Avid Technology, Inc.
Mar 16, 2015

Avid Announces Fourth Quarter and Full-Year 2014 Financial Results

Company Reports Highest Quarterly Bookings Since 2011 and Highest Quarterly Free Cash Flow Since 2012

BURLINGTON, Mass., March 16, 2015 (GLOBE NEWSWIRE) -- Avid® (Nasdaq:AVID) announced today that it has released fourth quarter 2014 results and filed its Form 10-K for the fiscal year ended December 31, 2014.

Fourth Quarter 2014 Highlights

Full Year 2014 Highlights

"Two years ago, we laid out a strategy to address the most important issues facing our industry, building on our heritage and capturing the imagination of the media industry," said Louis Hernandez, Jr, Chairman, President, and CEO of Avid. "The industry has responded by partnering with us and adopting our vision for the future."

Looking ahead, Mr. Hernandez continued, "We are very pleased with our progress so far, but we are still early in our transformation of connecting creative professionals with consumers on a common platform regardless of the media form. Avid Everywhere is still in its early stages, and we believe the financial expression will be powerful."

The Company's financial guidance for fiscal year 2015 reflects:

"The Company's 2014 financial performance reflects our focus on sustainable EBITDA growth, implementing a leaner and more directed cost structure and improving our conversion of adjusted EBITDA to cash," said John Frederick, Chief Financial and Administrative Officer of Avid. "Moving into 2015, we expect to see this trend continue with improvement in our three key metrics - adjusted EBITDA, bookings and free cash flow."

Avid includes non-GAAP financial measures in this press release, including adjusted EBITDA, free cash flow, non-GAAP operating income and non-GAAP operating income per share. The reconciliations to the Company's comparable GAAP financial measures for the periods presented are included in the tables in the appendix to this press release. The Company also includes the operational metric of bookings in this release. Unless noted, all financial information is reported based on actual exchange rates.

Conference Call

A conference call to discuss Avid's financial results for the fourth quarter and full year 2014 will be held on Tuesday, March 17, 2015 at 4:30 p.m. ET. The call will be open to the public and can be accessed by dialing 719-457-2697 and referencing confirmation code 9388800. You may also listen to the call on the Avid Investor Relations website. To listen via the website, go to the events tab at ir.avid.com for complete details prior to the start of the conference call. A replay of the call will also be available on the Avid Investor Relations website shortly after the completion of the call.

Non-GAAP Measures and Bookings

Avid defines adjusted EBITDA as non-GAAP operating income (loss) excluding depreciation and all amortization expense. Avid non-GAAP operating income (loss) and non-GAAP net income per share exclude restructuring and restatement costs, stock based compensation, amortization and impairment of intangibles as well as other unusual items such as costs related to the restatement; M&A related activity; or impact of significant legal settlements. Avid defines free cash flow as GAAP operating cash flow less capital expenditures and excludes from free cash flow payments or receipts related to M&A, significant legal settlements, restructuring, restatement or other non-operational or non-recurring events. These non-GAAP measures also reflect how Avid manages its businesses internally.

Avid's non-GAAP measures may vary from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. 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. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.

Avid references bookings in this press release. Bookings are an operational metric which is defined as the amount of revenue we expect to earn from an agreement between Avid and a customer for goods and services over the course of the agreement. To count as a booking, Avid expects there to be persuasive evidence of an agreement between Avid and its customer and that the collectability of the amounts payable under the arrangement are reasonably assured. Due to the timing of revenue recognition, all of the revenue related to the booking may not be recorded in the period that it was transacted and would therefore be reported as part of revenue backlog and/or deferred revenue, thereby providing visibility into future revenue. However, because Avid's bookings are based on orders that, under certain circumstances can be cancelled or adjusted, bookings may not convert into revenue earned.

