Avid Announces Fourth Quarter and Full Year 2010 Results
Q4 Revenue Growth of 12%, Highest Since 2006


Burlington, MA, 2011-02-04

Avid® (NASDAQ: AVID) today reported revenues of $195.3 million for the three-month period ended December 31, 2010, compared to $174.7 million for the same period in 2009. The GAAP net loss for the fourth quarter was $571 thousand, or $0.01 per share, compared to a GAAP net loss of $17.9 million, or $0.48 per share, in the fourth quarter of 2009.

The GAAP net loss for the fourth quarters of 2010 and 2009 included amortization of intangible assets, stock-based compensation, restructuring and other charges, gains on asset sales, acquisition-related costs and related tax adjustments collectively totaling $14.8 million and $16.5 million, respectively. Excluding these items, non-GAAP net income for the fourth quarter of 2010 was $14.2 million, or $0.37 per share, compared to a non-GAAP net loss of $1.4 million, or $0.04 per share, for the fourth quarter of 2009.

“We are pleased to end 2010 on a positive note with year-on-year revenue growth for the quarter and for the year,” said Gary Greenfield, chairman and CEO at Avid.  “Our return to non-GAAP net income for 2010 is a significant milestone in the transformation of the business and we feel well positioned from a product and financial standpoint as we move into 2011.”

Revenues for the twelve-month period ended December 31, 2010 were $678.5 million, compared to revenues of $629.0 million for the same period in 2009. GAAP net loss for 2010 was $37.0 million, or $0.98 per share, compared to a GAAP net loss of $68.4 million, or $1.83 per share, for 2009. GAAP net loss for 2010 and 2009 included amortization of intangible assets, stock-based compensation, restructuring and other charges, gains on asset sales, acquisition-related costs, a legal settlement and related tax adjustments collectively totaling $46.2 million and $55.7 million, respectively.  Excluding these items, non-GAAP net income for 2010 was $9.2 million, or $0.24 per share, compared to a non-GAAP net loss of $12.7 million, or $0.34 per share, for 2009.

GAAP operating loss for 2010 was $36.2 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 $49.8 million.  Excluding these items, our non-GAAP operating profit for 2010 was $13.6 million or 2% of revenue.

A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

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 fourth quarter 2010 financial results will be held today, February 4, 2011 at 8:00 a.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 contents of this release are subject to the completion and filing of our Annual Report on Form 10-K. This release includes forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. Statements in this press release that relate to future results or events are forward-looking statements and are based on Avid’s current estimates and assumptions.  Forward-looking statements may be identified by use of forward-looking words, such as “anticipate,” ‘believe,” “could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “feel,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: Avid’s ability to execute on its corporate strategy and meet customer needs, including the ability to produce innovative products in response to rapidly evolving market demand; general economic conditions and conditions within the media industry specifically; competitive factors; pricing pressures; delays in product shipments; and other risk factors and uncertainties 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   Twelve Months Ended
      December 31,   December 31,
      2010   2009   2010   2009
Net revenues:                
  Products   $162,863   $140,140   $559,907   $509,215
  Services         32,484         34,539        118,615        119,755
       Total net revenues        195,347        174,679        678,522        628,970
                   
Cost of revenues:                
  Products         74,458         66,588        267,985        243,362
  Services         15,117         16,239          56,490         59,754
  Amortization of intangible assets              642              568            3,299           2,033
  Restructuring costs                  -                  -                   -              799
       Total cost of revenues         90,217         83,395        327,774        305,948
                   
Gross profit        105,130         91,284        350,748        323,022
                   
Operating expenses:                
  Research and development         30,881         30,015        120,229        120,989
  Marketing and selling         47,759         46,121        177,178        173,601
  General and administrative         16,166         21,322          64,345         61,087
  Amortization of intangible assets           2,186           2,732            9,743         10,511
  Restructuring and other costs, net         14,918           9,741          20,450         26,873
  Gain on sales of assets          (3,502)          (3,553)           (5,029)             (155)
       Total operating expenses        108,408        106,378        386,916        392,906
                   
Operating loss          (3,278)        (15,094)         (36,168)        (69,884)
                   
Interest and other income (expense), net             (258)               (94)             (390)             (123)
Loss before income taxes          (3,536)        (15,188)         (36,558)        (70,007)
                   
(Benefit from) provision for income taxes, net          (2,965)           2,733              396          (1,652)
                   
Net loss   ($571)   ($17,921)   ($36,954)   ($68,355)
                   
Net loss per common share - basic and diluted   ($0.01)   ($0.48)   ($0.98)   ($1.83)
                   
Weighted-average common shares outstanding - basic and diluted   38,101   37,415   37,895   37,293

 

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 December 31, 2010
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses    (Loss) Income    (Benefit) Provision    (Loss) Income
GAAP   $105,130   $108,408   ($3,278)   ($2,965)   ($571)
                       
