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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): April 26, 2007
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)) |
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Item 2.02 |
Results of Operations and Financial Condition. |
On April 26, 2007, Avid Technology, Inc. announced its financial results for the quarter ended March 31, 2007. 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 |
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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 Registrant on April 26, 2007. |
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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.
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Date: April 26, 2007 |
AVID TECHNOLOGY, INC. | |
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EXHIBIT INDEX
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Exhibit |
Description |
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4
EXHIBIT 99.1
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Contact: |
Dean Ridlon, Investor Relations Director |
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Phone: 978.640.5309 |
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Email: Investor_Relations@avid.com |
Avid Reports First Quarter 2007 Results
Announces Authorization to Repurchase Up To $100 Million of Stock
Tewksbury, MA – April 26, 2007 – Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $218.9 million for the three-month period ended March 31, 2007 compared to $218.1 million for the same period in 2006. GAAP net income for the quarter was $20,000, or $.00 per diluted share compared to GAAP net income of $3.3 million, or $.08 per diluted share, in the first quarter of 2006.
GAAP net income in the first quarter of 2007 includes $10.6 million of charges including amortization, stock-based compensation, restructuring and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.25. For the first quarter of 2006, there was $12.8 million of amortization, stock-based compensation, restructuring costs, in-process research and development, and related tax adjustments included in GAAP net income. Excluding these items, non-GAAP earnings per share were $.37 in the first quarter of 2006.
“Although we’re pleased that our bottom-line results were at the high end of our expectations due to careful cost controls and favorable one-time tax adjustments, sustained, profitable growth is our main objective,” said David Krall, Avid’s president and chief executive officer. “In our professional video business, we believe that growth will come with continued focus on being at the core of our customers’ businesses. In the first quarter, our overall bookings were up 9% from the same period last year, however, there was a noticeable drop-off in our run-rate business, despite the introduction of several new products late in the quarter. In discussions with our installed base, it has become clear that they are looking for us to provide them with the ability to migrate to our new solutions in stages, rather than having to do a wholesale upgrade all at one time. Therefore, in response to that feedback, we will be diverting some engineering resources to build this migration path. While this will negatively impact our ability to recognize incremental revenue out of our backlog by one to two quarters, it should have a positive impact on our run-rate business – and it’s the best long-term strategy to meet the needs of our video customers.”
Stock Repurchase Program
Avid also announced that its Board of Directors approved a program to repurchase up to $100 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 March 31, 2007, the company had cash, cash equivalents and marketable securities of approximately $187.5 million.
Use of Non-GAAP Financial Measures
This press release contains “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. The reconciliation for net income and diluted earnings per share for the first quarters of 2007 and 2006 are in the tables attached to this press release.
We use non-GAAP financial measures internally to manage our business, for example, in establishing our annual operating budget, to assess segment operating performance and for measuring performance under our employee incentive compensation plans. Non-GAAP financial measures are used by our management in their operating and financial decision-making because management believes these measures reflect our ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, we believe it is useful for our investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate our 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 our past financial results. The primary limitations associated with our 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 our operations. Our 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 first quarter 2007 financial results will be held today, April 26, 2007, at 5:00 p.m. EDT. The call will be open to the public, and can be accessed by dialing (719) 457-2692 and referencing confirmation code 8128643. 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 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, Avid’s ability to recognize revenue in a timely manner, competitive factors, including pricing pressures, 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(, Grammy(, and Emmy( award-winning products and services, please visit: www.avid.com.
