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): October 26, 2004
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
This is Page 1 of 4 pages
Exhibit Index is on Page 4
Item 2.02 Disclosure of Results of Operations and Financial Condition
On October 26, 2004, the Registrant announced its financial results for
the quarter ended September 30, 2004. 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.
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: October 26, 2004 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 of the Registrant dated October 26, 2004.
4
Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
Avid Reports Highest Ever Quarterly Revenue and Operating Profit
Tewksbury, MA - October 26, 2004 - Avid Technology, Inc. (NASDAQ: AVID) today
reported the highest quarterly GAAP revenue and operating profit in the
company's history. Revenues for the three months ended September 30, 2004, were
$147.4 million, a 24% increase over the $119.1 million in the corresponding
quarter in 2003. GAAP operating profit for the third quarter of 2004 was $18.3
million compared to $11.6 million for the same quarter in 2003. GAAP net income
for the quarter was $19.0 million, or $0.54 per diluted share, compared to GAAP
net income of $11.8 million, or $0.35 per diluted share, for the corresponding
quarter in 2003. Excluding a non-recurring tax benefit, acquisition-related
stock-based compensation and amortization, and restructuring charges, pro forma
non-GAAP net income for the third quarter was $20.4 million, or $.58 per diluted
share, compared to pro forma non-GAAP net income of $12.3 million, or $.37 per
diluted share, in the third quarter of 2003.
Revenues for the nine months ended September 30, 2004, were $414.6 million
compared to revenues of $344.6 million for the same period in 2003. GAAP
operating profit for the first nine months of 2004 was $48.6 million compared to
$24.7 million for the same period in 2003. GAAP net income for the nine months
ended September 30, 2004, was $49.2 million, or $1.43 per diluted share,
compared to GAAP net income of $25.1 million, or $0.78 per diluted share, for
the same period in 2003. Excluding non-recurring tax benefits,
acquisition-related stock-based compensation and amortization, restructuring
charges, and expenses related to the settlement of a lawsuit, pro forma non-GAAP
net income for the nine months ended September 30, 2004, was $51.4 million, or
$1.50 per diluted share, compared to $28.0 million, or $.87 per diluted share,
for the first nine months of 2003.
"This quarter, we posted a 24% year-over-year increase in revenue and a
better-than 50% year-over-year increase in earnings per share, reflecting solid
performance across the entire business," said David Krall, Avid's president and
chief executive officer. "In video postproduction, we more than doubled our
year-over-year sales of the Avid DS Nitris family of products, which underscores
the strong demand for best-in-class HD tools for television and feature film
production. In broadcast, we had our most successful quarter in terms of the
total number of deals signed - bringing the total number of Avid digital
broadcast conversions either under way or completed to more than 200 and keeping
us on track to hit the high end of our target of 80-100 deals for 2004. Lastly,
a strong performance in all areas of Digidesign's business, combined with the
acquisition of M-Audio - the results of which are included in the last six weeks
of the quarter - helped push our year-over-year revenue growth in audio to 60%."
Use of Non-GAAP Financial Measures
The pro forma operating results listed above are "non-GAAP financial measures"
under SEC rules. 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 pro forma information supplements, and is not intended to represent a
measure of performance in accordance with, disclosures required by 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 third quarter 2004 financial results and the
company's outlook for the fourth quarter of 2004 and for 2005 will be held
today, October 26 at 5:00 p.m. EDT. The call will be open to the public. The
conference call can be accessed by dialing (719) 457-2629 and referencing
confirmation code 807503. 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 a forward-looking statement, 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
statement, such as the competitive market in which Avid operates, market
acceptance of Avid's existing and new products, Avid's ability to anticipate
customers' 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 June 30, 2004, and other filings with the Securities and Exchange
Commission. In addition, the forward-looking statement contained herein
represents 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 this forward-looking statement 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) 2004 Avid Technology, Inc. All rights reserved. Avid, Film Composer, Nitris,
Avid Xpress, Digidesign, 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(R) 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
September 30, September 30,
--------- --------- --------- ---------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues $147,374 $119,090 $147,374 $119,090
Cost of revenues 62,845 52,784 62,845 52,784
Amortization of intangible assets 127
--------- --------- --------- ---------
Gross profit 84,402 66,306 84,529 66,306
--------- --------- --------- ---------
Operating expenses:
Research and development 23,780 20,706 23,780 20,706
Marketing and selling 33,435 27,959 33,435 27,959
General and administrative 7,386 5,670 7,386 5,670
Stock-based compensation (Note A) 553
Restructuring and other costs, net 76
Amortization of intangible assets 988 341
--------- --------- --------- ---------
Total operating expenses 66,142 54,752 64,601 54,335
Operating income 18,260 11,554 19,928 11,971
Interest and other income, net 651 592 651 592
--------- --------- --------- ---------
Income before income taxes 18,911 12,146 20,579 12,563
Provision for income taxes 181 300 181 300
Non-recurring tax benefits (244)
--------- --------- --------- ---------
Net income $18,974 $11,846 $20,398 $12,263
========= ========= ========= =========
Net income per common share - basic $0.58 $0.40 $0.62 $0.41
========= ========= ========= =========
Net income per common share - diluted $0.54 $0.35 $0.58 $0.37
========= ========= ========= =========
Weighted average common shares outstanding - basic 32,737 29,865 32,737 29,865
========= ========= ========= =========
Weighted average common shares outstanding - diluted 35,033 33,380 35,033 33,380
========= ========= ========= =========
Note
- ----
A. Stock based compensation, related to stock iotions issued as part of the
acquisition of M-Audio, is comprised of $99 of Research and development
expense, $154 of Marketing and selling expense, and $300 of General and
administrative expense, based on teh departmental clasification of the
option holders.
