Avid Technology, Inc.
Jul 23, 2009

Avid Announces Second Quarter 2009 Results

TEWKSBURY, MA, Jul 23, 2009 (MARKETWIRE via COMTEX News Network) -- Avid(R) (NASDAQ: AVID) today reported revenues of $150.5 million for the three-month period ended June 30, 2009, compared to $222.9 million for the same period in 2008. The GAAP net loss for the quarter was $15.9 million, or $.43 per share, compared to a GAAP net loss of $10.4 million, or $.28 per share, in the second quarter of 2008.

The GAAP net loss for the second quarter of 2009 included amortization of intangibles, stock-based compensation, restructuring charges and related tax adjustments, collectively totaling $10.4 million. Excluding these items, the non-GAAP net loss was $5.5 million for the second quarter, or $.15 per share.

"We made a number of strategic and operational improvements in the first half of 2009, which have resulted in gross margin improvement and reduced operating costs on a sequential and annual basis," said Gary Greenfield, Avid's chairman and CEO. "While ongoing macroeconomic issues continue to affect our revenue results, we remain confident that our continued efforts to improve our operations have positioned us to take advantage of growth opportunities when the economy improves."

Revenues for the six-month period ended June 30, 2009 were $302.2 million, compared to revenues of $421.1 million for the same period in 2008. GAAP net loss for the first six months of 2009 was $33.2 million, or $.89 per share, compared to GAAP net loss of $31.5 million, or $.83 per share, for the same period in 2008. GAAP net loss for the six-month period ended June 30, 2009 included $22.1 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $.30 for the first half of 2009. 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 net loss per share was $.30 for the first half of 2008.

The company's cash balance on June 30, 2009 was $118.6 million, or approximately $3.18 per share. The company paid out approximately $6.8 million in cash in the second quarter related to restructuring activities.

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 (loss) and earnings (loss) per share for the three- and six-month periods ended June 30, 2009 and 2008 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 2009 financial results will be held today, July 23, 2009 at 4:30 p.m. ET. The call will be open to the public and can be accessed by dialing 719.457.2617 and referencing confirmation code 4569475. The call and subsequent replay will also be available on Avid's website. To listen via this alternative, go to the Investors tab 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 execute on its corporate strategy and meet customer needs, general economic conditions, 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 estimates only as of today and should not be relied upon as representing the company's estimates 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

Avid creates the digital audio and video technology used to make the most listened to, most watched and most loved media in the world -- from the most prestigious and award-winning feature films, music recordings, television shows, live concert tours and news broadcasts, to music and movies made at home. Some of Avid's most influential and pioneering solutions include Media Composer(R), Pro Tools(R), Avid Unity(TM), Interplay(R), Oxygen 8, Sibelius(R) and Pinnacle Studio(TM). For more information about Avid solutions and services, visit www.avid.com, del.icio.us, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

Copyright 2009 Avid Technology, Inc. All rights reserved. Product features, specifications, systems requirements and availability are subject to change without notice. Avid, Pinnacle Studio, Avid Unity, Interplay, Media Composer, Pro Tools, Symphony, Nitris, ISIS and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of Interplay Entertainment Corp., which bears no responsibility for Avid products. 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,
                                ---------  ---------  ---------  ---------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net revenues:
  Products                      $ 121,912  $ 189,115  $ 245,553  $ 357,291
  Services                         28,631     33,748     56,619     63,838
                                ---------  ---------  ---------  ---------
      Total net revenues          150,543    222,863    302,172    421,129
                                ---------  ---------  ---------  ---------
Cost of revenues:
  Products                         58,429     92,628    119,677    177,701
  Services                         14,090     19,629     29,929     37,016
  Amortization of intangible
   assets                             426      2,270        946      5,524
  Restructuring costs                   -          -        799          -
                                ---------  ---------  ---------  ---------
      Total cost of revenues       72,945    114,527    151,351    220,241
                                ---------  ---------  ---------  ---------
Gross profit                       77,598    108,336    150,821    200,888
                                ---------  ---------  ---------  ---------
Operating expenses:
  Research and development         30,661     38,972     61,712     77,482
  Marketing and selling            41,994     55,259     82,775    105,586
  General and administrative       12,559     19,492     27,672     41,435
  Amortization of intangible
   assets                           2,622      3,323      4,997      6,710
  Restructuring costs, net          5,019        937      9,241      2,000
                                ---------  ---------  ---------  ---------
      Total operating expenses     92,855    117,983    186,397    233,213
                                ---------  ---------  ---------  ---------
Operating loss                    (15,257)    (9,647)   (35,576)   (32,325)
Interest and other income
 (expense), net                        58        617        211      2,098
                                ---------  ---------  ---------  ---------
Loss before income taxes          (15,199)    (9,030)   (35,365)   (30,227)
Provision for (benefit from)
 income taxes, net                    750      1,355     (2,139)     1,306
                                ---------  ---------  ---------  ---------
Net loss                        $ (15,949) $ (10,385) $ (33,226) $ (31,533)
                                =========  =========  =========  =========
Net loss per common share -
 basic and diluted              $   (0.43) $   (0.28) $   (0.89) $   (0.83)
Weighted-average common shares
 outstanding - basic and
 diluted                           37,282     36,904     37,206     38,133
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)

Change in Financial Presentation

Beginning January 1, 2009, we combined our professional video and consumer video businesses into a single reporting segment. We will now consequently report on two business segments: Audio and Video. Please note that the segment contribution margin calculation has also changed from last year. Segment contribution margin is now calculated as segment gross margin less the research and development and product management expenses directly attributable to the segment. Comparative results for the 2008 periods have been updated to reflect our new business structure.

