Reports Year-on-Year Revenue Growth for Non-divested Business

BURLINGTON, Mass.--(BUSINESS WIRE)-- Avid® (NASDAQ: AVID) today reported GAAP revenues of $157.4 million for the three-month period ended June 30, 2012, compared to $161.8 million for the same period in 2011. The GAAP net loss for the second quarter was $39.0 million, or $1.01 per share, compared to a GAAP net loss of $11.1 million, or $0.29 per share, in the second quarter of 2011.

Excluding revenue from the consumer product lines divested on July 2nd, the revenue for the three-month period ended June 30, 2012 was $143.7 million and the revenue on the same basis for the three-month period ended June 30, 2011 was $137.3 million.

The GAAP net loss for the second quarter of 2012 and 2011 included amortization of intangible assets, stock-based compensation, restructuring costs and costs and allowances related to divestitures, acquisition and other costs, losses on assets held for sale and asset sales, legal settlement for 2011 only and related tax adjustments collectively totaling $34.9 million and $7.8 million, respectively. Excluding these items, the non-GAAP net loss for the second quarter of 2012 was $4.1 million, or $0.11 per share, compared to non-GAAP net loss of $3.4 million, or $0.09 per share, for the second quarter of 2011.

The GAAP operating loss for the second quarter of 2012 was $37.8 million and excluding the items identified above, except tax adjustments, the non-GAAP operating loss for the second quarter was $2.1 million.

"Our results for the second quarter were encouraging with 5% year-on-year revenue growth for our ongoing business and a $10 million sequential increase in our cash balance," said Gary Greenfield, chairman and CEO of Avid. "This performance reinforced the strategic direction we took earlier this month and we are excited about our prospects for the second half of the year."

Revenues for the six-month period ended June 30, 2012 were $309.6 million, compared to revenues of $327.5 million for the same period in 2011. The GAAP net loss for the first six months of 2012 was $52.0 million, or $1.34 per share, compared to a GAAP net loss of $15.9 million, or $0.42 per share, for the same period in 2011. The GAAP net loss for the six-month period ended June 30, 2012 included $40.5 million of amortization of intangible assets, stock-based compensation, restructuring costs and costs and allowances related to divestitures, acquisition and other costs, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss was $11.5 million, or $0.30 per share, for the first half of 2012. The GAAP net loss for the six-month period ended June 30, 2011 included $13.2 million of amortization of intangible assets, stock-based compensation, restructuring costs, legal settlement, acquisition-related costs, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss for the six-month period ended June 30, 2011 was $2.7 million or $0.07 per share.

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

The company's cash balance on June 30, 2012 was $59.4 million. The quarter-end cash balance excludes the proceeds from the sale of consumer product lines of $14.5 million, a portion of which is being held in escrow. It is expected that these proceeds will offset the majority of cash cost associated with the Company's 2012 restructuring plan.

The company continues to review certain estimates associated with the divestiture of consumer product lines and estimates related to the restructuring costs and costs and allowances related to divestitures. A change in those estimates could result in adjustments to the company's financial statements in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, which could be material.

Conference Call

A conference call to discuss Avid's second quarter 2012 financial results will be held today, July 30, 2012 at 5:00 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 join the webcast 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 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, terms referring to non-GAAP financial measures 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.

