UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 27, 2005
AVID TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21174 04-2977748
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
Avid Technology Park, One Park West, Tewksbury, MA 01876
(Address of Principal Executive Offices) (zip code)
Registrant's telephone number, including area code: (978) 640-6789
---------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
/ / Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2 (b) under
the Exchange Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On October 27, 2005, Avid Technology, Inc. announced its financial
results for the quarter ended September 30, 2005. The full text of the press
release issued in connection with the announcement is attached as Exhibit 99.1
to this Current Report on Form 8-K.
The information in this Form 8-K and the Exhibit attached hereto shall
not be deemed "filed" for purposes of the Securities Exchange Act of 1934 (the
"Exchange Act"), nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933 or the Exchange Act, except as expressly set
forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be
furnished, and not filed:
99.1 Press Release issued by the Registrant on October 27, 2005.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 27, 2005 AVID TECHNOLOGY, INC.
(Registrant)
By: /s/ Carol E. Kazmer
--------------------
Carol E. Kazmer
General Counsel
3
EXHIBIT INDEX
Exhibit Description
99.1 Press release issued by the Registrant dated October 27, 2005.
4
Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
Avid Reports Strong Third Quarter Results
Tewksbury, MA - October 27, 2005 - Avid Technology, Inc. (NASDAQ: AVID) today
reported revenues of $204.4 million for the three months ended September 30,
2005 compared to $147.4 million for the same period in 2004. Reflecting various
non-cash charges primarily associated with the closing of the acquisition of
Pinnacle Systems, Inc. on August 9, 2005, GAAP net loss for the quarter was
$17.8 million, or $.46 per share compared to GAAP net income of $19.0 million,
or $.54 per diluted share, in the third quarter of 2004.
Non-GAAP net income for the third quarter of 2005 was $24.2 million, or $.60 per
diluted share, compared to non-GAAP net income of $20.4 million, or $.58 per
diluted share in the corresponding quarter of 2004. In order to calculate
non-GAAP net income, which the company believes is a more meaningful measure of
normalized operating performance and will assist investors in understanding
results of operations on a comparative basis, the following items have been
excluded from third quarter 2005 GAAP net loss:
o A non-recurring in-process research and development charge of $32.4
million related to the Pinnacle acquisition.
o Non-cash acquisition-related amortization charges of $6.4 million.
o Restructuring costs of $2 million reflecting a revised estimate of a loss on
a facility vacated by Avid in 1999.
o A Pinnacle acquisition-related tax charge of $1.2 million, offset by
$468,000 of tax benefits related to acquisition-related amortization and
restructuring.
o Stock-based compensation charges of $458,000 related to the acquisition
of M-Audio in August 2004.
"We had a strong third quarter with all segments performing well," said David
Krall, Avid's president and chief executive officer. "We are especially pleased
with the performance of our broadcast and storage solutions in our video
division. The integration of the Deko and MediaStream products from Pinnacle
into our broadcast offering is off to a great start, and we're looking forward
to offering our broadcast customers an even more complete solution than we have
in the past. Audio also had a strong quarter, with Digidesign benefiting from
the release of the Mbox(R) 2 portable micro-studio and continuing demand for its
digital mixing consoles. Finally, our new Pinnacle consumer segment delivered a
solid quarter, driven by the release of Pinnacle Studio(TM) version 10."
Revenues for the nine months ended September 30, 2005, were $530.5 million
compared to revenues of $414.6 million for the same period in 2004. GAAP net
income for the first nine months of 2005 was $15.6 million, or $.41 per diluted
share, compared to GAAP net income of $49.2 million, or $1.43 per diluted share,
for the same period in 2004. Excluding the in-process research and development
charge, acquisition-related amortization, stock-based compensation, the Pinnacle
acquisition-related tax charge, the tax benefit related to amortization,
restructuring costs, and non-recurring expenses in the first quarter of 2004
related to the settlement of a lawsuit, non-GAAP net income for the nine months
ended September 30, 2005, was $62.3 million, or $1.63 per diluted share,
compared to $51.4 million, or $1.50 per diluted share, for the first nine months
of 2004.
Use of Non-GAAP Financial Measures
The non-GAAP operating results listed above are "non-GAAP financial measures"
under the rules of the Securities and Exchange Commission. These results have
been included because management believes they are a meaningful measure of
normalized operating performance and will assist investors in understanding the
company's results of operations on a comparative basis. 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. Management uses this information internally to
more accurately assess the ongoing nature of operations and to measure
performance on a comparative basis.
Conference Call
A conference call to discuss Avid's third quarter 2005 financial results and the
company's outlook for the fourth quarter of 2005 and the full year 2006 will be
held today, October 27, at 5:00 p.m. EDT. The call will be open to the public,
and can be accessed by dialing (913) 981-5509 and referencing confirmation code
6447118. The call and subsequent replay will also be available on Avid's web
site. To listen via this alternative, go to the Investor Relations page under
the About Us menu at www.avid.com for complete details 10-15 minutes prior to
the start of the conference call.
