Q2 2009 Earnings


Tewksbury, Mass, 2009-07-23 Avid® (NASDAQ: AVID) today reported revenues of $150.5 million for the three-month period ended June 30, 2009, compared to $222.9 million for the same period in 2008. The GAAP net loss for the quarter was $15.9 million, or $.43 per share, compared to a GAAP net loss of $10.4 million, or $.28 per share, in the second quarter of 2008.

The GAAP net loss for the second quarter of 2009 included amortization of intangibles, stock-based compensation, restructuring charges and related tax adjustments, collectively totaling $10.4 million. Excluding these items, the non-GAAP net loss was $5.5 million for the second quarter, or $.15 per share.

“We made a number of strategic and operational improvements in the first half of 2009, which have resulted in gross margin improvement and reduced operating costs on a sequential and annual basis,” said Gary Greenfield, Avid’s chairman and CEO. “While ongoing macroeconomic issues continue to affect our revenue results, we remain confident that our continued efforts to improve our operations have positioned us to take advantage of growth opportunities when the economy improves.”

Revenues for the six-month period ended June 30, 2009 were $302.2 million, compared to revenues of $421.1 million for the same period in 2008. GAAP net loss for the first six months of 2009 was $33.2 million, or $.89 per share, compared to GAAP net loss of $31.5 million, or $.83 per share, for the same period in 2008. GAAP net loss for the six-month period ended June 30, 2009 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 $.30 for the first half of 2009. GAAP net loss for the six-month period ended June 30, 2008 included $19.9 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $.30 for the first half of 2008.

The company’s cash balance on June 30, 2009 was $118.6 million, or approximately $3.18 per share. The company paid out approximately $6.8 million in cash in the second quarter related to restructuring activities.

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 (loss) and earnings (loss) per share for the three- and six-month periods ended June 30, 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 second quarter 2009 financial results will be held today, July 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
Six Months Ended
June 30,
June 30,
2009
2008
2009
2008
Net revenues:
Products
$ 121,912
$ 189,115
$ 245,553
$ 357,291
Services
28,631
33,748
56,619
63,838
Total net revenues
150,543
222,863
302,172
421,129
Cost of revenues:
Products
58,429
92,628
119,677
177,701
Services
14,090
19,629
29,929
37,016
Amortization of intangible assets
426
2,270
946
5,524
Restructuring costs
-
-
799
-
Total cost of revenues
72,945
114,527
151,351
220,241
Gross profit
77,598
108,336
150,821
200,888
Operating expenses:
Research and development
30,661
38,972
61,712
77,482
Marketing and selling
41,994
55,259
82,775
105,586
General and administrative
12,559
19,492
27,672
41,435
Amortization of intangible assets
2,622
3,323
4,997
6,710
Restructuring costs, net
5,019
937
9,241
2,000
Total operating expenses
92,855
117,983
186,397
233,213
Operating loss
(15,257)
(9,647)
(35,576)
(32,325)
Interest and other income (expense), net
58
617
211
2,098
Loss before income taxes
(15,199)
(9,030)
(35,365)
(30,227)
Provision for (benefit from) income taxes, net
750
1,355
(2,139)
1,306
Net loss
$ (15,949)
$ (10,385)
$ (33,226)
$ (31,533)
Net loss per common share - basic and diluted
$ (0.43)
$ (0.28)
$ (0.89)
$ (0.83)
Weighted-average common shares outstanding - basic and diluted
37,282
36,904
37,206
38,133

 

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

Change in Financial Presentation

Beginning January 1, 2009, we 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. Comparative results for the 2008 periods 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:

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Three Months Ended
Six Months Ended
June 30,
June 30,
2009
2008
2009
2008
Revenues:
Video (a)
$ 88,699
$ 147,548
$ 176,201
$ 272,575
Audio
61,844
75,315
125,971
148,554
Total revenues
$ 150,543
$ 222,863
$ 302,172
$ 421,129
Contribution Margin:
Video
$ 25,233
$ 43,616
$ 46,513
$ 72,086
Audio
21,831
26,460
44,561
52,785
Segment contribution margin
47,064
70,076
91,074
124,871
Less unallocated costs and expenses:
Research and development expenses
(1,837)
(1,731)
(3,591)
(3,501)
Marketing and selling expenses
(38,056)
(50,710)
(75,571)
(97,178)
General and administrative expenses
(11,467)
(16,164)
(24,463)
(35,550)
Amortization of acquisition-related intangible assets
(3,048)
(5,593)
(5,943)
(12,234)
Stock-based compensation
(2,894)
(4,588)
(7,042)
(6,733)
Restructuring costs, net
(5,019)
(937)
(10,040)
(2,000)
Consolidated operating loss
$ (15,257)
$ (9,647)
$ (35,576)
$ (32,325)
(a) Includes revenues from non-core product lines of:
$ 808
$ 16,641
$ 1,757
$ 35,093
     
Reconciliation of GAAP net loss to Non-GAAP net income (loss):
Three Months Ended
Six Months Ended
June 30,
June 30,
2009
2008
2009
2008
GAAP net loss
$ (15,949)
$ (10,385)
$ (33,226)
$ (31,533)
Adjustments to reconcile to Non-GAAP net (loss) income:
Amortization of intangible assets
3,048
5,593
5,943
12,234
Stock-based compensation
2,894
4,588
7,042
6,733
Restructuring costs, net
5,019
937
10,040
2,000
Related tax adjustments
(540)
(614)
(894)
(1,048)