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Avid Announces Fourth Quarter 2008 Results
TEWKSBURY, MA, Jan 29, 2009 (MARKET WIRE via COMTEX News Network) -- Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $206.7 million for the three-month period ended December 31, 2008, compared to $258.5 million for the same period in 2007. Preliminary GAAP net loss for the quarter was $31.9 million, or $.86 per share, compared to GAAP net income of $3.9 million, or $.09 per share, in the fourth quarter of 2007.
Preliminary GAAP net loss for the fourth quarter of 2008 included goodwill and intangible asset non-cash impairment charges associated with the company's Consumer Video segment, amortization of intangibles, stock-based compensation, restructuring costs, net gains from product line divestitures and related taxes collectively totaling $22.6 million. Excluding these items, non-GAAP net loss was $9.3 million for the fourth quarter, or $.25 per share. The goodwill and intangible asset impairment charge related to the Consumer Video segment was estimated at $9.6 million. Therefore the 2008 GAAP results are preliminary and there may be additional charges recorded in the three-month period ended December 31, 2008 as the company completes its annual impairment analysis for all of its business segments. The company's non-GAAP results will not be impacted by any additional impairment charges resulting from this analysis.
"We have completed our internal reorganization and we have made great progress executing on our strategy, which we believe will have a positive impact on our business as we move forward, both for our customers and shareholders," said Gary Greenfield, Avid's chairman and CEO. "While the economic climate in 2009 will be challenging, the changes we have made to our company put us in a better position to meet these challenges."
Revenues for the year ended December 31, 2008 were $844.9 million compared to revenues of $929.6 million for 2007. The 2008 revenues include $61.5 million of revenues associated with divested or discontinued product lines. Preliminary GAAP net loss for 2008 was $129.8 million, or $3.46 per share, compared to GAAP net loss of $8.0 million, or $.19 per share, for 2007. Preliminary GAAP net loss for 2008 includes $104.6 million of impairment charges, amortization, stock-based compensation, restructuring charges, net gains from divested product lines and related tax adjustments. Excluding these items, non-GAAP net loss for 2008 was $25.2 million, or $.67 per share.
At the end of 2008, the company's cash balance was $147.7 million, up $25.3 million since the end of the third quarter of 2008 primarily related to the receipt of $28.8 million of proceeds from product line divestitures.
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- and twelve-month periods ended December 31, 2008 and 2007 are in the tables in 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 fourth quarter 2008 financial results will be held today, January 29, 2009 at 4:30 p.m. EST. 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 Investor Relations page under the About Us menu 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 Annual Report on Form 10-K. 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 transformation 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 Technology, Inc.
Avid is a worldwide leader in tools for film, video, audio and broadcast professionals -- as well as for home audio and video enthusiasts. Avid professional and consumer brands include Avid(R), Digidesign(R), M-Audio(R), Pinnacle Systems(R) and Sibelius(R). The vast majority of primetime television shows, feature films, commercials and chart-topping music hits are made using one or more Avid products. Whether used by seasoned professionals or beginning students, Avid's products and services enable customers to work more efficiently, productively and creatively. Avid received an Oscar(R) statuette representing the 1998 Scientific and Technical Award for the concept, design and engineering of the Avid(R) Film Composer(R) system for motion picture editing. For more information about the company's Oscar, Grammy(R) and Emmy(R) award-winning products and services, visit www.avid.com, del.icio.us, Flickr, twitter and YouTube; connect with Avid on Facebook or subscribe to Avid Industry Buzz.
Copyright 2009 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, M-Audio, Pinnacle Systems and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. Emmy is a registered trademark of ATAS/NATAS. Academy Awards and Oscar are trademarks and service marks of the Academy of Motion Picture Arts and Sciences. Grammy is a trademark of the National Academy of Recording Arts and Sciences, Inc. 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,
----------------------- ----------------------
2008 2007 2008 2007
---------- ----------- ---------- ----------
Net revenues:
Products $ 173,255 $ 222,473 $ 714,232 $ 806,103
Services 33,451 36,047 130,669 123,467
---------- ----------- ---------- ----------
Total net revenues 206,706 258,520 844,901 929,570
---------- ----------- ---------- ----------
Cost of revenues:
Products 97,182 111,625 369,186 390,725
Services 18,128 19,042 73,888 68,529
Amortization of intangible
assets 753 3,566 7,526 16,895
Restructuring costs 1,876 1,481 1,876 4,278
---------- ----------- ---------- ----------
Total cost of revenues 117,939 135,714 452,476 480,427
---------- ----------- ---------- ----------
Gross profit 88,767 122,806 392,425 449,143
---------- ----------- ---------- ----------
Operating expenses:
Research and development 33,291 38,050 148,598 150,707
Marketing and selling 49,511 53,425 208,735 210,456
General and administrative 17,422 21,399 78,591 77,463
