AVID TECHNOLOGY, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE DATED OCTOBER 27, 2011

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8-K - FORM 8-K DATED OCTOBER 26, 2011 - AVID TECHNOLOGY, INC.	f8k_102611.htm

EXHIBIT 99.1

PR Contact: Amy Paladino, Avid, 781.772.1005, amy.paladino@avid.com

IR Contact: Tom Fitzsimmons, Avid, 978.640.3346, tom.fitzsimmons@avid.com

Avid Announces Results for Third Quarter 2011

BURLINGTON, MA— October 27, 2011—Avid® (NASDAQ: AVID) today reported revenues of $165.0 million for the three-month period ended September 30, 2011, compared to $165.1 million for the same period in 2010. The GAAP net loss for the third quarter was $8.0 million, or $0.21 per share, compared to a GAAP net loss of $10.0 million, or $0.26 per share, in the third quarter of 2010. The revenue reported for the second quarter of 2011 was $161.3 million and the GAAP net loss was $11.9 million.

The GAAP net loss for the third quarter of 2011 and 2010 included amortization of intangible assets, stock-based compensation, gain on asset sales, legal settlements and acquisition-related costs, restructuring charges, and related tax adjustments collectively totaling $8.4 million and $11.6 million, respectively. Excluding these items, the non-GAAP net income for the third quarter of 2011 was $385 thousand, or $0.01 per share, compared to non-GAAP net income of $1.6 million, or $0.04 per share, for the third quarter of 2010.

“The third quarter results showed sequential improvement in revenue and profit,” said Gary Greenfield, chairman and CEO of Avid. “We continue our sharp focus on providing our customers with the products and solutions that help them succeed. In addition, we have taken actions which should accelerate improvement in our financial performance.”

Revenues for the nine-month period ended September 30, 2011 were $492.6 million, compared to revenues of $483.2 million for the same period in 2010. The GAAP net loss for the first nine months of 2011 was $25.0 million, or $0.65 per share, compared to a GAAP net loss of $36.4 million, or $0.96 per share, for the same period in 2010. The GAAP net loss for the nine-month period ended September 30, 2011 included $20.6 million of amortization of intangible assets, stock-based compensation, restructuring charges, loss on asset sales, legal settlements and acquisition-related costs and related tax adjustments. Excluding these items, the non-GAAP net loss was $4.4 million, or $0.11 per share, for the first nine months of 2011. The GAAP net loss for the nine-month period ended September 30, 2010 included $31.4 million of amortization of intangible assets, gain on asset sales, stock-based compensation, restructuring charges, legal settlements and acquisition-related costs and related tax adjustments. Excluding these items, the non-GAAP net loss was $5.0 million, or $0.13 per share, for the first nine months of 2010.

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 third quarter 2011 financial results will be held today, October 27, 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 and non-GAAP net income, 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.

Use of Forward-Looking Statements

The contents of this release are 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. Statements in this press release that relate to future results or events are forward-looking statements and are based on Avid’s current estimates and assumptions. Forward-looking statements may be identified by the use of forward-looking words, such as “anticipate,” “believe,” “should,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “feel,” “could,” “will,” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: Avid’s ability to execute on its corporate strategy and meet customer needs, including the ability to produce innovative products in response to changing market demand; competitive factors; fluctuations in Avid’s revenues, based on, among other things, Avid’s performance in particular geographies; general economic conditions and conditions within the rapidly evolving media industry specifically; and other risk factors and uncertainties 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, Interplay®, ISIS®, VENUE, Sibelius®, System 5, and Avid® Studio. For more information about Avid solutions and services, visit www.avid.com, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2011 Avid Technology, Inc. All rights reserved. Product features, specifications, system requirements and availability are subject to change without notice. All prices are MSRP for the U.S. and Canada only and are subject to change without notice. Contact your local Avid office or reseller for prices outside the U.S. and Canada. Avid, the Avid logo, Fast Track, M-Audio, Media Composer, Pro Tools, Interplay, ISIS, Sibelius, and Avid Studio 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 the 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,
		2011		2010		2011		2010
Net revenues:
	Products		$131,875		$134,231		$398,400		$397,044
	Services		33,090		30,828		94,232		86,131
	Total net revenues		164,965		165,059		492,632		483,175

Cost of revenues:
	Products		60,048		64,421		187,663		193,527
	Services		16,497		14,194		46,196		41,373
	Amortization of intangible assets		685		745		2,036		2,657
	Total cost of revenues		77,230		79,360		235,895		237,557

Gross profit			87,735		85,699		256,737		245,618

Operating expenses:
	Research and development		28,960		28,929		89,386		89,348
	Marketing and selling		45,411		43,199		136,273		129,419
	General and administrative		13,240		19,698		43,458		48,179
	Amortization of intangible assets		2,159		2,283		6,465		7,557
	Restructuring and other costs, net		2,707		185		328		5,532
	(Gain) loss on sales of assets		-		(1,527)		597		(1,527)
	Total operating expenses		92,477		92,767		276,507		278,508

