Avid Announces Results for First Quarter

Reports 5th Consecutive Quarter of Year-on-Year Revenue Growth

BURLINGTON, Mass.--()--Avid® (NASDAQ: AVID) today reported revenues of $166.3 million for the three-month period ended March 31, 2011, compared to $156.0 million for the same period in 2010. The GAAP net loss for the first quarter was $5.1 million, or $0.13 per share, compared to a GAAP net loss of $13.5 million, or $0.36 per share, in the first quarter of 2010.

The GAAP net loss for the first quarter of 2010 and 2011 included amortization of intangible assets, stock-based compensation, restructuring and other charges and related tax adjustments collectively totaling $8.9 million and $4.3 million, respectively. Excluding these items, non-GAAP net loss for the first quarter of 2011 was $0.8 million, or $0.02 per share, compared to a non-GAAP net loss of $4.6 million, or $0.12 per share, for the first quarter of 2010.

“We are building on the momentum we established throughout the past year,” said Gary Greenfield, chairman and CEO at Avid. “This quarter represented the third consecutive quarter that we achieved a non-GAAP operating profit. With a number of new products now in the market, and a Q1 non-GAAP operating profit for the first time since 2007, we are off to a solid start for the year.”

The GAAP operating loss for the first quarter of 2011 was $3.4 million. This included amortization of intangible assets, stock-based compensation and restructuring items collectively totaling $4.3 million. Excluding these items, non-GAAP operating profit was $0.9 million for the first quarter of 2011.

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 first quarter 2011 financial results will be held today, April 21, 2011 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 that we provide 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, the terms used in this press release, such as non-GAAP net loss, 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.

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, Oxygen 8, Sibelius®, System 5, and Pinnacle Studio™. For more information about Avid solutions and services, visit www.avid.com, del.icio.us, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2011 Avid Technology, Inc. All rights reserved. Avid, the Avid Logo, Interplay, ISIS, Media Composer, Pinnacle Studio, Pro Tools and Sibelius 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 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
March 31,
2011 2010
Net revenues:
Products $ 137,335 $ 128,679
Services   28,988     27,277  
Total net revenues   166,323     155,956  
 
Cost of revenues:
Products 64,651 63,269
Services 14,387 14,040
Amortization of intangible assets   666     966  
Total cost of revenues 79,704 78,275
   
Gross profit   86,619     77,681  
 
Operating expenses:
Research and development 29,973 30,151
Marketing and selling 44,810 41,746
General and administrative 15,298 14,602
Amortization of intangible assets 2,145 2,857
Restructuring (recoveries) costs, net   (2,216 )   1,340  
Total operating expenses   90,010     90,696  
 
Operating loss (3,391 ) (13,015 )
 
Interest and other income (expense), net   (300 )   -  
Loss before income taxes (3,691 ) (13,015 )
 
Provision for income taxes, net   1,426     467  
 
Net loss   ($5,117 )   ($13,482 )
 
Net loss per common share - basic and diluted   ($0.13 )   ($0.36 )
 
Weighted-average common shares outstanding - basic and diluted 38,228 37,516
 

       
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
 
Reconciliations of GAAP financial measures to Non-GAAP financial measures:
 
Three Months Ended March 31, 2011
 

Gross
Profit

Operating
Expenses

Operating
(Loss) Income

Tax
Provision

Net
Loss

GAAP $ 86,619 $ 90,010 ($3,391 ) $ 1,426 ($5,117 )
 
Amortization of intangible assets 666 (2,145 ) 2,811 2,811
Restructuring recoveries, net 2,216 (2,216 ) (2,216 )
Tax adjustment 55 (55 )
Stock-based compensation included in:
Cost of products revenues 139 139 139
Cost of services revenues 268 268 268
Research and development expenses (472 ) 472 472
Marketing and selling expenses (1,218 ) 1,218 1,218
General and administrative expenses (1,640 ) 1,640 1,640
         
Non-GAAP $ 87,692 $ 86,751 $ 941 $ 1,481 ($840 )
 
Weighted-average shares outstanding - diluted 38,228
 
Non-GAAP net income per share - diluted ($0.02 )
 
Three Months Ended March 31, 2010
 

Gross
Profit

Operating
Expenses

Operating
Loss

Tax
Provision

Net
Loss

GAAP $ 77,681 $ 90,696 ($13,015 ) $ 467 ($13,482 )
 
