Delaware | 1-36254 | 04-2977748 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Exhibit Number | Description |
99.1* | Press Release dated August 10, 2015 |
AVID TECHNOLOGY, INC. | |
(Registrant) | |
Date: August 10, 2015 | By: /s/ John W. Frederick Name: John W. Frederick Title: Executive Vice President, Chief Financial Officer and Chief Administrative Officer |
• | Raised Full Year 2015 Earnings Guidance on substantially increased visibility |
◦ | Adjusted EBITDA range raised to $74 to $80 million, up from $72 to $78 million as previously guided |
◦ | Constant dollar bookings range raised to 2% to 6% over 2014, although continued currency pressure could impact actual results by approximately 4 percentage points |
◦ | Adjusted free cash flow range to $12 to $20 million |
◦ | Post-2010 revenue backlog of $489 million reflects 17% year over year increase. |
◦ | Recurring revenue shift accelerating as second quarter bookings for recurring revenue increased 58% over the prior year, representing 26% of Q2 2015 bookings |
◦ | Strong market momentum for new products announced in April 2015 with $17 million in Q2 bookings expected to be converted to revenue and cash flow in 2nd half of 2015 |
◦ | Cost initiatives on track with opening of new global service centers |
◦ | Completed the Orad transaction on June 23rd, and integration is on track |
• | Recognized major milestones in both Platform and Subscription adoption |
◦ | Topped 10,000 paid subscribers at end of the quarter, with over 12,000 active paid subscribers as of today, almost 130% growth since December 2014 |
◦ | More than 130,000 new users have pre-registered for Pro Tools First in the seven months since its launch |
◦ | Passed the 25,000 milestone for Media Central platform licenses, ending the quarter at about 26,000 |
• | Constant dollar bookings for marketed products of $122 million was flat year-over-year. Bookings of $118 million for quarter, up 5% sequentially and down 8% year over year |
◦ | The strong US dollar continues to put pressure on reported bookings and revenue results. |
• | Adjusted EBITDA of $1.4 million as compared to $10.7 million in second quarter of 2014 |
AVID TECHNOLOGY, INC. | ||||||||||
Condensed Consolidated Statements of Operations | ||||||||||
(unaudited - in thousands, except per share data) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, | June 30, | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Net revenues: | ||||||||||
Products | $ 76,150 | $ 87,315 | $ 156,179 | $ 181,885 | ||||||
Services | 33,617 | 37,329 | 73,174 | 77,741 | ||||||
Total net revenues | 109,767 | 124,644 | 229,353 | 259,626 | ||||||
Cost of revenues: | ||||||||||
Products | 28,363 | 35,097 | 60,160 | 70,091 | ||||||
Services | 14,943 | 15,323 | 30,638 | 30,994 | ||||||
Amortization of intangible assets | 163 | - | 163 | 50 | ||||||
Total cost of revenues | 43,469 | 50,420 | 90,961 | 101,135 | ||||||
Gross profit | 66,298 | 74,224 | 138,392 | 158,491 | ||||||
Operating expenses: | ||||||||||
Research and development | 23,310 | 22,070 | 46,483 | 45,024 | ||||||
Marketing and selling | 32,811 | 34,297 | 60,856 | 67,112 | ||||||
General and administrative | 17,425 | 19,984 | 36,812 | 38,315 | ||||||
Amortization of intangible assets | 408 | 398 | 782 | 878 | ||||||
Restructuring costs (recoveries), net | 539 | (165) | 539 | (165) | ||||||
Total operating expenses | 74,493 | 76,584 | 145,472 | 151,164 | ||||||
