Avid Announces Third Quarter 2010 Results, Reports Revenue Growth and Profit Improvement


Burlington, MA, 2010-10-21

Avid® (NASDAQ: AVID) today reported revenues of $165.1 million for the three-month period ended September 30, 2010, compared to $152.1 million for the same period in 2009. The GAAP net loss for the third quarter was $10.0 million, or $0.26 per share, compared to a GAAP net loss of $17.2 million, or $0.46 per share, in the third quarter of 2009.

The GAAP net loss for the third quarter of 2010 included amortization of intangible assets, stock-based compensation, restructuring and other charges, a gain on asset sales, acquisition-related costs, a legal settlement and related tax adjustments collectively totaling $11.6 million. Excluding these items, the non-GAAP net income was $1.6 million for the third quarter, or $0.04 per share. The GAAP net loss for the third quarter of 2009 included $17.0 million of amortization of intangible assets, stock-based compensation, restructuring and other charges, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss per share for the third quarter of 2009 was $0.01 per share

The GAAP operating loss for the third quarter was $7.1 million, including amortization of intangible assets, stock-based compensation, restructuring and other charges, a gain on asset sales, acquisition-related costs and a legal settlement collectively totaling $12.0 million. Excluding these items, the non-GAAP operating profit for the third quarter was $4.9 million. A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

“We are pleased to report our strongest financial quarter since 2007 including a non-GAAP operating profit and strong year-over-year revenue growth,” said Gary Greenfield, chairman and CEO at Avid. “The steady revenue growth trend in both Avid’s business and our customers’ businesses is encouraging and we remain focused on improving our profit margin.”

Revenues for the nine-month period ended September 30, 2010 were $483.2 million, compared to revenues of $454.3 million for the same period in 2009. GAAP net loss for the first nine months of 2010 was $36.4 million, or $0.96 per share, compared to GAAP net loss of $50.4 million, or $1.35 per share, for the same period in 2009. GAAP net loss for the nine-month period ended September 30, 2010 included $31.4 million of amortization of intangible assets, stock-based compensation, restructuring and other charges, a gain on asset sales, acquisition-related costs, a legal settlement and related tax adjustments. Excluding these items, the non-GAAP net loss was $5.0 million for the first nine-months of 2010, or $0.13 per share. GAAP net loss for the nine-month period ended September 30, 2009 was $50.4 million and included $39.1 million of amortization of intangible assets, stock-based compensation, restructuring and other charges, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss was $11.3 million for the first nine-months of 2009, or $0.30 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-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 profit and non-GAAP net income, 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 third quarter 2010 financial results will be held today, October 21, 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®, Interplay®, ISIS®, VENUE, Oxygen 8, Sibelius®, System 5, 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, Interplay, ISIS, 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   Nine Months Ended
      September 30,   September 30,
      2010   2009   2010   2009
Net revenues:                
  Products  
$134,231
 
$123,522
 
$397,044
 
$369,075
  Services  
     30,828
 
     28,597
 
      86,131
 
     85,216
       Total net revenues  
    165,059
 
    152,119
 
    483,175
 
    454,291
                   
Cost of revenues:                
  Products  
     64,421
 
     57,097
 
    193,527
 
    176,774
  Services  
     14,194
 
     13,586
 
      41,373
 
     43,515
  Amortization of intangible assets  
          745
 
          519
 
        2,657
 
       1,465
  Restructuring costs  
              -
 
              -
 
               -
 
          799
       Total cost of revenues  
     79,360
 
     71,202
 
    237,557
 
    222,553
                   
Gross profit  
     85,699
 
     80,917
 
    245,618
 
    231,738
                   
Operating expenses:                
  Research and development  
     28,929
 
     29,262
 
      89,348
 
     90,974
  Marketing and selling  
     43,199
 
     44,705
 
    129,419
 
    127,480
  General and administrative  
     19,698
 
     12,093
 
      48,179
 
     39,765
  Amortization of intangible assets  
       2,283
 
       2,782
 
        7,557
 
       7,779
  Restructuring and other costs, net  
          185
 
       7,891
 
        5,532
 
     17,132
  (Gain) loss on sales of assets  
      (1,527)
 
       3,398
 
       (1,527)
 
