UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 21, 2005
AVID TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21174 04-2977748
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
Avid Technology Park, One Park West, Tewksbury, MA 01876
(Address of Principal Executive Offices) (zip code)
Registrant's telephone number, including area code: (978) 640-6789
---------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
/ / Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2 (b) under
the Exchange Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On July 21, 2005, Avid Technology, Inc. announced its financial results
for the quarter ended June 30, 2005. The full text of the press release issued
in connection with the announcement is attached as Exhibit 99.1 to this Current
Report on Form 8-K.
The information in this Form 8-K and the Exhibit attached hereto shall
not be deemed "filed" for purposes of the Securities Exchange Act of 1934 (the
"Exchange Act"), nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933 or the Exchange Act, except as expressly set
forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be
furnished, and not filed:
99.1 Press Release issued by the Registrant on July 21, 2005.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 21, 2005 AVID TECHNOLOGY, INC.
(Registrant)
By: /s/ Paul Milbury
-------------------
Paul Milbury
Chief Financial Officer
(Principal Financial Officer)
3
EXHIBIT INDEX
Exhibit Description
99.1 Press release issued by the Registrant dated July 21, 2005.
4
Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
Avid Reports Second Quarter Results
Tewksbury, MA - July 21, 2005 - Avid Technology, Inc. (NASDAQ: AVID) today
reported revenues of $160.1 million for the three months ended June 30, 2005
compared to $139.9 million for the same period in 2004. GAAP net income for the
quarter was $13.6 million, or $.37 per diluted share compared to $15.5 million,
or $.45 per diluted share, in the second quarter of 2004. Excluding
acquisition-related amortization and related tax benefits and
acquisition-related stock-based compensation, non-GAAP net income for the second
quarter of 2005 was $15.9 million, or $.43 per diluted share, compared to
non-GAAP net income of $16.0 million, or $.47 per diluted share in the
corresponding quarter of 2004.
"This quarter's results were negatively impacted by new product delays in our
core broadcast markets as well as the negative effects of foreign currency
movements," said David Krall, Avid's president and chief executive officer.
"These product delays have shifted out revenues in our broadcast business, but
we are encouraged that the market demand for our broadcast products remains
robust, as indicated by our sequential increase in broadcast orders and backlog,
and that the fundamental growth indicators in each of the markets we serve are
still pointing in the right direction."
Revenues for the six months ended June 30, 2005, were $326.1 million compared to
revenues of $267.3 million for the same period in 2004. GAAP net income for the
first six months of 2005 was $33.3 million, or $.90 per diluted share, compared
to GAAP net income of $30.2 million, or $.89 per diluted share, for the same
period in 2004. Excluding acquisition-related amortization and related tax
benefits, acquisition-related stock-based compensation, non-recurring tax
benefits, and non-recurring expenses in the first quarter of 2004 related to the
settlement of a lawsuit, non-GAAP net income for the six months ended June 30,
2005, was $38.1 million, or $1.03 per diluted share, compared to $31.1 million,
or $.92 per diluted share, for the first six months of 2004.
Use of Non-GAAP Financial Measures
The non-GAAP operating results listed above are "non-GAAP financial measures"
under the rules of the Securities and Exchange Commission. We have included this
information because we believe it is a meaningful measure of our normalized
operating performance and will assist investors in understanding our results of
operations on a comparative basis. 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. We
use this information internally to help our management more accurately assess
the ongoing nature of our operations and measure our performance on a
comparative basis.
Conference Call
A conference call to discuss Avid's second quarter 2005 financial results and
the company's outlook for the balance of 2005 and the full year 2006 will be
held today, July 21, at 5:00 p.m. EDT. The call will be open to the public. The
conference call can be accessed by dialing (312) 461-9457 and referencing
confirmation code 4241723. The call and subsequent replay will also be available
on Avid's Web site. To listen via this alternative, go to the Investors page
under the Company menu at www.avid.com for complete details 10-15 minutes prior
to the start of the conference call.
