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Avid Reports Fourth Quarter 2007 Results
GAAP net income in the fourth quarter of 2007 includes $13.3 million of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.42. For the fourth quarter of 2006, GAAP net income included $75.1 million of impairment charges, amortization, stock-based compensation, restructuring costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.54 in the fourth quarter of 2006.
During the fourth quarter, the company's cash balance increased by $27.2 million to $224.5 million at December 31, 2007 primarily due to operating cash flow.
"Though sales and cash flow were strong, we are disappointed with the lower than expected earnings performance and need to improve our profitability," said Gary Greenfield, Avid's Chairman and Chief Executive Officer. "As we continue with the transformation of Avid into a more efficient and customer-focused organization, we are taking a long-term view that we believe will ultimately return the most value to our shareholders."
Revenue for the year ended December 31, 2007 was $929.6 million, compared to revenue of $910.6 million in 2006. GAAP net loss for 2007 was $8.0 million, or $.19 per share, compared to a GAAP net loss of $42.9 million, or $1.03 per share, for 2006. GAAP net loss for 2007 includes $59.1 million of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per share were $1.23 per diluted share for 2007. GAAP net loss for 2006 includes $113.9 million of impairment charges, amortization, stock-based compensation, restructuring costs, in-process research and development and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $1.67 for 2006.
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 diluted earnings per share for the three- and twelve-month periods ended December 31, 2007 and 2006 are in the tables attached to this press release.
We use non-GAAP financial measures internally to manage our business, for example, in establishing our annual operating budget, in assessing segment operating performance and for measuring performance under our employee incentive compensation plans. Non-GAAP financial measures are used by our management in its operating and financial decision-making because management believes these measures reflect our ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, we believe it is useful for our investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate our 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 our past financial results. The primary limitations associated with our 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 our operations. Our 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 2007 financial results will be held today, January 31, 2008, at 5:00 p.m. EST. The call will be open to the public and can be accessed by dialing (719) 457-2617 and referencing confirmation code 3538405. 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 meet customer needs, market acceptance of Avid's existing and new products, Avid's ability to recognize revenue in a timely manner, 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 estimate only as of today and should not be relied upon as representing the company's estimate 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, 3D animation, gaming and broadcast professionals - as well as for home audio and video enthusiasts. Avid professional and consumer brands include Avid, Digidesign, M-Audio, Pinnacle Systems, Sibelius, Softimage and Sundance Digital. 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® statuette representing the 1998 Scientific and Technical Award for the concept, design, and engineering of the Avid® Film Composer® system for motion picture editing. For more information about the company's Oscar, Grammy® and Emmy® award-winning products and services, visit www.avid.com.
© 2008 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, M-Audio, Pinnacle Systems, Sibelius, Softimage, and Sundance Digital 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. Oscar is a trademark and service mark 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,
------------------ -------------------
2007 2006 2007 2006
-------- --------- --------- ---------
Net revenues:
Products $222,473 $213,405 $806,103 $809,002
Services 36,047 25,644 123,467 101,576
-------- --------- --------- ---------
Total net revenues 258,520 239,049 929,570 910,578
Cost of revenues:
Products 111,625 104,101 390,725 388,483
Services 19,042 15,123 68,529 56,218
Amortization of intangible
assets 3,566 4,889 16,895 21,193
Restructuring costs 1,481 - 4,278 -
-------- --------- --------- ---------
Total cost of revenues 135,714 124,113 480,427 465,894
-------- --------- --------- ---------
Gross profit 122,806 114,936 449,143 444,684
-------- --------- --------- ---------
Operating expenses:
Research and development 38,050 35,000 150,707 141,363
Marketing and selling 53,425 50,831 210,456 203,967
General and administrative 21,399 16,239 77,463 63,250
Amortization of intangible
assets 3,431 3,520 13,726 14,460
Impairment of goodwill - 53,000 - 53,000
Restructuring costs, net 1,338 3,167 9,410 2,613
In-process research and
development - - - 879
-------- --------- --------- ---------