© 2007 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film 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® Film Composer® 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 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)
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Three Months Ended |
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March 31, |
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2007 |
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2006 |
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Net revenues |
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Products |
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$ |
192,443 |
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$ |
194,363 |
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Services |
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26,455 |
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23,707 |
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Total net revenues |
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218,898 |
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218,070 |
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Cost of revenues |
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Products |
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92,712 |
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91,361 |
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Services |
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15,979 |
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13,315 |
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Amortization of intangible assets |
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4,472 |
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5,080 |
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Total cost of revenues |
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113,163 |
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109,756 |
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Gross profit |
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105,735 |
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108,314 |
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Operating expenses |
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Research and development |
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37,742 |
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35,496 |
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Marketing and selling |
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51,694 |
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49,912 |
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General and administrative |
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17,852 |
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15,137 |
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Amortization of intangible assets |
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3,432 |
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3,665 |
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Restructuring costs, net |
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258 |
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1,066 |
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In-process research and development |
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— |
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310 |
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Total operating expenses |
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110,978 |
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105,586 |
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Operating income (loss) |
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(5,243 |
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2,728 |
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Interest and other income (expense), net |
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1,895 |
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1,970 |
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Income (loss) before income taxes |
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(3,348 |
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4,698 |
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Provision for (benefit from) income taxes, net |
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(3,368 |
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1,353 |
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Net income |
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$ |
20 |
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$ |
3,345 |
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Net income per common share – basic |
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$ |
0.00 |
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$ |
0.08 |
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Net income per common share – diluted |
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$ |
0.00 |
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$ |
0.08 |
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Weighted-average common shares outstanding – basic |
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41,154 |
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42,137 |
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Weighted-average common shares outstanding – diluted |
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41,763 |
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43,200 |
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AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Reconciliation of GAAP net income to Non-GAAP net income:
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Three Months Ended |
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March 31, |
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2007 |
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2006 |
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GAAP net income |
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$ |
20 |
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$ |
3,345 |
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Adjustments to reconcile Non-GAAP net income: |
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Amortization of intangible assets |
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$ |
7,904 |
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$ |
8,745 |
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Stock-based compensation |
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3,552 |
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4,435 |
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Restructuring costs, net |
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258 |
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1,066 |
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In-process research and development |
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— |
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310 |
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Related tax adjustments |
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(1,115 |
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(1,770 |
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Total adjustments to reconcile to Non-GAAP net income |
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$ |
10,599 |
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$ |
12,786 |
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Non-GAAP net income |
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$ |
10,619 |
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$ |
16,131 |
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Weighted average common shares outstanding – diluted |
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41,763 |
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43,200 |
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Non-GAAP net income per common share – diluted |
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$ |
0.25 |
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$ |
0.37 |
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Stock-based compensation, which relates to the adoption of SFAS 123R, the acquisition of M-Audio, and the issuance of restricted stock and restricted stock units for Q1 2007 and Q1 2006, is comprised of the following:
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Stock-based compensation included in: |
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Three Months Ended |
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2007 |
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2006 |
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Cost of products revenues |
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$ |
141 |
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$ |
139 |
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Cost of services revenues |
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197 |
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219 |
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Research and development expense |
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1,043 |
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1,306 |
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Marketing and selling expense |
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935 |
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1,261 |
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General and administrative expense |
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1,236 |
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1,510 |
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$ |
3,552 |
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$ |
4,435 |
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AVID TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited - in thousands)
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March 31, |
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December 31, |
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2007 |
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2006 |
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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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$ |
187,535 |
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$ |
172,107 |
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Accounts receivable, net of allowances of $20,506 and $23,087 at |
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March 31, 2007 and December 31, 2006, respectively |
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134,415 |
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138,578 |
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Inventories |
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145,591 |
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144,238 |
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Prepaid and other current assets |
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32,840 |
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29,016 |
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Total current assets |
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500,381 |
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483,939 |
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Property and equipment, net |
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42,464 |
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40,483 |
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Intangible assets, net |
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94,144 |
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102,048 |
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Goodwill |
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360,550 |
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360,143 |
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Other assets |
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10,782 |
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10,421 |
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Total assets |
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$ |
1,008,321 |
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$ |
997,034 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
34,863 |
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$ |
34,108 |
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Accrued expenses and other current liabilities |
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84,687 |
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88,331 |
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Deferred revenues |
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83,627 |
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73,743 |
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Total current liabilities |
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203,177 |
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196,182 |
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Long-term liabilities |
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18,861 |
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20,471 |
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Total liabilities |
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222,038 |
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216,653 |
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Stockholders’ equity: |
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Common stock |
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423 |
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423 |
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Additional paid-in capital |
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956,315 |
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952,763 |
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Accumulated deficit |
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(138,382 |
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(134,708 |
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Treasury stock at cost, net of reissuances |
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(38,121 |
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(43,768 |
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Accumulated other comprehensive income |
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6,048 |
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5,671 |
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Total stockholders’ equity |
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786,283 |
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780,381 |
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Total liabilities and stockholders’ equity |
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$ |
1,008,321 |
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$ |
997,034 |
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