Amortization of intangible
assets 2,837 3,431 12,854 13,726
Impairment of goodwill and
intangible assets 9,595 - 60,852 -
Restructuring costs, net 22,060 1,338 26,167 9,410
Gain on sale of assets (13,287) - (13,287) -
---------- ----------- ---------- ----------
Total operating
expenses 121,429 117,643 522,510 461,762
---------- ----------- ---------- ----------
Operating income (loss) (32,662) 5,163 (130,085) (12,619)
Interest and other income
(expense), net 331 1,739 2,936 7,637
---------- ----------- ---------- ----------
Income (loss) before income
taxes (32,331) 6,902 (127,149) (4,982)
Provision for (Benefit from)
income taxes, net (444) 3,049 2,663 2,997
---------- ----------- ---------- ----------
Net income (loss) $ (31,887) $ 3,853 $ (129,812) $ (7,979)
========== =========== ========== ==========
Net income (loss) per
common share - basic $ (0.86) $ 0.09 $ (3.46) $ (0.19)
Net income (loss) per
common share - diluted $ (0.86) $ 0.09 $ (3.46) $ (0.19)
Weighted-average common
shares outstanding - basic 37,012 41,008 37,556 40,974
Weighted-average common
shares outstanding - diluted 37,012 41,253 37,556 40,974
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Summary of the Company's revenues and contribution margin by reportable
segment and a reconciliation of segment contribution margin to consolidated
operating income (loss):
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues:
Professional Video $ 111,230 $ 133,342 $ 438,420 $ 485,186
Audio 72,410 85,987 293,195 318,993
Consumer Video 23,066 39,191 113,286 125,391
---------- ---------- ---------- ----------
Total revenues (a) $ 206,706 $ 258,520 $ 844,901 $ 929,570
========== ========== ========== ==========
Contribution Margin:
Professional Video $ 16,822 $ 22,018 $ 40,917 $ 66,502
Audio 10,926 16,121 40,541 55,710
Consumer Video (11,904) 2,799 (16,135) 6,552
---------- ---------- ---------- ----------
Segment contribution margin 15,844 40,938 65,323 128,764
---------- ---------- ---------- ----------
Less: Unallocated
costs and expenses:
Common costs and
operating expenses (21,561) (21,874) (85,219) (79,523)
Amortization of
acquisition-related
intangible assets (3,590) (6,997) (20,380) (30,621)
Impairment of
goodwill and
intangible asset (9,595) - (60,852) -
Stock-based
compensation (3,111) (3,858) (14,201) (15,949)
Restructuring costs,
net (23,936) (2,819) (28,043) (13,688)
Gain on sale of
assets 13,287 - 13,287 -
Other costs - (227) - (1,602)
---------- ---------- ---------- ----------
Consolidated operating
income (loss) $ (32,662) $ 5,163 $ (130,085) $ (12,619)
========== ========== ========== ==========
(a) Includes revenues
from divestitures
and discontinued
product lines of: $ 11,294 $ 19,899 $ 61,508 $ 68,692
Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss):
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
GAAP net income (loss) $ (31,887) $ 3,853 $ (129,812) $ (7,979)
Adjustments to reconcile
to Non-GAAP net income:
Amortization of
intangible assets 3,590 6,997 20,380 30,621
Impairment of goodwill
and intangible asset 9,595 - 60,852 -
Stock-based compensation 3,111 3,858 14,201 15,949
Restructuring costs, net 23,936 2,819 28,043 13,688
Gain on sale of assets (13,287) - (13,287) -
Other costs - 227 - 1,602
Related tax adjustments (4,331) (600) (5,619) (2,740)
---------- ---------- ---------- ----------
Non-GAAP net income (loss) $ (9,273) $ 17,154 $ (25,242) $ 51,141
========== ========== ========== ==========
Weighted-average common
shares outstanding -
diluted 37,012 41,253 37,556 41,450
Non-GAAP net income (loss)
per common share -
diluted $ (0.25) $ 0.42 $ (0.67) $ 1.23
Stock-based compensation included in:
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Cost of products revenues $ 136 $ 174 $ 616 $ 679
Cost of services revenues 131 133 539 829
Research and development
expenses 605 1,106 2,820 4,521
Marketing and selling
expenses 897 1,242 4,005 4,470
General and administrative
expenses 1,342 1,203 6,221 5,450
---------- ---------- ---------- ----------
$ 3,111 $ 3,858 $ 14,201 $ 15,949
========== ========== ========== ==========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
December 31, December 31,
2008 2007
----------- -----------
ASSETS:
Current assets:
Cash, cash equivalents and marketable
securities $ 147,694 $ 224,460
Accounts receivable, net of allowances of
$23,182 and $20,784 at December 31, 2008
and 2007, respectively 103,527 138,692
Inventories 95,755 117,324
Prepaid and other current assets 43,969 36,788
----------- -----------
Total current assets 390,945 517,264
Property and equipment, net 38,321 46,160
Intangible assets, net 40,063 71,427
Goodwill 292,575 360,584
Other assets 10,801 10,518
----------- -----------
Total assets $ 772,705 $ 1,005,953
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 29,419 $ 34,992
Accrued expenses and other current liabilities 101,862 93,912
Deferred revenues 68,581 79,771
----------- -----------
Total current liabilities 199,862 208,675
Long-term liabilities 11,823 17,495
----------- -----------
Total liabilities 211,685 226,170
----------- -----------
Stockholders' equity:
Common stock 423 423
Additional paid-in capital 980,563 968,339
Accumulated deficit (296,974) (155,722)
Treasury stock at cost, net of reissuances (124,852) (45,823)
Accumulated other comprehensive income 1,860 12,566
----------- -----------
Total stockholders' equity 561,020 779,783
----------- -----------
Total liabilities and stockholders' equity $ 772,705 $ 1,005,953
=========== ===========
Investor Contact: Tom Fitzsimmons Email Contact 978-640-3346 Media Contact: Amy Peterson Email Contact 978-640-3448
SOURCE: Avid Technology, Inc.
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