Use of Forward-Looking Statements

The financial results included in this release are preliminary and unaudited. The contents of this release are subject to the completion and filing of our Quarterly Report on Form 10-Q. This release may include 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 the use of forward-looking words, such as "anticipate," "believe," "should," "estimate," "expect," "intend," "confidence," "may," "plan," "feel," "could," "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: adjustments that may be made to Avid's preliminary financial results included in this release as a result of the review of certain estimates associated with the sale of Avid's consumer audio and video product lines and restructuring costs and costs and allowances related to divestitures; Avid's ability to execute its strategic plan and meet customer needs; Avid's ability to realize operational and financial benefits from the sale of its consumer audio and video product lines and the reduction in workforce announced earlier this month; Avid's ability to sell its professional products through retail sales channels following the divestiture of consumer products sold through those sales channels; its ability to produce innovative products in response to changing market demand, particularly in the media industry; competitive factors; fluctuations in its revenue, based on, among other things, Avid's performance in particular geographies or markets, fluctuations in foreign currency exchange rates, and seasonal factors; adverse changes in economic conditions; Avid's liquidity; 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, to live concert tours and news broadcasts. Some of Avid's most influential and pioneering solutions include Media Composer®, Pro Tools®, Interplay®, ISIS®, VENUE, Sibelius®, and System 5. For more information about Avid solutions and services, visit www.avid.com, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2012 Avid Technology, Inc. All rights reserved. Product features, specifications, system requirements and availability are subject to change without notice. All prices are MSRP for the U.S. and Canada only and are subject to change without notice. Contact your local Avid office or reseller for prices outside the U.S. and Canada. Avid, the Avid logo, Fast Track, Media Composer, Pro Tools, Interplay, 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 the 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,
									2011 (Revised)										2011 (Revised)
					2012										2012
Net revenues:
Products				$	125,874				$	129,488				$	245,812				$	266,234
Services					34,405					32,295					66,607					61,301
Less allowances related to divestitures					(2,848	)									(2,848	)
Total net revenues				$	157,431					161,783				$	309,571					327,535
Cost of revenues:
Products					66,637					64,023					127,850					127,888
Services					14,325					14,706					27,042					28,760
Amortization of intangible assets					649					685					1,294					1,351
Restructuring costs					1,913										1,913
Total cost of revenues					83,524					79,414					158,099					157,999
Gross profit				$	73,907					82,369					151,472					169,536
Operating expenses:
Research and development					26,900					30,453					54,381					60,426
Marketing and selling					43,454					45,851					89,380					90,917
General and administrative					14,324					14,234					29,214					29,219
Amortization of intangible assets					1,105					2,161					2,717					4,306
Restructuring costs (recoveries), net					15,841					162					16,009					(1,314	)
Loss on sales of assets					10,045					597					9,793					597
Total operating expenses					111,669					93,458					201,494					184,151
Operating loss					($37,762	)				(11,089	)				(50,022	)				(14,615	)
Interest and other income (expense), net					(379	)				(645	)				(573	)				(945	)
Loss before income taxes					($38,141	)				(11,734	)				(50,595	)				(15,560	)
Provision for (benefit from) income taxes, net					903					(590	)				1,426					367
Net loss					($39,044	)				($11,144	)				($52,021	)				($15,927	)
Net loss per common share - basic & diluted					($1.01	)				($0.29	)				($1.34	)				($0.42	)
Weighted-average common shares outstanding - basic & diluted					38,778					38,413					38,720					38,323

AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Reconciliations of GAAP financial measures to Non-GAAP financial measures:
				Three Months Ended June 30, 2012
													Gross				Operating					Operating					Tax					Net
				Revenues				COGS					Profit				Expenses					Loss					Provision					Loss
GAAP				$	157,431				83,524					73,907				111,669					($37,762	)				903				($39,044	)
Amortization of intangible assets									(649	)				649				(1,105	)			$	1,754									1,754
Restructuring costs, and costs and allowances related to divestitures					2,848				(1,913	)				4,761				(15,841	)			$	20,602									20,602
Acquisition and other costs (a)																		(974	)			$	974									974
Loss on assets held for sale																		(10,045	)			$	10,045									10,045
Tax adjustment																												674				(674	)
Stock-based compensation included in:
Cost of products revenues									(110	)				110								$	110									110
Cost of services revenues									(151	)				151								$	151									151
Research and development expenses																		(268	)			$	268									268
Marketing and selling expenses																		63					($63	)								(63	)
General and administrative expenses																		(1,776	)			$	1,776									1,776
Non-GAAP				$	160,279			$	80,701				$	79,578			$	81,723					($2,145	)			$	1,577				($4,101	)
Weighted-average shares outstanding - diluted																																38,778
Non-GAAP net loss per share - diluted																																($0.11	)
(a) Represents costs included in general and administrative expenses
				Three Months Ended June 30, 2011 (Revised)
													Gross				Operating					Operating					Tax					Net
				Revenues				COGS					Profit				Expenses					Loss					Provision					Loss
GAAP					161,783				79,414					82,369				93,458					($11,089	)				(590	)			($11,144	)
Amortization of intangible assets									(685	)				685				(2,161	)				2,846									2,846
Restructuring recoveries, net																		(162	)				162									162
Legal settlement and acquisition-related costs (a)																		(392	)				392									392
Loss on sales of assets																		(597	)				597									597
Tax adjustment																												245				(245	)
Stock-based compensation included in:
Cost of products revenues									(111	)				111									111									111
Cost of services revenues									(277	)				277									277									277
Research and development expenses																		(427	)				427									427
Marketing and selling expenses																		(1,356	)				1,356									1,356
General and administrative expenses																		(1,846	)				1,846									1,846
Non-GAAP					161,783				78,341				$	83,442			$	86,517					($3,075	)				($345	)			($3,375	)
Weighted-average shares outstanding - diluted																																38,413
Non-GAAP net loss per share - diluted																																($0.09	)
(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:
				Six Months Ended June 30, 2012
														Gross					Operating					Operating				Tax				Net
				Revenues					COGS					Profit					Expenses					Loss				Provision				(Loss) Income
GAAP					309,571					158,099				$	151,472				$	201,494				($50,022	)			$	1,426			($52,021	)
Amortization of intangible assets										(1,294	)				1,294					(2,717	)			4,011								4,011
Restructuring costs, and costs and allowances related to divestitures					2,848					(1,913	)				4,761					(16,009	)			20,770								20,770
Acquisition and other costs (a)																				(1,457	)			1,457								1,457
Loss on assets held for sale																				(9,793	)			9,793								9,793
Tax adjustment																													926			(926	)
Stock-based compensation included in:
Cost of products revenues										(204	)				204									204								204
Cost of services revenues										(308	)				308									308								308
Research and development expenses																				(575	)			575								575
Marketing and selling expenses																				(1,198	)			1,198								1,198
General and administrative expenses																				(3,091	)			3,091								3,091
Non-GAAP				$	312,419				$	154,380				$	158,039				$	166,654				($8,615	)			$	2,352			($11,540	)
Weighted-average shares outstanding - diluted																																38,720
Non-GAAP net loss per share - diluted																																($0.30	)
(a) Represents costs included in general and administrative expenses
				Six Months Ended June 30, 2011 (Revised)
														Gross					Operating					Operating				Tax				Net
				Revenues					COGS					Profit					Expenses					(Loss) Income				Provision				Loss
GAAP					327,535					157,999				$	169,536				$	184,151				($14,615	)			$	367			($15,927	)
Amortization of intangible assets										(1,351	)				1,351					(4,306	)			5,657								5,657
Restructuring and other costs, net																				1,314				(1,314	)							(1,314	)
Legal settlement and acquisition-related costs (a)																				(392	)			392								392
Loss on sales of assets																				(597	)			597								597
Tax adjustment																													300			(300	)
Stock-based compensation included in:
Cost of products revenues										(249	)				249									249								249
Cost of services revenues										(545	)				545									545								545
Research and development expenses																				(899	)			899								899
Marketing and selling expenses																				(2,574	)			2,574								2,574
General and administrative expenses																				(3,882	)			3,882								3,882
Non-GAAP					327,535					155,854				$	171,681				$	172,815				($1,134	)			$	667			($2,746	)
Weighted-average shares outstanding - diluted																																38,323
Non-GAAP net loss per share - diluted																																($0.07	)
(a) Represents costs included in general and administrative expenses
Revenue Summary:
				Three Months Ended										Six Months Ended
				June 30,										June 30,
										2011										2011
					2012				(Revised)						2012				(Revised)
Video revenues				$	98,942				$	96,667				$	182,948				$	190,686
Audio revenues					61,337					65,116					129,471					136,849
Less allowances related to divestitures					(2,848	)									(2,848	)
Total net revenues				$	157,431				$	161,783				$	309,571				$	327,535

AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
										December 31,
				June 30,						2011
				2012						(Revised)
ASSETS:
Current assets:
Cash and cash equivalents				$	59,383					$	32,855
Accounts receivable, net of allowances of $19,187 and $15,985
at June 30, 2012 and December 31, 2011, respectively					89,180						104,305
Inventories					77,813						111,397
Deferred tax assets, net					1,462						1,480
Prepaid expenses					8,580						7,652
Assets held for sale (a)					12,608						-
Other current assets					15,948						14,405
Total current assets					264,974						272,094
Property and equipment, net					49,153						53,487
Intangible assets, net					10,996						18,524
Goodwill					238,338						246,592
Other assets					8,496						11,568
Total assets				$	571,957					$	602,265
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable					38,990						42,533
Accrued compensation and benefits					26,411						31,447
Accrued expenses and other current liabilities					46,442						35,108
Income taxes payable					10,877						8,950
Deferred revenues					57,015						45,768
Total current liabilities					179,735						163,806
Long-term liabilities					29,704						27,885
Total liabilities					209,439						191,691
Stockholders' equity:
Common stock					423						423
Additional paid-in capital					1,024,082						1,019,200
Accumulated deficit					(588,219	)					(532,477	)
Treasury stock at cost, net of reissuances					(78,008	)					(82,301	)
Accumulated other comprehensive income					4,240						5,729
Total stockholders' equity					362,518						410,574
Total liabilities and stockholders' equity				$	571,957					$	602,265

(a) - Assets held for sale comprise
10,703			Inventory
60			Prepaid expense
372			Capitalized Software
11,518			Intangibles and Goodwill
(10,045)			Less write down to Fair Value
12,608

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
					Three Months Ended										Six Months Ended
					June 30,										June 30,
										2011										2011
					2012					(Revised)					2012					(Revised)
Cash flows from operating activities:
Net loss						($39,044	)				($11,144	)				($52,021	)				($15,927	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization						10,549					7,983					18,123					15,875
Provision for doubtful accounts						15					315					(62	)				459
Non-cash provision for restructuring						(4,761	)				-					(4,761	)				125
(Gain)/Loss on Divestitures						10,045					-					10,045					-
(Gain)/Loss on Disposal of Fixed Assets						(255	)				596					(257	)				591
Compensation expense from stock grants and options						2,242					4,016					5,375					8,149
Non-cash interest expense						-					(80	)				73					-
Unrealized foreign currency transaction losses						(3,146	)				2,705					(848	)				6,490
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions						451					(4	)				823					(4	)
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable						495					(2,497	)				17,352					2,783
Inventories						28,427					(5,285	)				36,158					(22,161	)
Prepaid expenses and other current assets						(13,891	)				1,491					(14,866	)				(208	)
Accounts payable						1,845					(2,496	)				(3,531	)				(2,389	)
Accrued expenses, compensation and benefits, and other liabilities						17,820					(5,002	)				5,482					(20,244	)
Income taxes payable						2,936					(1,490	)				2,170					(2,031	)
Deferred revenues						(260	)				2,916					13,171					14,460
Net cash provided by (used in) operating activities						13,468					(7,976	)				32,426					(14,032	)
Cash flows from investing activities:
Purchases of property and equipment						(1,901	)				(2,300	)				(5,489	)				(5,845	)
Decrease (increase) in other long-term assets						(1,321	)				156					(3	)				(461	)
Net cash used in investing activities						(3,222	)				(2,144	)				(5,492	)				(6,306	)
Cash flows from financing activities:
(Payments related to) proceeds from the issuance of common stock under employee stock plans, net						252					1,222					80					1,349
Proceeds from revolving credit facilities						-					13,000					1,000					21,000
Payments on revolving credit facilities						-					-					(1,000	)				(8,000	)
Net cash (used in) provided by financing activities						252					14,222					80					14,349
Effect of exchange rate changes on cash and cash equivalents						(796	)				235					(486	)				764
Net increase (decrease) in cash and cash equivalents						9,702					4,337					26,528					(5,225	)
Cash and cash equivalents at beginning of period						49,681					33,220					32,855					42,782
Cash and cash equivalents at end of period					$	59,383				$	37,557				$	59,383				$	37,557