Amortization of intangible assets 966 (2,857 ) 3,823 3,823
Restructuring costs, net (1,340 ) 1,340 1,340
Acquisition-related costs (a) (686 ) 686 686
Tax adjustment 284 (284 )
Stock-based compensation included in:
Cost of products revenues 189 189 189
Cost of services revenues 253 253 253
Research and development expenses (651 ) 651 651
Marketing and selling expenses (968 ) 968 968
General and administrative expenses (1,261 ) 1,261 1,261
         
Non-GAAP $ 79,089 $ 82,933 ($3,844 ) $ 751 ($4,595 )
 
Weighted-average shares outstanding - diluted 37,516
 
Non-GAAP net loss per share - diluted ($0.12 )
 
(a)Represents costs included in general and administrative expenses
 
 
Revenue Summary:
Three Months Ended
March 31,
 
2011 2010
Video revenues $ 94,651 $ 84,353
Audio revenues   71,672   71,603  
Total net revenues $ 166,323 $ 155,956  
 

   
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
 
March 31, December 31,
2011 2010
ASSETS:
Current assets:
Cash and cash equivalents $ 33,220 $ 42,782
Accounts receivable, net of allowances of $18,442 and $17,149
at March 31, 2011 and December 31, 2010, respectively
95,881 101,171
Inventories 125,100 108,357
Deferred tax assets, net 1,114 1,068
Prepaid expenses 9,381 7,688
Other current assets   16,818     16,130  
Total current assets 281,514 277,196
 
Property and equipment, net 61,351 62,519
Intangible assets, net 27,340 29,750
Goodwill 247,315 246,997
Other assets   11,007     10,109  
 
Total assets $ 628,527   $ 626,571  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 47,493 $ 47,340
Accrued compensation and benefits 27,346 41,101
Accrued expenses and other current liabilities 41,431 40,986
Income taxes payable 4,183 4,640
Deferred revenues   51,399     40,585  
Total current liabilities 171,852 174,652
 
Long-term liabilities   25,892     25,309  
Total liabilities   197,744     199,961  
 
Stockholders' equity:
Common stock 423 423
Additional paid-in capital 1,007,853 1,005,198
Accumulated deficit (502,965 ) (495,254 )
Treasury stock at cost, net of reissuances (87,188 ) (91,025 )
Accumulated other comprehensive income   12,660     7,268  
Total stockholders' equity   430,783     426,610  
 
Total liabilities and stockholders' equity $ 628,527   $ 626,571  
 

 
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
   
Three Months Ended
March 31,
2011 2010
Cash flows from operating activities:
Net loss ($5,117 ) ($13,482 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 7,972 8,303
Provision for (recoveries of) doubtful accounts 144 (170 )
Non-cash provision for restructuring 125 -
Gain on disposal of fixed assets (5 ) (13 )
Compensation expense from stock grants and options 3,737 3,322
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable 9,613 (4,605 )
Inventories (16,743 ) 5,703
Prepaid expenses and other current assets (3,300 ) (690 )
Accounts payable 107 2,803
Accrued expenses, compensation and benefits and other liabilities (13,936 ) (15,453 )
Income taxes payable (604 ) 205
Deferred revenues   11,143     7,560  
Net cash used in operating activities   (6,864 )   (6,517 )
 
Cash flows from investing activities:
Purchases of property and equipment (3,544 ) (10,009 )
Decrease in other long-term assets 190 281
Payments for business acquisitions, net of cash acquired - (16,087 )
Purchases of marketable securities - (1,750 )
Proceeds from sales of marketable securities   -     18,605  
Net cash used in investing activities   (3,354 )   (8,960 )
 
Cash flows from financing activities:
Proceeds from (payments related to) the issuance of common stock under employee stock plans, net 127 (727 )
Proceeds from revolving credit facilities 8,000 -
Payments on revolving credit facilities   (8,000 )   -  
Net cash provided by (used in) financing activities   127     (727 )
 
Effect of exchange rate changes on cash and cash equivalents   529     (1,578 )
Net decrease in cash and cash equivalents (9,562 ) (17,782 )
Cash and cash equivalents at beginning of period   42,782     91,517  
Cash and cash equivalents at end of period $ 33,220   $ 73,735  
 

Contacts

Investor Contact:
Tom Fitzsimmons, 978-640-3346
tom.fitzsimmons@avid.com
or
Media Contact:
Avid
Carter Holland, 978-640-3172
carter.holland@avid.com

Sharing

Contacts

Investor Contact:
Tom Fitzsimmons, 978-640-3346
tom.fitzsimmons@avid.com
or
Media Contact:
Avid
Carter Holland, 978-640-3172
carter.holland@avid.com