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Avid Reports Solid Second Quarter 2006 Results; Announces Authorization to Repurchase Up to $50 Million of Stock
"Our June quarter results were solid," said David Krall, Avid's president and chief executive officer. "Contributing substantially to these results was the on-schedule delivery of all of the new products announced at the National Association of Broadcasters convention in April, that were scheduled to ship during the second quarter. We continue to emphasize the importance of delivering new products to our customers on time, and our Interplay nonlinear workflow engine is still expected to ship in the third quarter. In broadcast, we had a strong bookings quarter and increased our backlog substantially. We continue to rebuild our consumer business, and the improvements that have been made to Pinnacle Studio 10 are being reflected by significant increases in user satisfaction ratings. Finally, our audio business had another good quarter, highlighted by strong performances in both our home recording and live sound markets."
Revenues for the six month period ended June 30, 2006, were $440.3 million compared to revenues of $326.1 million for the same period in 2005. GAAP net income for the first six months of 2006 was $6.0 million, or $.14 per diluted share, compared to GAAP net income of $33.3 million, or $.90 per diluted share, for the same period in 2005. GAAP net income for the six month period ended June 30, 2006 includes $24.6 million of non-cash acquisition-related amortization, stock-based compensation charges, restructuring charges, in-process research and development, and related tax adjustments. This compares to $4.8 million of acquisition-related amortization, stock-based compensation and related tax adjustments included in GAAP net income for the six month period ended June 30, 2005.
Stock Repurchase Program
Avid also announced that its Board of Directors approved a program to repurchase up to $50 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 June 30, 2006, the company had cash, cash equivalents and marketable securities of approximately $238.1 million.
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 second quarter 2006 financial results and the company's outlook for the balance of 2006 will be held today, July 20, 2006, at 5:00 p.m. EDT. The call will be open to the public, and can be accessed by dialing (913) 981-5509 and referencing confirmation code 9034125. 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, fluctuating currency exchange rates, 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, Interplay, Media Composer, Pinnacle Studio 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 Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenue
Product $197,512 $141,434 $391,534 $288,812
Service 24,714 18,617 48,762 37,240
--------- --------- --------- ---------
Total Revenue 222,226 160,051 440,296 326,052
Cost of Revenue
Product 93,819 61,244 185,180 122,141
Service 13,812 10,027 27,127 20,097
Amortization of intangible
assets 5,016 282 10,096 563
--------- --------- --------- ---------
Total Cost of Revenue 112,647 71,553 222,403 142,801
--------- --------- --------- ---------
Gross Profit 109,579 88,498 217,893 183,251
--------- --------- --------- ---------
Operating Expenses
Research and development 35,617 24,910 71,113 49,589
Marketing and selling 52,583 38,452 102,495 76,294
General and administrative 15,853 10,471 30,990 20,773
In-process research and
development - - 310 -
Amortization of intangible
assets 3,977 1,593 7,642 3,185
Restructuring charges - - 1,066 -
--------- --------- --------- ---------
Total Operating Expense 108,030 75,426 213,616 149,841
Operating income 1,549 13,072 4,277 33,410
Interest and other income
(expense), net 1,881 1,179 3,852 2,016
--------- --------- --------- ---------
Income before income taxes 3,430 14,251 8,129 35,426
Provision for income taxes 731 685 2,084 2,114
--------- --------- --------- ---------
Net Income $2,699 $13,566 $6,045 $33,312
========= ========= ========= =========
Net income per common share -
basic $0.06 $0.39 $0.14 $0.95
Net income per common share -
diluted $0.06 $0.37 $0.14 $0.90
Weighted average common shares
outstanding - basic 42,273 35,177 42,205 35,083
Weighted average common shares
outstanding - diluted 43,057 37,024 43,126 37,154
AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)
Net income includes the following items that were highlighted in the
text of this press release:
Three Months Ended
June 30,
------------------------------
2006 2005
------- ------- ------ -------
per per
diluted diluted
share share
--------------- -------------
Amortization of intangible assets 8,993 $0.21 1,875 $0.05
Stock-based compensation 4,283 $0.10 601 $0.02
Related tax adjustments (1,481) $(0.03) (172) $(0.01)
------- ------
Total 11,795 $0.28 2,304 $0.06
Six Months Ended
June 30,
-------------------------------
2006 2005
------- ------- ------ --------
per per
diluted diluted
share share
---------------- --------------
Amortization of intangible assets 17,738 $0.41 3,748 $0.10
Stock-based compensation 8,718 $0.20 1,372 $0.04
Restructuring charges 1,066 $0.02 - $-
In-process research and development 310 $0.01 - $-
Related tax adjustments (3,251) $(0.08) (345) $(0.01)
------- ------
Total 24,581 $0.57 4,775 $0.13
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
June 30, December 31,
2006 2005
------------ -------------
ASSETS:
Current assets:
Cash, cash equivalents and marketable
securities $238,147 $238,430
Accounts receivable, net of allowances
of $22,212 and $22,233 at June 30, 2006
and December 31, 2005, respectively 143,934 140,669
Inventories 121,979 96,845
Prepaid and other current assets 23,276 25,733
------------ -------------
Total current assets 527,336 501,677
Property and equipment, net 38,096 38,563
Goodwill 410,895 396,902
Intangible assets, net 110,248 118,676
Other assets 6,410 6,228
------------ -------------
Total assets $1,092,985 $1,062,046
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $52,459 $43,227
Accrued expenses and other current
liabilities 92,501 96,311
Deferred revenues 66,913 63,184
------------ -------------
Total current liabilities 211,873 202,722
Long term liabilities 18,790 19,727
------------ -------------
Total liabilities 230,663 222,449
------------ -------------
Stockholders' equity:
Common stock 423 421
Additional paid-in capital 939,907 928,703
Accumulated deficit (82,750) (88,795)
Deferred compensation - (1,830)
Accumulated other comprehensive income 4,742 1,098
------------ -------------
Total stockholders' equity 862,322 839,597
------------ -------------
Total liabilities and stockholders'
equity $1,092,985 $1,062,046
============ =============
CONTACT: Avid Technology, Inc.
Dean Ridlon, 978-640-5309
Investor Relations Director
Investor_Relations@avid.com
SOURCE: Avid Technology, Inc.