Avid Technology, Inc.
Feb 7, 2012

Avid Announces Results for Fourth Quarter 2011

Reports First Quarterly GAAP Net Income Since 2007

BURLINGTON, Mass.--(BUSINESS WIRE)-- Avid® (NASDAQ: AVID) today reported revenues of $185.3 million for the three-month period ended December 31, 2011, compared to $195.3 million for the same period in 2010. The GAAP net income for the fourth quarter was $1.2 million or $0.03 per share, compared to a GAAP net loss of $571,000 or $0.01 per share, in the fourth quarter of 2010.

The GAAP net income for the fourth quarter of 2011 and GAAP net loss for 2010 included amortization of intangible assets, stock-based compensation, gain on asset sales in 2010 only, restructuring and other charges, and related tax adjustments collectively totaling $13.4 million and $14.8 million, respectively. Excluding these items, the non-GAAP net income for the fourth quarter of 2011 was $14.6 million, or $0.38 per share, compared to non-GAAP net income of $14.2 million, or $0.37 per share, for the fourth quarter of 2010.

"Our results for the fourth quarter were encouraging and reflect our continued efforts to streamline our operations and improve execution across the business," said Gary Greenfield, chairman and CEO of Avid. "For the quarter, we reported positive GAAP net income for the first time since 2007, positive cash flow from operations and the highest gross margin as a percent of revenue since 2005. In addition, we have implemented the restructuring we announced in October and expect to see additional benefit from these actions in 2012. We continue to identify and implement changes across the Company to help improve our operational performance and remain sharply focused on improving profitability while driving revenue growth."

Revenues for the twelve-month period ended December 31, 2011 were $677.9 million, compared to revenues of $678.5 million for the same period in 2010. The GAAP net loss for 2011 was $23.8 million, or $0.62 per share, compared to a GAAP net loss of $37.0 million, or $0.98 per share, for 2010. The GAAP net loss for 2011 and 2010 included $34.0 million and $46.2 million, respectively, of amortization of intangible assets, stock-based compensation, restructuring and other charges, gain or loss on sales of assets, legal settlements, acquisition-related costs and related tax adjustments. Excluding these items, the non-GAAP net income for 2011 was $10.2 million, or $0.26 per share, compared to a non-GAAP net income of $9.2 million, or $0.24 per share, for 2010.

A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

Conference Call

A conference call to discuss Avid's fourth quarter 2011 financial results will be held today, February 7, 2012 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 Non-GAAP Financial Measures

This press release contains "non-GAAP financial measures" under the rules of the U.S. Securities and Exchange Commission. 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. The reconciliation of the GAAP to non-GAAP financial measures is in the tables attached to this press release.

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 income, 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 Annual Report on Form 10-K which will reflect our audited results. 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: such as 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, 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 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®, 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 YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2012 Avid Technology, Inc. All rights reserved. Product features, specifications, system requirements and availability are subject to change without notice. All prices are MSRP for the U.S. and Canada only and are subject to change without notice. Contact your local Avid office or reseller for prices outside the U.S. and Canada. Avid, the Avid logo, Fast Track, M-Audio, Media Composer, Pro Tools, Interplay, ISIS, Sibelius, and Avid Studio 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 Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Net revenues:
Products $

147,971

$ 162,863 $

546,371

$ 559,907
Services   37,333     32,484     131,565     118,615  
Total net revenues  

185,304

    195,347    

677,936

    678,522  
 
Cost of revenues:
Products

66,221

74,458

255,735

267,985
Services 18,137 15,117 62,482 56,490
Amortization of intangible assets   657     642     2,693     3,299  
Total cost of revenues

85,015

90,217

320,910

327,774
       
Gross profit  

100,289

    105,130    

357,026

    350,748  
 
Operating expenses:
Research and development 28,722 30,881 118,108 120,229
Marketing and selling 47,592 47,759 183,865 177,178
General and administrative

14,393

16,166

57,851

64,345
Amortization of intangible assets 2,063 2,186 8,528 9,743
Restructuring and other costs, net 8,530 14,918 8,858 20,450
(Gain) loss on sales of assets   -     (3,502 )   597     (5,029 )
Total operating expenses  

101,300

    108,408    

377,807

    386,916  
 
Operating loss

(1,011

) (3,278 )

(20,781

) (36,168 )
 
Interest and other income (expense), net   (497 )   (258 )   (2,068 )   (390 )
Loss before income taxes

(1,508

) (3,536 )

(22,849

) (36,558 )
 
(Benefit from) provision for income taxes, net   (2,715 )   (2,965 )   942     396  
 
Net income (loss) $

1,207

    ($571 )  

($23,791

)   ($36,954 )
 
Net income (loss) per common share - basic $

0.03

    ($0.01 )  