Forward-Looking Statements

The information provided in this press release includes forward-looking statements that involve risks and uncertainties, including statements about our anticipated plans, objectives, expectations and intentions. Such statements include, without limitation, statements regarding our recently filed financial statements or other information included herein based upon or otherwise incorporating judgments or estimates relating to future performance such as future operating expenses, earnings, bookings, backlog, booking conversion rate, product mix and free cash flow; our cost initiatives; our future strategy and business plans; our product plans, including products under development, such as cloud and subscription based offerings; and our liquidity and ability to raise capital. These forward-looking statements are based on current expectations as of the date of this release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to the effect on our sales, operations and financial performance resulting from: our liquidity; our ability to execute our strategic plan, including cost savings initiatives, and meet customer needs; our ability to produce innovative products in response to changing market demand, particularly in the media industry; our ability to successfully accomplish our product development plans; competitive factors; history of losses; fluctuations in our revenue, based on, among other things, our performance and risks in particular geographies or markets;, fluctuations in foreign currency exchange rates and seasonal factors; adverse changes in economic conditions; variances in our backlog and the realization thereof; the identified material weaknesses in our internal control over financial reporting; the previously disclosed SEC and Department of Justice inquiries; pending litigation, including the previously disclosed class action and possibility of further legal proceedings adverse to our company resulting from the restatement or related matters; the costs associated with the restatement. Moreover, the business may be adversely affected by future legislative, regulatory or changes, including tax law changes, as well as other economic, business and/or competitive factors. The risks included above are not exhaustive. Other factors that could adversely affect our business and prospects are described in the filings made by our company with the SEC. We expressly disclaim any obligation or undertaking to update or revise any forward-looking statements whether as a result of new information, future events or otherwise

About Avid

Through Avid Everywhere™, Avid delivers the industry's most open, innovative and comprehensive media platform connecting content creation with collaboration, asset protection, distribution and consumption for the most listened to, most watched and most loved media in the world—from the most prestigious and award-winning feature films, music recordings, and television shows, to live concerts and news broadcasts. Industry leading solutions include Pro Tools®, Media Composer®, ISIS®, Interplay®, and Sibelius®. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn; or subscribe to Avid Blogs.

© 2015 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Media Composer, Pro Tools, Interplay, 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 the 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 EndedTwelve Months Ended
 December 31,December 31,
 2014201320142013
         
Net revenues:        
Products  $ 91,412  $ 103,986  $ 378,627  $ 395,531
Services  36,784  43,117  151,624  167,881
Total net revenues  128,196  147,103  530,251  563,412
         
Cost of revenues:        
Products  35,867  43,664  143,765  159,264
Services  14,681  16,137  60,656  63,177
Amortization of intangible assets  --  158  50  1,468
Total cost of revenues  50,548  59,959  204,471  223,909
         
Gross profit  77,648  87,144  325,780  339,503
         
Operating expenses:        
Research and development  23,212  24,556  90,390  95,249
Marketing and selling  34,527  34,566  133,049  133,890
General and administrative  22,222  23,135  81,181  77,578
Amortization of intangible assets  375  667  1,626  2,648
Restructuring costs (recoveries), net  --  2,491  (165)  5,370
Total operating expenses  80,336  85,415  306,081  314,735
         
Operating (loss) income  (2,688)  1,729  19,699  24,768
         
Interest and other expense, net  (1,620)  192  (2,783)  (676)
Income before income taxes  (4,308)  1,921  16,916  24,092
         
Provision for income taxes, net  761  792  2,188  2,939
Net (loss) income  (5,069)  1,129  14,728  21,153
         
(Loss) income per share - basic and diluted  (0.13)  0.03  0.38  0.54
         
Weighted-average common shares outstanding - basic 39,234 39,080 39,147 39,044
Weighted-average common shares outstanding - diluted 39,966 39,111 39,267 39,070
         
AVID TECHNOLOGY, INC.        
Reconciliations of GAAP financial measures to Non-GAAP financial measures      
(unaudited - in thousands, except per share data)        
         
         
 Three Months EndedTwelve Months Ended
 December 31,December 31,
 2014201320142013
         
GAAP        
Net Revenues $ 128,196  $ 147,103  $ 530,251  $ 563,412
Cost of revenues  50,548  59,959  204,471  223,909
Gross profit  77,648  87,144  325,780  339,503
Operating expenses  80,336  85,415  306,081  314,735
Operating (loss) income  (2,688)  1,729  19,699  24,768
Interest and other expense, net  (1,620)  192  (2,783)  (676)
Provision for income taxes, net  761  792  2,188  2,939
Net (loss) income  $ (5,069)  $ 1,129  $ 14,728  $ 21,153
Weighted-average common shares outstanding - diluted 39,966 39,111 39,267 39,070
Net (loss) income per share - diluted $ (0.13) $ 0.03  $ 0.38  $ 0.54
         
