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Avid Announces Results for First Quarter 2012
The GAAP net loss for the first quarter of 2012 and 2011 included
amortization of intangible assets, stock-based compensation,
restructuring charges, acquisition and other costs for 2012 only and
related tax adjustments collectively totaling
The GAAP operating loss for the first quarter of 2012 was
"While revenues were down from last year primarily related to the
creative enthusiast portion of our business, we see positive signs in
the post and professional and our media enterprise markets as customers
seek to become more competitive by moving to more seamless workflows,"
said
Avid is currently reviewing its prior tax and accounting treatment of an
intercompany loan made in 2007 between two of its international
subsidiaries. Avid's preliminary financial results for the first quarter
of 2012 do not reflect the potential impact of this matter, and the
final conclusions and results of its review could impact Avid's final
financial results for the first quarter of 2012 and the results of prior
periods. Based on the current status of its review, which is in its
initial stages and subject to change, Avid currently believes that the
impact of this matter could increase tax expenses by approximately
Conference Call
A conference call to discuss Avid's first quarter 2012 financial results
will be held today,
Use of Non-GAAP Financial Measures
This press release contains "non-GAAP financial measures" under the
rules of the
Management considers both GAAP and non-GAAP financial results in managing our business. Non-GAAP financial measures are used internally, for example, in establishing annual operating budgets, in assessing operating performance and for measuring performance under incentive compensation plans. Non-GAAP financial measures are also used in operating and financial decision-making because we believe these measures reflect our ongoing business and allow meaningful period-to-period comparisons. We believe it is useful for investors and others to also review both GAAP and non-GAAP measures in order to understand and evaluate our current operating performance and future prospects in the same manner as management and to compare in a consistent manner the company's current financial results with past financial performance. The primary limitations associated with our use of non-GAAP financial measures are that they may not include all items of income and expense that affect our operations and that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, terms referring to non-GAAP financial measures used in this press release, such as non-GAAP net loss, do not have standardized meanings. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for this limitation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.
Use of Forward-Looking Statements
The financial results included in this release are unaudited. The
contents of this release are subject to the completion and filing of our
Quarterly Report on Form 10-Q. This release may include forward-looking
statements, as defined by the Private Securities Litigation Reform Act
of 1995. Statements in this press release that relate to future results
or events are forward-looking statements and are based on Avid's current
estimates and assumptions. Forward-looking statements may be identified
by the use of forward-looking words, such as "anticipate," "believe,"
"should," "estimate," "expect," "intend," "confidence," "may," "plan,"
"feel," "could," "will," and "would," or similar expressions. Actual
results and events in future periods may differ materially from those
expressed or implied by these forward-looking statements because of a
number of risks, uncertainties and other factors, including: accounting
and other adjustments that may be made to Avid's preliminary financial
results as a result of the review of the treatment of the 2007
intercompany loan; Avid's ability to execute its strategic plan and meet
customer needs; its ability to produce innovative products in response
to changing market demand, particularly in the media industry;
competitive factors; fluctuations in its revenue, based on, among other
things, Avid's performance in particular geographies or markets,
fluctuations in foreign currency exchange rates, and seasonal factors,
such as higher consumer demand at year-end; adverse changes in economic
conditions; Avid's liquidity; and other risk factors and uncertainties
disclosed previously and from time to time in Avid's filings with the
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®, Pro Tools®, Interplay®, ISIS®, VENUE,
Sibelius®, System 5, and Avid® Studio. For more information about Avid