Operating loss			(4,742)		(7,068)		(19,770)		(32,890)

Interest and other income (expense), net			(503)		(30)		(1,571)		(132)
Loss before income taxes			(5,245)		(7,098)		(21,341)		(33,022)

Provision for income taxes, net			2,774		2,897		3,657		3,361

Net loss			($8,019)		($9,995)		($24,998)		($36,383)

Net loss per common share - basic and diluted			($0.21)		($0.26)		($0.65)		($0.96)

Weighted-average common shares outstanding - basic and diluted			38,511		38,045		38,386		37,826

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

Reconciliations of GAAP financial measures to Non-GAAP financial measures:

		Three Months Ended September 30, 2011

			Gross		Operating		Operating		Tax		Net
			Profit		Expenses		(Loss) Income		Provision		(Loss) Income
GAAP				$87,735		$92,477		($4,742)		$2,774		($8,019)

	Amortization of intangible assets			685		(2,159)		2,844				2,844
	Restructuring costs, net					(2,707)		2,707				2,707
	Legal settlement and acquisition-related costs (a)					(163)		163				163
	Tax adjustment									815		(815)
	Stock-based compensation included in:
		Cost of products revenues		168				168				168
		Cost of services revenues		63				63				63
		Research and development expenses				(435)		435				435
		Marketing and selling expenses				(1,051)		1,051				1,051
		General and administrative expenses				(1,788)		1,788				1,788
Non-GAAP				$88,651		$84,174		$4,477		$3,589		$385

Weighted-average shares outstanding - diluted												38,530

Non-GAAP net income per share - diluted												$0.01

		Three Months Ended September 30, 2010

			Gross		Operating		Operating		Tax		Net
			Profit		Expenses		(Loss) Income		Provision		(Loss) Income
GAAP				$85,699		$92,767		($7,068)		$2,897		($9,995)

	Amortization of intangible assets			745		(2,283)		3,028				3,028
	Restructuring and other costs, net					(185)		185				185
	Legal settlement and acquisition-related costs (a)					(5,656)		5,656				5,656
	Gain on sales of assets					527		(527)				(527)
	Tax adjustment									399		(399)
	Stock-based compensation included in:
		Cost of products revenues		176				176				176
		Cost of services revenues		287				287				287
		Research and development expenses				(506)		506				506
		Marketing and selling expenses				(1,078)		1,078				1,078
		General and administrative expenses				(1,581)		1,581				1,581
Non-GAAP				$86,907		$82,005		$4,902		$3,296		$1,576

Weighted-average shares outstanding - diluted												38,065

Non-GAAP net income per share - diluted												$0.04

	(a)	Represents costs included in general and administrative expenses

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

Reconciliations of GAAP financial measures to Non-GAAP financial measures:

		Nine Months Ended September 30, 2011

			Gross		Operating		Operating		Tax		Net
			Profit		Expenses		(Loss) Income		Provision		Loss
GAAP				$256,737		$276,507		($19,770)		$3,657		($24,998)

	Amortization of intangible assets			2,036		(6,465)		8,501				8,501
	Restructuring costs, net					(328)		328				328
	Legal settlements and acquisition-related costs (a)					(555)		555				555
	Loss on sales of assets					(597)		597				597
	Tax adjustment									1,115		(1,115)
	Stock-based compensation included in:
		Cost of products revenues		417				417				417
		Cost of services revenues		608				608				608
		Research and development expenses				(1,334)		1,334				1,334
		Marketing and selling expenses				(3,625)		3,625				3,625
		General and administrative expenses				(5,783)		5,783				5,783
Non-GAAP				$259,798		$257,820		$1,978		$4,772		($4,365)

Weighted-average shares outstanding - diluted												38,386

Non-GAAP net loss per share - diluted												($0.11)

		Nine Months Ended September 30, 2010

			Gross		Operating		Operating		Tax		Net
			Profit		Expenses		Loss		Provision		Loss
GAAP				$245,618		$278,508		($32,890)		$3,361		($36,383)

	Amortization of intangible assets			2,657		(7,557)		10,214				10,214
	Restructuring and other costs, net (b)					(5,532)		5,532				5,532
	Legal settlement and acquisition-related costs (a)					(6,425)		6,425				6,425
	Gain on sales of assets					527		(527)				(527)
	Tax adjustment									854		(854)
	Stock-based compensation included in:
		Cost of products revenues		562				562				562
		Cost of services revenues		822				822				822
		Research and development expenses				(1,704)		1,704				1,704
		Marketing and selling expenses				(3,153)		3,153				3,153
		General and administrative expenses				(4,373)		4,373				4,373
Non-GAAP				$249,659		$250,291		($632)		$4,215		($4,979)