Total operating expenses 117,643 161,757 461,762 479,532
Operating income (loss) 5,163 (46,821) (12,619) (34,848)
Interest and other income
(expense), net 1,739 1,591 7,637 7,274
-------- --------- --------- ---------
Income (loss) before income
taxes 6,902 (45,230) (4,982) (27,574)
Provision for income taxes,
net 3,049 7,335 2,997 15,353
-------- --------- --------- ---------
Net income (loss) $ 3,853 $(52,565) $ (7,979) $(42,927)
======== ========= ========= =========
Net income (loss) per common
share - basic $ 0.09 $ (1.28) $ (0.19) $ (1.03)
Net income (loss) per common
share - diluted $ 0.09 $ (1.28) $ (0.19) $ (1.03)
Weighted-average common shares
outstanding - basic 41,008 41,016 40,974 41,736
Weighted-average common shares
outstanding - diluted 41,253 41,016 40,974 41,736
AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)
Segment revenue and operating income (loss):
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Professional Video:
Revenues $133,342 $117,741 $485,186 $479,383
Operating income 10,289 5,448 24,181 38,559
Audio:
Revenues $ 85,987 $ 83,163 $318,993 $304,362
Operating income 9,432 14,924 30,927 41,405
Consumer Video:
Revenues $ 39,191 $ 38,145 $125,391 $126,833
Operating income (loss) (657) 943 (5,867) (6,063)
Total:
Total segment revenues $258,520 $239,049 $929,570 $910,578
Total segment operating
income 19,064 21,315 49,241 73,901
Reconciliation of GAAP
operating income (loss) to
Non-GAAP operating income:
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Consolidated GAAP operating
income (loss) $ 5,163 $(46,821) $(12,619) $(34,848)
Adjustments to reconcile to
Non-GAAP operating income:
Amortization of intangible
assets 6,997 8,409 30,621 35,653
Impairment of goodwill - 53,000 - 53,000
Stock-based compensation 3,858 3,560 15,949 16,604
Restructuring costs, net 2,819 3,167 13,688 2,613
Other costs 227 - 1,602 -
In-process research and
development - - - 879
--------- --------- --------- ---------
Total operating income for
reportable segments $ 19,064 $ 21,315 $ 49,241 $ 73,901
========= ========= ========= =========
Reconciliation of GAAP net
income (loss) to Non-GAAP net
income:
GAAP net income (loss) $ 3,853 $(52,565) $ (7,979) $(42,927)
Adjustments to reconcile to
Non-GAAP net income:
Amortization of intangible
assets 6,997 8,409 30,621 35,653
Impairment of goodwill - 53,000 - 53,000
Stock-based compensation 3,858 3,560 15,949 16,604
Restructuring costs, net 2,819 3,167 13,688 2,613
Other costs 227 - 1,602 -
In-process research and
development - - - 879
Related tax adjustments (600) 6,954 (2,740) 5,197
--------- --------- --------- ---------
Non-GAAP net income $ 17,154 $ 22,525 $ 51,141 $ 71,019
========= ========= ========= =========
Weighted-average common
shares outstanding -
diluted 41,253 41,734 41,450 42,570
Non-GAAP net income per
common share - diluted $ 0.42 $ 0.54 $ 1.23 $ 1.67
Stock-based compensation,
which relates to the adoption
of SFAS 123R, the acquisition
of M-Audio, and the issuance
of restricted stock and
restricted stock units in
2006 and 2007, is comprised
of the following:
Three Months Ended Twelve Months Ended
Stock-based compensation December 31, December 31,
included in:
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Cost of products revenues $ 174 $ 118 $ 679 $ 516
Cost of services revenues 133 178 829 801
Research and development
expenses 1,106 1,028 4,521 4,830
Marketing and selling
expenses 1,242 1,053 4,470 4,691
General and administrative
expenses 1,203 1,183 5,450 5,766
--------- --------- --------- ---------
$ 3,858 $ 3,560 $ 15,949 $ 16,604
========= ========= ========= =========
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
December 31, December 31,
2007 2006
------------ ------------
ASSETS:
Current assets:
Cash, cash equivalents and marketable
securities $ 224,460 $ 172,107
Accounts receivable, net of allowances of
$20,784 and $23,087 at December 31, 2007
and 2006, respectively 138,692 138,578
Inventories 117,324 144,238
Prepaid and other current assets 36,788 29,016
------------ ------------
Total current assets 517,264 483,939
Property and equipment, net 46,160 40,483
Intangible assets, net 71,427 102,048
Goodwill 360,584 360,143
Other assets 10,518 10,421
------------ ------------
Total assets $1,005,953 $ 997,034
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 34,992 $ 34,108
Accrued expenses and other current
liabilities 93,912 88,331
Deferred revenues 79,771 73,743
------------ ------------
Total current liabilities 208,675 196,182
Long-term liabilities 17,495 20,471
------------ ------------
Total liabilities 226,170 216,653
------------ ------------
Stockholders' equity:
Common stock 423 423
Additional paid-in capital 968,339 952,763
Accumulated deficit (155,722) (134,708)
Treasury stock at cost, net of reissuances (45,823) (43,768)
Accumulated other comprehensive income 12,566 5,671
------------ ------------
Total stockholders' equity 779,783 780,381
------------ ------------
Total liabilities and stockholders'
equity $1,005,953 $ 997,034
============ ============
CONTACT: Avid Technology, Inc.
Investor Contact:
Dean Ridlon, 978-640-5309
dean_ridlon@avid.com
or
Media Contact:
Lisa Pistacchio, 650-930-3083
lisa_pistacchio@avid.com
SOURCE: Avid Technology, Inc.