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Avid Announces Results for Third Quarter 2011
The GAAP net loss for the third quarter of 2011 and 2010 included
amortization of intangible assets, stock-based compensation, gain on
asset sales, legal settlements and acquisition-related costs,
restructuring charges, and related tax adjustments collectively totaling
"The third quarter results showed sequential improvement in revenue and
profit," said
Revenues for the nine-month period ended
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 third quarter 2011 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, the terms used in this press release, such as non-GAAP net loss and 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 contents of this release are subject to 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. 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: Avid's
ability to execute on its corporate strategy and meet customer needs,
including the ability to produce innovative products in response to
changing market demand; competitive factors; fluctuations in Avid's
revenues, based on, among other things, Avid's performance in particular
geographies; general economic conditions and conditions within the
rapidly evolving media industry specifically; 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
© 2011
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Condensed Consolidated Statements of Operations | ||||||||||||||||
(unaudited - in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
|
|
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 131,875 | $ | 134,231 | $ | 398,400 | $ | 397,044 | ||||||||
Services | 33,090 | 30,828 | 94,232 | 86,131 | ||||||||||||
Total net revenues | 164,965 | 165,059 | 492,632 | 483,175 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Products | 60,048 | 64,421 | 187,663 | 193,527 | ||||||||||||
Services | 16,497 | 14,194 | 46,196 | 41,373 | ||||||||||||
Amortization of intangible assets | 685 | 745 | 2,036 | 2,657 | ||||||||||||
Total cost of revenues | 77,230 | 79,360 | 235,895 | 237,557 | ||||||||||||
Gross profit | 87,735 | 85,699 | 256,737 | 245,618 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 28,960 | 28,929 | 89,386 | 89,348 | ||||||||||||
Marketing and selling | 45,411 | 43,199 | 136,273 | 129,419 | ||||||||||||
General and administrative | 13,240 | 19,698 | 43,458 | 48,179 | ||||||||||||
Amortization of intangible assets | 2,159 | 2,283 | 6,465 | 7,557 | ||||||||||||
Restructuring and other costs, net | 2,707 | 185 | 328 | 5,532 | ||||||||||||
(Gain) loss on sales of assets | - | (1,527 | ) | 597 | (1,527 | ) | ||||||||||
Total operating expenses | 92,477 | 92,767 | 276,507 | 278,508 | ||||||||||||
Operating loss | (4,742 | ) | (7,068 | ) | (19,770 | ) | (32,890 | ) | ||||||||
Interest and other income (expense), net | (503 | ) | (30 | ) | (1,571 | ) | (132 | ) | ||||||||
Loss before income taxes | (5,245 | ) | (7,098 | ) | (21,341 | ) | (33,022 | ) | ||||||||
Provision for income taxes, net | 2,774 | 2,897 | 3,657 | 3,361 | ||||||||||||
Net loss |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Net loss per common share - basic and diluted |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Weighted-average common shares outstanding - basic and diluted | 38,511 | 38,045 | 38,386 | 37,826 |
|
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(unaudited - in thousands, except per share data) | |||||||||||||||||||
Reconciliations of GAAP financial measures to Non-GAAP financial measures: | |||||||||||||||||||
Three Months Ended |
|||||||||||||||||||
Gross | Operating | Operating | Tax | Net | |||||||||||||||
Profit | Expenses | (Loss) Income | Provision | (Loss) Income | |||||||||||||||