       3,398
       Total operating expenses  
     92,767
 
    100,131
 
    278,508
 
    286,528
                   
Operating loss  
      (7,068)
 
    (19,214)
 
     (32,890)
 
    (54,790)
                   
Interest and other income (expense), net  
           (30)
 
         (240)
 
         (132)
 
           (29)
Loss before income taxes  
      (7,098)
 
    (19,454)
 
     (33,022)
 
    (54,819)
                   
Provision for (benefit from) income taxes, net  
       2,897
 
      (2,246)
 
        3,361
 
      (4,385)
                   
Net loss  
($9,995)
 
($17,208)
 
($36,383)
 
($50,434)
                   
Net loss per common share - basic and diluted  
($0.26)
 
($0.46)
 
($0.96)
 
($1.35)
                   
Weighted-average common shares outstanding - basic and diluted  
38,045
 
37,341
 
37,826
 
37,251
                   
       

 

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
periods have been updated to reflect this new business structure.            
                       
Reconciliations of GAAP financial measures to Non-GAAP financial measures:        
                       
  Three Months Ended September 30, 2010
                       
      Gross   Operating   Operating   Tax   Net
      Profit    Expenses     (Loss) Income    Provision   (Loss) Income
GAAP
$85,699
 
$92,767
 
($7,068)
 
$2,897
  ($9,995)
                       
  Amortization of intangible assets
           745
 
       (2,283)
 
        3,028
     
        3,028
  Restructuring and other costs, net    
          (185)
 
           185
     
           185
  Acquisition-related costs (a)    
            (56)
 
             56
     
             56
  Legal settlement (a)    
       (5,600)
 
        5,600
     
        5,600
  Gain on sales of assets    
           527
 
          (527)
     
          (527)
  Tax adjustment            
           399
 
          (399)
  Stock-based compensation included in:                  
    Cost of products revenues
           176
     
           176
     
           176
    Cost of services revenues
           287
     
           287
     
           287
    Research and development expenses    
          (506)
 
           506
     
           506
    Marketing and selling expenses    
       (1,078)
 
        1,078
     
        1,078
    General and administrative expenses    
       (1,581)
 
        1,581
     
        1,581
Non-GAAP
$86,907
 
$82,005
 
$4,902
 
$3,296
 
$1,576
                       
Weighted-average shares outstanding - diluted                
38,065
                       
Non-GAAP net income per share - diluted                 $0.04
                       
  (a) Represents costs included in general and administrative expenses        
                       
                       
Three Months Ended September 30, 2009
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   Benefit   Loss
GAAP
$80,917
 
$100,131
 
($19,214)
 
($2,246)
 
($17,208)
                       
  Amortization of intangible assets
           519
 
       (2,782)
 
        3,301
     
        3,301
  Restructuring and other costs, net    
       (7,891)
 
        7,891
     
        7,891
  Loss on sales of assets    
       (3,398)
 
        3,398
     
        3,398
  Tax adjustment            
           463
 
          (463)
  Stock-based compensation included in:                  
    Cost of products revenues
           163
     
           163
     
           163
    Cost of services revenues
           247
     
           247
     
           247
    Research and development expenses    
          (655)
 
           655
     
           655
    Marketing and selling expenses    
          (895)
 
           895
     
           895
    General and administrative expenses    
          (906)
 
           906
     
           906
Non-GAAP
$81,846
 
$83,604
 
($1,758)
 
($1,783)
 
($215)
                       
Weighted-average shares outstanding - diluted                
37,341
                       
Non-GAAP net loss per share - diluted                
($0.01)
     

 

AVID TECHNOLOGY, INC.                  
(unaudited - in thousands, except per share data)                
                       
Reconciliations of GAAP financial measures to Non-GAAP financial measures:    
                       
Nine Months Ended September 30, 2010
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   Provision   Loss
GAAP
$245,618
 
$278,508
 
($32,890)
 
$3,361
 
($36,383)
                       
  Amortization of intangible assets
        2,657
 
       (7,557)
 
      10,214
     
      10,214
  Restructuring and other costs, net (a)    
       (5,532)
 
        5,532
     
        5,532
  Acquisition-related costs (b)    
          (825)
 
           825
     
           825
  Legal settlement (b)    
       (5,600)
 
        5,600
     
        5,600
  Gain on sales of assets    
           527
 
          (527)
     