The above release includes forward-looking statements, as defined by the Private
Securities Litigation Reform Act of 1995, about Avid's future performance. There
are a number of factors that could cause actual events or results to differ
materially from that indicated by such forward-looking statements, such as the
competitive market in which Avid operates, market acceptance of Avid's existing
and new products, Avid's ability to anticipate customer needs and the other
factors set forth under the caption "Certain Factors That May Affect Future
Results" in Avid's Form 10-Q for the quarter ended March 31, 2005, and other
filings with the SEC. In addition, the forward-looking statements contained
herein represent Avid's estimate only as of today and should not be relied upon
as representing the company's estimate 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 estimate
changes.
About Avid Technology, Inc.
Avid Technology, Inc. is the world leader in digital nonlinear media creation,
management, and distribution solutions, enabling film, video, audio, animation,
games, and broadcast professionals to work more efficiently, productively, and
creatively. For more information about the company's Oscar(R), Grammy(R), and
Emmy(R) award-winning products and services, please visit: www.avid.com.
(C) 2005 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film
Composer and Pro Tools are either registered trademarks or trademarks of Avid
Technology, Inc. in the United States and/or other countries. Avid received an
Oscar statuette representing the 1998 Scientific and Technical Award for the
concept, design, and engineering of the Avid Film Composer(R) system for motion
picture editing. Digidesign, Avid's audio division, received an Oscar statuette
representing the 2003 Scientific and Technical Award for the design,
development, and implementation of its Pro Tools(R) digital audio workstation.
Oscar is a trademark and service mark of the Academy of Motion Picture Arts and
Sciences. Emmy is a registered trademark of ATAS/NATAS. Grammy is a trademark of
the National Academy of Recording Arts and Sciences, Inc. All other trademarks
contained herein are the property of their respective owners.
AVID TECHNOLOGY, INC
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
------------------------- -------------------------
GAAP NON - GAAP
------------------------- -------------------------
Three Months Ended Three Months Ended
June 30th, June 30th,
2005 2004 2005 2004
----------- ---------- ----------- -----------
Revenue
Product $141,434 $124,269 $141,434 $124,269
Service 18,617 15,617 18,617 15,617
----------- ---------- ----------- -----------
Total Revenue 160,051 139,886 160,051 139,886
----------- ---------- ----------- -----------
Cost of Revenue
Product 61,244 52,152 61,244 52,152
Service 10,027 8,843 10,027 8,843
Amortization of intangible assets 282 - - -
----------- ---------- ----------- -----------
Total Cost of Revenue 71,553 60,995 71,271 60,995
----------- ---------- ----------- -----------
Gross Profit 88,498 78,891 88,780 78,891
----------- ---------- ----------- -----------
Operating Expenses
Research and development 24,871 22,924 24,871 22,924
Marketing and selling 39,999 33,656 39,999 33,656
General and administrative 8,362 6,184 8,362 6,184
Stock-based compensation (Note A) 601 - - -
Amortization of intangible assets 1,593 549 - -
----------- ---------- ----------- -----------
Total Operating Expenses 75,426 63,313 73,232 62,764
----------- ---------- ----------- -----------
Operating income 13,072 15,578 15,548 16,127
Interest and other income, net 1,179 595 1,179 595
----------- ---------- ----------- -----------
Income before income taxes 14,251 16,173 16,727 16,722
Provision for income taxes 857 700 857 700
Non-recurring tax benefits (172) - - -
----------- ---------- ----------- -----------
Net Income $13,566 $15,473 $15,870 $16,022
=========== ========== =========== ===========
Net income per common share - basic $0.39 $0.49 $0.45 $0.51
Net income per common share - diluted $0.37 $0.45 $0.43 $0.47
Weighted average common shares outstanding - basic 35,177 31,623 35,177 31,623
Weighted average common shares outstanding - diluted 37,024 34,134 37,024 34,134
Note
- ----
A. Stock based compensation related to stock options issued as part of the
acquisition of M-Audio is comprised of $38 of Research and development expense,
$163 of Marketing and selling expense, and $400 of General and administrative
expense, based on the departmental classification of the option holders.
