,010)
1,952
Total stockholders' equity
474,963
492,655
Total liabilities and stockholders' equity
$ 651,291
$ 703,585