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,
                                ---------  ---------  ---------  ---------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 Revenues:
    Video  (a)                  $  88,699  $ 147,548  $ 176,201  $ 272,575
    Audio                          61,844     75,315    125,971    148,554
                                ---------  ---------  ---------  ---------
 Total revenues                 $ 150,543  $ 222,863  $ 302,172  $ 421,129
                                =========  =========  =========  =========
 Contribution Margin:
    Video                       $  25,233  $  43,616  $  46,513  $  72,086
    Audio                          21,831     26,460     44,561     52,785
                                ---------  ---------  ---------  ---------
 Segment contribution margin       47,064     70,076     91,074    124,871
                                ---------  ---------  ---------  ---------
    Less unallocated costs and
     expenses:
       Research and development
        expenses                   (1,837)    (1,731)    (3,591)    (3,501)
       Marketing and selling
        expenses                  (38,056)   (50,710)   (75,571)   (97,178)
       General and
        administrative expenses   (11,467)   (16,164)   (24,463)   (35,550)
       Amortization of
        acquisition-related
        intangible assets          (3,048)    (5,593)    (5,943)   (12,234)
       Stock-based compensation    (2,894)    (4,588)    (7,042)    (6,733)
       Restructuring costs, net    (5,019)      (937)   (10,040)    (2,000)
                                ---------  ---------  ---------  ---------
 Consolidated operating loss    $ (15,257) $  (9,647) $ (35,576) $ (32,325)
                                =========  =========  =========  =========
 (a)  Includes revenues from
  non-core product lines of:    $     808  $  16,641  $   1,757  $  35,093
Reconciliation of GAAP net loss
to Non-GAAP net income (loss):
                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                ---------  ---------  ---------  ---------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 GAAP net loss                  $ (15,949) $ (10,385) $ (33,226) $ (31,533)
 Adjustments to reconcile to
  Non-GAAP net (loss) income:
    Amortization of intangible
     assets                         3,048      5,593      5,943     12,234
    Stock-based compensation        2,894      4,588      7,042      6,733
    Restructuring costs, net        5,019        937     10,040      2,000
    Related tax adjustments          (540)      (614)      (894)    (1,048)
                                ---------  ---------  ---------  ---------
 Non-GAAP net (loss) income:    $  (5,528) $     119  $ (11,095) $ (11,614)
                                =========  =========  =========  =========
 Weighted-average common shares
  outstanding - diluted            37,282     37,056     37,206     38,133
 Non-GAAP net (loss) income per
  common share - diluted        $   (0.15) $    0.00  $   (0.30) $   (0.30)
Stock-based compensation         Three Months Ended     Six Months Ended
 included in:                         June 30,              June 30,
                                ---------  ---------  ---------  ---------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 Cost of products revenues      $     153  $     171  $     503  $     303
 Cost of services revenues            231        166        621        264
 Research and development
  expenses                            612      1,089      1,082      1,452
 Marketing and selling expenses       806      1,109      1,627      1,638
 General and administrative
  expenses                          1,092      2,053      3,209      3,076
                                ---------  ---------  ---------  ---------
                                $   2,894  $   4,588  $   7,042  $   6,733
                                =========  =========  =========  =========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
                                                  June 30,    December 31,
                                                    2009          2008
                                                ------------  ------------
ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                  $    118,588  $    147,694
   Accounts receivable, net of allowances of
    $16,631 and $23,182 at June 30, 2009 and
    December 31, 2008, respectively                   85,192       103,527
   Inventories                                        93,399        95,755
   Prepaid and other current assets                   36,532        43,969
                                                ------------  ------------
       Total current assets                          333,711       390,945
Property and equipment, net                           35,643        38,321
Intangible assets, net                                32,200        38,143
Goodwill                                             225,375       225,375
Other assets                                          11,221        10,801
                                                ------------  ------------
       Total assets                             $    638,150  $    703,585
                                                ============  ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                             $     27,785  $     29,419
   Accrued expenses and other current
    liabilities                                       69,097       101,107
   Deferred revenues                                  61,566        68,581
                                                ------------  ------------
       Total current liabilities                     158,448       199,107
Long-term liabilities                                 12,705        11,823
                                                ------------  ------------
       Total liabilities                             171,153       210,930
                                                ------------  ------------
Stockholders' equity:
   Common stock                                          423           423
   Additional paid-in capital                        986,197       980,563
   Accumulated deficit                              (406,679)     (365,431)
   Treasury stock at cost, net of reissuances       (116,224)     (124,852)
   Accumulated other comprehensive income              3,280         1,952
                                                ------------  ------------
       Total stockholders' equity                    466,997       492,655
                                                ------------  ------------
       Total liabilities and stockholders'
        equity                                  $    638,150  $    703,585
                                                ============  ============

Contact:

Investor Contact:
Tom Fitzsimmons
Email Contact
978-640-3346

Media Contact:
Amy Peterson
Email Contact
978-640-3448


SOURCE: Avid

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