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Avid Finishes 2004 with Record Quarter and Year
"It's been a fantastic year across all of our major markets, with strong results in our video postproduction, broadcast, and audio businesses contributing to Avid's highest annual revenue growth rate in nine years," said David Krall, Avid's president and chief executive officer. "The postproduction industry, where our tools are already used by the lion's share of industry professionals, is undergoing a significant transition to HD. We experienced healthy demand for our new Media Composer® Adrenaline HD and Avid Xpress® Pro HD systems, which began shipping in December, and now offer HD capabilities across our entire Avid DNA product line. We also had a solid quarter in broadcast, finishing the year with over 100 deals signed, bringing the total number of Avid® digital broadcast conversions either under way or completed to more than 250. Lastly, our fourth quarter audio revenues grew by 70% year over year, with Digidesign successfully expanding its professional audio mixing business and entering the live sound market, and M-Audio delivering its first full quarter of results as a part of Avid in Q4."
GAAP operating profit for the fourth quarter of 2004 was $20.1 million compared to $14.9 million for the same quarter in 2003. GAAP net income for the quarter was $22.5 million, or $0.61 per diluted share, compared to GAAP net income of $15.8 million, or $0.47 per diluted share, for the corresponding quarter in 2003. Excluding non-recurring tax benefits, acquisition-related stock-based compensation and amortization, restructuring charges and a non-cash charge related to the impairment of intangible assets, pro forma non-GAAP net income for the fourth quarter was $23.5 million, or $0.64 per diluted share, compared to pro forma non-GAAP net income of $16.9 million, or $.50 per diluted share, in the fourth quarter of 2003.
GAAP operating profit for 2004 was $68.8 million, compared to $39.6 million in 2003. GAAP net income for 2004 was $71.7 million, or $2.05 per diluted share, compared to GAAP net income of $40.9 million, or $1.25 per diluted share, for 2003. Excluding non-recurring tax benefits, acquisition-related stock-based compensation and amortization, restructuring charges, expenses related to the settlement of a lawsuit and a non-cash charge related to the impairment of intangible assets, pro forma non-GAAP net income for 2004 was $74.9 million, or $2.14 per diluted share, compared to $44.9 million, or $1.37 per diluted share, for 2003.
Use of Non-GAAP Financial Measures
The pro forma operating results listed above are "non-GAAP financial measures" under the rules of the Securities and Exchange Commission ("SEC"). We have included this information because we believe it is a meaningful measure of our normalized operating performance and will assist investors in understanding our results of operations on a comparative basis. This pro forma 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 use this information internally to help our management more accurately assess the ongoing nature of our operations and measure our performance on a comparative basis.
Conference Call
A conference call to discuss Avid's fourth quarter 2004 financial results and the company's outlook for 2005 will be held today, February 3 at 5:00 p.m. EST. The call will be open to the public. The conference call can be accessed by dialing (719) 457-2649 and referencing confirmation code 8462916. The call and subsequent replay will also be available on Avid's Web site. To listen via this alternative, go to the Investors page under the Company menu at www.avid.com for complete details 10-15 minutes prior to the start of the conference call.
The above release includes a forward-looking statement, as defined by the Private Securities Litigation Reform Act of 1995, about Avid's future performance. There are a number of factors that could cause actual events or results to differ materially from that indicated by such forward-looking statement, such as the competitive market in which Avid operates, market acceptance of Avid's existing and new products, Avid's ability to anticipate customers' needs and the other factors set forth under the caption "Certain Factors That May Affect Future Results" in Avid's Form 10-Q for the quarter ended September 30, 2004, and other filings with the SEC. In addition, the forward-looking statement contained herein represents 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 this forward-looking statement 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.
© 2005 Avid Technology, Inc. All rights reserved. Avid, Avid DNA, Avid Xpress, Adrenaline, Film Composer, M-Audio, Media Composer, Digidesign, and Pro Tools are either registered trademarks or trademarks of Avid Technology, Inc. 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 for share and per share data)
------------------- -------------------
GAAP NON - GAAP
------------------- -------------------
Three Months Ended Three Months Ended
December 31, December 31st,
2004 2003 2004 2003
--------- --------- --------- ---------
Revenue
Product $158,590 $115,146 $158,590 $115,146
Service 16,381 12,182 16,381 12,182
--------- --------- --------- ---------
Total Revenue 174,971 127,328 174,971 127,328
--------- --------- --------- ---------
Cost of Revenue
Product 67,338 46,414 67,338 46,414
Service 9,807 7,340 9,807 7,340
Amortization of intangible
assets 281 - - -
--------- --------- --------- ---------
Total Cost of Revenue 77,426 53,754 77,145 53,754
--------- --------- --------- ---------
Gross Profit 97,545 73,574 97,826 73,574
--------- --------- --------- ---------
Operating Expenses
Research and development 25,812 21,719 25,812 21,719
Marketing and selling 38,435 28,733 38,435 28,733
General and administrative 9,469 6,576 9,469 6,576
Stock-based compensation
(Note A) 865 - - -
Restructuring and other
costs, net - 1,335 - -
Amortization of intangible
assets 1,665 341 - -
Impairment of intangible
assets 1,187 - - -
--------- --------- --------- ---------
Total Operating
Expense 77,433 58,704 73,716 57,028
--------- --------- --------- ---------
Operating income 20,112 14,870 24,110 16,546
Interest and other income, net 653 544 653 544
--------- --------- --------- ---------
Income before income taxes 20,765 15,414 24,763 17,090
Provision for income taxes 1,313 200 1,313 200
Non-recurring tax benefits (3,062) (550) - -
--------- --------- --------- ---------
Net Income $22,514 $15,764 $23,450 $16,890
========= ========= ========= =========
Net income per common share -
basic $0.66 $0.51 $0.68 $0.55
Net income per common share -
diluted $0.61 $0.47 $0.64 $0.50
Weighted average common shares
outstanding - basic 34,355 30,764 34,355 30,764
Weighted average common shares
outstanding - diluted 36,751 33,864 36,751 33,864
Note
-------------------------------
A. Stock based compensation relates primarily to stock options issued
as part of the acquisition of M-Audio.