Operating (loss) income | (8,195) | (2,360) | (7,080) | 7,327 | ||||||
Interest and other expense, net | (1,439) | (357) | (2,162) | (708) | ||||||
(Loss) income before income taxes | (9,634) | (2,717) | (9,242) | 6,619 | ||||||
(Benefit from) provision for income taxes, net | (5,550) | 622 | (4,989) | 1,062 | ||||||
Net (loss) income | (4,084) | (3,339) | (4,253) | 5,557 | ||||||
Net (loss) income per common share - basic and diluted | $ (0.10) | $ (0.09) | $ (0.11) | $ 0.14 | ||||||
Weighted-average common shares outstanding - basic | 39,635 | 39,119 | 39,512 | 39,109 | ||||||
Weighted-average common shares outstanding - diluted | 39,635 | 39,119 | 39,512 | 39,138 |
AVID TECHNOLOGY, INC. | ||||||||||||
Reconciliations of GAAP financial measures to Non-GAAP financial measures | ||||||||||||
(unaudited - in thousands, except per share data) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
GAAP | ||||||||||||
Net Revenues | $ 109,767 | $ 124,644 | $ 229,353 | $ 259,626 | ||||||||
Cost of revenues | 43,469 | 50,420 | 90,961 | 101,135 | ||||||||
Gross profit | 66,298 | 74,224 | 138,392 | 158,491 | ||||||||
Operating expenses | 74,493 | 76,584 | 145,472 | 151,164 | ||||||||
Operating (loss) income | (8,195) | (2,360) | (7,080) | 7,327 | ||||||||
Interest and other expense, net | (1,439) | (357) | (2,162) | (708) | ||||||||
(Benefit from) provision for income taxes, net | (5,550) | 622 | (4,989) | 1,062 | ||||||||
Net (loss) income | $ (4,084) | $ (3,339) | $ (4,253) | $ 5,557 | ||||||||
Weighted-average common shares outstanding - basic | 39,635 | 39,119 | 39,512 | 39,109 | ||||||||
Weighted-average common shares outstanding - diluted | 39,635 | 39,119 | 39,512 | 39,138 | ||||||||
Net (loss) income per share - basic and diluted | $ (0.10) | $ (0.09) | $ (0.11) | $ 0.14 | ||||||||
Adjustments to GAAP Results | ||||||||||||
Cost of Revenues | ||||||||||||
Amortization of intangible assets | 163 | - | 163 | 50 | ||||||||
Stock-based compensation | 215 | 163 | 469 | 316 | ||||||||
Operating Expenses | ||||||||||||
Amortization of intangible assets | 408 | 398 | 782 | 878 | ||||||||
Restructuring costs (recoveries), net | 539 | (165) | 539 | (165) | ||||||||
Restatement (recoveries) costs | (1,106) | 6,690 | 701 | 10,843 | ||||||||
Acquisition and other costs | 3,333 | - | 5,675 | - | ||||||||
Stock-based compensation | ||||||||||||
R&D | 46 | 113 | 152 | 240 |
Sales & Marketing | 683 | 642 | 1,373 | 934 | ||||||||
G&A | 1,938 | 1,218 | 3,349 | 1,909 | ||||||||
Other | ||||||||||||
Tax adjustment | - | 4 | - | (12) | ||||||||
Non-GAAP | ||||||||||||
Net revenues | 109,767 | 124,644 | 229,353 | 259,626 | ||||||||
Cost of revenues | 43,091 | 50,257 | 90,329 | 100,769 | ||||||||
Gross Profit | 66,676 | 74,387 | 139,024 | 158,857 | ||||||||
Operating Expenses | 68,652 | 67,688 | 132,901 | 136,525 | ||||||||
Operating (loss) income | (1,976) | 6,699 | 6,123 | 22,332 | ||||||||
Interest and other expense, net | (1,439) | (357) | (2,162) | (708) | ||||||||
(Benefit from) provision for income taxes, net | (5,550) | 618 | (4,989) | 1,074 | ||||||||
Net income | 2,135 | 5,724 | 8,950 | 20,550 | ||||||||
Net income per share - diluted | $ 0.05 | $ 0.15 | $ 0.22 | $ 0.53 | ||||||||
Adjusted EBITDA | ||||||||||||
Non-GAAP Operating (loss) income (from above) | (1,976) | 6,699 | 6,123 | 22,332 | ||||||||
Depreciation | 3,411 | 3,990 | 7,088 | 8,325 | ||||||||
Amortization of capitalized software development costs | - | 49 | - | 99 | ||||||||