The above release includes forward-looking statements, as defined by the Private
Securities Litigation Reform Act of 1995, about Avid's future performance. There
are a number of factors that could cause actual events or results to differ
materially from that indicated by such forward-looking statements, such as the
competitive market in which Avid operates, market acceptance of Avid's existing
and new products, Avid's ability to anticipate customer needs and the other
factors set forth under the caption "Certain Factors That May Affect Future
Results" in Avid's Form 10-Q for the quarter ended June 30, 2005, and other
filings with the SEC. 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 estimate
changes.
About Avid Technology, Inc.
Avid Technology, Inc. is the world leader in digital nonlinear media creation,
management, and distribution solutions, enabling film, video, audio, animation,
games, and broadcast professionals to work more efficiently, productively, and
creatively. For more information about the company's Oscar(R), Grammy(R), and
Emmy(R) award-winning products and services, please visit: www.avid.com.
(C) 2005 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film
Composer, M-Audio, Mbox, Pinnacle Studio and Pro Tools are either registered
trademarks or trademarks of Avid Technology, Inc. or its subsidiaries in the
United States and/or other countries. Avid received an Oscar statuette
representing the 1998 Scientific and Technical Award for the concept, design,
and engineering of the Avid Film Composer(R) system for motion picture editing.
Digidesign, Avid's audio division, received an Oscar statuette representing the
2003 Scientific and Technical Award for the design, development, and
implementation of its Pro Tools(R) digital audio workstation. Oscar is a
trademark and service mark of the Academy of Motion Picture Arts and Sciences.
Emmy is a registered trademark of ATAS/NATAS. Grammy is a trademark of the
National Academy of Recording Arts and Sciences, Inc. All other trademarks
contained herein are the property of their respective owners.
AVID TECHNOLOGY, INC
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
------------------------- -------------------------
GAAP NON - GAAP
------------------------- -------------------------
Three Months Ended Three Months Ended
September 30th, September 30th,
2005 2004 2005 2004
----------- ---------- ----------- -----------
Revenue
Product $183,515 $131,550 $183,515 $131,550
Service 20,905 15,824 20,905 15,824
----------- ---------- ----------- -----------
Total Revenue 204,420 147,374 204,420 147,374
----------- ---------- ----------- -----------
Cost of Revenue
Product 82,133 54,242 82,133 54,242
Service 11,587 8,603 11,587 8,603
Amortization of intangible assets 3,854 127 - -
----------- ---------- ----------- -----------
Total Cost of Revenue 97,574 62,972 93,720 62,845
----------- ---------- ----------- -----------
Gross Profit 106,846 84,402 110,700 84,529
----------- ---------- ----------- -----------
Operating Expenses
Research and development 29,600 23,781 29,600 23,781
Marketing and selling 44,464 31,855 44,464 31,855
General and administrative 11,903 8,966 11,903 8,966
Stock-based compensation (Note A) 458 553 - -
In-process research & development 32,390 - -
Amortization of intangible assets 2,544 988 - -
Restructuring 1,997 - -
----------- ---------- ----------- -----------
Total Operating Expenses 123,356 66,143 85,967 64,602
----------- ---------- ----------- -----------
Operating income (loss) (16,510) 18,259 24,733 19,927
Interest and other income (expense), net 1,719 651 1,719 651
----------- ---------- ----------- -----------
Income (loss) before income taxes (14,791) 18,910 26,452 20,578
Provision for income taxes 2,231 181 2,231 181
GAAP tax adjustment provision (benefit), net 735 (244) - -
----------- ---------- ----------- -----------
Net Income (loss) ($17,757) $18,973 $24,221 $20,397
=========== ========== =========== ===========
Net income per common share - basic ($0.46) $0.58 $0.62 $0.62
Net income per common share - diluted ($0.46) $0.54 $0.60 $0.58
Weighted average common shares outstanding - basic 38,935 32,737 38,935 32,737
Weighted average common shares outstanding - diluted 38,935 35,033 40,264 35,033
Note
- ----
A. For the three month period ended 9/30/2005, stock based compensation related
to stock options issued as part of the acquisition of M-Audio is comprised of
$36 of Research and development expense, $137 of Marketing and selling expense,
and $285 of General and administrative expense, based on the departmental
classification of the option holders.
For the three month period ended 9/30/2004, stock based compensation related to
stock options issued as part of the acquisition of M-Audio is comprised of $99
of Research and development expense, $154 of Marketing and selling expense, and
$300 of General and administrative expense, based on the departmental
classification of the option holders.
