SOURCE: Avid

Avid

November 16, 2009 18:30 ET

Avid Announces Final Financial Results for 2009 Third Quarter

TEWKSBURY, MA--(Marketwire - November 16, 2009) - Avid® (NASDAQ: AVID) today reported final financial results for the three- and nine-month periods ended September 30, 2009. These results reflect corrections of errors identified in its previously announced investigation concerning the timing of recognition of revenue. As a result of these errors, Avid has determined that it has a material weakness in the design and operating effectiveness of its controls and procedures in Europe relating to ensuring that revenue is recognized only after transfer of title and risk of loss to the customer.

Avid reported revenues of $152.1 million for the three-month period ended September 30, 2009, compared to $217.1 million for the same period in 2008. The GAAP net loss for the quarter was $17.2 million, or $0.46 per share, compared to a GAAP net loss of $66.4 million, or $1.80 per share, in the third quarter of 2008. The third quarter 2008 results included a non-cash impairment charge of $51.3 million or $1.39 per share.

The GAAP net loss for the third quarter of 2009 included amortization of intangibles, stock-based compensation, restructuring charges, loss on asset sales and related tax adjustments, collectively totaling $17.0 million. Excluding these items, the non-GAAP net loss was $215 thousand for the third quarter, or $0.01 per share.

Revenues for the nine-month period ended September 30, 2009 were $454.3 million, compared to revenues of $638.2 million for the same period in 2008. GAAP net loss for the first nine months of 2009 was $50.4 million, or $1.35 per share, compared to GAAP net loss of $97.9 million, or $2.59 per share, for the same period in 2008.

GAAP net loss for the nine-month period ended September 30, 2009 included $39.1 million of amortization, stock-based compensation, restructuring charges, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $0.30 for the nine-month period ended September 30, 2009. GAAP net loss for the nine-month period ended September 30, 2008 included $82.0 million of amortization, stock-based compensation, restructuring charges, impairment charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $0.42 for the first nine months of 2008.

The changes to the results for the third quarter and nine months ended September 30, 2009 when compared to the results reported by Avid on October 22, 2009 are that revenues were decreased by $1.6 million and gross profit was decreased by $1.1 million. Since these adjustments were related to timing of revenue recognition, and not amount, the revenue and related gross profit will be recognized in the fourth quarter of 2009. Additionally, income taxes were reduced by $0.1 million.

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. 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. The reconciliation for net income (loss) and earnings (loss) per share for the three- and nine-month periods ended September 30, 2009 and 2008 are in the tables attached to this press release.

The company uses non-GAAP financial measures internally to manage its business, for example, in establishing its annual operating budget, in assessing segment operating performance and for measuring performance under employee incentive compensation plans. Non-GAAP financial measures are used by management in its operating and financial decision-making because management believes these measures reflect the company's ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate the company's current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company's current financial results with past financial results. The primary limitations associated with the company's use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect the company's operations. The company's management compensates for these limitations by considering the company's financial results as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in this press release.

Use of Forward-Looking Statements

The above release is subject to the completion and results of the audit committee's investigation described above and 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, about the anticipated impact of the audit committee's investigation described above, and these statements are subject to the outcome of such investigation. This release also makes forward-looking statements about Avid's performance. There are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, such as Avid's ability to execute on its corporate strategy and meet customer needs, general economic conditions, competitive factors, pricing pressures, delays in product shipments and other important events and factors disclosed previously and from time to time in Avid's filings with the U.S. Securities and Exchange Commission. In addition, the forward-looking statements contained herein represent Avid's estimates only as of today and should not be relied upon as representing the company's estimates 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 estimates change.

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®, Avid Unity™, Interplay®, Oxygen 8, Sibelius® 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.

