Avid Announces Results for First Quarter


BURLINGTON, MA., 2011-04-21

Reports 5th Consecutive Quarter of Year-on-Year Revenue Growth

Avid® (NASDAQ: AVID) today reported revenues of $166.3 million for the three-month period ended March 31, 2011, compared to $156.0 million for the same period in 2010. The GAAP net loss for the first quarter was $5.1 million, or $0.13 per share, compared to a GAAP net loss of $13.5 million, or $0.36 per share, in the first quarter of 2010.

The GAAP net loss for the first quarter of 2010 and 2011 included amortization of intangible assets, stock-based compensation, restructuring and other charges and related tax adjustments collectively totaling $8.9 million and $4.3 million, respectively. Excluding these items, non-GAAP net loss for the first quarter of 2011 was $0.8 million, or $0.02 per share, compared to a non-GAAP net loss of $4.6 million, or $0.12 per share, for the first quarter of 2010.

"We are building on the momentum we established throughout the past year," said Gary Greenfield, chairman and CEO at Avid. "This quarter represented the third consecutive quarter that we achieved a non-GAAP operating profit.  With a number of new products now in the market, and a Q1 non-GAAP operating profit for the first time since 2007, we are off to a solid start for the year."

The GAAP operating loss for the first quarter of 2011 was $3.4 million.   This included amortization of intangible assets, stock-based compensation and restructuring items collectively totaling $4.3 million.   Excluding these items, non-GAAP operating profit was $0.9 million for the first quarter of 2011.

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

Conference Call

A conference call to discuss Avid’s first quarter 2011 financial results will be held today, April 21, 2011 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 www.avid.com for complete details prior to the start of the conference call.

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. 

Management considers 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, such as non-GAAP net 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.

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.

© 2011 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
     
March 31,
     
2011
2010
Net revenues:        
  Products   $137,335   $128,679
  Services         28,988         27,277
       Total net revenues        166,323        155,956
           
Cost of revenues:        
  Products         64,651         63,269
  Services         14,387         14,040
  Amortization of intangible assets              666              966
       Total cost of revenues         79,704         78,275
           
Gross profit         86,619         77,681
           
Operating expenses:        
  Research and development         29,973         30,151
  Marketing and selling         44,810         41,746
  General and administrative         15,298         14,602
  Amortization of intangible assets           2,145           2,857
  Restructuring (recoveries) costs, net          (2,216)           1,340
       Total operating expenses         90,010         90,696
           
Operating loss          (3,391)        (13,015)
           
Interest and other income (expense), net             (300)                  -
Loss before income taxes          (3,691)        (13,015)
           
Provision for income taxes, net           1,426              467
           
Net loss   ($5,117)   ($13,482)
           
Net loss per common share - basic and diluted   ($0.13)   ($0.36)
           
Weighted-average common shares outstanding - basic and diluted   38,228   37,516

 

AVID TECHNOLOGY, INC.                  
(unaudited - in thousands, except per share data)                
                       
Reconciliations of GAAP financial measures to Non-GAAP financial measures:        
                       
     
Three Months Ended March 31, 2011
                       
     
Gross
Operating
Operating
Tax
Net
     
Profit
Expenses
 (Loss) Income
Provision
Loss
GAAP $86,619   $90,010   ($3,391)   $1,426   ($5,117)
                       
  Amortization of intangible assets              666            (2,145)                  2,811                    2,811
  Restructuring recoveries, net               2,216                 (2,216)                   (2,216)
  Tax adjustment                              55                   (55)
  Stock-based compensation included in:                  
    Cost of products revenues              139                         139                      139
    Cost of services revenues              268                         268                      268
    Research and development expenses                 (472)                     472                      472
    Marketing and selling expenses              (1,218)                  1,218                    1,218
    General and administrative expenses              (1,640)                  1,640                    1,640
                       
Non-GAAP $87,692   $86,751   $941   $1,481   ($840)
                       
Weighted-average shares outstanding - diluted           38,228
                       
Non-GAAP net income per share - diluted           ($0.02)
                       
        Three Months Ended March 31, 2010    
                       
     
Gross
Operating
Operating
Tax
Net
     
Profit
Expenses
 Loss
Provision
Loss
GAAP $77,681   $90,696   ($13,015)   $467   ($13,482)
                       
  Amortization of intangible assets              966            (2,857)                  3,823                    3,823
  Restructuring costs, net              (1,340)                  1,340                    1,340
  Acquisition-related costs (a)                 (686)                     686                      686
  Tax adjustment                            284                 (284)
  Stock-based compensation included in:                  
    Cost of products revenues              189                         189                      189
    Cost of services revenues              253                         253                      253
    Research and development expenses                 (651)                     651                      651
    Marketing and selling expenses                 (968)                     968                      968
    General and administrative expenses              (1,261)                  1,261                    1,261
                       