($0.62

)   ($0.98 )
 
Net income (loss) per common share - diluted $

0.03

    ($0.01 )  

($0.62

)   ($0.98 )
 
Weighted-average common shares outstanding - basic 38,580 38,101 38,435 37,895
 
Weighted-average common shares outstanding - diluted 38,584 38,101 38,435 37,895
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
       
Reconciliations of GAAP financial measures to Non-GAAP financial measures:
 

Three Months Ended December 31, 2011

 
Gross Operating Operating Tax Net
Profit Expenses (Loss) Income   Benefit Income
GAAP $

100,289

$

101,300

($1,011

) ($2,715 ) $

1,207

 

Amortization of intangible assets

657 (2,063 ) 2,720 2,720
Restructuring costs, net (8,530 ) 8,530 8,530
Tax adjustment 750 (750 )
Stock-based compensation included in:
Cost of products revenues 2 2 2
Cost of services revenues 156 156 156
Research and development expenses (300 ) 300 300
Marketing and selling expenses (1,105 ) 1,105 1,105
General and administrative expenses     (1,289 )   1,289       1,289  
Non-GAAP $

101,104

$

88,013

$

13,091

($1,965 ) $

14,559

 
Weighted-average shares outstanding - diluted 38,584
 
Non-GAAP net income per share - diluted $

0.38

 

Three Months Ended December 31, 2010

 
Gross Operating Operating Tax Net
Profit Expenses (Loss) Income   Benefit (Loss) Income
GAAP $ 105,130 $ 108,408 ($3,278 ) ($2,965 ) ($571 )
 
Amortization of intangible assets 642 (2,186 ) 2,828 2,828
Restructuring and other costs, net (14,918 ) 14,918 14,918
Gain on sales of assets 3,502 (3,502 ) (3,502 )
Tax adjustment 2,752 (2,752 )
Stock-based compensation included in:
Cost of products revenues 162 162 162
Cost of services revenues 232 232 232
Research and development expenses (523 ) 523 523
Marketing and selling expenses (956 ) 956 956
General and administrative expenses     (1,434 )   1,434       1,434  
Non-GAAP $ 106,166 $ 91,893 $ 14,273 ($213 ) $ 14,228
 
Weighted-average shares outstanding - diluted 38,182
 
Non-GAAP net income per share - diluted $ 0.37
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
         
Reconciliations of GAAP financial measures to Non-GAAP financial measures:
 

Twelve Months Ended December 31, 2011

 
Gross Operating Operating Tax Net
Profit Expenses (Loss) Income   Provision (Loss) Income
GAAP $

357,026

$

377,807

($20,781

) $ 942

($23,791

)
 
Amortization of intangible assets 2,693 (8,528 ) 11,221 11,221
Restructuring costs, net (8,858 ) 8,858 8,858
Legal settlements and acquisition-related costs (a) (555 ) 555 555
Loss on sales of assets (597 ) 597 597
Tax adjustment 1,865 (1,865 )
Stock-based compensation included in:
Cost of products revenues 419 419 419
Cost of services revenues 764 764 764
Research and development expenses (1,634 ) 1,634 1,634
Marketing and selling expenses (4,730 ) 4,730 4,730
General and administrative expenses     (7,072 )   7,072       7,072  
Non-GAAP $

360,902

$

345,833

$

15,069

$ 2,807 $

10,194

 
Weighted-average shares outstanding - diluted 38,534
 
Non-GAAP net income per share - diluted $

0.26

 

Twelve Months Ended December 31, 2010

 
Gross Operating Operating Tax Net
Profit Expenses (Loss) Income Provision (Loss) Income
GAAP $ 350,748 $ 386,916 ($36,168 ) $ 396 ($36,954 )
 
Amortization of intangible assets 3,299 (9,743 ) 13,042 13,042
Restructuring and other costs, net (b) (20,450 ) 20,450 20,450
Legal settlement and acquisition-related costs (a) (6,425 ) 6,425 6,425
Gain on sales of assets 4,029 (4,029 ) (4,029 )
Tax adjustment 3,606 (3,606 )
Stock-based compensation included in:
Cost of products revenues 724 724 724
Cost of services revenues 1,054 1,054 1,054
Research and development expenses (2,227 ) 2,227 2,227
Marketing and selling expenses (4,109 ) 4,109 4,109
General and administrative expenses     (5,807 )   5,807       5,807  
Non-GAAP $ 355,825 $ 342,184 $ 13,641 $ 4,002 $ 9,249
 
Weighted-average shares outstanding - diluted 37,963
 
Non-GAAP net income per share - diluted $ 0.24
 

(a) Represents costs included in general and administrative expenses

(b) Includes costs of $3.7 million related to exiting our former Tewksbury, Massachusetts headquarters lease