© 2009 Avid Technology, Inc. All rights reserved. Product features, specifications, systems requirements and availability are subject to change without notice. Avid, Pinnacle Studio, Avid Unity, Interplay, Media Composer, Pro Tools, Symphony, Nitris, ISIS 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   Nine Months Ended
                                     September 30,        September 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net revenues:
  Products                      $ 123,522  $ 183,686  $ 369,075  $ 540,977
  Services                         28,597     33,380     85,216     97,218
                                ---------  ---------  ---------  ---------
      Total net revenues          152,119    217,066    454,291    638,195
                                ---------  ---------  ---------  ---------

Cost of revenues:
  Products                         57,097     94,303    176,774    272,004
  Services                         13,586     18,744     43,515     55,760
  Amortization of intangible
   assets                             519      1,249      1,465      6,773
  Restructuring costs                   -          -        799          -
                                ---------  ---------  ---------  ---------
      Total cost of revenues       71,202    114,296    222,553    334,537

                                ---------  ---------  ---------  ---------
Gross profit                       80,917    102,770    231,738    303,658
                                ---------  ---------  ---------  ---------

Operating expenses:
  Research and development         29,262     37,825     90,974    115,307
  Marketing and selling            44,705     53,638    127,480    159,224
  General and administrative       12,093     19,734     39,765     61,169
  Amortization of intangible
   assets                           2,782      3,307      7,779     10,017
  Impairment of goodwill and
   intangible assets                    -     51,257          -     51,257
  Restructuring costs, net          7,891      2,107     17,132      4,107
  Loss on sales of assets           3,398          -      3,398          -
                                ---------  ---------  ---------  ---------
      Total operating expenses    100,131    167,868    286,528    401,081
                                ---------  ---------  ---------  ---------

Operating loss                    (19,214)   (65,098)   (54,790)   (97,423)

Interest and other income
 (expense), net                      (240)       507        (29)     2,605
                                ---------  ---------  ---------  ---------
Loss before income taxes          (19,454)   (64,591)   (54,819)   (94,818)

(Benefit from) provision for
 income taxes, net                 (2,246)     1,800     (4,385)     3,106
                                ---------  ---------  ---------  ---------

Net loss                        $ (17,208) $ (66,391) $ (50,434) $ (97,924)
                                =========  =========  =========  =========

Net loss per common share -
 basic and diluted              $   (0.46) $   (1.80) $   (1.35) $   (2.59)

Weighted-average common shares
 outstanding - basic and
 diluted                           37,341     36,960     37,251     37,739



AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)

Change in Financial Presentation
Beginning January 1, 2009, we combined our professional video and consumer
video businesses into a single reporting segment. We will now consequently
report on two business segments:  Audio and Video. Please note that the
segment contribution margin calculation has also changed from last year.
Segment contribution margin is now calculated as segment gross margin
less the research and development and product management expenses directly
attributable to the segment. Comparative results for the 2008 periods have
been updated to reflect our new business structure.

Summary of the Company's revenues and contribution margin by reportable
segment and a reconciliation of segment contribution margin to consolidated
operating loss:


                                 Three Months Ended    Nine Months Ended
                                    September 30,        September 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 Revenues:
    Video (a)                   $  92,617  $ 144,835  $ 268,818  $ 417,410
    Audio                          59,502     72,231    185,473    220,785
                                ---------  ---------  ---------  ---------
 Total revenues                 $ 152,119  $ 217,066  $ 454,291  $ 638,195
                                =========  =========  =========  =========

 Contribution Margin:
    Video                       $  31,196  $  40,791  $  77,709  $ 112,877
    Audio                          20,883     23,493     65,444     76,278
                                ---------  ---------  ---------  ---------
 Segment contribution margin       52,079     64,284    143,153    189,155
                                ---------  ---------  ---------  ---------

    Less unallocated costs and
     expenses:
       Corporate research and
        development expenses       (1,633)    (1,890)    (5,224)    (5,391)
       Marketing and selling
        expenses                  (41,017)   (48,841)  (116,588)  (146,019)
       General and
        administrative expenses   (11,187)   (16,374)   (35,650)   (51,924)
       Amortization of
        acquisition-related
        intangible assets          (3,301)    (4,556)    (9,244)   (16,790)
       Impairment of goodwill
        and intangible assets           -    (51,257)         -    (51,257)
       Stock-based compensation    (2,866)    (4,357)    (9,908)   (11,090)
       Restructuring costs, net    (7,891)    (2,107)   (17,931)    (4,107)
       Loss on sales of assets     (3,398)         -     (3,398)         -
                                ---------  ---------  ---------  ---------
 Consolidated operating loss    $ (19,214) $ (65,098) $ (54,790) $ (97,423)
                                =========  =========  =========  =========

