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): February 3, 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 February 3, 2005, Avid Technology, Inc. announced its financial
results for the quarter ended December 31, 2004 and year ended 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.
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 February 3, 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: February 3, 2005 AVID TECHNOLOGY, INC.
(Registrant)
By: /s/ Paul Milbury
-----------------
Paul Milbury
Chief Financial Officer
(Principal Financial Officer)
3
EXHIBIT INDEX
Exhibit Description
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99.1 Press release issued by the Registrant dated February 3, 2005.
4
Contact: Dean Ridlon, Investor Relations Director
Phone: 978.640.5309
Email: Investor_Relations@avid.com
Avid Finishes 2004 with Record Quarter and Year
Tewksbury, MA - February 3, 2005 - Avid Technology, Inc. (NASDAQ: AVID) today
reported record revenues of $175.0 million for the three months ended December
31, 2004 - a 37% increase over the $127.3 million generated in the corresponding
quarter in 2003. For the year ended December 31, 2004, Avid reported record
revenues of $589.6 million, up 25% from $471.9 million in 2003. This annual
revenue growth rate is Avid's highest since 1995, the year it acquired
Digidesign.
"It's been a fantastic year across all of our major markets, with strong results
in our video postproduction, broadcast, and audio businesses contributing to
Avid's highest annual revenue growth rate in nine years," said David Krall,
Avid's president and chief executive officer. "The postproduction industry,
where our tools are already used by the lion's share of industry professionals,
is undergoing a significant transition to HD. We experienced healthy demand for
our new Media Composer(R) Adrenaline(TM) HD and Avid Xpress(R) Pro HD systems,
which began shipping in December, and now offer HD capabilities across our
entire Avid DNA(TM) product line. We also had a solid quarter in broadcast,
finishing the year with over 100 deals signed, bringing the total number of
Avid(R) digital broadcast conversions either under way or completed to more than
250. Lastly, our fourth quarter audio revenues grew by 70% year over year, with
Digidesign successfully expanding its professional audio mixing business and
entering the live sound market, and M-Audio delivering its first full quarter of
results as a part of Avid in Q4."
GAAP operating profit for the fourth quarter of 2004 was $20.1 million compared
to $14.9 million for the same quarter in 2003. GAAP net income for the quarter
was $22.5 million, or $0.61 per diluted share, compared to GAAP net income of
$15.8 million, or $0.47 per diluted share, for the corresponding quarter in
2003. Excluding non-recurring tax benefits, acquisition-related stock-based
compensation and amortization, restructuring charges and a non-cash charge
related to the impairment of intangible assets, pro forma non-GAAP net income
for the fourth quarter was $23.5 million, or $0.64 per diluted share, compared
to pro forma non-GAAP net income of $16.9 million, or $.50 per diluted share, in
the fourth quarter of 2003.
GAAP operating profit for 2004 was $68.8 million, compared to $39.6 million in
2003. GAAP net income for 2004 was $71.7 million, or $2.05 per diluted share,
compared to GAAP net income of $40.9 million, or $1.25 per diluted share, for
2003. Excluding non-recurring tax benefits, acquisition-related stock-based
compensation and amortization, restructuring charges, expenses related to the
settlement of a lawsuit and a non-cash charge related to the impairment of
intangible assets, pro forma non-GAAP net income for 2004 was $74.9 million, or
$2.14 per diluted share, compared to $44.9 million, or $1.37 per diluted share,
for 2003.
Use of Non-GAAP Financial Measures
The pro forma operating results listed above are "non-GAAP financial measures"
under the rules of the Securities and Exchange Commission ("SEC"). 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 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 fourth quarter 2004 financial results and
the company's outlook for 2005 will be held today, February 3 at 5:00 p.m. EST.
The call will be open to the public. The conference call can be accessed by
dialing (719) 457-2649 and referencing confirmation code 8462916. 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 September 30, 2004, and other filings with the SEC. 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) 2005 Avid Technology, Inc. All rights reserved. Avid, Avid DNA, Avid Xpress,
Adrenaline, Film Composer, M-Audio, Media Composer, 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 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 for share and per share data)
------------------ -------------------
GAAP NON-GAAP
------------------ -------------------
Three Months Ended Three Months Ended
December 31, December 31,
--------- --------- --------- ---------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenue
Product $158,590 $115,146 $158,590 $115,146
Service 16,381 12,182 16,381 12,182
--------- --------- --------- ---------
Total Revenue 174,971 127,328 174,971 127,328
Cost of Revenue
Product 67,338 46,414 67,338 46,414
Service 9,807 7,340 9,807 7,340
Amortization of intangible assets 281
--------- --------- --------- ---------
Total Cost of Revenue 77,426 53,754 77,145 53,754
--------- --------- --------- ---------
Gross profit 97,545 73,574 97,826 73,574
--------- --------- --------- ---------
Operating expenses
Research and development 25,812 21,719 25,812 21,719
Marketing and selling 38,435 28,733 38,435 28,733
General and administrative 9,469 6,576 9,469 6,576
Stock-based compensation (Note A) 865
Restructuring and other costs, net 1,335
Amortization of intangible assets 1,665 341
Impairment of intangible assets 1,187
--------- --------- --------- ---------
Total operating expenses 77,433 58,704 73,716 57,028
Operating income 20,112 14,870 24,110 16,546
Interest and other income, net 653 544 653 544
--------- --------- --------- ---------
Income before income taxes 20,765 15,414 24,763 17,090
Provision for income taxes 1,313 200 1,313 200
Non-recurring tax benefits (3,062) (550)
--------- --------- --------- ---------
Net income $22,514 $15,764 $23,450 $16,890
========= ========= ========= =========
Net income per common share - basic $0.66 $0.51 $0.68 $0.55
========= ========= ========= =========
Net income per common share - diluted $0.61 $0.47 $0.64 $0.50
========= ========= ========= =========
Weighted average common shares outstanding - basic 34,355 30,764 34,355 30,764
========= ========= ========= =========
Weighted average common shares outstanding - diluted 36,751 33,864 36,751 33,864
========= ========= ========= =========
Note
- ----
A. Stock based compensationrelates primarily to stock options issued as part
of the acquisition of M-Audio.