solutions and services, visit www.avid.com,
Flickr,
Twitter
and
© 2012
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Condensed Consolidated Statements of Operations | ||||||||||
(unaudited - in thousands, except per share data) | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2012 | 2011 | |||||||||
Net revenues: | ||||||||||
Products |
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Services | 32,201 | 28,988 | ||||||||
Total net revenues | 152,139 | 166,323 | ||||||||
Cost of revenues: | ||||||||||
Products | 62,700 | 64,984 | ||||||||
Services | 12,717 | 14,054 | ||||||||
Amortization of intangible assets | 650 | 666 | ||||||||
Total cost of revenues | 76,067 | 79,704 | ||||||||
Gross profit | 76,072 | 86,619 | ||||||||
Operating expenses: | ||||||||||
Research and development | 27,482 | 29,973 | ||||||||
Marketing and selling | 46,515 | 44,810 | ||||||||
General and administrative | 15,234 | 15,298 | ||||||||
Amortization of intangible assets | 1,611 | 2,145 | ||||||||
Restructuring costs (recoveries), net | 408 | (2,216 | ) | |||||||
Total operating expenses | 91,250 | 90,010 | ||||||||
Operating loss | (15,178 | ) | (3,391 | ) | ||||||
Interest and other income (expense), net | (194 | ) | (300 | ) | ||||||
Loss before income taxes | (15,372 | ) | (3,691 | ) | ||||||
Provision for income taxes, net | 242 | 1,426 | ||||||||
Net loss |
( |
) |
( |
) | ||||||
Net loss per common share - basic & diluted |
( |
) |
( |
) | ||||||
Weighted-average common shares outstanding - basic & diluted | 38,662 | 38,228 |
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(unaudited - in thousands, except per share data) | |||||||||||||||||||||||
Reconciliations of GAAP financial measures to Non-GAAP financial measures: | |||||||||||||||||||||||
Three Months Ended |
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Gross | Operating | Operating | Tax | Net | |||||||||||||||||||
Profit | Expenses | Loss | Provision | Loss | |||||||||||||||||||
GAAP |
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( |
) |
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( |
) | ||||||||||||||||
Amortization of intangible assets | 650 | (1,611 | ) | 2,261 | 2,261 | ||||||||||||||||||
Restructuring costs, net | (408 | ) | 408 | 408 | |||||||||||||||||||
Acquisition and other costs (a) | (231 | ) | 231 | 231 | |||||||||||||||||||
Tax adjustment | 446 | (446 | ) | ||||||||||||||||||||
Stock-based compensation included in: | |||||||||||||||||||||||
Cost of products revenues | 94 | 94 | 94 | ||||||||||||||||||||
Cost of services revenues | 157 | 157 | 157 | ||||||||||||||||||||
Research and development expenses | (306 | ) | 306 | 306 | |||||||||||||||||||
Marketing and selling expenses | (1,261 | ) | 1,261 | 1,261 | |||||||||||||||||||
General and administrative expenses | (1,911 | ) | 1,911 | 1,911 | |||||||||||||||||||
Non-GAAP |
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( |
) |
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( |
) | ||||||||||||||||
Weighted-average shares outstanding - diluted | 38,662 | ||||||||||||||||||||||
Non-GAAP net loss per share - diluted |
( |
) | |||||||||||||||||||||
(a) | Represents costs included in general and administrative expenses | ||||||||||||||||||||||
Three Months Ended |
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Gross | Operating | Operating | Tax | Net | |||||||||||||||||||
Profit | Expenses | (Loss) Income | Provision | Loss | |||||||||||||||||||
GAAP |
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( |
) |
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( |
) | ||||||||||||||||
Amortization of intangible assets | 666 | (2,145 | ) | 2,811 | 2,811 | ||||||||||||||||||
Restructuring recoveries, net | 2,216 | (2,216 | ) | (2,216 | ) | ||||||||||||||||||
Tax adjustment | 55 | (55 | ) | ||||||||||||||||||||
Stock-based compensation included in: | |||||||||||||||||||||||
Cost of products revenues | 139 | 139 | 139 | ||||||||||||||||||||
Cost of services revenues | 268 | 268 | 268 | ||||||||||||||||||||
Research and development expenses | (472 | ) | 472 | 472 | |||||||||||||||||||
Marketing and selling expenses | (1,218 | ) | 1,218 | 1,218 | |||||||||||||||||||
General and administrative expenses | (1,640 | ) | 1,640 | 1,640 | |||||||||||||||||||
Non-GAAP |
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( |
) | |||||||||||||||||
Weighted-average shares outstanding - diluted | 38,228 | ||||||||||||||||||||||
Non-GAAP net loss per share - diluted |
( |
) | |||||||||||||||||||||
Revenues Summary:
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Three Months Ended |
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2012 |
2011 |