          (527)
  Tax adjustment            
           854
 
          (854)
  Stock-based compensation included in:                  
    Cost of products revenues
           562
     
           562
     
           562
    Cost of services revenues
           822
     
           822
     
           822
    Research and development expenses    
       (1,704)
 
        1,704
     
        1,704
    Marketing and selling expenses    
       (3,153)
 
        3,153
     
        3,153
    General and administrative expenses    
       (4,373)
 
        4,373
     
        4,373
Non-GAAP
$249,659
 
$250,291
 
($632)
 
$4,215
 
($4,979)
                       
Weighted-average shares outstanding - diluted              
37,826
                       
Non-GAAP net loss per share - diluted                
($0.13)
                       
  (a) Includes costs of $3.7 million related to exiting our former Tewksbury, Massachusetts headquarters lease
  (b) Represents costs included in general and administrative expenses        
                       
Nine Months Ended September 30, 2009
                       
      Gross    Operating   Operating   Tax   Net
      Profit    Expenses   Loss   Benefit   Loss
GAAP
$231,738
 
$286,528
 
($54,790)
 
($4,385)
 
($50,434)
                       
  Amortization of intangible assets
        1,465
 
       (7,779)
 
        9,244
     
        9,244
  Restructuring and other costs, net
           799
 
     (17,132)
 
      17,931
     
      17,931
  Loss on sales of assets    
       (3,398)
 
        3,398
     
        3,398
  Tax adjustment            
        1,357
 
       (1,357)
  Stock-based compensation included in:                  
    Cost of products revenues
           666
     
           666
     
           666
    Cost of services revenues
           868
     
           868
     
           868
    Research and development expenses    
       (1,737)
 
        1,737
     
        1,737
    Marketing and selling expenses    
       (2,522)
 
        2,522
     
        2,522
    General and administrative expenses    
       (4,115)
 
        4,115
     
        4,115
Non-GAAP
$235,536
 
$249,845
 
($14,309)
 
($3,028)
 
($11,310)
                       
Weighted-average shares outstanding - diluted              
37,251
                       
Non-GAAP net loss per share - diluted                
($0.30)
                       
 Revenue Summary: Three Months Ended   Nine Months Ended    
      September 30,   September 30,    
      2010   2009   2010   2009    
Video revenues
$100,186
 
$92,617
 
$278,060
 
$268,818
   
Audio revenues
64,873
 
59,502
 
205,115
 
185,473
   
  Total net revenues
$165,059
 
$152,119
 
$483,175
 
$454,291
   
     

 

AVID TECHNOLOGY, INC.        
Condensed Consolidated Balance Sheets        
(unaudited - in thousands)        
         
    September 30,   December 31,
    2010   2009
ASSETS:        
Current assets:        
   Cash, cash equivalents and marketable securities  
$34,361
 
$108,877
   Accounts receivable, net of allowances of $15,733 and $16,347        
      at September 30, 2010 and December 31, 2009, respectively  
89,674
 
79,741
   Inventories  
96,306
 
77,243
   Prepaid and other current assets  
27,782
 
31,075
       Total current assets  
248,123
 
296,936
         
Property and equipment, net  
65,088
 
37,217
Intangible assets, net  
32,564
 
29,235
Goodwill  
244,282
 
227,195
Other assets  
9,859
 
20,455
         
       Total assets  
$599,916
 
$611,038
         
LIABILITIES AND STOCKHOLDERS' EQUITY:        
Current liabilities:        
   Accounts payable  
45,250
 
$30,230
   Accrued expenses and other current liabilities  
66,770
 
84,100
   Deferred revenues  
46,822
 
39,107
       Total current liabilities  
158,842
 
153,437
         
Long-term liabilities  
22,116
 
14,483
       Total liabilities  
180,958
 
167,920
         
Stockholders' equity:        
   Common stock  
423
 
423
   Additional paid-in capital  
1,001,891
 
992,489
   Accumulated deficit  
(494,927)
 
(444,661)
   Treasury stock at cost, net of reissuances  
(92,355)
 
(112,389)
   Accumulated other comprehensive income  
3,926
 
7,256
       Total stockholders' equity  
418,958
 
443,118
         
       Total liabilities and stockholders' equity  
$599,916
 
$611,038