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): July 20, 2006
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 July 20, 2006, Avid Technology, Inc. announced its financial results
for the quarter ended June 30, 2006. 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
(d) 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 July 20, 2006.
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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: July 20, 2006 AVID TECHNOLOGY, INC.
(Registrant)
By: /s/ Paul J. Milbury
-------------------
Paul J. Milbury
Vice President and Chief Financial Officer
(Principal Financial Officer)
3
EXHIBIT INDEX
Exhibit Description
- ------ -----------
99.1 Press release issued by the Registrant dated July 20, 2006.
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Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
Avid Reports Solid Second Quarter 2006 Results
Announces Authorization to Repurchase Up To $50 Million of Stock
Tewksbury, MA - July 20, 2006 - Avid Technology, Inc. (NASDAQ: AVID) today
reported revenues of $222.2 million for the three month period ended June 30,
2006 compared to $160.1 million for the same period in 2005. GAAP net income for
the quarter was $2.7 million, or $.06 per diluted share compared to GAAP net
income of $13.6 million, or $.37 per diluted share, in the second quarter of
2005. GAAP net income in the second quarter of 2006 includes $11.8 million of
non-cash acquisition related charges, non-cash stock-based compensation and
related tax adjustments. This compares to $2.3 million of acquisition related
charges, stock-based compensation and related tax adjustments included in GAAP
net income for the second quarter of 2005.
"Our June quarter results were solid," said David Krall, Avid's president and
chief executive officer. "Contributing substantially to these results was the
on-schedule delivery of all of the new products announced at the National
Association of Broadcasters convention in April that were scheduled to ship
during the second quarter. We continue to emphasize the importance of delivering
new products to our customers on time, and our Interplay(TM) nonlinear workflow
engine is still expected to ship in the third quarter. In broadcast, we had a
strong bookings quarter and increased our backlog substantially. We continue to
rebuild our consumer business, and the improvements that have been made to
Pinnacle Studio(TM) 10 are being reflected by significant increases in user
satisfaction ratings. Finally, our audio business had another good quarter,
highlighted by strong performances in both our home recording and live sound
markets."
Revenues for the six month period ended June 30, 2006, were $440.3 million
compared to revenues of $326.1 million for the same period in 2005. GAAP net
income for the first six months of 2006 was $6.0 million, or $.14 per diluted
share, compared to GAAP net income of $33.3 million, or $.90 per diluted share,
for the same period in 2005. GAAP net income for the six month period ended June
30, 2006 includes $24.6 million of non-cash acquisition-related amortization,
stock-based compensation charges, restructuring charges, in-process research and
development, and related tax adjustments. This compares to $4.8 million of
acquisition-related amortization, stock-based compensation and related tax
adjustments included in GAAP net income for the six month period ended June 30,
2005.
Stock Repurchase Program
Avid also announced that its Board of Directors approved a program to repurchase
up to $50 million of stock through transactions on the open market, in block
trades or otherwise. The stock repurchase program will be funded using the
company's working capital. As of June 30, 2006, the company had cash, cash
equivalents and marketable securities of approximately $238.1 million.
Use of Non-GAAP Financial Measures
This press release may contain "non-GAAP financial measures" under the rules of
the 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. We
believe it is useful for ourselves and investors to review both GAAP and
non-GAAP measures in order to assess our performance. We also believe these
non-GAAP financial measures are a meaningful measure of our operating
performance and will assist investors in understanding our results of operations
on a comparative basis.