  Amortization of intangible assets            642          (2,186)           2,828               2,828
  Restructuring and other costs, net          (14,918)         14,918              14,918
  Gain on sales of assets             3,502          (3,502)              (3,502)
  Tax adjustment                            2,752          (2,752)
  Stock-based compensation included in:                  
    Cost of products revenues            162                  162                  162
    Cost of services revenues            232                  232                  232
    Research and development expenses               (523)              523                  523
    Marketing and selling expenses               (956)              956                  956
    General and administrative expenses            (1,434)           1,434               1,434
Non-GAAP $106,166   $91,893   $14,273   ($213)   $14,228
                       
Weighted-average shares outstanding - diluted               38,182
                       
Non-GAAP net income per share - diluted                 $0.37
                       
Three Months Ended December 31, 2009
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   (Loss) Income   Provision   Loss
GAAP   $91,284   $106,378   ($15,094)   $2,733   ($17,921)
                       
  Amortization of intangible assets            568          (2,732)           3,300               3,300
  Restructuring and other costs, net            (9,741)           9,741               9,741
  Acquisition-related costs (a)            (4,159)           4,159               4,159
  Gain on sales of assets             3,553          (3,553)              (3,553)
  Tax adjustment                     585             (585)
  Stock-based compensation included in:                  
    Cost of products revenues            193                  193                  193
    Cost of services revenues            286                  286                  286
    Research and development expenses               (717)              717                  717
    Marketing and selling expenses            (1,074)           1,074               1,074
    General and administrative expenses            (1,216)           1,216               1,216
Non-GAAP $92,331   $90,292   $2,039   $3,318   ($1,373)
                       
Weighted-average shares outstanding - diluted               37,415
                       
Non-GAAP net loss per share - diluted                 ($0.04)
                       
  (a)  Represents costs included in general and administrative expenses        

 

AVID TECHNOLOGY, INC.                  
(unaudited - in thousands, except per share data)                  
                       
Reconciliations of GAAP financial measures to Non-GAAP financial measures:        
                       
Twelve Months Ended December 31, 2010
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   (Loss) Income   Provision   (Loss) Income
GAAP $350,748   $386,916   ($36,168)   $396   ($36,954)
                       
  Amortization of intangible assets 3,299   (9,743)   13,042       13,042
  Restructuring and other costs, net (a)     (20,450)   20,450       20,450
  Acquisition-related costs (b)     (825)   825       825
  Legal settlement (b)     (5,600)   5,600       5,600
  Gain on sales of assets     4,029   (4,029)       (4,029)
  Tax adjustment             3,606   (3,606)
  Stock-based compensation included in:                  
    Cost of products revenues 724       724       724
    Cost of services revenues 1,054       1,054       1,054
    Research and development expenses     (2,227)   2,227       2,227
    Marketing and selling expenses     (4,109)   4,109       4,109
    General and administrative expenses     (5,807)   5,807       5,807
Non-GAAP $355,825   $342,184   $13,641   $4,002   $9,249
                       
Weighted-average shares outstanding - diluted                 37,963
                       
Non-GAAP net income per share - diluted                 $0.24
                       
Twelve Months Ended December 31, 2009
                       
      Gross   Operating   Operating   Tax   Net
      Profit   Expenses   Loss   (Benefit) Provision   Loss
GAAP $323,022   $392,906   ($69,884)   ($1,652)   ($68,355)
                       
  Amortization of intangible assets 2,033   (10,511)   12,544       12,544
  Restructuring and other costs, net 799   (26,873)   27,672       27,672
  Acquisition-related costs (b)     (4,159)   4,159       4,159
  Gain on sales of assets     155   (155)       (155)
  Tax adjustment             1,942   (1,942)
  Stock-based compensation included in:                  
    Cost of products revenues 859       859       859
    Cost of services revenues 1,154       1,154       1,154
    Research and development expenses     (2,454)   2,454       2,454
    Marketing and selling expenses     (3,596)   3,596       3,596
    General and administrative expenses     (5,331)   5,331       5,331
                       
Non-GAAP $327,867   $340,137   ($12,270)   $290   ($12,683)
                       
Weighted-average shares outstanding - diluted                 37,293
                       
Non-GAAP net loss per share - diluted                 ($0.34)
                       
  (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            
                       
                       
Revenue Summary: Three Months Ended   Twelve Months Ended    
      December 31   December 31,    
      2010   2009   2010   2009    
Video revenues $117,793   $106,192   $395,853   $375,010    
Audio revenues 77,554   68,487   282,669   253,960    
  Total net revenues $195,347   $174,679   $678,522   $628,970    

 

AVID TECHNOLOGY, INC.        
Condensed Consolidated Balance Sheets        
(unaudited - in thousands)        
         
