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Avid Reports Second Quarter 2008 Results
TEWKSBURY, MA, Jul 24, 2008 (MARKET WIRE via COMTEX News Network) -- 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
-- 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.
-- 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.
-- 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.
-- 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.
-- 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.
Copyright 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.
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,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net revenues:
Products $ 189,115 $ 192,370 $ 357,291 $ 384,813
Services 33,748 32,956 63,838 59,411
--------- --------- --------- ---------
Total net revenues 222,863 225,326 421,129 444,224
--------- --------- --------- ---------
Cost of revenues:
Products 92,628 92,991 177,701 185,703
Services 19,629 17,454 37,016 33,433
Amortization of intangible
assets 2,270 4,761 5,524 9,233
--------- --------- --------- ---------
Total cost of revenues 114,527 115,206 220,241 228,369
--------- --------- --------- ---------
Gross profit 108,336 110,120 200,888 215,855
--------- --------- --------- ---------
Operating expenses:
Research and development 38,972 38,444 77,482 76,186
Marketing and selling 55,259 56,505 105,586 108,199
General and administrative 19,492 17,698 41,435 35,550
Amortization of intangible
assets 3,323 3,431 6,710 6,863
Restructuring costs, net 937 1,517 2,000 1,775
--------- --------- --------- ---------
Total operating expenses 117,983 117,595 233,213 228,573
--------- --------- --------- ---------
Operating loss (9,647) (7,475) (32,325) (12,718)
Interest and other income
(expense), net 617 2,023 2,098 3,918
--------- --------- --------- ---------
Loss before income taxes (9,030) (5,452) (30,227) (8,800)
Provision for (benefit from)
income taxes, net 1,355 547 1,306 (2,821)
--------- --------- --------- ---------
Net loss $ (10,385) $ (5,999) $ (31,533) $ (5,979)
========= ========= ========= =========
Net loss per common share -
basic $ (0.28) $ (0.15) $ (0.83) $ (0.15)
Net loss per common share -
diluted $ (0.28) $ (0.15) $ (0.83) $ (0.15)
Weighted-average common shares
outstanding - basic 36,904 40,940 38,133 41,046
Weighted-average common shares
outstanding - diluted 36,904 40,940 38,133 41,046
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Summary of the Company's revenues and contribution margin by reportable
segment and a reconciliation of segment contribution margin to consolidated
operating loss:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Professional Video $ 115,738 $ 120,318 $ 209,988 $ 232,989
Audio 75,315 76,763 148,554 155,686
Consumer Video 31,810 28,245 62,587 55,549
--------- --------- --------- ---------
Total revenues $ 222,863 $ 225,326 $ 421,129 $ 444,224
========= ========= ========= =========
Contribution Margin:
Professional Video $ 10,563 $ 12,136 $ 9,243 $ 23,737
Audio 10,626 12,109 21,496 25,262
Consumer Video 21 1,967 530 2,535
--------- --------- --------- ---------
Segment contribution margin 21,210 26,212 31,269 51,534
--------- --------- --------- ---------
Less: Unallocated costs
and expenses:
Common costs and
operating expenses (19,739) (18,402) (42,627) (37,253)
Amortization of
acquisition-related
intangible assets (5,593) (8,192) (12,234) (16,096)
Stock-based compensation (4,588) (4,551) (6,733) (8,103)
Restructuring costs, net (937) (1,517) (2,000) (1,775)
Legal settlements -- (1,025) -- (1,025)
--------- --------- --------- ---------
Consolidated operating loss $ (9,647) $ (7,475) $ (32,325) $ (12,718)
========= ========= ========= =========
Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
GAAP net loss $ (10,385) $ (5,999) $ (31,533) $ (5,979)
Adjustments to reconcile to
Non-GAAP net income:
Amortization of intangible
assets 5,593 8,192 12,234 16,096
Stock-based compensation 4,588 4,551 6,733 8,103
Restructuring costs, net 937 1,517 2,000 1,775
Legal settlements -- 1,025 -- 1,025
Related tax adjustments (614) (1,099) (1,048) (2,214)
--------- --------- --------- ---------
Non-GAAP net income (loss) $ 119 $ 8,187 $ (11,614) $ 18,806
========= ========= ========= =========
Weighted-average common shares
outstanding - diluted 37,056 41,517 38,133 41,653
Non-GAAP net income (loss) per
common share - diluted $ 0.00 $ 0.20 $ (0.30) $ 0.45
Stock-based compensation Three Months Ended Six Months Ended
included in: June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Cost of products revenues $ 171 $ 182 $ 303 $ 323
Cost of services revenues 166 251 264 448
Research and development
expenses 1,089 1,354 1,452 2,397
Marketing and selling expenses 1,109 1,201 1,638 2,136
General and administrative
expenses 2,053 1,563 3,076 2,799
--------- --------- --------- ---------
$ 4,588 $ 4,551 $ 6,733 $ 8,103
========= ========= ========= =========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
June 30, December 31,
2008 2007
----------- -----------
ASSETS:
Current assets:
Cash, cash equivalents and marketable
securities $ 138,462 $ 224,460
Accounts receivable, net of allowances of
$20,976 and $20,784 at June 30, 2008 and
December 31, 2007, respectively 114,080 138,692
Inventories 120,728 117,324
Prepaid and other current assets 41,499 36,788
----------- -----------
Total current assets 414,769 517,264
Property and equipment, net 44,491 46,160
Intangible assets, net 59,193 71,427
Goodwill 360,521 360,584
Other assets 11,537 10,518
----------- -----------
Total assets $ 890,511 $ 1,005,953
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 36,358 $ 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
=========== ===========
Investor Contact:
Tom Fitzsimmons
tom_fitzsimmons@avid.com
978-640-3346
Media Contact:
Lisa Pistacchio
lisa_pistacchio@avid.com
650-930-3083
SOURCE: Avid Technology, Inc.
mailto:tom_fitzsimmons@avid.com
mailto:lisa_pistacchio@avid.com