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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 24, 2008
AVID TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
0-21174 |
04-2977748 | |||
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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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
This Current Report on Form 8-K contains a number of forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, about the performance of Avid Technology, Inc. (the “Company”). For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. There are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, many of which are beyond the Company’s control, including the risk factors disclosed previously and from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. In addition, the forward-looking statements contained herein represent the Company’s estimate only as of the date of this filing and should not be relied upon as representing the Company’s estimate as of any subsequent date. While the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.
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Item 2.02. |
Results of Operations and Financial Condition. |
On July 24, 2008, the Company announced its financial results for the quarter ended June 30, 2008. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in Item 2.02 of this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, 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.
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Item 9.01. |
Financial Statements and Exhibits. |
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(d) |
Exhibits. |
The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:
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99.1 |
Press Release issued by the Company on July 24, 2008. |
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.
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Date: July 24, 2008 |
AVID TECHNOLOGY, INC. | |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press release issued by the Company dated July 24, 2008. |
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Exhibit 99.1
For Immediate Release
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Investor Contact: |
Tom Fitzsimmons, tom_fitzsimmons@avid.com, 978-640-3346 |
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Media Contact: |
Lisa Pistacchio, lisa_pistacchio@avid.com, 650-930-3083 |
Avid Reports Second Quarter 2008 Results
TEWKSBURY, Mass., July 24, 2008 — Avid Technology, Inc. (Nasdaq: AVID) today reported revenue of $222.9 million for the three-month period ended June 30, 2008, compared to $225.3 million for the same period in 2007. GAAP net loss for the quarter was $10.4 million, or $.28 per share, compared to GAAP net loss of $6.0 million, or $.15 per diluted share, in the second quarter of 2007.
GAAP net loss in the second quarter of 2008 included $10.5 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, non-GAAP earnings per share were $.00. For the second quarter of 2007, GAAP net loss included $14.2 million of amortization, stock-based compensation, restructuring charges, legal settlements and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.20 in the second quarter of 2007.
At June 30, 2008, the company’s cash balance was $138.5 million, down $86.0 million since the end of 2007. During the first quarter of 2008, the company used $93.2 million in cash to repurchase 4.3 million shares of common stock under the previously-announced share buyback program.
“Our sequential improvement in revenue, margin and earnings in the second quarter is an indication that our transformation is on schedule,” said Gary Greenfield, Avid chairman and CEO. “In the second half of the year, we plan to build on our strengths in both audio and video and align the organization to better position the company for long-term sustainable value.”
Revenue for the six-month period ended June 30, 2008 was $421.1 million, compared to revenue of $444.2 million for the same period in 2007. GAAP net loss for the first six months of 2008 was $31.5 million, or $.83 per share, compared to GAAP net loss of $6.0 million, or $.15 per share, for the same period in 2007. GAAP net loss for the six-month period ended June 30, 2008 included $19.9 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP loss per share was $.30 per share for the first half of 2008. GAAP net loss for the six-month period ended June 30, 2007 included $24.8 million of amortization, stock-based compensation, restructuring charges, legal settlements and related tax adjustments. Excluding these items, non-GAAP earnings per share were $.45 for the first half of 2007.
Recent Highlights
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The release of Avid® Media Composer®, Symphony™ and NewsCutter® professional video editing products, each with upgraded HD capabilities, improves performance and support for additional camera and media formats. |
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Launch of the consumer video editor, Pinnacle Studio™ 12, helped to drive sales of the consumer editing software line to its highest level in over two years. |
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The availability of Pro Tools® 7.4.2 software provides Mac OS X 10.5.3 (Leopard) compatibility for Pro Tools|HD®, Pro Tools LE® and Pro Tools M-Powered™ users. |
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The introduction in July of SOFTIMAGE®|XSI® 7 3D animation software with the open platform ICE allows content producers to create, modify and deploy complex tools and effects more efficiently than ever before. |
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The release of Sibelius® First, a powerful new notation and composition tool for singers/songwriters, keyboard players and guitarists. |
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 six-month periods ended June 30, 2008 and 2007 are in the tables attached to this press release.
The company uses non-GAAP financial measures internally to manage its business, for example, in establishing its annual operating budget, in assessing segment operating performance and for measuring performance under employee incentive compensation plans. Non-GAAP financial measures are used by management in its operating and financial decision-making because management believes these measures reflect the company’s ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate the company’s 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 past financial results. The primary limitations associated with the company’s 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 the company’s operations. The company’s 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 second quarter 2008 financial results will be held today, July 24, 2008, at 5:00 p.m. EDT. 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 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 Avid’s ability to meet customer needs, market acceptance of Avid’s existing and new products, 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, Media Composer, NewsCutter, Pinnacle Studio, Pinnacle Systems, Pro Tools, Pro Tools|HD, Pro Tools LE, Pro Tools M-Powered, Sibelius, Softimage, Sundance Digital, Symphony and XSI 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. Academy Awards and Oscar are trademarks and service marks 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.