    December 31,   December 31,
    2010   2009
ASSETS:        
Current assets:        
   Cash and cash equivalents   $42,782   $91,517
   Marketable securities                       -              17,360
   Accounts receivable, net of allowances of $17,403 and $16,347          
      at December 31, 2010 and 2009, respectively            101,171   79,741
   Inventories            108,357   77,243
   Deferred tax assets, net                1,068   770
   Prepaid expenses                7,688   7,789
   Other current assets              16,130   22,516
       Total current assets   277,196   296,936
         
Property and equipment, net              62,519   37,217
Intangible assets, net              29,750   29,235
Goodwill            246,221   227,195
Other assets              10,109   20,455
         
       Total assets   $625,795   $611,038
         
LIABILITIES AND STOCKHOLDERS' EQUITY:        
Current liabilities:        
   Accounts payable   $47,340   $30,230
   Accrued compensation and benefits              41,101              25,281
   Accrued expenses and other current liabilities              40,673              55,591
   Deferred tax liabilities, net                   313                       -
   Income taxes payable                4,640   3,228
   Deferred revenues              40,585   39,107
       Total current liabilities   174,652   153,437
         
Long-term liabilities              25,309   14,483
       Total liabilities   199,961   167,920
         
Stockholders' equity:        
   Common stock                   423   423
   Additional paid-in capital          1,005,198   992,489
   Accumulated deficit           (496,030)   (444,661)
   Treasury stock at cost, net of reissuances             (91,025)   (112,389)
   Accumulated other comprehensive income                7,268   7,256
       Total stockholders' equity   425,834   443,118
         
       Total liabilities and stockholders' equity   $625,795   $611,038
         

 

AVID TECHNOLOGY, INC.                
Condensed Consolidated Statements of Cash Flows                
(unaudited - in thousands)                
                       
          Three Months Ended   Twelve Months Ended
          December 31,   December 31,
          2010   2009   2010   2009
Cash flows from operating activities:                
  Net loss   ($571)   ($17,921)   ($36,954)   ($68,355)
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
    Depreciation and amortization             8,521             8,072            33,547            32,130
    (Recoveries of) provision for doubtful accounts                 (91)                276                194             1,930
    Non-cash provision for restructuring                  89             1,042                380             3,140
    Gain on sales of assets            (3,502)            (3,553)            (5,029)               (155)
    (Gain) loss on disposal of fixed assets                   (8)                  (3)                 (78)                  43
    Compensation expense from stock grants and options             3,307             3,486            13,921            13,394
    Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions                233                381            (1,160)            (1,634)
  Changes in operating assets and liabilities, excluding intitial effects of acquisitions                
    Accounts receivable           (11,510)             5,449           (17,847)            24,771
    Inventories           (12,328)           14,453           (27,672)            17,766
    Prepaid expenses and other current assets             2,358             1,521             8,778             8,980
    Accounts payable             2,109             7,471            15,941                739
    Accrued expenses, compensation and benefits and other liabilities            25,739           14,295                718           (13,517)
    Income taxes payable               (621)                391             1,669            (6,330)
    Deferred revenues            (5,947)          (16,824)                816           (26,373)
Net cash provided by (used in) operating activities             7,778           18,536           (12,776)           (13,471)
                       
Cash flows from investing activities:                
  Purchases of property and equipment            (2,930)            (9,058)           (28,856)           (18,689)
  Increase in other long-term assets               (634)            (9,848)               (523)           (11,432)
  Payments for business acquisitions, net of cash acquired                    -                    -           (27,008)            (4,413)
  Proceeds from sales of assets             3,502             3,502             4,502             3,502
  Proceeds from notes receivable                    -                511                    -             2,500
  Purchases of marketable securities                    -            (3,149)            (2,250)           (55,741)
  Proceeds from sales of marketable securities                    -           10,642            19,605            64,318
Net cash used in investing activities               (62)            (7,400)           (34,530)           (19,955)
                       
Cash flows from financing activities:                
  Payments related to stock option purchase                    -                    -                    -               (526)
  Proceeds from the issuance of common stock under employee stock plans, net                797                535                736                646
  Proceeds from revolving credit facilities   5,000   -   5,000   -
  Payments on revolving credit facilities   (5,000)   -   (5,000)   -
  Payments for credit facility issuance costs   (870)   -   (1,063)   -
Net cash provided by financing activities                (73)                535                (327)                120
                       
Effect of exchange rate changes on cash and cash equivalents                778             1,728            (1,102)             3,031
Net increase (decrease) in cash and cash equivalents             8,421           13,399           (48,735)           (30,275)
Cash and cash equivalents at beginning of period            34,361           78,118            91,517          121,792
Cash and cash equivalents at end of period   $42,782   $91,517   $42,782   $91,517
                       
Non-cash investing activities:                
  Landlord allowance for leasehold improvements    -    -    $6,036    -
  Issuance of common stock for business acquisition    -    -    $5,000    -