GAAP | $ | 87,735 | $ | 92,477 |
( |
) | $ | 2,774 |
( |
) | |||||||||
Amortization of intangible assets | 685 | (2,159 | ) | 2,844 | 2,844 | ||||||||||||||
Restructuring costs, net | (2,707 | ) | 2,707 | 2,707 | |||||||||||||||
Legal settlement and acquisition-related costs (a) | (163 | ) | 163 | 163 | |||||||||||||||
Tax adjustment | 815 | (815 | ) | ||||||||||||||||
Stock-based compensation included in: | |||||||||||||||||||
Cost of products revenues | 168 | 168 | 168 | ||||||||||||||||
Cost of services revenues | 63 | 63 | 63 | ||||||||||||||||
Research and development expenses | (435 | ) | 435 | 435 | |||||||||||||||
Marketing and selling expenses | (1,051 | ) | 1,051 | 1,051 | |||||||||||||||
General and administrative expenses | (1,788 | ) | 1,788 | 1,788 | |||||||||||||||
Non-GAAP | $ | 88,651 | $ | 84,174 | $ | 4,477 | $ | 3,589 | $ | 385 | |||||||||
Weighted-average shares outstanding - diluted | 38,530 | ||||||||||||||||||
Non-GAAP net income per share - diluted | $ | 0.01 | |||||||||||||||||
Three Months Ended |
|||||||||||||||||||
Gross | Operating | Operating | Tax | Net | |||||||||||||||
Profit | Expenses | (Loss) Income | Provision | (Loss) Income | |||||||||||||||
GAAP | $ | 85,699 | $ | 92,767 |
( |
) | $ | 2,897 |
( |
) | |||||||||
Amortization of intangible assets | 745 | (2,283 | ) | 3,028 | 3,028 | ||||||||||||||
Restructuring and other costs, net | (185 | ) | 185 | 185 | |||||||||||||||
Legal settlement and acquisition-related costs (a) | (5,656 | ) | 5,656 | 5,656 | |||||||||||||||
Gain on sales of assets | 527 | (527 | ) | (527 | ) | ||||||||||||||
Tax adjustment | 399 | (399 | ) | ||||||||||||||||
Stock-based compensation included in: | |||||||||||||||||||
Cost of products revenues | 176 | 176 | 176 | ||||||||||||||||
Cost of services revenues | 287 | 287 | 287 | ||||||||||||||||
Research and development expenses | (506 | ) | 506 | 506 | |||||||||||||||
Marketing and selling expenses | (1,078 | ) | 1,078 | 1,078 | |||||||||||||||
General and administrative expenses | (1,581 | ) | 1,581 | 1,581 | |||||||||||||||
Non-GAAP | $ | 86,907 | $ | 82,005 | $ | 4,902 | $ | 3,296 | $ | 1,576 | |||||||||
Weighted-average shares outstanding - diluted | 38,065 | ||||||||||||||||||
Non-GAAP net income per share - diluted |
$ | 0.04 | |||||||||||||||||
(a) Represents costs included in general and administrative expenses |
|
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(unaudited - in thousands, except per share data) | ||||||||||||||||||
Reconciliations of GAAP financial measures to Non-GAAP financial measures: | ||||||||||||||||||
Nine Months Ended |
||||||||||||||||||
Gross | Operating | Operating | Tax | Net | ||||||||||||||
Profit | Expenses | (Loss) Income | Provision | Loss | ||||||||||||||
GAAP | $ | 256,737 | $ | 276,507 |
( |
) | $ | 3,657 |
( |
) | ||||||||
Amortization of intangible assets | 2,036 | (6,465 | ) | 8,501 | 8,501 | |||||||||||||
Restructuring costs, net | (328 | ) | 328 | 328 | ||||||||||||||
Legal settlements and acquisition-related costs (a) | (555 | ) | 555 | 555 | ||||||||||||||
Loss on sales of assets | (597 | ) | 597 | 597 | ||||||||||||||
Tax adjustment | 1,115 | (1,115 | ) | |||||||||||||||
Stock-based compensation included in: | ||||||||||||||||||
Cost of products revenues | 417 | 417 | 417 | |||||||||||||||
Cost of services revenues | 608 | 608 | 608 | |||||||||||||||
Research and development expenses | (1,334 | ) | 1,334 | 1,334 | ||||||||||||||
Marketing and selling expenses | (3,625 | ) | 3,625 | 3,625 | ||||||||||||||
General and administrative expenses | (5,783 | ) | 5,783 | 5,783 | ||||||||||||||
Non-GAAP | $ | 259,798 | $ | 257,820 | $ | 1,978 | $ | 4,772 |
( |
