Avid Technology, Inc. (Nasdaq: AVID) today reported revenue of $258.5 million for the three-month period ended December 31, 2007, compared to $239.0 million for the same period in 2006. GAAP net income for the quarter was $3.9 million, or $.09 per diluted share, compared to a GAAP net loss of $52.6 million, or $1.28 per share, in the fourth quarter of 2006.
GAAP net income in the fourth quarter of 2007 includes $13.3 million of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.42. For the fourth quarter of 2006, GAAP net income included $75.1 million of impairment charges, amortization, stock-based compensation, restructuring costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.54 in the fourth quarter of 2006.
During the fourth quarter, the company’s cash balance increased by $27.2 million to $224.5 million at December 31, 2007 primarily due to operating cash flow.
“Though sales and cash flow were strong, we are disappointed with the lower than expected earnings performance and need to improve our profitability,” said Gary Greenfield, Avid’s Chairman and Chief Executive Officer. “As we continue with the transformation of Avid into a more efficient and customer-focused organization, we are taking a long-term view that we believe will ultimately return the most value to our shareholders.”
Revenue for the year ended December 31, 2007 was $929.6 million, compared to revenue of $910.6 million in 2006. GAAP net loss for 2007 was $8.0 million, or $.19 per share, compared to a GAAP net loss of $42.9 million, or $1.03 per share, for 2006. GAAP net loss for 2007 includes $59.1 million of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per share were $1.23 per diluted share for 2007. GAAP net loss for 2006 includes $113.9 million of impairment charges, amortization, stock-based compensation, restructuring costs, in-process research and development and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $1.67 for 2006.
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 twelve-month periods ended December 31, 2007 and 2006 are in the tables attached to this press release.
We use non-GAAP financial measures internally to manage our business, for example, in establishing our annual operating budget, in assessing segment operating performance and for measuring performance under our employee incentive compensation plans. Non-GAAP financial measures are used by our management in its operating and financial decision-making because management believes these measures reflect our ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, we believe it is useful for our investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate our 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 our past financial results. The primary limitations associated with our 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 our operations. Our 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 filing of our Annual Report on Form 10-K. 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 meet customer needs, market acceptance of Avid’s existing and new products, Avid’s ability to recognize revenue in a timely manner, 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(R) statuette representing the 1998 Scientific and Technical Award for the concept, design, and engineering of the Avid(R) Film Composer(R) system for motion picture editing. For more information about the company’s Oscar, Grammy(R) and Emmy(R) award-winning products and services, visit www.avid.com.
(C) 2008 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, M-Audio, Pinnacle Systems, Sibelius, Softimage, and Sundance Digital 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. Oscar is a trademark and service mark 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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