 (a)  Includes revenues from
       non-core product lines
       of:                      $     117  $  15,121  $   1,874  $  50,214


Reconciliation of GAAP net loss
 to Non-GAAP net loss:

                                  Three Months Ended   Nine Months Ended
                                     September 30,        September 30,
                                --------------------  --------------------
                                   2009       2008       2009      2008
                                ---------  ---------  ---------  ---------
 GAAP net loss                  $ (17,208) $ (66,391) $ (50,434) $ (97,924)

 Adjustments to reconcile to
  Non-GAAP net loss:
    Amortization of intangible
     assets                         3,301      4,556      9,244     16,790
    Impairment of goodwill and
     intangible assets                  -     51,257          -     51,257
    Stock-based compensation        2,866      4,357      9,908     11,090
    Restructuring costs, net        7,891      2,107     17,931      4,107
    Loss on sale of assets          3,398          -      3,398          -
    Related tax adjustments          (463)      (240)    (1,357)    (1,288)
                                ---------  ---------  ---------  ---------
 Non-GAAP net loss:             $    (215) $  (4,354) $ (11,310) $ (15,968)
                                =========  =========  =========  =========

 Weighted-average common shares
  outstanding - diluted            37,341     36,960     37,251     37,739

 Non-GAAP net loss per common
  share - diluted               $   (0.01) $   (0.12) $   (0.30) $   (0.42)



Stock-based compensation included
 in:                              Three Months Ended    Nine Months Ended
                                     September 30,        September 30,
                                --------------------  --------------------
                                   2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
 Cost of products revenues      $     163  $     177  $     666  $     480
 Cost of services revenues            247        144        868        408
 Research and development
  expenses                            655        763      1,737      2,215
 Marketing and selling expenses       895      1,470      2,522      3,108
 General and administrative
  expenses                            906      1,803      4,115      4,879
                                ---------  ---------  ---------  ---------
                                $   2,866  $   4,357  $   9,908  $  11,090
                                =========  =========  =========  =========



AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)


                                                September 30, December 31,
                                                    2009          2008
                                                ------------  ------------
ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                  $    102,981  $    147,694
   Accounts receivable, net of allowances of
    $15,793 and $23,182
    at September 30, 2009 and December 31,
    2008, respectively                                86,544       103,527
   Inventories                                        91,692        95,755
   Prepaid and other current assets                   33,378        43,969
                                                ------------  ------------
       Total current assets                          314,595       390,945

Property and equipment, net                           33,556        38,321
Intangible assets, net                                32,451        38,143
Goodwill                                             227,118       225,375
Other assets                                          11,570        10,801
                                                ------------  ------------
       Total assets                             $    619,290  $    703,585
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                             $     22,744  $     29,419
   Accrued expenses and other current
    liabilities                                       69,708       101,107
   Deferred revenues                                  56,748        68,581
                                                ------------  ------------
       Total current liabilities                     149,200       199,107

Long-term liabilities                                 13,320        11,823
                                                ------------  ------------
       Total liabilities                             162,520       210,930
                                                ------------  ------------

Stockholders' equity:
   Common stock                                          423           423
   Additional paid-in capital                        989,018       980,563
   Accumulated deficit                              (425,337)     (365,431)
   Treasury stock at cost, net of reissuances       (114,343)     (124,852)
   Accumulated other comprehensive income              7,009         1,952
                                                ------------  ------------
       Total stockholders' equity                    456,770       492,655
                                                ------------  ------------
       Total liabilities and stockholders'
        equity                                  $    619,290  $    703,585
                                                ============  ============

Contact Information