Reconciliation of Non-GAAP net income to GAAP net income:
Three Months Ended
September 30,
2004 2003
----------- -----------
Non-GAAP net income $20,398 $12,263
Stock-based compensation (553)
Restructuring and other costs, net (76)
Amortization of intangible assets (1,115) (341)
Tax refunds 244
----------- -----------
GAAP net income $18,974 $11,846
=========== ===========
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
GAAP NON-GAAP
------------------ -------------------
Nine Months Ended Nine Months Ended
September 30, September 30,
--------- --------- --------- ---------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues $414,634 $344,584 $414,634 $344,584
Cost of revenues 177,943 155,619 177,943 155,619
Amortization of intangible assets 127
--------- --------- --------- ---------
Gross profit 236,564 188,965 236,691 188,965
--------- --------- --------- ---------
Operating expenses:
Research and development 68,996 63,833 68,996 63,833
Marketing and selling 96,945 80,971 96,945 80,971
General and administrative 19,456 16,632 19,456 16,632
Stock-based compensation (Note A) 553
Restructuring and other costs, net 1,859
Amortization of intangible assets 1,976 975
--------- --------- --------- ---------
Total operating expenses 187,926 164,270 185,397 161,436
Operating income 48,638 24,695 51,294 27,529
Interest and other income, net 1,736 1,330 1,736 1,330
Legal settlement (1,050)
--------- --------- --------- ---------
Income before income taxes 49,324 26,025 53,030 28,859
Provision for income taxes 1,581 900 1,581 900
Non-recurring tax benefits (1,444)
--------- --------- --------- ---------
Net income $49,187 $25,125 $51,449 $27,959
========= ========= ========= =========
Net income per common share - basic $1.54 $0.88 $1.61 $0.98
========= ========= ========= =========
Net income per common share - diluted $1.43 $0.78 $1.50 $0.87
========= ========= ========= =========
Weighted average common shares outstanding - basic 31,857 28,663 31,857 28,663
========= ========= ========= =========
Weighted average common shares outstanding - diluted 34,374 32,059 34,374 32,059
========= ========= ========= =========
Note
- ----
A. Stock based compensation, related to stock iotions issued as part of the
acquisition of M-Audio, is comprised of $99 of Research and development
expense, $154 of Marketing and selling expense, and $300 of General and
administrative expense, based on teh departmental clasification of the
option holders.
Reconciliation of Non-GAAP net income to GAAP net income:
Nine Months Ended
September 30,
2004 2003
----------- -----------
Non-GAAP net income $51,449 $27,959
Stock-based compensation (553)
Restructuring and other costs, net (1,859)
Amortization of intangible assets (2,103) (975)
Tax refunds 1,444
Legal settlement (1,050)
----------- -----------
GAAP net income $49,187 $25,125
=========== ===========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
September 30, December 31,
2004 2003
-------------- --------------
ASSETS:
Current assets:
Cash and marketable securities $120,082 $196,309
Accounts receivable, net of allowances of $9,193 and $9,161
at September 30, 2004 and December 31, 2003, respectively 94,438 69,230
Inventories 54,913 38,292
Prepaid and other current assets 13,952 13,181
-------------- --------------
Total current assets 283,385 317,012
Property and equipment, net 26,558 23,223
Acquisition-related intangible assets, net 215,373 5,150
Other assets 6,361 2,734
-------------- --------------
Total assets $531,677 $348,119
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $26,214 $15,755
Accrued expenses and other current liabilities 69,568 59,709
Deferred revenue and deposits 52,615 44,943
-------------- --------------
Total current liabilities 148,397 120,407
Long term liabilities, less current portion 1,818 607
-------------- --------------
Total liabilities 150,215 121,014
-------------- --------------
Total stockholders' equity 381,462 227,105
-------------- --------------
Total liabilities and stockholders' equity $531,677 $348,119
============== ==============