 
Revenue Summary:
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Video revenues $ 116,229 $ 117,793 $ 405,471 $ 395,853
Audio revenues  

69,075

$ 77,554  

 

272,465

    282,669
Total net revenues $

185,304

$ 195,347   $

677,936

  $ 678,522
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
   
December 31, December 31,
2011 2010
ASSETS:
Current assets:
Cash and cash equivalents $ 32,855 $ 42,782
Accounts receivable, net of allowances of $15,985 and $17,149 at December 31, 2011 and 2010, respectively
104,305 101,171
Inventories 111,833 108,357
Deferred tax assets, net 1,480 1,068
Prepaid expenses 7,652 7,688
Other current assets   14,509     15,701  
Total current assets 272,634 276,767
 
Property and equipment, net 53,487 62,519
Intangible assets, net 18,524 29,750
Goodwill 246,398 246,997
Other assets   11,568     10,538  
 
Total assets $ 602,611   $ 626,571  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 42,533 $ 47,340
Accrued compensation and benefits

31,350

38,686
Accrued expenses and other current liabilities 34,174 40,986
Income taxes payable 3,898 4,640
Deferred revenues   45,768     43,634  
Total current liabilities

157,723

175,286
 
Long-term liabilities   27,885     24,675  
Total liabilities  

185,608

    199,961  
 
Stockholders' equity:
Common stock 423 423
Additional paid-in capital 1,018,604 1,005,198
Accumulated deficit

(524,530

) (495,254 )
Treasury stock at cost, net of reissuances (82,301 ) (91,025 )
Accumulated other comprehensive income   4,807     7,268  
Total stockholders' equity  

417,003

    426,610  
 
Total liabilities and stockholders' equity $ 602,611   $ 626,571  
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
     
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Cash flows from operating activities:
Net income (loss) $

1,207

($571 )

($23,791

) ($36,954 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 8,445 8,454 31,983 33,480
Provision for doubtful accounts 1,028 (91 ) 1,562 194
Non-cash provision for restructuring 68 126 326 417
(Gain) loss on sales of assets - (3,502 ) 597 (5,029 )
Gain on disposal of fixed assets (14 ) (8 ) (24 ) (78 )
Compensation expense from stock grants and options 2,852 3,307 14,619 13,921
Non-cash interest expense 73 52 301 52
Unrealized foreign currency transaction (gains) losses (4,123 ) 825 (135 ) 1,078
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions (1,654 ) 233 (1,658 ) (1,160 )
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable (12,479 ) (12,111 ) (4,905 ) (19,313 )
Inventories 14,196 (12,328 ) (3,475 ) (27,672 )
Prepaid expenses and other current assets (1,076 ) 2,219 (298 ) 9,251
Accounts payable 7,493 2,109 (4,769 ) 15,941
Accrued expenses, compensation and benefits, and other liabilities

9,806

25,737

(14,323

) 716
Income taxes payable (548 ) (621 ) (757 ) 1,669
Deferred revenues   (10,853 )   (5,947 )   5,611     816  
Net cash provided by (used in) operating activities   14,421     7,883     864     (12,671 )
 
Cash flows from investing activities:
Purchases of property and equipment (1,909 ) (2,966 ) (10,771 ) (28,892 )
Increase in other long-term assets (130 ) (441 ) (1,099 ) (523 )
Payments for business acquisitions, net of cash acquired - - - (27,008 )
Proceeds from sales of assets - 3,502 - 4,502
Purchases of marketable securities - - - (2,250 )
Proceeds from sales of marketable securities   -     -     -     19,605  
Net cash (used in) provided by investing activities   (2,039 )   95     (11,870 )   (34,566 )
 
Cash flows from financing activities:
Proceeds from (payments related to) the issuance of common stock under employee stock plans, net 274 797 2,027 736
Proceeds from revolving credit facilities - 5,000 21,000 5,000
Payments on revolving credit facilities (13,000 ) (5,000 ) (21,000 ) (5,000 )
Payments for credit facility issuance costs   -     (1,132 )   -     (1,132 )
Net cash (used in) provided by financing activities   (12,726 )   (335 )   2,027     (396 )
 
Effect of exchange rate changes on cash and cash equivalents   (453 )   778     (948 )   (1,102 )
Net (decrease) increase in cash and cash equivalents (797 ) 8,421 (9,927 ) (48,735 )
Cash and cash equivalents at beginning of period   33,652     34,361     42,782     91,517  
Cash and cash equivalents at end of period $ 32,855   $ 42,782   $ 32,855   $ 42,782  

Avid
PR Contact:
Amy Paladino, 781-772-1005
amy.paladino@avid.com
or
IR Contact:
Tom Fitzsimmons, 978-640-3346
tom.fitzsimmons@avid.com

Source: Avid

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