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Video revenues |
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Audio revenues |
68,134 |
71,703 |
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Total net revenues |
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Condensed Consolidated Balance Sheets | ||||||||||
(unaudited - in thousands) | ||||||||||
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December 31, | |||||||||
2012 | 2011 | |||||||||
ASSETS: | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents |
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Accounts receivable, net of allowances of |
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at |
87,506 | 104,305 | ||||||||
Inventories | 103,460 | 111,833 | ||||||||
Deferred tax assets, net | 1,482 | 1,480 | ||||||||
Prepaid expenses | 9,714 | 7,652 | ||||||||
Other current assets | 13,072 | 14,509 | ||||||||
Total current assets | 264,915 | 272,634 | ||||||||
Property and equipment, net | 52,213 | 53,487 | ||||||||
Intangible assets, net | 16,387 | 18,524 | ||||||||
Goodwill | 246,884 | 246,398 | ||||||||
Other assets | 9,526 | 11,568 | ||||||||
Total assets |
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LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||||
Current liabilities: | ||||||||||
Accounts payable |
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Accrued compensation and benefits | 22,873 | 31,350 | ||||||||
Accrued expenses and other current liabilities | 32,347 | 34,174 | ||||||||
Income taxes payable | 3,116 | 3,898 | ||||||||
Deferred revenues | 57,908 | 45,768 | ||||||||
Total current liabilities | 153,432 | 157,723 | ||||||||
Long-term liabilities | 29,121 | 27,885 | ||||||||
Total liabilities | 182,553 | 185,608 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 423 | 423 | ||||||||
Additional paid-in capital | 1,021,880 | 1,018,604 | ||||||||
Accumulated deficit | (542,264 | ) | (524,530 | ) | ||||||
Treasury stock at cost, net of reissuances | (79,899 | ) | (82,301 | ) | ||||||
Accumulated other comprehensive income | 7,232 | 4,807 | ||||||||
Total stockholders' equity | 407,372 | 417,003 | ||||||||
Total liabilities and stockholders' equity |
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Condensed Consolidated Statements of Cash Flows | |||||||||||
(unaudited - in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2012 | 2011 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss |
( |
) |
( |
) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | 7,574 | 7,892 | |||||||||
Provision for doubtful accounts | (77 | ) | 144 | ||||||||
Non-cash provision for restructuring | - | 125 | |||||||||
Gain on disposal of fixed assets | (2 | ) | (5 | ) | |||||||
Compensation expense from stock grants and options | 3,729 | 3,737 | |||||||||
Non-cash interest expense | 73 | 80 | |||||||||
Unrealized foreign currency transaction losses | 2,298 | 3,785 | |||||||||
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions | 372 | - | |||||||||
Changes in operating assets and liabilities, excluding initial effects of acquisitions: | |||||||||||
Accounts receivable | 16,857 | 5,092 | |||||||||
Inventories | 8,373 | (16,743 | ) | ||||||||
Prepaid expenses and other current assets | (476 | ) | (1,553 | ) | |||||||
Accounts payable | (5,376 | ) | 107 | ||||||||
Accrued expenses, compensation and benefits, and other liabilities | (11,159 | ) | (14,139 | ) | |||||||
Income taxes payable | (851 | ) | (604 | ) | |||||||
Deferred revenues | 13,431 | 11,143 | |||||||||
Net cash provided by (used in) operating activities | 19,152 | (6,056 | ) | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (3,588 | ) | (3,545 | ) | |||||||
Decrease (increase) in other long-term assets | 1,124 | (617 | ) | ||||||||
Net cash used in investing activities | (2,464 | ) | (4,162 | ) | |||||||
Cash flows from financing activities: | |||||||||||
(Payments related to) proceeds from the issuance of common stock under employee stock plans, net | (172 | ) | 127 | ||||||||
Proceeds from revolving credit facilities | 1,000 | 8,000 | |||||||||
Payments on revolving credit facilities | (1,000 | ) | (8,000 | ) | |||||||
Net cash (used in) provided by financing activities | (172 | ) | 127 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 310 | 529 | |||||||||
Net increase (decrease) in cash and cash equivalents | 16,826 | (9,562 | ) | ||||||||
Cash and cash equivalents at beginning of period | 32,855 | 42,782 | |||||||||
Cash and cash equivalents at end of period |
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Avid
PR Contact:
ian.bruce@avid.com
or
IR
Contact:
tom.fitzsimmons@avid.com
Source: Avid
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