Reconciliation of Non-GAAP net income to GAAP net income (loss):
Three months ended September 30,
2005 2004
----------- ----------
Non-GAAP net income $ 24,221 $ 20,397
Stock-based compensation (458) (553)
In-process research & development (32,390) -
Amortization of intangible assets (6,398) (1,115)
Restructuring (1,997) -
GAAP tax adjustment provision (benefit), net (735) 244
----------- ----------
GAAP net income (loss) $(17,757) $18,973
=========== ==========
AVID TECHNOLOGY, INC
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
-------------------------- --------------------------
GAAP NON - GAAP
-------------------------- --------------------------
Nine Months Ended Nine Months Ended
September 30th, September 30th,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenue
Product $472,327 $369,403 $472,327 $369,403
Service 58,145 45,231 58,145 45,231
----------- ----------- ----------- -----------
Total Revenue 530,472 414,634 530,472 414,634
----------- ----------- ----------- -----------
Cost of Revenue
Product 204,274 152,907 204,274 152,907
Service 31,684 25,036 31,684 25,036
Amortization of intangible assets 4,417 127 - -
----------- ----------- ----------- -----------
Total Cost of Revenue 240,375 178,070 235,958 177,943
----------- ----------- ----------- -----------
Gross Profit 290,097 236,564 294,514 236,691
----------- ----------- ----------- -----------
Operating Expenses
Research and development 79,096 68,997 79,096 68,997
Marketing and selling 120,403 93,200 120,403 93,200
General and administrative 31,752 23,200 31,752 23,200
Stock-based compensation (Note A) 1,830 553 - -
In-process research & development 32,390 - - -
Amortization of intangible assets 5,729 1,976 - -
Restructuring 1,997 - - -
----------- ----------- ----------- -----------
Total Operating Expenses 273,197 187,926 231,251 185,397
----------- ----------- ----------- -----------
Operating income 16,900 48,638 63,263 51,294
Interest and other income, net 3,735 1,736 3,735 1,736
Legal settlement - (1,050) - -
----------- ----------- ----------- -----------
Income before income taxes 20,635 49,324 66,998 53,030
Provision for income taxes 4,690 1,581 4,690 1,581
GAAP tax adjustment provision (benefit), net 390 (1,444) - -
----------- ----------- ----------- -----------
Net Income $15,555 $49,187 $62,308 $51,449
=========== =========== =========== ===========
Net income per common share - basic $0.43 $1.54 $1.71 $1.61
Net income per common share - diluted $0.41 $1.43 $1.63 $1.50
Weighted average common shares outstanding - basic 36,381 31,857 36,381 31,857
Weighted average common shares outstanding - diluted 38,217 34,374 38,217 34,374
Note
For the nine month period ended 9/30/2005, stock based compensation related to
stock options issued as part of the acquisition of M-Audio is comprised of $129
of Research and development expense, $492 of Marketing and selling expense, and
$1,209 of General and administrative expense, based on the departmental
classification of the option holders.
For the nine month period ended 9/30/2004, stock based compensation related to
stock options issued as part of the acquisition of M-Audio is comprised of $99
of Research and development expense, $154 of Marketing and selling expense, and
$300 of General and administrative expense, based on the departmental
classification of the option holders.
Reconciliation of Non-GAAP net income to GAAP net income:
Nine months ended September 30,
2005 2004
----------- -----------
Non-GAAP net income $ 62,308 $ 51,449
Stock-based compensation (1,830) (553)
In-process research & development (32,390) -
Amortization of intangible assets (10,146) (2,103)
Restructuring (1,997) -
GAAP tax adjustment provision (benefit), net (390) 1,444
Legal settlement - (1,050)
----------- -----------
GAAP net income $ 15,555 $ 49,187
=========== ===========
Avid Technology, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2005 2004
----------------- -----------------
ASSETS:
Current assets:
Cash and marketable securities $ 228,639 $ 155,419
Accounts receivable, net of allowances of
$21,399 and $9,334 at September 30, 2005 and
December 31, 2004, respectively 127,743 97,536
Inventories 93,219 53,946
Prepaid and other current assets 24,356 19,407
----------------- -----------------
Total current assets 473,957 326,308
Property and equipment, net 39,237 29,092
Goodwill 395,832 165,803
Other intangible assets, net 128,751 46,884
Other assets 9,546 8,147
----------------- -----------------
Total assets $1,047,323 $ 576,234
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 38,335 $ 26,517
Accrued expenses and other current liabilities 113,137 74,727
Deferred revenues 70,514 48,680
----------------- -----------------
Total current liabilities 221,986 149,924
Long term liabilities, less current portion 11,736 1,689
----------------- -----------------
Total liabilities 233,722 151,613
----------------- -----------------
Stockholders' equity:
Common stock 417 348
Additional paid-in capital 920,596 546,849
Accumulated deficit (107,223) (122,775)
Deferred compensation (2,308) (4,392)
Accumulated other comprehensive income 2,119 4,591
----------------- -----------------
Total stockholders' equity 813,601 424,621
----------------- -----------------
Total liabilities and stockholders' equity $ 1,047,323 $ 576,234
================= =================