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): January 26, 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 January 26, 2006, Avid Technology, Inc. announced its financial
results for the quarter and the year ended December 31, 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 January 26, 2006.
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: January 26, 2006 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 January 26, 2006.
4
Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
Avid Finishes 2005 with Solid Fourth Quarter Results
Tewksbury, MA - January 26, 2006 - Avid Technology, Inc. (NASDAQ: AVID) today
reported revenues of $245.0 million for the three months ended December 31, 2005
compared to $175.0 million for the same period in 2004. GAAP net income for the
quarter was $18.4 million, or $.43 per diluted share compared to GAAP net income
of $22.5 million, or $.61 per diluted share, in the fourth quarter of 2004.
Non-GAAP net income for the fourth quarter of 2005 was $30.1 million, or $.69
per diluted share, compared to non-GAAP net income of $23.4 million, or $.64 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 fourth quarter 2005 GAAP net income:
o Non-cash acquisition-related amortization totaling $10.1 million.
o Restructuring charges of $1.2 million related to vacating a facility and
reducing headcount in Montreal.
o Acquisition-related stock-based compensation charges and net tax
provisions, and other non-recurring tax benefits of $394,000.
"We finished 2005 with a solid fourth quarter," said David Krall, Avid's
president and chief executive officer. "Our professional video segment posted
good results in the quarter led by strong sales of Avid(R) Symphony(TM)
Nitris(R) into the postproduction market and Avid Unity ISIS(TM) to our
broadcast customers. Audio had a strong quarter, with record sales of
Digidesign's Mbox(R) portable micro-studio, continuing demand for digital mixing
consoles for both the studio and live sound markets and new product launches by
M-Audio for the home studio. Finally, our consumer segment delivered a
profitable quarter, as Pinnacle Studio(TM) version 10 was available during the
important holiday buying season."
Revenues for the year ended December 31, 2005, were $775.4 million compared to
revenues of $589.6 million for 2004. GAAP net income for 2005 was $34.0 million,
or $.86 per diluted share, compared to GAAP net income of $71.7 million, or
$2.05 per diluted share, for 2004. Non-GAAP net income for the year ended
December 31, 2005, was $92.4 million, or $2.34 per diluted share, compared to
$74.9 million, or $2.14 per diluted share, for 2004. Non-GAAP net income in 2005
excludes a $32.4 million in-process research and development charge related to
the acquisition of Pinnacle Systems, Inc. on August 9, 2005, $20.2 million of
non-cash acquisition-related amortization, $3.2 million of restructuring costs,
$2.2 million of stock-based compensation, and $451,000 of non-recurring and
other tax provisions.
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 fourth quarter 2005 financial results and
the company's outlook for 2006 will be held today, January 26, 2006, at 5:00
p.m. EST. The call will be open to the public, and can be accessed by dialing
(913) 981-5509 and referencing confirmation code 2836084. 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 final audit and 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 that indicated by such forward-looking
statements, such as competitive factors, including pricing pressures,
fluctuating currency exchange rates, delays in product shipments, market
acceptance of Avid's existing and new products, Avid's ability to anticipate
customer needs 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, Avid Unity ISIS,
Digidesign, Film Composer, Mbox, Symphony, Nitris, 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
December 31, December 31,
2005 2004 2005 2004
----------- ---------- ----------- -----------
Revenue
Product $220,460 $159,060 $220,460 $159,060
Service 24,511 15,911 24,511 15,911
----------- ---------- ----------- -----------
Total Revenue 244,971 174,971 244,971 174,971
----------- ---------- ----------- -----------
Cost of Revenue
Product 104,112 67,338 104,112 67,338
Service 13,590 9,807 13,590 9,807
Amortization of intangible assets 6,610 281 - -
----------- ---------- ----------- -----------
Total Cost of Revenue 124,312 77,426 117,702 77,145
----------- ---------- ----------- -----------
Gross Profit 120,659 97,545 127,269 97,826
----------- ---------- ----------- -----------
Operating Expenses
Research and development 32,080 25,831 32,080 25,831
Marketing and selling 49,782 36,519 49,782 36,519
General and administrative 13,992 11,413 13,992 11,413
Stock-based compensation (Note A) 333 818 - -
Amortization of intangible assets 3,465 1,665 - -
Impairment of intangible assets - 1,187 - -
Restructuring charges 1,158 - - -
----------- ---------- ----------- -----------
Total Operating Expenses 100,810 77,433 95,854 73,763
----------- ---------- ----------- -----------
Operating income 19,849 20,112 31,415 24,063
Interest and other income (expense), net 1,851 653 1,851 653
----------- ---------- ----------- -----------
Income before income taxes 21,700 20,765 33,266 24,716
Provision for income taxes 3,214 1,313 3,214 1,313
Non-recurring and other tax provision (benefits) 61 (3,062) - -
----------- ---------- ----------- -----------
Net Income $18,425 $22,514 $30,052 $23,403
=========== ========== =========== ===========
Net income per common share - basic $0.44 $0.66 $0.72 $0.68
Net income per common share - diluted $0.43 $0.61 $0.69 $0.64
Weighted average common shares outstanding - basic 41,859 34,355 41,859 34,355
Weighted average common shares outstanding - diluted 43,309 36,751 43,309 36,751
Note
- ----
A. For the three month period ended 12/31/2005, stock based compensation related
to stock options issued as part of the acquisition of M-Audio is comprised of
$29 of Research and development expense, $110 of Marketing and selling expense,
and $194 of General and administrative expense, based on the departmental
classification of the option holders.
