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Avid Reports Third Quarter 2006 Results
"Our professional video business had a solid quarter, with record broadcast bookings driving a 23% sequential increase in that segment's backlog, and healthy demand for our HD-enabled postproduction solutions yielding growth in our post business," said David Krall, Avid's president and chief executive officer. "As previously announced, we had a slowdown in demand at quarter-end for Digidesign's Pro Tools|HD® systems. Now that many of the best-selling third-party Pro Tools® plug-ins have been ported to the Intel-based Mac platform, we expect Pro Tools|HD demand to improve in Q4. We've also addressed the stability issue with Pinnacle Studio 10, and are now focusing our development efforts on an upcoming release of Pinnacle Studio for the new Windows Vista operating system."
Revenues for the nine-month period ended September 30, 2006, were $671.5 million compared to revenues of $530.5 million for the same period in 2005. GAAP net income for the first nine months of 2006 was $9.6 million, or $.22 per diluted share, compared to GAAP net income of $15.6 million, or $.41 per diluted share, for the same period in 2005. GAAP net income for the nine-month period ended September 30, 2006 includes $38.9 million of non-cash amortization, stock-based compensation, restructuring costs, in-process research and development, and related tax adjustments. This compares to $46.8 million of acquisition-related charges including in-process research and development, restructuring costs, stock-based compensation and related tax adjustments included in GAAP net income for the nine-month period ended September 30, 2005.
Use of Non-GAAP Financial Measures
This press release may contain "non-GAAP financial measures" under the rules of the Securities and Exchange Commission. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. We believe it is useful for ourselves and investors to review both GAAP and non-GAAP measures in order to assess our performance. We also believe these non-GAAP financial measures are a meaningful measure of our operating performance and will assist investors in understanding our results of operations on a comparative basis.
Conference Call
A conference call to discuss Avid's third quarter 2006 financial results will be held today, October 26, 2006, at 5:00 p.m. EDT. The call will be open to the public, and can be accessed by dialing (913) 981-4902 and referencing confirmation code 8103614. The call and subsequent replay will also be available on Avid's web site. To listen via this alternative, go to the Investor Relations page under the About Us menu at www.avid.com for complete details 10-15 minutes prior to the start of the conference call.
The above release is subject to the completion and filing of our Quarterly Report on Form 10-Q. This release includes forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, about Avid's performance. There are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, such as market acceptance of Avid's existing and new products, Avid's ability to anticipate customer needs, competitive factors, including pricing pressures, 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.
© 2006 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, Pinnacle Studio, Pro Tools|HD 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)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenue
Product $203,274 $183,658 $595,597 $472,975
Service 27,959 20,762 75,932 57,497
--------- --------- --------- ---------
Total Revenue 231,233 204,420 671,529 530,472
Cost of Revenue
Product 99,202 82,133 284,382 204,274
Service 13,968 11,587 41,095 31,684
Amortization of intangible
assets 6,208 3,854 16,304 4,417
--------- --------- --------- ---------
Total Cost of Revenue 119,378 97,574 341,781 240,375
--------- --------- --------- ---------
Gross Profit 111,855 106,846 329,748 290,097
--------- --------- --------- ---------
Operating Expenses
Research and development 35,250 29,636 106,363 79,225
Marketing and selling 50,641 44,601 153,136 120,895
General and administrative 16,021 12,188 47,011 32,961
In-process research and
development 569 32,390 879 32,390
Amortization of intangible
assets 3,298 2,544 10,940 5,729
Restructuring charges
(recoveries) (1,620) 1,997 (554) 1,997