Conference Call
A conference call to discuss Avid's second quarter 2006 financial results and
the company's outlook for the balance of 2006 will be held today, July 20, 2006,
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 9034125. 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 is subject to the completion and filing of our Quarterly
Report on Form 10-Q. 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 market acceptance of Avid's existing and new products,
Avid's ability to anticipate customer needs, competitive factors, including
pricing pressures, fluctuating currency exchange rates, delays in product
shipments, and the 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 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) 2006 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film
Composer, Interplay, Media Composer, 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(R) 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)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2006 2005 2006 2005
---------- --------- --------- ---------
Revenue
Product $197,512 $141,434 $391,534 $288,812
Service 24,714 18,617 48,762 37,240
---------- --------- --------- ---------
Total Revenue 222,226 160,051 440,296 326,052
Cost of Revenue
Product 93,819 61,244 185,180 122,141
Service 13,812 10,027 27,127 20,097
Amortization of intangible assets 5,016 282 10,096 563
---------- --------- --------- ---------
Total Cost of Revenue 112,647 71,553 222,403 142,801
---------- --------- --------- ---------
Gross Profit 109,579 88,498 217,893 183,251
---------- --------- --------- ---------
Operating Expenses
Research and development 35,617 24,910 71,113 49,589
Marketing and selling 52,583 38,452 102,495 76,294
General and administrative 15,853 10,471 30,990 20,773
In-process research and development - - 310 -
Amortization of intangible assets 3,977 1,593 7,642 3,185
Restructuring charges - - 1,066 -
---------- --------- --------- ---------
Total Operating Expense 108,030 75,426 213,616 149,841
Operating income 1,549 13,072 4,277 33,410
Interest and other income (expense), net 1,881 1,179 3,852 2,016
---------- --------- --------- ---------
Income before income taxes 3,430 14,251 8,129 35,426
Provision for income taxes 731 685 2,084 2,114
---------- --------- --------- ---------
Net Income $2,699 $13,566 $6,045 $33,312
========== ========= ========= =========
Net income per common share - basic $0.06 $0.39 $0.14 $0.95
Net income per common share - diluted $0.06 $0.37 $0.14 $0.90
Weighted average common shares
outstanding - basic 42,273 35,177 42,205 35,083
Weighted average common shares
outstnading - diluted 43,057 37,024 43,126 37,154
AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)
Net income includes the following items that were highlighted in the text of
this press release:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ -------------------------------
2006 2005 2006 2005
-------------- ------------- -------------- --------------
per per per per
diluted diluted diluted diluted
share share share share
-------------- ------------- -------------- --------------
Amortization of intangible assets 8,993 $ 0.21 1,875 $ 0.05 17,738 $ 0.41 3,748 $ 0.10
Stock-based compensation 4,283 $ 0.10 601 $ 0.02 8,718 $ 0.20 1,372 $ 0.04
Restructuring charges - $ - - $ - 1,066 $ 0.02 - $ -
In-process research and development - $ - - $ - 310 $ 0.01 - $ -
Related tax adjustments (1,481)$(0.03) (172)$(0.01) (3,251)$(0.08) (345)$(0.01)
------- ------ ------- ------
Total 11,795 $ 0.28 2,304 $ 0.06 24,581 $ 0.57 4,775 $ 0.13
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
June 30, December 31,
2006 2005
--------------- ---------------
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities $ 238,147 $ 238,430
Accounts receivable, net of allowances of
$22,212 and $22,233 at June 30, 2006 and
December 31, 2005, respectively 143,934 140,669
Inventories 121,979 96,845
Prepaid and other current assets 23,276 25,733
--------------- ---------------
Total current assets 527,336 501,677
Property and equipment, net 38,096 38,563
Goodwill 410,895 396,902
Intangible assets, net 110,248 118,676
Other assets 6,410 6,228
--------------- ---------------
Total assets $ 1,092,985 $ 1,062,046
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 52,459 $ 43,227
Accrued expenses and other current liabilities 92,501 96,311
Deferred revenues 66,913 63,184
--------------- ---------------
Total current liabilities 211,873 202,722
Long term liabilities 18,790 19,727
--------------- ---------------
Total liabilities 230,663 222,449
--------------- ---------------
Stockholders' equity:
Common stock 423 421
Additional paid-in capital 939,907 928,703
Accumulated deficit (82,750) (88,795)
Deferred compensation - (1,830)
Accumulated other comprehensive income 4,742 1,098
--------------- ---------------
Total stockholders' equity 862,322 839,597
--------------- ---------------
Total liabilities and stockholders' equity $ 1,092,985 $ 1,062,046
=============== ===============