Adjusted EBITDA | 1,435 | 10,738 | 13,211 | 30,756 | ||||||||
Adjusted Free Cash Flow | ||||||||||||
GAAP net cash used in operating activities | (30,844) | (2,090) | (26,214) | (26,082) | ||||||||
Capital Expenditures | (3,802) | (2,876) | (6,742) | (6,391) | ||||||||
Restructuring payments | 308 | 1,885 | 736 | 4,811 | ||||||||
Restatement payments | 1,507 | 5,737 | 3,624 | 16,088 | ||||||||
Acquisition and other payments | 1,590 | - | 1,590 | - | ||||||||
Adjusted Free Cash Flow | $ | (31,241 | ) | $ 2,656 | $ | (27,006 | ) | $ (11,574) |
AVID TECHNOLOGY, INC. | ||||
Condensed Consolidated Balance Sheets | ||||
(unaudited - in thousands) | ||||
June 30, | December 31, | |||
2015 | 2014 | |||
ASSETS: | ||||
Current assets: | ||||
Cash and cash equivalents | $ 34,647 | $ 25,056 | ||
Accounts receivable, net of allowances of $9,290 and $10,692 | 54,929 | 54,655 | ||
at June 30, 2015 and December 31, 2014, respectively | ||||
Inventories | 43,872 | 48,001 | ||
Deferred tax assets, net | 399 | 322 | ||
Prepaid expenses | 9,467 | 6,892 | ||
Other current assets | 14,542 | 17,932 | ||
Total current assets | 157,856 | 152,858 | ||
Property and equipment, net | 33,328 | 32,136 | ||
Intangible assets, net | 38,701 | 2,445 | ||
Goodwill | 33,905 | - | ||
Long-term deferred tax assets, net | 4,441 | 1,886 | ||
Other long-term assets | 7,998 | 2,274 | ||
Total assets | $ 276,229 | $ 191,599 | ||
LIABILITIES AND STOCKHOLDERS' DEFICIT: | ||||
Current liabilities: | ||||
Accounts payable | $ 34,684 | $ 32,951 | ||
Accrued compensation and benefits | 24,666 | 32,636 | ||
Accrued expenses and other current liabilities | 38,047 | 32,353 | ||
Income taxes payable | 2,756 | 5,480 | ||
Deferred tax liabilities, net | 402 | - | ||
Deferred revenues | 204,495 | 206,608 | ||
Total current liabilities | 305,050 | 310,028 | ||
Long-term debt | 93,497 | - | ||
Long-term deferred tax liabilities, net | 10,078 | 136 | ||
Long-term deferred revenues | 188,304 | 208,232 | ||
Other long-term liabilities | 17,396 | 14,273 | ||
Total liabilities | 614,325 | 532,669 | ||
Stockholders' deficit: | ||||
Common stock | 423 | 423 | ||
Additional paid-in capital | 1,057,027 | 1,049,969 | ||
Accumulated deficit | (1,326,051) | (1,321,798) | ||
Treasury stock at cost | (64,214) | (68,051) | ||
Accumulated other comprehensive loss | (5,281) | (1,613) | ||
Total stockholders' deficit | (338,096) | (341,070) | ||
Total liabilities and stockholders' deficit | $ 276,229 | $ 191,599 |
AVID TECHNOLOGY, INC. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(unaudited - in thousands) | ||||||||
Six Months Ended | ||||||||
June 30, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss) income | $ (4,253) | $ 5,557 | ||||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 8,014 | 9,352 | ||||||
Recovery from doubtful accounts | (205) | (158) | ||||||
Stock-based compensation expense | 5,344 | 3,398 | ||||||
Non-cash interest expense | 207 | 147 | ||||||
Unrealized foreign currency transaction gains | (4,043) | (317) | ||||||
Deferred tax benefit | (6,514) | (16) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 8,935 | 7,668 | ||||||
Inventories | 8,940 | 5,424 | ||||||
Prepaid expenses and other current assets | 784 | 833 | ||||||
Accounts payable | 347 | (5,666) | ||||||
Accrued expenses, compensation and benefits and other liabilities | (17,362) | (14,842) | ||||||
Income taxes payable | 770 | (583) | ||||||
