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): May 4, 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 May 4, 2006, Avid Technology, Inc. announced its financial results
for the quarter ended March 31, 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
(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 May 4, 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: May 4, 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 May 4, 2006.
4
Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
---------------------------
Avid Reports First Quarter 2006 Results
Tewksbury, MA - May 4, 2006 - Avid Technology, Inc. (NASDAQ: AVID) today
reported revenues of $218.1 million for the three months ended March 31, 2006
compared to $166.0 million for the same period in 2005. GAAP net income for the
quarter was $3.3 million, or $.08 per diluted share compared to GAAP net income
of $19.7 million, or $.53 per diluted share, in the first quarter of 2005.
Non-GAAP net income for the first quarter of 2006 was $16.1 million, or $.37 per
diluted share, compared to non-GAAP net income of $22.2 million, or $.60 per
diluted share in the corresponding quarter of 2005. In order to calculate
non-GAAP earnings per share, which the company believes is a meaningful measure
of our operating performance and will assist investors in understanding results
of operations on a comparative basis, the following adjustments were made to
first quarter 2006 and 2005 GAAP earnings per share:
2006 2005
---- ----
Non-cash acquisition-related amortization $ .20 .05
Non-cash stock-based compensation charges .10 $ .02
Non-recurring and other tax adjustments (.04) --
Restructuring charges .02 --
In-process research and development .01 --
--- ----
TOTAL $ .29 $ .07
"Our results for the quarter were in line with the preliminary results announced
on April 11. These results reflect lower-than-expected sales of broadcast
products including playout servers and on-air graphics, add-on and local
storage, and European consumer products," said David Krall, Avid's president and
chief executive officer. "Looking forward, we're pleased with the momentum we
created at last week's National Association of Broadcasters convention, where
Avid just completed one of its strongest showings in years. In particular,
Avid's new Open Storage Initiative was received well by partners and customers
alike, and TV Technology Magazine recognized Avid as a Superior Technology Award
Recipient (STAR) for our new Interplay(TM) nonlinear workflow engine. We also
received Pick Hits awards for our new software-only Media Composer(R) and Avid
Mojo(R) SDI, from Broadcast Engineering Magazine, as well as a VIDY award from
Videography Magazine for Avid Unity ISIS(TM). These products are all expected to
be strong contributors to Avid's results this year."
Use of Non-GAAP Financial Measures
The non-GAAP operating results and non-GAAP earnings per share listed above are
"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. The non-GAAP
financial measures used in this release exclude the accounting treatment of
stock-based compensation, and these non-GAAP measures should not be relied upon
independently, as they ignore the contribution to our operating results that is
generated by the incentive and compensation effects of the underlying
stock-based compensation programs. In addition to the reasons stated above, we
have excluded stock-based compensation from our non-GAAP measures based on our
desire to offer consistent information that is comparable to previous
information that we have publicly disclosed.
Conference Call
A conference call to discuss Avid's first quarter 2006 financial results and the
company's outlook for the balance of 2006 will be held today, May 4, 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 7315480. 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 that 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, Avid Mojo, Avid Unity
ISIS, Digidesign, Film Composer, Interplay, Media Composer, 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 for share data)
------------------------- --------------------------
GAAP NON - GAAP
------------------------- --------------------------
Three Months Ended Three Months Ended
March 31st, March 31st,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenue
Product $194,022 $147,378 $194,022 $147,378
Service 24,048 18,623 24,048 18,623
----------- ----------- ----------- -----------
Total Revenue 218,070 166,001 218,070 166,001
Cost of Revenue
Product 91,361 60,897 91,222 60,897
Service 13,315 10,070 13,096 10,070
Amortization of intangible assets 5,080 281
----------- ----------- ----------- -----------
Total Cost of Revenue 109,756 71,248 104,318 70,967
----------- ----------- ----------- -----------
Gross Profit 108,314 94,753 113,752 95,034
----------- ----------- ----------- -----------
Operating Expenses
Research and development 35,496 24,679 34,190 24,624
Marketing and selling 49,912 37,842 48,651 37,650
General and administrative 15,137 10,302 13,627 9,778
In-process research & development 310
Amortization of intangible assets 3,665 1,592
Restructuring charges 1,066
----------- ----------- ----------- -----------
Total Operating Expense 105,586 74,415 96,468 72,052
Operating income 2,728 20,338 17,284 22,982
Interest and other income (expense), net 1,970 837 1,970 837
----------- ----------- ----------- -----------
Income before income taxes 4,698 21,175 19,254 23,819
Provision for income taxes 3,123 1,602 3,123 1,602
Non-recurring and other tax adjustments (1,770) (173)
----------- ----------- ----------- -----------
Total provision for income taxes 1,353 1,429 3,123 1,602
Net Income $3,345 $19,746 $16,131 $22,217
=========== =========== =========== ===========
Net income per common share - basic $0.08 $0.56 $0.38 $0.64
Net income per common share - diluted $0.08 $0.53 $0.37 $0.60
Weighted average common shares
outstanding - basic 42,137 34,987 42,137 34,987
Weighted average common shares
outstanding - dilute 43,200 37,263 43,200 37,263
Note
The above results include stock-based compensation related to the adoption
of SFAS 123R, the acquisition of M-Audio, and the issuance of restricted
stock and restricted stock units in Q1 2006, as follows:
Three Months Ended
Stock-based compensation included in: March 31st,
2006 2005
----------- -----------
Cost of product revenues $ 139 $ -
Cost of service revenues 219 -
Research and development expense 1,306 55
Marketing and selling expense 1,261 192
General and administrative expense 1,510 524
----------- -----------
$ 4,435 $ 771
=========== ===========
Reconciliation of GAAP net income to Non-GAAP net income
Three Months Ended
March 31st,
2006 2005
----------- -----------
GAAP net income $ 3,345 $ 19,746
Amortization of intangible assets 8,745 1,873
Stock-based compensation 4,435 771
Non-recurring and other tax adjustments (1,770) (173)
Restructuring charges 1,066 -
In-process research & development 310 -
----------- -----------
Non-GAAP net income $ 16,131 $ 22,217
=========== ===========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
March 31, December 31,
2006 2005
---------------- ---------------
ASSETS:
Current assets:
Cash and marketable securities $ 238,679 $ 238,430
Accounts receivable, net of allowances of
$21,920 and $22,233 at March 31, 2006
and December 31, 2005, respectively 131,700 140,669
Inventories 100,717 96,845
Prepaid and other current assets 26,119 25,733
---------------- ---------------
Total current assets 497,215 501,677
Property and equipment, net 38,036 38,563
Goodwill 404,424 396,902
Other intangible assets, net 113,691 118,676
Other assets 9,603 6,228
---------------- ---------------
Total assets $ 1,062,969 $ 1,062,046
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 36,097 $ 43,227
Accrued expenses and other current liabilities 90,548 96,311
Deferred revenues and deposits 64,593 66,034
---------------- ---------------
Total current liabilities 191,238 205,572
Long term liabilities, less current portion 20,321 16,877
---------------- ---------------
Total liabilities 211,559 222,449
---------------- ---------------
Stockholders' equity:
Common stock 423 421
Additional paid-in capital 934,093 928,703
Accumulated deficit (85,450) (88,795)
Deferred compensation - (1,830)
Accumulated other comprehensive income 2,344 1,098
---------------- ---------------
Total stockholders' equity 851,410 839,597
---------------- ---------------
Total liabilities and stockholders' equity $ 1,062,969 $ 1,062,046
================ ===============