) | ||||||||
Weighted-average shares outstanding - diluted | 38,386 | |||||||||||||||||
Non-GAAP net loss per share - diluted |
( |
) | ||||||||||||||||
Nine Months Ended |
||||||||||||||||||
Gross | Operating | Operating | Tax | Net | ||||||||||||||
Profit | Expenses | Loss | Provision | Loss | ||||||||||||||
GAAP | $ | 245,618 | $ | 278,508 |
( |
) | $ | 3,361 |
( |
) | ||||||||
Amortization of intangible assets | 2,657 | (7,557 | ) | 10,214 | 10,214 | |||||||||||||
Restructuring and other costs, net (b) | (5,532 | ) | 5,532 | 5,532 | ||||||||||||||
Legal settlement and acquisition-related costs (a) | (6,425 | ) | 6,425 | 6,425 | ||||||||||||||
Gain on sales of assets | 527 | (527 | ) | (527 | ) | |||||||||||||
Tax adjustment | 854 | (854 | ) | |||||||||||||||
Stock-based compensation included in: | ||||||||||||||||||
Cost of products revenues | 562 | 562 | 562 | |||||||||||||||
Cost of services revenues | 822 | 822 | 822 | |||||||||||||||
Research and development expenses | (1,704 | ) | 1,704 | 1,704 | ||||||||||||||
Marketing and selling expenses | (3,153 | ) | 3,153 | 3,153 | ||||||||||||||
General and administrative expenses | (4,373 | ) | 4,373 | 4,373 | ||||||||||||||
Non-GAAP | $ | 249,659 | $ | 250,291 |
( |
) | $ | 4,215 |
( |
) | ||||||||
Weighted-average shares outstanding - diluted | 37,826 | |||||||||||||||||
Non-GAAP net loss per share - diluted |
( |
) | ||||||||||||||||
(a) Represents costs included in general and administrative expenses | ||||||||||||||||||
(b) Includes costs of |
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Revenue Summary: | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
|
September 30, | |||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
Video revenues | $ | 98,443 | $ | 100,186 | $ | 289,325 | $ | 278,060 | ||||||||||
Audio revenues | 66,522 | 64,873 | 203,307 | 205,115 | ||||||||||||||
Total net revenues | $ | 164,965 | $ | 165,059 | $ | 492,632 | $ | 483,175 |
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Condensed Consolidated Balance Sheets | ||||||||
(unaudited - in thousands) | ||||||||
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2011 | 2010 | |||||||
ASSETS: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 33,652 | $ | 42,782 | ||||
Accounts receivable, net of allowances of |
||||||||
at |
92,904 | 101,171 | ||||||
Inventories | 126,029 | 108,357 | ||||||
Deferred tax assets, net | 1,081 | 1,068 | ||||||
Prepaid expenses | 6,598 | 7,688 | ||||||
Other current assets | 15,065 | 16,130 | ||||||
Total current assets | 275,329 | 277,196 | ||||||
Property and equipment, net | 57,063 | 62,519 | ||||||
Intangible assets, net | 21,327 | 29,750 | ||||||
Goodwill | 246,658 | 246,997 | ||||||
Other assets | 10,788 | 10,109 | ||||||
Total assets | $ | 611,165 | $ | 626,571 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
Current liabilities: | ||||||||
Borrowings under revolving credit facilities | $ | 13,000 | $ | 0 | ||||
Accounts payable | 35,090 | 47,340 | ||||||
Accrued compensation and benefits | 28,551 | 41,101 | ||||||
Accrued expenses and other current liabilities | 32,200 | 40,986 | ||||||
Income taxes payable | 4,570 | 4,640 | ||||||
Deferred revenues | 52,752 | 40,585 | ||||||
Total current liabilities | 166,163 | 174,652 | ||||||
Long-term liabilities | 30,060 | 25,309 | ||||||
Total liabilities | 196,223 | 199,961 | ||||||
Stockholders' equity: | ||||||||
Common stock | 423 | 423 | ||||||
Additional paid-in capital | 1,015,770 | 1,005,198 | ||||||
Accumulated deficit | (524,717 | ) | (495,254 | ) | ||||
Treasury stock at cost, net of reissuances | (83,612 | ) | (91,025 | ) | ||||
Accumulated other comprehensive income | 7,078 | 7,268 | ||||||