Deferred revenues | (27,178) | (36,879) | ||||||
Net cash used in operating activities | (26,214) | (26,082) | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (6,742) | (6,391) | ||||||
Payments for business and technology acquisitions, net of cash acquired | (65,967) | - | ||||||
Proceeds from divestiture of consumer business | - | 1,500 |
(Increase) decrease in other long-term assets | (850) | 11 | ||||||
Increase in restricted cash | (2,330) | - | ||||||
Net cash used in investing activities | (75,889) | (4,880) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from long-term debt, net of issuance costs | 121,150 | - | ||||||
Cash paid for capped call transaction | (10,125) | - | ||||||
Proceeds from the issuance of common stock under employee stock plans | 2,804 | 1 | ||||||
Common stock repurchases for tax withholdings for net settlement of equity awards | (1,299) | (141) | ||||||
Proceeds from revolving credit facilities | 29,500 | 11,500 | ||||||
Payments on revolving credit facilities | (29,500) | (6,500) | ||||||
Payments of credit facilities issuance costs | (505) | - | ||||||
Net cash provided by financing activities | 112,025 | 4,860 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (331) | 948 | ||||||
Net increase (decrease) in cash and cash equivalents | 9,591 | (25,154) | ||||||
Cash and cash equivalents at beginning of period | 25,056 | 48,203 | ||||||
Cash and cash equivalents at end of period | $ 34,647 | $ 23,049 |
AVID TECHNOLOGY, INC. | ||||||||||||||||
Supplemental Revenue Information | ||||||||||||||||
(unaudited - in thousands) | ||||||||||||||||
$K | June 30, | March 31, | June 30, | |||||||||||||
Revenue Backlog* | 2015 | 2015 | 2014 | |||||||||||||
Pre-2011 | $ | 51,520 | $ | 66,928 | $ | 126,171 | ||||||||||
Post-2010 | $ 341,279 | $ 345,748 | $ 303,780 | |||||||||||||
Deferred Revenue | $ 392,799 | $ 412,676 | $ 429,951 | |||||||||||||
Other Backlog | $ 147,453 | $ 115,965 | $ 113,175 | |||||||||||||
Total Revenue Backlog | $ 540,252 | $ 528,641 | $ 543,126 | |||||||||||||
Post 2010 | $ 488,732 | $ 461,713 | $ 416,955 | |||||||||||||
The expected timing of recognition of revenue backlog as of June 30, 2015 is as follows: | ||||||||||||||||
Q3-Q4 2015 | 2016 | 2017 | Thereafter | Total | ||||||||||||
Orders executed prior to January 1, 2011 | $ 25,652 | $ 24,772 | $ 952 | $ 144 | $ 51,520 | |||||||||||
Orders executed or materially modified on or | $ 82,396 | $ 122,846 | $ 67,779 | $ 68,258 | $ 341,279 | |||||||||||
after January 1, 2011 | ||||||||||||||||
Other Backlog | $ 70,018 | $ 38,578 | $ 23,237 | $ 15,620 | $ 147,453 | |||||||||||
Total Revenue Backlog | $ 178,066 | $ 186,196 | $ 91,968 | $ 84,022 | $ 540,252 | |||||||||||
*A definition of Revenue Backlog is included in the body of our press release. | ||||||||||||||||
Note: current estimates could change based on a number of factors, including (i) the timing of delivery of products and services, (ii) customer cancellations or change order, (iii) changes in the estimated period of time Implied Maintenance Release PCS is provided to customers, including as a result of changes in business practices | ||||||||||||||||
AVID TECHNOLOGY, INC. | |||||||
2015 Outlook (a) | |||||||
(unaudited - in millions) | |||||||
Bookings | |||||||
CFX | AFX | Revenue | |||||
Low | High | Low | High | Low | High | ||
1st Half of 2015 | $ 240 | $ 240 | $ 230 | $ 230 | $ 229 | $ 229 | |