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AVID TECHNOLOGY, INC. |
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Condensed Consolidated Statements of Operations |
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(unaudited - in thousands, except per share data) |
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Three Months Ended |
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Six Months Ended | ||||
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June 30, |
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June 30, | ||||
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2008 |
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2007 |
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2008 |
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2007 |
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Net revenues: |
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Products |
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$ 189,115 |
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$ 192,370 |
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$ 357,291 |
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$ 384,813 |
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Services |
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33,748 |
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32,956 |
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63,838 |
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59,411 |
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Total net revenues |
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222,863 |
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225,326 |
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421,129 |
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444,224 |
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Cost of revenues: |
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Products |
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92,628 |
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92,991 |
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177,701 |
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185,703 |
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Services |
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19,629 |
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17,454 |
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37,016 |
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33,433 |
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Amortization of intangible assets |
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2,270 |
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4,761 |
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5,524 |
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9,233 |
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Total cost of revenues |
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114,527 |
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115,206 |
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220,241 |
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228,369 |
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Gross profit |
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108,336 |
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110,120 |
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200,888 |
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215,855 | |
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Operating expenses: |
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Research and development |
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38,972 |
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38,444 |
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77,482 |
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76,186 |
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Marketing and selling |
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55,259 |
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56,505 |
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105,586 |
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108,199 |
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General and administrative |
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19,492 |
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17,698 |
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41,435 |
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35,550 |
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Amortization of intangible assets |
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3,323 |
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3,431 |
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6,710 |
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6,863 |
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Restructuring costs, net |
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937 |
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1,517 |
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2,000 |
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1,775 |
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Total operating expenses |
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117,983 |
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117,595 |
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233,213 |
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228,573 |
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Operating loss |
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(9,647) |
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(7,475) |
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(32,325) |
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(12,718) | |
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Interest and other income (expense), net |
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617 |
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2,023 |
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2,098 |
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3,918 | |
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Loss before income taxes |
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(9,030) |
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(5,452) |
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(30,227) |
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(8,800) | |
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Provision for (benefit from) income taxes, net |
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1,355 |
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547 |
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1,306 |
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(2,821) | |
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Net loss |
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$ (10,385) |
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$ (5,999) |
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$ (31,533) |
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$ (5,979) | |
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Net loss per common share - basic |
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$(0.28) |
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$(0.15) |
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$(0.83) |
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$(0.15) | |
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Net loss per common share - diluted |
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$(0.28) |
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$(0.15) |
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$(0.83) |
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$(0.15) | |
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Weighted-average common shares outstanding - basic |
36,904 |
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40,940 |
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38,133 |
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41,046 | ||
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Weighted-average common shares outstanding - diluted |
36,904 |
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40,940 |
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38,133 |
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41,046 | ||
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AVID TECHNOLOGY, INC. |
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(unaudited - in thousands, except per share data) |
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Summary of the Company's revenues and contribution margin by reportable segment and a reconciliation of | |||||||||
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segment contribution margin to consolidated operating loss: |
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Three Months Ended |
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Six Months Ended | ||||
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June 30, |
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June 30, | ||||
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2008 |
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2007 |
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2008 |
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2007 |
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Revenues: |
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Professional Video |
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$ 115,738 |
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$ 120,318 |
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$ 209,988 |
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$ 232,989 |
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Audio |
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75,315 |
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76,763 |
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148,554 |
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155,686 |
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Consumer Video |
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31,810 |
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28,245 |
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62,587 |
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55,549 |
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Total revenues |
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$ 222,863 |
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$ 225,326 |
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$ 421,129 |
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$ 444,224 |
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Contribution Margin: |
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Professional Video |
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$ 10,563 |
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$ 12,136 |
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$ 9,243 |
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$ 23,737 |
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Audio |
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10,626 |
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12,109 |
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21,496 |
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25,262 |
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Consumer Video |
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21 |
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1,967 |
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530 |
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2,535 |
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Segment contribution margin |
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21,210 |
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26,212 |
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31,269 |