Weighted-average shares outstanding - diluted												37,826

Non-GAAP net loss per share - diluted												($0.13)

	(a)	Represents costs included in general and administrative expenses
	(b)	Includes costs of $3.7 million related to exiting our former Tewksbury, Massachusetts headquarters lease

Revenue Summary:
				Three Months Ended				Nine Months Ended
				September 30,				September 30,
				2011		2010		2011		2010
Video revenues				$98,443		$100,186		$289,325		$278,060
Audio revenues				66,522		64,873		203,307		205,115
	Total net revenues			$164,965		$165,059		$492,632		$483,175

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

	September 30,			December 31,
	2011			2010
ASSETS:
Current assets:
Cash and cash equivalents		$33,652			$42,782
Accounts receivable, net of allowances of $13,277 and $17,149
at September 30, 2011 and December 31, 2010, respectively		92,904			101,171
Inventories		126,029			108,357
Deferred tax assets, net		1,081			1,068
Prepaid expenses		6,598			7,688
Other current assets		15,065			16,130
Total current assets		275,329			277,196

Property and equipment, net		57,063			62,519
Intangible assets, net		21,327			29,750
Goodwill		246,658			246,997
Other assets		10,788			10,109

Total assets		$611,165			$626,571

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Borrowings under revolving credit facilities		$13,000			$0
Accounts payable		35,090			47,340
Accrued compensation and benefits		28,551			41,101
Accrued expenses and other current liabilities		32,200			40,986
Income taxes payable		4,570			4,640
Deferred revenues		52,752			40,585
Total current liabilities		166,163			174,652

Long-term liabilities		30,060			25,309
Total liabilities		196,223			199,961

Stockholders' equity:
Common stock		423			423
Additional paid-in capital		1,015,770			1,005,198
Accumulated deficit		(524,717	)		(495,254	)
Treasury stock at cost, net of reissuances		(83,612	)		(91,025	)
Accumulated other comprehensive income		7,078			7,268
Total stockholders' equity		414,942			426,610

Total liabilities and stockholders' equity		$611,165			$626,571

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Cash flows from operating activities:
Net loss		($8,019)		($9,995)		($24,998)		($36,383)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		7,817		8,529		23,538		25,026
Provision for doubtful accounts		75		295		534		285
Non-cash provision for restructuring		133		42		258		291
(Gain) loss on sales of assets		-		(1,527)		597		(1,527)
Gain on disposal of fixed assets		(4)		(24)		(10)		(70)
Compensation expense from stock grants and options		3,505		3,628		11,767		10,614
Non-cash interest expense		74		-		228		-
Unrealized foreign currency transaction (gains) losses		(2,502)		5,501		3,988		253
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions		-		(1,143)		(4)		(1,393)
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable		5,346		10,319		7,574		(7,202)
Inventories		3,767		(17,088)		(17,671)		(15,344)
Prepaid expenses and other current assets		489		1,763		778		7,032
Accounts payable		(9,637)		(7,088)		(12,262)		13,832
Accrued expenses, compensation and benefits, and other liabilities		(7,883)		(6,539)		(24,129)		(25,021)
Income taxes payable		1,822		3,257		(209)		2,290
Deferred revenues		4,649		(1,583)		16,464		6,763
Net cash used in operating activities		(368)		(11,653)		(13,557)		(20,554)

Cash flows from investing activities:
Purchases of property and equipment		(2,784)		(3,417)		(8,862)		(25,926)
Decrease (increase) in other long-term assets		102		(149)		(969)		(82)
Payments for business acquisitions, net of cash acquired		-		-		-		(27,008)
Purchases of marketable securities		-		-		-		(2,250)
Proceeds from sales of marketable securities		-		-		-		19,605
Proceeds from sales of assets		-		1,000		-		1,000
Net cash used in investing activities		(2,682)		(2,566)		(9,831)		(34,661)

Cash flows from financing activities:
Proceeds from (payments related to) the issuance of common stock under employee stock plans, net		404		261		1,753		(61)
Proceeds from revolving credit facilities		-		-		21,000		-
Payments on revolving credit facilities		-		-		(8,000)		-
Net cash provided by (used in) financing activities		404		261		14,753		(61)

Effect of exchange rate changes on cash and cash equivalents		(1,259)		1,526		(495)		(1,880)
Net decrease in cash and cash equivalents		(3,905)		(12,432)		(9,130)		(57,156)
Cash and cash equivalents at beginning of period		37,557		46,793		42,782		91,517
Cash and cash equivalents at end of period		$33,652		$34,361		$33,652		$34,361

AVID TECHNOLOGY, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE DATED OCTOBER 27, 2011 - October 27, 2011

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AVID TECHNOLOGY, INC. Reports