Avid Technology, Inc.
Oct 22, 2009

Avid Announces Third Quarter 2009 Results

TEWKSBURY, MA, Oct 22, 2009 (MARKETWIRE via COMTEX News Network) -- Avid(R) (NASDAQ: AVID) today reported revenues of $153.7 million for the three-month period ended September 30, 2009, compared to $217.1 million for the same period in 2008. The GAAP net loss for the quarter was $16.2 million, or $.43 per share, compared to a GAAP net loss of $66.4 million, or $1.80 per share, in the third quarter of 2008. The third quarter 2008 results included a non-cash impairment charge of $51.3 million or $1.39 per share.

The GAAP net loss for the third quarter of 2009 included amortization of intangibles, stock-based compensation, restructuring charges, loss on asset sales and related tax adjustments, collectively totaling $17.0 million. Excluding these items, the non-GAAP net income was $787 thousand for the third quarter, or $.02 per share.

"We continue to execute on a number of strategic initiatives to improve the overall health and efficiency of our operations," said Gary Greenfield, Avid's chairman and CEO. "The third quarter showed sequential improvement in revenue and expanded gross margins, resulting in another quarter of improving results."

Revenues for the nine-month period ended September 30, 2009 were $455.9 million, compared to revenues of $638.2 million for the same period in 2008. GAAP net loss for the first nine months of 2009 was $49.4 million, or $1.33 per share, compared to GAAP net loss of $97.9 million, or $2.59 per share, for the same period in 2008. GAAP net loss for the nine-month period ended September 30, 2009 included $39.1 million of amortization, stock-based compensation, restructuring charges, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $.28 for the nine-month period ended September 30, 2009. GAAP net loss for the nine-month period ended September 30, 2008 included $82.0 million of amortization, stock-based compensation, restructuring charges, impairment charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $.42 for the first nine months of 2008.

The company's cash balance on September 30, 2009 was $103.0 million, or approximately $2.76 per share. The company paid out approximately $4.9 million in cash in the third quarter related to restructuring activities.

Avid also announced that its Audit Committee is overseeing an investigation concerning the manner in which revenue was recognized on certain shipments of Audio products near the end of previous quarters from certain warehouses outside the United States. Based on the current progress of the investigation, Avid believes that there have been errors that affected the timing but not the amount of revenue recognized, and that correction of the errors likely will not have a material impact on its financial statements for the current or any prior period. This investigation was only recently commenced. Avid's expectations concerning the nature and materiality of these or any other errors are subject to change based on the final outcome of the investigation.