Adjustments to GAAP Results        
Cost of Revenues        
Amortization of intangible assets  --  158  50  1,468
Stock-based compensation  282  173  675  796
Operating Expenses        
Amortization of intangible assets  375  667  1,626  2,648
Restructuring costs (recoveries), net  --  2,491  (165)  5,370
Restatement costs   3,919  8,162  23,327  20,591
Gain on sale of assets  --  --  --  (125)
Stock-based compensation        
 R&D  166  127  502  581
 Sales & Marketing  2,472  329  3,658  1,786
 G&A  5,875  572  6,677  3,752
Other        
Tax adjustment  (5)  (215)  (12)  (860)
         
Non-GAAP         
Net revenues 128,196  147,103  530,251  563,412
Cost of revenues  50,266  59,628  203,746  221,645
Gross Profit  77,930  87,475  326,505  341,767
Operating Expenses  67,529  73,067  270,456  280,132
Operating Income 10,401  14,408  56,049  61,635
Interest and other expense, net  (1,620)  192  (2,783)  (676)
Provision for income taxes, net  766  1,007  2,200  3,799
Net income  8,015  13,593  51,066  57,160
Net income per share - diluted $ 0.20  $ 0.35  $ 1.30  $ 1.46
         
Adjusted EBITDA        
Non-GAAP Operating Income (from above) 10,401  14,408  56,049  61,635
Depreciation  3,847  4,386  16,140  17,837
Amortization of capitalized software development costs  11  586  138  815
Adjusted EBITDA 14,259  19,380  72,327  80,287
         
Free Cash Flow        
GAAP net cash provided by (used in) operating activities 10,933  883  (9,897) (9,145)
Capital Expenditures  (1,632)  (2,627)  (13,292)  (11,625)
Restructuring/Other Payments  1,127  2,536  7,212  13,151
Restatement Payments  5,756  7,728  28,658  13,161
Free Cash Flow $ 16,184  $ 8,520  $ 12,681  $ 5,542
     
AVID TECHNOLOGY, INC.    
Condensed Consolidated Balance Sheets    
(unaudited - in thousands)    
     
 December 31,December 31,
 20142013
ASSETS:    
Current assets:    
Cash and cash equivalents  $ 25,056  $ 48,203
 Accounts receivable, net of allowances of $10,692 and $13,963     
 at December 31, 2014 and 2013, respectively   54,655  56,770
Inventories  48,001  60,122
Deferred tax assets, net  322  522
Prepaid expenses  6,892  7,778
Other current assets  17,932  17,493
Total current assets 152,858 190,888
     
Property and equipment, net  32,136  35,186
Intangible assets, net  2,445  4,260
Long-term deferred tax assets, net  1,886  2,415
Other long-term assets  2,274  2,393
Total assets  $ 191,599  $ 235,142
     
LIABILITIES AND STOCKHOLDERS' DEFICIT:    
Current liabilities:    
Accounts payable  $ 32,951  $ 33,990
Accrued compensation and benefits  32,636  30,342
Accrued expenses and other current liabilities  32,353  41,273
Income taxes payable  5,480  6,875
Deferred tax liabilities, net  --  14
Deferred revenues  206,608  211,403
Total current liabilities 310,028 323,897
     
Long-term deferred tax liabilities, net  136  565
Long-term deferred revenues  208,232  255,429
Other long-term liabilities  14,273  14,586
Total liabilities 532,669 594,477
     
Stockholders' deficit:    
Common stock. $0.01 par value, 100,000 shares authorized; 42,339 shares    
and 42,339 shares issued and 39,294 shares and 39,082 shares outstanding    
at December 31, 2014 and 2013, respectively  423  423
Additional paid-in capital  1,049,969  1,043,384
Accumulated deficit  (1,321,798)  (1,336,526)
Treasury stock at cost, net of reissuances, 3,045 shares    
and 3,257 shares at December 31, 2014 and 2013, respectively  (68,051)  (72,543)
Accumulated other comprehensive income  (1,613)  5,927
Total stockholders' deficit (341,070) (359,335)
Total liabilities and stockholders' deficit  $ 191,599  $ 235,142
     