--------- --------- --------- ---------
Total Operating Expenses 104,159 123,356 317,775 273,197
Operating income (loss) 7,696 (16,510) 11,973 16,900
Interest and other income
(expense), net 1,832 1,719 5,683 3,735
--------- --------- --------- ---------
Income (loss) before income
taxes 9,528 (14,791) 17,656 20,635
Provision for income taxes 5,935 2,966 8,018 5,080
--------- --------- --------- ---------
Net Income (Loss) $3,593 ($17,757) $9,638 $15,555
========= ========= ========= =========
Net income (loss) per common
share - basic $0.09 ($0.46) $0.23 $0.43
Net income (loss) per common
share - diluted $0.08 ($0.46) $0.22 $0.41
Weighted average common shares
outstanding - basic 41,531 38,935 41,978 36,381
Weighted average common shares
outstanding - diluted 42,281 38,935 42,845 38,217
AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)
Net income (loss) includes the following items that were highlighted
in the text of this press release:
Three Months Ended
September 30,
-----------------------------------
2006 2005
----------------- -----------------
per per
diluted diluted
share share
-------- ----------------- --------
Amortization of intangible
assets $9,506 $0.23 $6,398 $0.16
Stock-based compensation 4,326 $0.10 458 $0.01
Restructuring charges
(recoveries) (1,620) $(0.04) 1,997 $0.05
In-process research and
development 569 $0.01 32,390 $0.80
Related tax adjustments 1,494 $0.04 735 $0.02
-------- -------- -------- --------
Total $14,275 $0.34 $41,978 $1.04
Nine Months Ended
September 30,
-----------------------------------
2006 2005
----------------- -----------------
per per
diluted diluted
share share
--------- ----------------- --------
Amortization of intangible
assets $27,244 $0.64 $10,146 $0.26
Stock-based compensation 13,044 $0.30 1,830 $0.05
Restructuring charges
(recoveries) (554) $(0.01) 1,997 $0.05
In-process research and
development 879 $0.02 32,390 $0.85
Related tax adjustments (1,757) $(0.04) 390 $0.01
-------- -------- -------- --------
Total $38,856 $0.91 $46,753 $1.22
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 in Q3 2006 and Q3 YTD 2006, is comprised of
the following:
Three Months Nine Months
Ended Ended
Stock-based compensation included in: September 30, September 30,
-------------- ----------------
2006 2005 2006 2005
------- ------ -------- -------
Cost of product revenues $ 128 $ - $ 398 $ -
Cost of service revenues 196 - 623 -
Research and development expense 1,252 36 3,802 129
Marketing and selling expense 1,190 137 3,638 492
General and administrative expense 1,560 285 4,583 1,209
------- ------ -------- -------
$4,326 $ 458 $13,044 $1,830
======= ====== ======== =======
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
September 30, December 31,
2006 2005
---------------- -------------
ASSETS:
Current assets:
Cash, cash equivalents and
marketable securities $ 159,731 $ 238,430
Accounts receivable, net of
allowances of $22,326 and $22,233
at September 30, 2006 and December
31, 2005, respectively 149,073 140,669
Inventories 134,390 96,845
Prepaid and other current assets 26,186 25,733
---------------- -------------
Total current assets 469,380 501,677
Property and equipment, net 39,362 38,563
Goodwill 424,735 396,902
Intangible assets, net 110,451 118,676
Other assets 6,421 6,228
---------------- -------------
Total assets $1,050,349 $1,062,046
================ =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 44,759 $ 43,227
Accrued expenses and other current
liabilities 96,728 96,311
Deferred revenues 67,235 62,863
---------------- -------------
Total current liabilities 208,722 202,401
Long term liabilities 20,105 20,048
---------------- -------------
Total liabilities 228,827 222,449
---------------- -------------
Stockholders' equity:
Common stock 423 421
Additional paid-in capital 944,911 928,703
Accumulated deficit (80,282) (88,795)
Treasury stock at cost, net of
reissuances (47,924) -
Deferred compensation - (1,830)
Accumulated other comprehensive
income 4,394 1,098
---------------- -------------
Total stockholders' equity 821,522 839,597
---------------- -------------
Total liabilities and
stockholders' equity $1,050,349 $1,062,046
================ =============
CONTACT: Avid Technology, Inc.
Dean Ridlon, 978-640-5309
Investor Relations Director
Investor_Relations@avid.com
SOURCE: Avid Technology, Inc.