Reconciliation of Non-GAAP net income to GAAP net income:
Three months ended June 30,
2005 2004
----------- ----------
Non-GAAP net income $ 15,870 $ 16,022
Stock-based compensation (601)
Amortization of intangible assets (1,875) (549)
Non-recurring tax benefits 172
----------- ----------
GAAP net income $ 13,566 $ 15,473
=========== ==========
AVID TECHNOLOGY, INC
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
-------------------------- --------------------------
GAAP NON - GAAP
-------------------------- --------------------------
Six Months Ended Six Months Ended
June 30th, June 30th,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenue
Product $288,812 $237,853 $288,812 $237,853
Service 37,240 29,407 37,240 29,407
----------- ----------- ----------- -----------
Total Revenue 326,052 267,260 326,052 267,260
----------- ----------- ----------- -----------
Cost of Revenue
Product 122,141 98,666 122,141 98,666
Service 20,097 16,432 20,097 16,432
Amortization of intangible assets 563 - - -
----------- ----------- ----------- -----------
Total Cost of Revenue 142,801 115,098 142,238 115,098
----------- ----------- ----------- -----------
Gross Profit 183,251 152,162 183,814 152,162
----------- ----------- ----------- -----------
Operating Expenses
Research and development 49,495 45,216 49,495 45,216
Marketing and selling 79,454 63,510 79,454 63,510
General and administrative 16,335 12,070 16,335 12,070
Stock-based compensation (Note A) 1,372 - - -
Amortization of intangible assets 3,185 988 - -
----------- ----------- ----------- -----------
Total Operating Expenses 149,841 121,784 145,284 120,796
----------- ----------- ----------- -----------
Operating income 33,410 30,378 38,530 31,366
Interest and other income, net 2,016 1,085 2,016 1,085
Legal settlement - 1,050 - -
----------- ----------- ----------- -----------
Income before income taxes 35,426 30,413 40,546 32,451
Provision for income taxes 2,459 1,400 2,459 1,400
Non-recurring tax benefits (345) (1,200) - -
----------- ----------- ----------- -----------
Net Income $33,312 $30,213 $38,087 $31,051
=========== =========== =========== ===========
Net income per common share - basic $0.95 $0.96 $1.09 $0.99
Net income per common share - diluted $0.90 $0.89 $1.03 $0.92
Weighted average common shares outstanding - basic 35,083 31,413 35,083 31,413
Weighted average common shares outstanding - diluted 37,154 33,912 37,154 33,912
Note
A. Stock based compensation related to stock options issued as part of the
acquisition of M-Audio is comprised of $93 of Research and development expense,
$355 of Marketing and selling expense, and $924 of General and administrative
expense, based on the departmental classification of the option holders.
Reconciliation of Non-GAAP net income to GAAP net income:
Six months ended June 30,
2005 2004
----------- -----------
Non-GAAP net income $ 38,087 $ 31,051
Stock-based compensation (1,372)
Amortization of intangible assets (3,748) (988)
Non-recurring tax benefits 345 1,200
Legal settlement (1,050)
----------- -----------
GAAP net income $ 33,312 $ 30,213
=========== ===========
Avid Technology, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2005 2004
----------------- -----------------
ASSETS:
Current assets:
Cash and marketable securities $ 192,553 $ 155,419
Accounts receivable, net of allowances of
$9,358 and $9,334 at June 30, 2005 and
December 31, 2004, respectively 99,132 97,536
Inventories 63,492 53,946
Prepaid and other current assets 22,652 19,407
----------------- -----------------
Total current assets 377,829 326,308
Property and equipment, net 29,976 29,092
Goodwill 167,211 165,803
Other intangible assets, net 43,139 46,884
Other assets 8,634 8,147
----------------- -----------------
Total assets $ 626,789 $ 576,234
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 28,960 $ 26,517
Accrued expenses and other current liabilities 71,781 74,727
Deferred revenues 59,244 48,680
----------------- -----------------
Total current liabilities 159,985 149,924
Long term liabilities, less current portion 1,465 1,689
----------------- -----------------
Total liabilities 161,450 151,613
----------------- -----------------
Stockholders' equity:
Common stock 353 348
Additional paid-in capital 555,766 546,849
Accumulated deficit (89,463) (122,775)
Deferred compensation (2,858) (4,392)
Accumulated other comprehensive income 1,541 4,591
----------------- -----------------
Total stockholders' equity 465,339 424,621
----------------- -----------------
Total liabilities and stockholders' equity $ 626,789 $ 576,234
================= =================