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 nine-month periods ended September 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 third quarter 2009 financial results will be held today, October 22, 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 results of the audit committee's investigation described above and 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 the anticipated impact of the audit committee's investigation described above, and these statements are subject to the outcome of such investigation. This release also makes forward-looking statements 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     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net revenues:
  Products                      $ 125,146  $ 183,686  $ 370,699  $ 540,977
  Services                         28,597     33,380     85,216     97,218
                                ---------  ---------  ---------  ---------
      Total net revenues          153,743    217,066    455,915    638,195
                                ---------  ---------  ---------  ---------
Cost of revenues:
  Products                         57,625     94,303    177,302    272,004
  Services                         13,586     18,744     43,515     55,760
  Amortization of intangible
   assets                             519      1,249      1,465      6,773
  Restructuring costs                   -          -        799          -
                                ---------  ---------  ---------  ---------
      Total cost of revenues       71,730    114,296    223,081    334,537
                                ---------  ---------  ---------  ---------
Gross profit                       82,013    102,770    232,834    303,658
                                ---------  ---------  ---------  ---------
Operating expenses:
  Research and development         29,262     37,825     90,974    115,307
  Marketing and selling            44,705     53,638    127,480    159,224
  General and administrative       12,093     19,734     39,765     61,169
  Amortization of intangible
   assets                           2,782      3,307      7,779     10,017
  Impairment of goodwill and
   intangible asset                     -     51,257          -     51,257
  Restructuring costs, net          7,891      2,107     17,132      4,107
  Loss on sales of assets           3,398          -      3,398          -
                                ---------  ---------  ---------  ---------
      Total operating expenses    100,131    167,868    286,528    401,081
                                ---------  ---------  ---------  ---------
Operating loss                    (18,118)   (65,098)   (53,694)   (97,423)
Interest and other income
 (expense), net                      (240)       507        (29)     2,605
                                ---------  ---------  ---------  ---------
Loss before income taxes          (18,358)   (64,591)   (53,723)   (94,818)
(Benefit from) provision for
 income taxes, net                 (2,152)     1,800     (4,291)     3,106
                                ---------  ---------  ---------  ---------
Net loss                        $ (16,206) $ (66,391) $ (49,432) $ (97,924)
                                =========  =========  =========  =========
Net loss per common share -
 basic and diluted              $   (0.43) $   (1.80) $   (1.33) $   (2.59)
Weighted-average common shares
 outstanding - basic and
 diluted                           37,341     36,960     37,251     37,739
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     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 Revenues:
    Video  (a)                  $  93,246  $ 144,835  $ 269,447  $ 417,410
    Audio                          60,497     72,231    186,468    220,785
                                ---------  ---------  ---------  ---------
 Total revenues                 $ 153,743  $ 217,066  $ 455,915  $ 638,195
                                =========  =========  =========  =========
 Contribution Margin:
    Video                       $  31,647  $  40,791  $  78,160  $ 112,877
    Audio                          21,529     23,493     66,090     76,278
                                ---------  ---------  ---------  ---------
 Segment contribution margin       53,176     64,284    144,250    189,155
                                ---------  ---------  ---------  ---------
    Less unallocated costs and
     expenses:
       Research and development
        expenses                   (1,633)    (1,890)    (5,224)    (5,391)
       Marketing and selling
        expenses                  (41,018)   (48,841)  (116,589)  (146,019)
       General and
        administrative expenses   (11,187)   (16,374)   (35,650)   (51,924)
       Amortization of
        acquisition-related
        intangible assets          (3,301)    (4,556)    (9,244)   (16,790)
       Impairment of goodwill
        and intangible asset            -    (51,257)         -    (51,257)
       Stock-based compensation    (2,866)    (4,357)    (9,908)   (11,090)
       Restructuring costs, net    (7,891)    (2,107)   (17,931)    (4,107)
       Loss on sales of assets     (3,398)         -     (3,398)         -
                                ---------  ---------  ---------  ---------
 Consolidated operating loss    $ (18,118) $ (65,098) $ (53,694) $ (97,423)
                                =========  =========  =========  =========
 (a)  Includes revenues from
  non-core product lines of:    $     117  $  15,121  $   1,874  $  50,214
Reconciliation of GAAP net loss to Non-GAAP net income (loss):
                                 Three Months Ended     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 GAAP net loss                  $ (16,206) $ (66,391) $ (49,432) $ (97,924)
 Adjustments to reconcile to
  Non-GAAP net income (loss):
    Amortization of intangible
     assets                         3,301      4,556      9,244     16,790
    Impairment of goodwill and
     intangible asset                   -     51,257          -     51,257
    Stock-based compensation        2,866      4,357      9,908     11,090
    Restructuring costs, net        7,891      2,107     17,931      4,107
    Loss on sales of assets         3,398          -      3,398          -
    Related tax adjustments          (463)      (240)    (1,357)    (1,288)
                                ---------  ---------  ---------  ---------
 Non-GAAP net income (loss):    $     787  $  (4,354) $ (10,308) $ (15,968)
                                =========  =========  =========  =========
 Weighted-average common shares
  outstanding - diluted            37,376     36,960     37,251     37,739
 Non-GAAP net income (loss) per
  common share - diluted        $    0.02  $   (0.12) $   (0.28) $   (0.42)
                                 Three Months Ended     Nine Months Ended
Stock-based compensation            September 30,         September 30,
 included in:                   --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 Cost of products revenues      $     163  $     177  $     666  $     480
 Cost of services revenues            247        144        868        408
 Research and development
  expenses                            655        763      1,737      2,215
 Marketing and selling expenses       895      1,470      2,522      3,108
 General and administrative
  expenses                            906      1,803      4,115      4,879
                                ---------  ---------  ---------  ---------
                                $   2,866  $   4,357  $   9,908  $  11,090
                                =========  =========  =========  =========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
                                            September 30,    December 31,
                                                 2009            2008
                                            --------------  --------------
ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                              $      102,981  $      147,694
   Accounts receivable, net of allowances
    of $14,458 and $23,182 at September 30,
    2009 and December 31, 2008, respectively        89,503         103,527
   Inventories                                      91,164          95,755
   Prepaid and other current assets                 33,378          43,969
                                            --------------  --------------
       Total current assets                        317,026         390,945
Property and equipment, net                         33,556          38,321
Intangible assets, net                              32,451          38,143
Goodwill                                           227,118         225,375
Other assets                                        11,571          10,801
                                            --------------  --------------
       Total assets                         $      621,722  $      703,585
                                            ==============  ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                         $       22,744  $       29,419
   Accrued expenses and other current
    liabilities                                     71,137         101,107
   Deferred revenues                                56,748          68,581
                                            --------------  --------------
       Total current liabilities                   150,629         199,107
Long-term liabilities                               13,320          11,823
                                            --------------  --------------
       Total liabilities                           163,949         210,930
                                            --------------  --------------
Stockholders' equity:
   Common stock                                        423             423
   Additional paid-in capital                      989,018         980,563
   Accumulated deficit                            (424,335)       (365,431)
   Treasury stock at cost, net of
    reissuances                                   (114,342)       (124,852)
   Accumulated other comprehensive income            7,009           1,952
                                            --------------  --------------
       Total stockholders' equity                  457,773         492,655
                                            --------------  --------------
       Total liabilities and stockholders'
        equity                              $      621,722  $      703,585
                                            ==============  ==============

Contact:

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

Media Contact:
Christi Dean
Email Contact
978-640-5147


SOURCE: Avid

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