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Avid Announces Final Financial Results for 2009 Third Quarter
TEWKSBURY, MA, Nov 16, 2009 (MARKETWIRE via COMTEX News Network) -- Avid(R) (NASDAQ: AVID) today reported final financial results for the three- and nine-month periods ended September 30, 2009. These results reflect corrections of errors identified in its previously announced investigation concerning the timing of recognition of revenue. As a result of these errors, Avid has determined that it has a material weakness in the design and operating effectiveness of its controls and procedures in Europe relating to ensuring that revenue is recognized only after transfer of title and risk of loss to the customer.
Avid reported revenues of $152.1 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 $17.2 million, or $0.46 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 loss was $215 thousand for the third quarter, or $0.01 per share.
Revenues for the nine-month period ended September 30, 2009 were $454.3 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 $50.4 million, or $1.35 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 $0.30 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 $0.42 for the first nine months of 2008.
The changes to the results for the third quarter and nine months ended September 30, 2009 when compared to the results reported by Avid on October 22, 2009 are that revenues were decreased by $1.6 million and gross profit was decreased by $1.1 million. Since these adjustments were related to timing of revenue recognition, and not amount, the revenue and related gross profit will be recognized in the fourth quarter of 2009. Additionally, income taxes were reduced by $0.1 million.
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.
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 $ 123,522 $ 183,686 $ 369,075 $ 540,977
Services 28,597 33,380 85,216 97,218
--------- --------- --------- ---------
Total net revenues 152,119 217,066 454,291 638,195
--------- --------- --------- ---------
Cost of revenues:
Products 57,097 94,303 176,774 272,004
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 71,202 114,296 222,553 334,537
--------- --------- --------- ---------
Gross profit 80,917 102,770 231,738 303,658
--------- --------- --------- ---------
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 assets - 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 (19,214) (65,098) (54,790) (97,423)
Interest and other income
(expense), net (240) 507 (29) 2,605
--------- --------- --------- ---------
Loss before income taxes (19,454) (64,591) (54,819) (94,818)
(Benefit from) provision for
income taxes, net (2,246) 1,800 (4,385) 3,106
--------- --------- --------- ---------
Net loss $ (17,208) $ (66,391) $ (50,434) $ (97,924)
========= ========= ========= =========
Net loss per common share -
basic and diluted $ (0.46) $ (1.80) $ (1.35) $ (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) $ 92,617 $ 144,835 $ 268,818 $ 417,410
Audio 59,502 72,231 185,473 220,785
--------- --------- --------- ---------
Total revenues $ 152,119 $ 217,066 $ 454,291 $ 638,195
========= ========= ========= =========
Contribution Margin:
Video $ 31,196 $ 40,791 $ 77,709 $ 112,877
Audio 20,883 23,493 65,444 76,278
--------- --------- --------- ---------
Segment contribution margin 52,079 64,284 143,153 189,155
--------- --------- --------- ---------
Less unallocated costs and
expenses:
Corporate research and
development expenses (1,633) (1,890) (5,224) (5,391)
Marketing and selling
expenses (41,017) (48,841) (116,588) (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 assets - (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 $ (19,214) $ (65,098) $ (54,790) $ (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 loss:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
GAAP net loss $ (17,208) $ (66,391) $ (50,434) $ (97,924)
Adjustments to reconcile to
Non-GAAP net loss:
Amortization of intangible
assets 3,301 4,556 9,244 16,790
Impairment of goodwill and
intangible assets - 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 sale of assets 3,398 - 3,398 -
Related tax adjustments (463) (240) (1,357) (1,288)
--------- --------- --------- ---------
Non-GAAP net loss: $ (215) $ (4,354) $ (11,310) $ (15,968)
========= ========= ========= =========
Weighted-average common shares
outstanding - diluted 37,341 36,960 37,251 37,739
Non-GAAP net loss per common
share - diluted $ (0.01) $ (0.12) $ (0.30) $ (0.42)
Stock-based compensation included
in: Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
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
$15,793 and $23,182
at September 30, 2009 and December 31,
2008, respectively 86,544 103,527
Inventories 91,692 95,755
Prepaid and other current assets 33,378 43,969
------------ ------------
Total current assets 314,595 390,945
Property and equipment, net 33,556 38,321
Intangible assets, net 32,451 38,143
Goodwill 227,118 225,375
Other assets 11,570 10,801
------------ ------------
Total assets $ 619,290 $ 703,585
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 22,744 $ 29,419
Accrued expenses and other current
liabilities 69,708 101,107
Deferred revenues 56,748 68,581
------------ ------------
Total current liabilities 149,200 199,107
Long-term liabilities 13,320 11,823
------------ ------------
Total liabilities 162,520 210,930
------------ ------------
Stockholders' equity:
Common stock 423 423
Additional paid-in capital 989,018 980,563
Accumulated deficit (425,337) (365,431)
Treasury stock at cost, net of reissuances (114,343) (124,852)
Accumulated other comprehensive income 7,009 1,952
------------ ------------
Total stockholders' equity 456,770 492,655
------------ ------------
Total liabilities and stockholders'
equity $ 619,290 $ 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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