Non-GAAP $79,089   $82,933   ($3,844)   $751   ($4,595)
                       
Weighted-average shares outstanding - diluted           37,516
                       
Non-GAAP net loss per share - diluted           ($0.12)
                       
  (a) Represents costs included in general and administrative expenses          

 

Revenue Summary:
     
Three Months Ended
     
March 31,
     
2011
2010
Video revenues $94,651   $84,353
Audio revenues 71,672   71,603
     Total net revenues     $166,323   $155,956

 

AVID TECHNOLOGY, INC.        
Condensed Consolidated Balance Sheets        
(unaudited - in thousands)        
         
   
March 31,
December 31,
   
2011
2010
ASSETS:        
Current assets:        
   Cash and cash equivalents   $33,220   $42,782
   Accounts receivable, net of allowances of $18,442 and $17,149        
      at March 31, 2011 and December 31, 2010, respectively              95,881            101,171
   Inventories            125,100            108,357
   Deferred tax assets, net                1,114                1,068
   Prepaid expenses                9,381                7,688
   Other current assets              16,818              16,130
       Total current assets   281,514   277,196
         
Property and equipment, net              61,351              62,519
Intangible assets, net              27,340              29,750
Goodwill            247,315            246,997
Other assets              11,007              10,109
         
       Total assets   $628,527   $626,571
         
LIABILITIES AND STOCKHOLDERS' EQUITY:        
Current liabilities:        
   Accounts payable   $47,493   $47,340
   Accrued compensation and benefits   27,346              41,101
   Accrued expenses and other current liabilities   41,431              40,986
   Income taxes payable   4,183                4,640
   Deferred revenues   51,399              40,585
       Total current liabilities   171,852   174,652
         
Long-term liabilities   25,892              25,309
       Total liabilities   197,744   199,961
         
Stockholders' equity:        
   Common stock   423                   423
   Additional paid-in capital   1,007,853          1,005,198
   Accumulated deficit   (502,965)           (495,254)
   Treasury stock at cost, net of reissuances   (87,188)             (91,025)
   Accumulated other comprehensive income              12,660                7,268
       Total stockholders' equity   430,783   426,610
         
       Total liabilities and stockholders' equity   $628,527   $626,571
         

 

AVID TECHNOLOGY, INC.        
Condensed Consolidated Statements of Cash Flows        
(unaudited - in thousands)        
                 
           
Three Months Ended
           
March 31,
           
2011
2010
Cash flows from operating activities:        
  Net loss   ($5,117)   ($13,482)
  Adjustments to reconcile net loss to net cash used in operating activities:        
    Depreciation and amortization           7,972           8,303
    Provision for (recoveries of) doubtful accounts              144             (170)
    Non-cash provision for restructuring              125                  -
    Gain on disposal of fixed assets                (5)               (13)
    Compensation expense from stock grants and options           3,737           3,322
    Changes in operating assets and liabilities, excluding initial effects of acquisitions:        
      Accounts receivable           9,613          (4,605)
      Inventories        (16,743)           5,703
      Prepaid expenses and other current assets          (3,300)             (690)
      Accounts payable              107           2,803
      Accrued expenses, compensation and benefits and other liabilities        (13,936)        (15,453)
      Income taxes payable             (604)              205
      Deferred revenues         11,143           7,560
Net cash used in operating activities          (6,864)          (6,517)
                 
Cash flows from investing activities:        
  Purchases of property and equipment          (3,544)        (10,009)
  Decrease in other long-term assets              190              281
  Payments for business acquisitions, net of cash acquired    -        (16,087)
  Purchases of marketable securities                  -          (1,750)
  Proceeds from sales of marketable securities                  -         18,605
Net cash used in investing activities          (3,354)          (8,960)
                 
Cash flows from financing activities:        
  Proceeds from (payments related to) the issuance of common stock under employee stock plans, net              127             (727)
  Proceeds from revolving credit facilities           8,000                  -
  Payments on revolving credit facilities          (8,000)                  -
Net cash provided by (used in) financing activities              127             (727)
                 
Effect of exchange rate changes on cash and cash equivalents              529          (1,578)
Net decrease in cash and cash equivalents          (9,562)        (17,782)
Cash and cash equivalents at beginning of period   42,782         91,517
Cash and cash equivalents at end of period   $33,220   $73,735