Avid Announces Third Quarter 2008 Results and Continued Business Transformation
TEWKSBURY, Mass. — Avid Technology, Inc. (Nasdaq: AVID) reported revenue of $217.1 million for the three-month period ended September 30, 2008, compared to $226.8 million for the same period in 2007. GAAP net loss for the quarter was $66.4 million, or $1.80 per share, compared to GAAP net loss of $5.9 million, or $.14 per share, in the third quarter of 2007.
GAAP net loss in the third quarter of 2008 included goodwill and intangible asset impairment charges associated with the 2005 Pinnacle acquisition, amortization, stock-based compensation, restructuring charges and related tax adjustments totaling $62.0 million. Excluding these items, non-GAAP loss per share was $.12. For the third quarter of 2007, GAAP net loss included $21.0 million of amortization, stock-based compensation, restructuring charges, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.37 in the third quarter of 2007.
As part of the company’s business transformation efforts, Avid also announced today plans to divest the Softimage® 3D animation product line. In addition, the company announced a reduction in workforce to better align its cost structure around the core businesses.
“We’ve made solid progress in transforming Avid, by organizing around our customers, delivering solutions that will help our customers succeed, and taking necessary steps to align our cost structure to support our core product lines,” said Gary Greenfield, Avid’s chairman and CEO. “We are pleased with our progress and plan to leverage Avid’s collective audio and video strengths, from the consumer to the enterprise, in ways that will deliver sustainable value to customers and prospects.”
Revenue for the nine-month period ended September 30, 2008 was $638.2 million, compared to revenue of $671.1 million for the same period in 2007. GAAP net loss for the first nine months of 2008 was $97.9 million, or $2.59 per share, compared to GAAP net loss of $11.8 million, or $.29 per share, for the same period in 2007. GAAP net loss for the nine-month period ended September 30, 2008 included $82.0 million of impairment charges, amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP loss per share was $.42 per share for the first nine months of 2008. GAAP net loss for the nine-month period ended September 30, 2007 included $45.8 million of amortization, stock-based compensation, restructuring charges, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.82 for the first nine months of 2007.
At September 30, 2008, the company’s cash balance was $122.4 million, down $102.0 million since the end of 2007. During the first quarter of 2008, the company used $93.2 million in cash to repurchase 4.3 million shares of common stock under the previously-announced share buyback program.
* The release of Avid® DS 10 – a solution designed to save customers time and money by offering professional editing, compositing, keying, image retouching, and paint and graphics capabilities in a single application.
* The introduction of Avid automation to the European marketplace for the first time – integrating the broadcast master control solutions Avid acquired from Sundance Digital.
* BusinessWeek named Avid’s Digidesign® 003® Factory, a portable digital audio production console for aspiring musicians and producers, as a recipient of this year’s prestigious IDEA Award for Best Global Design. The 003 Factory was awarded a bronze medal in the highly competitive Entertainment category. M-Audio also received the prestigious Best Buy BRAVO! Award in the Musical Instruments category.
* All of the Emmy® Award winners across 31 Outstanding Picture Editing, Outstanding Sound Editing/Mixing, and Outstanding Program categories at the 60th Annual Emmy Awards used at least one system from Avid to create this year’s top television programming. A majority of these programs employed workflows consisting of multiple systems from the various Avid brands. In total, more than 140 nominees in 38 categories used Avid brand systems.
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 and diluted earnings per share for the three- and nine-month periods ended September 30, 2008 and 2007 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.
A conference call to discuss Avid’s third quarter 2008 financial results will be held today, October 23, 2008, at 4:30 p.m. EDT. The call will be open to the public and can be accessed by dialing (719) 457-2617 and referencing confirmation code 3538405. The call and subsequent replay will also be available on Avid’s website. To listen via this alternative, go to the Investor Relations page under the About Us menu at www.avid.com for complete details prior to the start of the conference call.
Use of Forward-Looking Statements
The above release is subject to 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 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 transformation strategy and meet customer needs, market acceptance of Avid’s existing and new products, 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 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 estimates change.
About Avid Technology, Inc.
Avid is a worldwide leader in tools for film, video, audio, 3D animation, gaming and broadcast professionals – as well as for home audio and video enthusiasts. Avid professional and consumer brands include Avid, Digidesign, M-Audio®, Pinnacle Systems®, Sibelius®, Softimage and Sundance Digital®. The vast majority of primetime television shows, feature films, commercials and chart-topping music hits are made using one or more Avid products. Whether used by seasoned professionals or beginning students, Avid’s products and services enable customers to work more efficiently, productively and creatively. Avid received an Oscar® statuette representing the 1998 Scientific and Technical Award for the concept, design, and engineering of the Avid Film Composer® system for motion picture editing. For more information about the company’s Oscar, Grammy® and Emmy award-winning products and services, visit www.avid.com.
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© 2008 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, M-Audio, Pinnacle Systems, Sibelius, Softimage, Sundance Digital and 003 are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. Emmy is a registered trademark of ATAS/NATAS. Academy Awards and Oscar are trademarks and service marks of the Academy of Motion Picture Arts and Sciences. Grammy is a trademark of the National Academy of Recording Arts and Sciences, Inc. All other trademarks are the property of their respective owners.
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