AVID TECHNOLOGY, INC.    
Condensed Consolidated Statements of Cash Flows    
(unaudited - in thousands)    
     
 Twelve Months Ended
 December 31,
 20142013
     
Cash flows from operating activities:    
Net income  $ 14,728  $ 21,153
Adjustments to reconcile net income to net cash used in operating activities:    
Depreciation and amortization  17,954  22,767
(Recovery) expense from doubtful accounts  (143)  157
Gain on sale of assets  --  (125)
Stock-based compensation expense  11,513  6,917
Non-cash interest expense  220  294
Unrealized foreign currency transaction gains  (6,730)  (10)
Provision for deferred taxes  69  730
Changes in operating assets and liabilities:    
Accounts receivable  2,258  11,030
Inventories  12,122  9,021
Prepaid expenses and other current assets  (2,130)  4,393
Accounts payable  (947)  (1,416)
Accrued expenses, compensation and benefits and other liabilities  (5,758)  8,932
Income taxes payable  (1,090)  (1,324)
Deferred revenues  (51,963)  (91,664)
Net cash used in operating activities  (9,897)  (9,145)
     
Cash flows from investing activities:    
Purchases of property and equipment  (13,292)  (11,625)
Change in other long-term assets  (8)  (36)
Proceeds from divestiture of consumer business  1,500  --
Proceeds from sale of assets  --  125
Net cash used in investing activities  (11,800)  (11,536)
     
Cash flows from financing activities:    
Proceeds from the issuance of common stock under employee stock plans  252  177
Common stock repurchases for tax withholdings for net settlement of equity awards  (688)  (273)
Proceeds from revolving credit facilities  25,500  --
Payments on revolving credit facilities  (25,500)  --
Net cash used in financing activities  (436)  (96)
     
Effect of exchange rate changes on cash and cash equivalents  (1,014)  (1,410)
Net decrease in cash and cash equivalents  (23,147)  (22,187)
Cash and cash equivalents at beginning of period  48,203  70,390
Cash and cash equivalents at end of period  $ 25,056  $ 48,203
               
AVID TECHNOLOGY, INC.              
Revenue Backlog Schedule              
(unaudited - in thousands)              
               
               
 December 31,September 30,June 30,March 31,December 31,   
Revenue Backlog20142014201420142013YoY
       $%
Orders executed prior to January 1, 2011  $ 84,597  $ 104,629  $ 126,171  $ 150,000  $ 176,102  $ (91,505) -52%
Orders executed or materially modified on or  $ 330,243  $ 314,700  $ 303,780  $ 301,812  $ 290,730  $ 39,513 14%
after January 1, 2011              
Deferred Revenue $ 414,840  $ 419,329  $ 429,951  $ 451,812  $ 466,832  $ (51,992)-11%
Backlog  $ 124,670  $ 119,850  $ 113,175  $ 97,177  $ 92,225  $ 32,445 35%
Total Revenue Backlog  $ 539,510  $ 539,179  $ 543,126  $ 548,989  $ 559,057  $ (19,547) -3%
               
The expected timing of recognition of revenue backlog as of December 31, 2014 is as follows:
               
 Twelve Months Ended December 31,
 20152016201720182019ThereafterTotal
Orders executed prior to January 1, 2011  $ 58,543  $ 24,954  $ 955  $ 145  $ --   $ --   $ 84,597
Orders executed or materially modified on or  $ 147,477  $ 97,523  $ 49,697  $ 24,704  $ 10,785  $ 56  $ 330,242
after January 1, 2011              
Backlog  $ 82,532  $ 28,385  $ 11,547  $ 1,424  $ 509  $ 274  $ 124,671
Total Revenue Backlog  $ 288,552  $ 150,862  $ 62,199  $ 26,273  $ 11,294  $ 330  $ 539,510
CONTACT: Media Contact

         Lisa Kilborn

         Avid

         978.640.3230

         lisa.kilborn@avid.com

         

         Investor Contact

         Tom Fitzsimmons

         Avid

         978.640.3346

         tom.fitzsimmons@avid.com