Reconciliation of Non-GAAP net income to GAAP net income:
Three Months Ended
December 31,
2004 2003
----------- -----------
Non-GAAP net income $23,450 $16,890
Stock-based compensation (865)
Restructuring and other costs, net (1,335)
Amortization of intangible assets (1,946) (341)
Impairment of intangible assets (1,187)
tax refunds and benefits 3,062 550
----------- -----------
GAAP net income $22,514 $15,764
=========== ===========
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except for share and per share data)
------------------- -------------------
GAAP NON-GAAP
------------------- -------------------
Twelve Months Ended Twelve Months Ended
December 31, December 31,
--------- --------- --------- ---------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenue
Product $528,463 $425,403 $528,463 $425,403
Service 61,142 46,509 61,142 46,509
--------- --------- --------- ---------
Total Revenue 589,605 471,912 589,605 471,912
Cost of Revenue
Product 220,246 183,304 220,246 183,304
Service 34,842 26,069 34,842 26,069
Amortization of intangible assets 408
--------- --------- --------- ---------
Total Cost of Revenue 255,496 209,373 255,088 209,373
--------- --------- --------- ---------
Gross profit 334,109 262,539 334,517 262,539
--------- --------- --------- ---------
Operating expenses
Research and development 94,808 85,552 94,808 85,552
Marketing and selling 135,380 109,704 135,380 109,704
General and administrative 28,925 23,208 28,925 23,208
Stock-based compensation (Note A) 1,418
Restructuring and other costs, net 3,194
Amortization of intangible assets 3,641 1,316
Impairment of intangible assets 1,187
--------- --------- --------- ---------
Total operating expenses 265,359 222,974 259,113 218,464
Operating income 68,750 39,565 75,404 44,075
Interest and other income, net 2,389 1,874 2,389 1,874
Legal settlement (1,050)
--------- --------- --------- ---------
Income before income taxes 70,089 41,439 77,793 45,949
Provision for income taxes 2,894 1,100 2,894 1,100
Non-recurring tax benefits (4,506) (550)
--------- --------- --------- ---------
Net income $71,701 $40,889 $74,889 $44,849
========= ========= ========= =========
Net income per common share - basic $2.21 $1.40 $2.31 $1.54
========= ========= ========= =========
Net income per common share - diluted $2.05 $1.25 $2.14 $1.37
========= ========= ========= =========
Weighted average common shares outstanding - basic 32,485 29,192 32,485 29,192
========= ========= ========= =========
Weighted average common shares outstanding - diluted 35,003 32,653 35,003 32,653
========= ========= ========= =========
Note
A. Stock based compensationrelates primarily to stock options issued as part
of the acquisition of M-Audio.
Reconciliation of Non-GAAP net income to GAAP net income:
Twelve Months Ended
December 31,
2004 2003
----------- -----------
Non-GAAP net income $74,899 $44,849
Stock-based compensation (1,418)
Restructuring and other costs, net (3,194)
Amortization of intangible assets (4,049) (1,316)
Impairment of intangible assets (1,187)
Tax refunds and benefits 4,506 550
Legal settlement (1,050)
----------- -----------
GAAP net income $71,701 $40,889
=========== ===========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
December 31, December 31,
2004 2003
-------------- --------------
ASSETS:
Current assets:
Cash and marketable securities $155,419 $196,309
Accounts receivable, net of allowances of $9,334 and $9,161
at December 31, 2004 and December 31, 2003, respectively 97,536 69,230
Inventories 53,946 38,292
Prepaid and other current assets 19,407 13,181
-------------- --------------
Total current assets 326,308 317,012
Property and equipment, net 29,092 23,223
Acquisition-related intangible assets, net 46,884 1,815
Goodwill 165,803 3,335
Other assets 7,384 2,734
-------------- --------------
Total assets $575,471 $348,119
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $26,517 $15,755
Accrued expenses and other current liabilities 74,727 59,709
Deferred revenue and deposits 48,680 44,943
-------------- --------------
Total current liabilities 149,924 120,407
Long term liabilities, less current portion 926 607
-------------- --------------
Total liabilities 150,850 121,014
-------------- --------------
Total stockholders' equity 424,621 227,105
-------------- --------------
Total liabilities and stockholders' equity $575,471 $348,119
============== ==============