For the three month period ended 12/31/2004, stock based compensation related to
stock options issued as part of the acquisition of M-Audio is comprised of $14
of Research and development expense, $249 of Marketing and selling expense, and
$555 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 December 31,
2005 2004
----------- ----------
Non-GAAP net income $ 30,052 $ 23,403
Stock-based compensation (333) (818)
Amortization of intangible assets (10,075) (1,946)
Impairment of intangible assets - (1,187)
Restructuring charges (1,158) -
Non-recurring and other tax
provisions (benefit), (61) 3,062
----------- ----------
GAAP net income $18,425 $22,514
=========== ==========
AVID TECHNOLOGY, INC
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
-------------------------- --------------------------
GAAP NON - GAAP
-------------------------- --------------------------
Twelve Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenue
Product $692,787 $528,463 $692,787 $528,463
Service 82,656 61,142 82,656 61,142
----------- ----------- ----------- -----------
Total Revenue 775,443 589,605 775,443 589,605
----------- ----------- ----------- -----------
Cost of Revenue
Product 308,386 220,246 308,386 220,246
Service 45,274 34,842 45,274 34,842
Amortization of intangible assets 11,027 408 - -
----------- ----------- ----------- -----------
Total Cost of Revenue 364,687 255,496 353,660 255,088
----------- ----------- ----------- -----------
Gross Profit 410,756 334,109 421,783 334,517
----------- ----------- ----------- -----------
Operating Expenses
Research and development 111,176 94,827 111,176 94,827
Marketing and selling 170,185 129,720 170,185 129,720
General and administrative 45,744 34,613 45,744 34,613
Stock-based compensation (Note A) 2,163 1,371 - -
In-process research & development 32,390 - - -
Amortization of intangible assets 9,194 3,641 - -
Impairment of intangible assets - 1,187 - -
Restructuring charges 3,155 - - -
----------- ----------- ----------- -----------
Total Operating Expenses 374,007 265,359 327,105 259,160
----------- ----------- ----------- -----------
Operating income 36,749 68,750 94,678 75,357
Interest and other income (expense), net 5,586 2,389 5,586 2,389
Legal settlement - (1,050) - -
----------- ----------- ----------- -----------
Income before income taxes 42,335 70,089 100,264 77,746
Provision for income taxes 7,904 2,894 7,904 2,894
Non-recurring and other tax provision (benefits) 451 (4,506) - -
----------- ----------- ----------- -----------
Net Income $33,980 $71,701 $92,360 $74,852
=========== =========== =========== ===========
Net income per common share - basic $0.90 $2,21 $2.45 $2.30
Net income per common share - diluted $0.86 $2.05 $2.34 $2.14
Weighted average common shares outstanding - basic 37,762 32,485 37,762 32,485
Weighted average common shares outstanding - diluted 39,517 35,003 39,517 35,003
Note
For the twelve month period ended 12/31/2005, stock based compensation related to
stock options issued as part of the acquisition of M-Audio is comprised of $158
of Research and development expense, $602 of Marketing and selling expense, and
$1,403 of General and administrative expense, based on the departmental
classification of the option holders.
For the twelve month period ended 12/31/2004, stock based compensation related to
stock options issued as part of the acquisition of M-Audio is comprised of $113
of Research and development expense, $403 of Marketing and selling expense, and
$855 of General and administrative expense, based on the departmental
classification of the option holders.
Reconciliation of Non-GAAP net income to GAAP net income:
Twelve months ended December 31,
2005 2004
----------- -----------
Non-GAAP net income $ 92,360 $ 74,852
Stock-based compensation (2,163) (1,371)
In-process research & development (32,390) -
Amortization of intangible assets (20,221) (4,049)
Impairment of intangible assets - (1,187)
Restructuring charges (3,155) -
Legal settlement - (1,050)
Non-recurring and other tax
provisions (benefit), (451) 4,506
----------- -----------
GAAP net income $ 33,980 $ 71,701
=========== ===========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
December 31, December 31,
2005 2004
----------------- -----------------
ASSETS:
Current assets:
Cash and marketable securities $ 238,431 $ 155,419
Accounts receivable, net of allowances of
$22,232 and $9,334 at December 31, 2005 and
2004, respectively 140,668 97,536
Inventories 96,845 53,946
Prepaid and other current assets 25,733 19,407
----------------- -----------------
Total current assets 501,677 326,308
Property and equipment, net 38,563 29,092
Goodwill 396,902 165,803
Other intangible assets, net 118,676 46,884
Other assets 6,228 8,147
----------------- -----------------
Total assets $1,062,046 $ 576,234
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 43,227 $ 26,517
Accrued expenses and other current liabilities 103,816 74,727
Deferred revenues and deposits 66,034 48,680
----------------- -----------------
Total current liabilities 213,077 149,924
Long term liabilities, less current portion 9,372 1,689
----------------- -----------------
Total liabilities 222,449 151,613
----------------- -----------------
Stockholders' equity:
Common stock 421 348
Additional paid-in capital 928,703 546,849
Accumulated deficit (88,795) (122,775)
Deferred compensation (1,830) (4,392)
Accumulated other comprehensive income 1,098 4,591
----------------- -----------------
Total stockholders' equity 839,597 424,621
----------------- -----------------
Total liabilities and stockholders' equity $ 1,062,046 $ 576,234
================= =================