Total stockholders' equity | 414,942 | 426,610 | ||||||
Total liabilities and stockholders' equity | $ | 611,165 | $ | 626,571 |
|
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Condensed Consolidated Statements of Cash Flows | |||||||||||||||||
(unaudited - in thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
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2011 | 2010 | 2011 | 2010 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net loss |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||
Depreciation and amortization | 7,817 | 8,529 | 23,538 | 25,026 | |||||||||||||
Provision for doubtful accounts | 75 | 295 | 534 | 285 | |||||||||||||
Non-cash provision for restructuring | 133 | 42 | 258 | 291 | |||||||||||||
(Gain) loss on sales of assets | - | (1,527 | ) | 597 | (1,527 | ) | |||||||||||
Gain on disposal of fixed assets | (4 | ) | (24 | ) | (10 | ) | (70 | ) | |||||||||
Compensation expense from stock grants and options | 3,505 | 3,628 | 11,767 | 10,614 | |||||||||||||
Non-cash interest expense | 74 | - | 228 | - | |||||||||||||
Unrealized foreign currency transaction (gains) losses | (2,502 | ) | 5,501 | 3,988 | 253 | ||||||||||||
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions | - | (1,143 | ) | (4 | ) | (1,393 | ) | ||||||||||
Changes in operating assets and liabilities, excluding initial effects of acquisitions: | |||||||||||||||||
Accounts receivable | 5,346 | 10,319 | 7,574 | (7,202 | ) | ||||||||||||
Inventories | 3,767 | (17,088 | ) | (17,671 | ) | (15,344 | ) | ||||||||||
Prepaid expenses and other current assets | 489 | 1,763 | 778 | 7,032 | |||||||||||||
Accounts payable | (9,637 | ) | (7,088 | ) | (12,262 | ) | 13,832 | ||||||||||
Accrued expenses, compensation and benefits, and other liabilities | (7,883 | ) | (6,539 | ) | (24,129 | ) | (25,021 | ) | |||||||||
Income taxes payable | 1,822 | 3,257 | (209 | ) | 2,290 | ||||||||||||
Deferred revenues | 4,649 | (1,583 | ) | 16,464 | 6,763 | ||||||||||||
Net cash used in operating activities | (368 | ) | (11,653 | ) | (13,557 | ) | (20,554 | ) | |||||||||
Cash flows from investing activities: | |||||||||||||||||
Purchases of property and equipment | (2,784 | ) | (3,417 | ) | (8,862 | ) | (25,926 | ) | |||||||||
Decrease (increase) in other long-term assets | 102 | (149 | ) | (969 | ) | (82 | ) | ||||||||||
Payments for business acquisitions, net of cash acquired | - | - | - | (27,008 | ) | ||||||||||||
Purchases of marketable securities | - | - | - | (2,250 | ) | ||||||||||||
Proceeds from sales of marketable securities | - | - | - | 19,605 | |||||||||||||
Proceeds from sales of assets | - | 1,000 | - | 1,000 | |||||||||||||
Net cash used in investing activities | (2,682 | ) | (2,566 | ) | (9,831 | ) | (34,661 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from (payments related to) the issuance of common stock under employee stock plans, net | 404 | 261 | 1,753 | (61 | ) | ||||||||||||
Proceeds from revolving credit facilities | - | - | 21,000 | - | |||||||||||||
Payments on revolving credit facilities | - | - | (8,000 | ) | - | ||||||||||||
Net cash provided by (used in) financing activities | 404 | 261 | 14,753 | (61 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,259 | ) | 1,526 | (495 | ) | (1,880 | ) | ||||||||||
Net decrease in cash and cash equivalents | (3,905 | ) | (12,432 | ) | (9,130 | ) | (57,156 | ) | |||||||||
Cash and cash equivalents at beginning of period | 37,557 | 46,793 | 42,782 | 91,517 | |||||||||||||
Cash and cash equivalents at end of period | $ | 33,652 | $ | 34,361 | $ | 33,652 | $ | 34,361 |
Avid
PR Contact:
amy.paladino@avid.com
or
IR
Contact:
tom.fitzsimmons@avid.com
Source: Avid
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