AVID TECHNOLOGY, INC.
(unaudited - in Thousands)
Supplemental Revenue Information
				Twelve Months Ended Dec 31, 2010			Three Months Ended Mar 31, 2011			Three Months Ended Jun 30, 2011			Three Months Ended Sep 30, 2011			Three Months Ended Dec 31, 2011			Twelve Months Ended Dec 31, 2011			Three Months Ended Mar 31, 2012			Three Months Ended Jun 30, 2012			Six Months Ended Jun 30, 2012			Percentage Change Three Months Ended June 30, 2011 compared to June 30, 2012
Revenue
Video
Product				281,898			66,510			64,612			67,605			79,548			278,276			53,422			65,017			118,439			0.6%
Services				113,429			27,508			31,001			31,829			36,177			126,515			30,584			33,048			63,632			6.6%
Sub-Total				395,327			94,018			95,613			99,434			115,726			404,791			84,006			98,065			182,071			2.6%
Audio
Product				279,409			70,253			65,002			64,002			67,919			267,176			66,516			58,009			124,525			-10.8%
Services				5,002			1,480			1,169			1,261			1,156			5,066			1,618			1,358			2,975			16.2%
Sub-Total				284,411			71,733			66,171			65,264			69,075			272,242			68,134			59,366			127,500			-10.3%
Total
Product				561,307			136,763			129,614			131,608			147,467			545,452			119,938			123,026			242,964			-5.1%
Services				118,430			28,988			32,170			33,090			37,333			131,581			32,201			34,406			66,607			7.0%
Total				679,737			165,751			161,783			164,698			184,800			677,033			152,139			157,431			309,571			-2.7%
Divested Consumer Product Lines
Video
Product				30,793			8,779			7,532			6,097			5,565			27,973			4,369			2,310			6,679			-69.3%
Services				-			-			-			-			-			-			-			-			-
Sub-Total				30,793			8,779			7,532			6,097			5,565			27,973			4,369			2,310			6,679			-69.3%
Audio
Product				72,694			16,258			16,939			15,364			14,881			63,442			12,884			11,392			24,276			-32.7%
Services				-			-			-			-			-			-			-			-			-
Sub-Total				72,694			16,258			16,939			15,364			14,881			63,442			12,884			11,392			24,276			-32.7%
Total
Product				103,487			25,037			24,471			21,461			20,446			91,415			17,253			13,702			30,955			-44.0%
Services				-			-			-			-			-			-			-			-			-
Total				103,487			25,037			24,471			21,461			20,446			91,415			17,253			13,702			30,955			-44.0%
On-going Business
Video
Product				251,105			57,731			57,080			61,508			73,983			250,303			49,053			62,707			111,760			9.9%
Services				113,429			27,508			31,001			31,829			36,177			126,515			30,584			33,048			63,632			6.6%
Sub-Total				364,534			85,239			88,081			93,337			110,161			376,818			79,637			95,755			175,391			8.7%
Audio
Product				206,715			53,995			48,063			48,638			53,038			203,734			53,632			46,617			100,249			-3.0%
Services				5,002			1,480			1,169			1,261			1,156			5,066			1,618			1,358			2,975			16.2%
Sub-Total				211,717			55,475			49,232			49,900			54,194			208,800			55,250			47,974			103,224			-2.6%
Total
Product				457,820			111,726			105,143			110,147			127,021			454,037			102,685			109,323			212,008			4.0%
Services				118,430			28,988			32,170			33,090			37,333			131,581			32,201			34,406			66,607			7.0%
Total				576,250			140,714			137,312			143,237			164,354			585,618			134,886			143,729			278,615			4.7%

Avid
PR Contact:
Ian Bruce, 978-640-5584
ian.bruce@avid.com
or
IR Contact:
Tom Fitzsimmons, 978-640-3346
tom.fitzsimmons@avid.com

Source: Avid

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