Reconciliation of Non-GAAP
net income to GAAP net income: Three months ended December 31,
2004 2003
--------- ---------
Non-GAAP net income $23,450 $16,890
Stock-based compensation (865) -
Restructuring and other
costs, net - (1,335)
Amortization of intangible
assets (1,946) (341)
Impairment of intangible
assets (1,187) -
Tax refunds and benefits 3,062 550
--------- ---------
GAAP net income $22,514 $15,764
========= =========
AVID TECHNOLOGY, INC
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except for share and per share data)
------------------- -------------------
GAAP NON - GAAP
------------------- -------------------
Twelve Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
--------- --------- --------- ---------
Revenue
Product $528,463 $425,403 $528,463 $425,403
Service 61,142 46,509 61,142 46,509
--------- --------- --------- ---------
Total Revenue 589,605 471,912 589,605 471,912
--------- --------- --------- ---------
Cost of Revenue
Product 220,246 183,304 220,246 183,304
Service 34,842 26,069 34,842 26,069
Amortization of intangible
assets 408 - - -
--------- --------- --------- ---------
Total Cost of Revenue 255,496 209,373 255,088 209,373
--------- --------- --------- ---------
Gross Profit 334,109 262,539 334,517 262,539
--------- --------- --------- ---------
Operating Expenses
Research and development 94,808 85,552 94,808 85,552
Marketing and selling 135,380 109,704 135,380 109,704
General and administrative 28,925 23,208 28,925 23,208
Stock-based compensation
(Note A) 1,418 - - -
Restructuring and other
costs, net - 3,194 - -
Amortization of intangible
assets 3,641 1,316 - -
Impairment of intangible
assets 1,187 - - -
--------- --------- --------- ---------
Total Operating Expense 265,359 222,974 259,113 218,464
--------- --------- --------- ---------
Operating income 68,750 39,565 75,404 44,075
Interest and other income, net 2,389 1,874 2,389 1,874
Legal settlement (1,050) - - -
--------- --------- --------- ---------
Income before income taxes 70,089 41,439 77,793 45,949
Provision for income taxes 2,894 1,100 2,894 1,100
Non-recurring tax benefits (4,506) (550) - -
--------- --------- --------- ---------
Net Income $71,701 $40,889 $74,899 $44,849
========= ========= ========= =========
Net income per common share -
basic $2.21 $1.40 $2.31 $1.54
Net income per common share -
diluted $2.05 $1.25 $2.14 $1.37
Weighted average common shares
outstanding - basic 32,485 29,192 32,485 29,192
Weighted average common shares
outstanding - diluted 35,003 32,653 35,003 32,653
Note
-------------------------------
A. Stock based compensation relates primarily to stock options issued
as part of the acquisition of M-Audio.
Reconciliation of Non-GAAP
net income to GAAP net income: Year ended December 31,
2004 2003
--------- ---------
Non-GAAP net income $74,899 $44,849
Stock-based compensation (1,418) -
Restructuring and other
costs, net - (3,194)
Amortization of intangible
assets (4,049) (1,316)
Impairment of intangible
assets (1,187) -
Tax refunds and benefits 4,506 550
Legal settlement (1,050) -
--------- ----------
GAAP net income $71,701 $40,889
========= ==========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
December 31, December 31,
2004 2003
------------- ------------
ASSETS:
Current assets:
Cash and marketable securities $ 155,419 $ 196,309
Accounts receivable, net of allowances
of $9,334 and $9,161 at December 31,
2004 and 2003, respectively 97,536 69,230
Inventories 53,946 38,292
Prepaid and other current assets 19,407 13,181
------------- ------------
Total current assets 326,308 317,012
Property and equipment, net 29,092 23,223
Acquisition-related intangible assets,
net 46,884 1,815
Goodwill 165,803 3,335
Other assets 7,384 2,734
------------- ------------
Total assets $ 575,471 $ 348,119
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 26,517 $ 15,755
Accrued expenses and other current
liabilities 74,727 59,709
Deferred revenue and deposits 48,680 44,943
------------- ------------
Total current liabilities 149,924 120,407
Long term liabilities, less current
portion 926 607
------------- ------------
Total liabilities 150,850 121,014
Total stockholders' equity 424,621 227,105
------------- ------------
Total liabilities and stockholders'
equity $ 575,471 $ 348,119
============= ============
CONTACT: Avid Technology, Inc.
Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
SOURCE: Avid Technology, Inc.