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51,534 |
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Less: Unallocated costs and expenses: |
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Common costs and operating expenses |
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(19,739) |
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(18,402) |
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(42,627) |
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(37,253) |
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Amortization of acquisition-related intangible assets |
(5,593) |
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(8,192) |
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(12,234) |
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(16,096) | |
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Stock-based compensation |
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(4,588) |
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(4,551) |
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(6,733) |
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(8,103) |
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Restructuring costs, net |
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(937) |
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(1,517) |
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(2,000) |
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(1,775) |
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Legal settlements |
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— |
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(1,025) |
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— |
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(1,025) |
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Consolidated operating loss |
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$ (9,647) |
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$ (7,475) |
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$ (32,325) |
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$ (12,718) |
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Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss): |
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Three Months Ended |
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Six Months Ended | ||||
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June 30, |
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June 30, | ||||
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2008 |
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2007 |
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2008 |
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2007 |
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GAAP net loss |
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$ (10,385) |
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$ (5,999) |
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$ (31,533) |
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$ (5,979) |
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Adjustments to reconcile to Non-GAAP net income: |
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Amortization of intangible assets |
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5,593 |
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8,192 |
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12,234 |
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16,096 |
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Stock-based compensation |
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4,588 |
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4,551 |
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6,733 |
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8,103 |
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Restructuring costs, net |
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937 |
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1,517 |
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2,000 |
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1,775 |
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Legal settlements |
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— |
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1,025 |
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— |
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1,025 |
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Related tax adjustments |
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(614) |
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(1,099) |
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(1,048) |
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(2,214) |
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Non-GAAP net income (loss) |
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$ 119 |
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$ 8,187 |
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$ (11,614) |
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$ 18,806 |
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Weighted-average common shares outstanding - diluted |
37,056 |
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41,517 |
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38,133 |
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41,653 | |
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Non-GAAP net income (loss) per common share - diluted |
$0.00 |
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$0.20 |
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$(0.30) |
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$0.45 | |
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Three Months Ended |
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Six Months Ended | ||||
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Stock-based compensation included in: |
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June 30, |
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June 30, | |||||
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2008 |
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2007 |
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2008 |
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2007 |
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Cost of products revenues |
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$ 171 |
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$ 182 |
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$ 303 |
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$ 323 |
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Cost of services revenues |
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166 |
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251 |
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264 |
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448 |
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Research and development expenses |
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1,089 |
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1,354 |
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1,452 |
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2,397 |
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Marketing and selling expenses |
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1,109 |
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1,201 |
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1,638 |
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2,136 |
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General and administrative expenses |
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2,053 |
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1,563 |
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3,076 |
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2,799 |
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$ 4,588 |
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$ 4,551 |
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$ 6,733 |
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$ 8,103 |
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AVID TECHNOLOGY, INC. |
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Condensed Consolidated Balance Sheets |
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(unaudited - in thousands) |
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June 30, |
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December 31, |
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2008 |
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2007 |
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ASSETS: |
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Current assets: |
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Cash, cash equivalents and marketable securities |
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$ 138,462 |
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$ 224,460 |
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Accounts receivable, net of allowances of $20,976 and $20,784 |
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at June 30, 2008 and December 31, 2007, respectively |
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114,080 |
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138,692 |
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Inventories |
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120,728 |
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117,324 |
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Prepaid and other current assets |
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41,499 |
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36,788 |
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Total current assets |
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414,769 |
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517,264 |
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Property and equipment, net |
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44,491 |
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46,160 |
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Intangible assets, net |
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59,193 |
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71,427 |
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Goodwill |
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360,521 |
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360,584 |
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Other assets |
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11,537 |
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10,518 |
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Total assets |
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$ 890,511 |
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$ 1,005,953 |
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LIABILITIES AND STOCKHOLDERS' EQUITY: |
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Current liabilities: |
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Accounts payable |
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$ 36,358 |
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$ 34,992 |
|
Accrued expenses and other current liabilities |
|
93,142 |
|
93,912 |
|
Deferred revenues |
|
79,186 |
|
79,771 |
|
Total current liabilities |
|
208,686 |
|
208,675 |
|
|
|
|
|
|
|
Long-term liabilities |
|
17,539 |
|
17,495 |
|
Total liabilities |
|
226,225 |
|
226,170 |
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Common stock |
|
423 |
|
423 |
|
Additional paid-in capital |
|
973,482 |
|
968,339 |
|
Accumulated deficit |
|
(196,123) |
|
(155,722) |
|
Treasury stock at cost, net of reissuances |
|
(128,735) |
|
(45,823) |
|
Accumulated other comprehensive income |
|
15,239 |
|
12,566 |
|
Total stockholders' equity |
|
664,286 |
|
779,783 |
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
|
$ 890,511 |
|
$ 1,005,953 |