Estimated 2nd Half (including Orad product lines), using 1st Half run rates | 261 | 263 | 250 | 252 | 252 | 252 | |
Estimated Impact of New Product and Growth Initiatives: | |||||||
- New Products Booked in 1st Half and Expected to be Shipped in 2nd Half | - | - | - | - | 17 | 17 | |
- Estimated New Products Booked in 2nd Half | 5 | 7 | 5 | 7 | 3 | 4 | |
- Estimated Growth Initiatives | 10 | 15 | 10 | 14 | 7 | 11 | |
Estimated Impact of Cost Initiatives: | |||||||
- Facilities and Wage Rationalization and other | - | - | - | - | - | - | |
Estimated Seasonality and Other: | |||||||
- Estimated 2nd Half Seasonality, including resolution of sales elongation cycle | 14 | 25 | 14 | 25 | 14 | 19 | |
- Estimated Accounting Impact of Improved Business Practices -Q2 Carryover | - | - | - | - | 11 | 11 | |
- Estimated Accounting Impact of Improved Business Practices -2H Impact | - | - | - | - | 5 | 7 | |
Outlook 2015 (a) | $ 530 | $ 550 | $ 509 | $ 528 | $ 538 | $ 550 | |
(a) As of August 10, 2015 | |||||||
Note: The 2015 Outlook is based on estimates as of the date of this press release and Avid expressly disclaims any obligation or undertaking to update such estimates; | |||||||
actual results may differ materially from those estimates as a result of a number of risks and uncertainties. Please see the forward looking disclaimer included in the press | |||||||
release. Each range of values provided represents the expected low and high estimates for such financial or operating factor. |
AVID TECHNOLOGY, INC. | ||||||||||||||
2015 Outlook (a) | ||||||||||||||
(unaudited - in millions) | ||||||||||||||
Adjusted | ||||||||||||||
Adjusted EBITDA | Free Cash Flow | |||||||||||||
Low | High | Low | High | |||||||||||
1st Half of 2015 | $ 13 | $ 13 | $ (27) | $ (27) | ||||||||||
Estimated 2nd Half (including Orad product lines), using 1st Half run rates | 18 | 18 | (23 | ) | (23 | ) | ||||||||
Estimated Impact of New Product and Growth Initiatives: | ||||||||||||||
- New Products Booked in 1st Half and Expected to be Shipped in 2nd Half | 11 | 11 | 11 | 11 | ||||||||||
- Estimated New Products Booked in 2nd Half | 2 | 3 | 2 | 2 | ||||||||||
- Estimated Growth Initiatives | 5 | 6 | 3 | 5 | ||||||||||
Estimated Impact of Cost Initiatives: | ||||||||||||||
- Facilities and Wage Rationalization and other | 4 | 5 | 4 | 5 | ||||||||||
Estimated Seasonality and Other: | ||||||||||||||
- Estimated 2nd Half Seasonality, including resolution of sales elongation cycle | 5 | 6 | 42 | 47 | ||||||||||
- Estimated Accounting Impact of Improved Business Practices -Q2 Carryover | 11 | 11 | - | - | ||||||||||
- Estimated Accounting Impact of Improved Business Practices -2H Impact | 5 | 7 | - | - | ||||||||||
Outlook 2015 (a) | $ 74 | $ | 80 | $ | 12 | $ | 20 | |||||||
(a) As of August 10, 2015 | ||||||||||||||
Note: The 2015 Outlook is based on estimates as of the date of this press release and Avid expressly disclaims any obligation or undertaking to update such estimates; | ||||||||||||||
actual results may differ materially from those estimates as a result of a number of risks and uncertainties. Please see the forward looking disclaimer included in the press | ||||||||||||||
release. Each range of values provided represents the expected low and high estimates for such financial or operating factor. |
Media Contact | Investor Contact | |
Sara Griggs | Jonathan Huang | |
Avid | Avid | |
310.821.0801 | 978.640.5126 | |
sara.griggs@avid.com | jonathan.huang@avid.com | |