Avid Technology Reports Fourth Quarter Results; Company Provides Update On Significant Progress Made Since November Restructuring.Business/Technology Editors TEWKSBURY, Mass.--(BUSINESS WIRE)--Feb. 3, 2000 Avid Technology "Avid" redirects here. For the "Advancement Via Individual Determination" educational program, see AVID. Avid Technology, Inc NASDAQ: AVID is an American company specializing in video and audio production technology; specifically, digital non-linear media editing (NLE) , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AVID) today announced financial results for the fourth quarter ended December 31, 1999. The company also provided an update on its growth initiatives announced in November 1999. Fourth quarter 1999 revenues were $111.6 million compared to $144.6 million in the fourth quarter 1998. For the fourth quarter 1999, the Company recorded a net loss of $104.9 million, or $4.42 per share, which includes charges for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other costs as well as amortization of acquisition-related intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . The fourth quarter 1999 also included a tax provision of $68.1 million, which reflects the recording of a full valuation allowance against the Company's net deferred tax assets as of December 31, 1999. Excluding these charges and amortization, the Company had a pre-tax loss of $2.6 million in the fourth quarter of 1999 compared with pre-tax income of $22.0 million for the same quarter a year earlier. For the year ended December 31, 1999, revenues were $452.6 million versus $482.4 million for 1998. The Company recorded a 1999 net loss of $137.5 million, or $5.75 per share. Included in the current year net loss were charges for restructuring and other costs of $14.5 million, amortization of acquisition-related intangible assets of $79.9 million, as well as a tax provision of $46.4 million which reflects the recording of a full valuation allowance against the Company's net deferred tax assets. Excluding these charges and amortization, the Company had pre-tax income of $3.2 million for 1999 compared with pre-tax income of $58.1 million for 1998, excluding similar items. William L. Flaherty, Acting Chief Executive Officer and Chief Financial Officer, commented, &uot;Fourth quarter 1999 revenue reflected some softness in high-end system sales System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. following the ABVB-based Media Composer(R) promotion offered in the third quarter. The promotion also had a residual impact on pricing and discounting, adversely affecting both revenue and gross margin. Sales of upgrades and Avid Xpress(R) products increased from the third quarter, but these offerings are aggressively priced and carry lower margins. These factors resulted in a change in product mix which reduced margins for our video and film editing and effects business.&uot; &uot;Avid's Digidesign audio division had an excellent quarter and completed its second consecutive year of record sales and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ,&uot; Flaherty said. &uot;During the quarter, two significant product releases occurred, Pro Tools(R) 5.0 and Digi 001(TM). Pro Tools 5.0 includes its own complete integrated MIDI sequencer A hardware device or software application that allows for the composition, editing and playback of MIDI sound sequences. Media player applications can play MIDI sound files, but creating and modifying MIDI files requires a sequencer. and a wealth of advanced editing tools designed specifically for high-end music and audio post-production. Digi 001 is a complete audio/MIDI, hardware/software solution for all aspects of home studio recording, and is receiving excellent customer reception.&uot; &uot;Special charges for the quarter totaled $14.5 million, including a charge of $9.6 million for restructuring actions as previously announced in November 1999. In addition, charges were taken for the costs associated with the sale of Avid's Italian subsidiary as well as severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. to the restructuring. We expect the cost savings obtained from the restructuring will enable Avid to return to profitability, excluding amortization of acquisition-related intangible assets, for the full year 2000. However, since Avid typically experiences seasonal weakness in sales in the first quarter in anticipation of the NAB show in April, we expect a loss for the first quarter of 2000 on this basis,&uot; Flaherty concluded. David Krall, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. commented, &uot;Since our November restructuring, Avid has made significant progress with a number of Web-based initiatives. First, on January 15, 2000, the Avid Production Network(TM) went live with the mission of being the premier Web-based resource for storytellers. In its introductory form, the site creates an online community of media professionals and serves as an information and services hub. Later this year, we plan to extend its capabilities to provide the infrastructure to make Web publishing Creating a Web site and placing it on the Web server. A Web site is a collection of HTML pages with the home page typically named INDEX.HTML. Web sites are designed using Web authoring software which provides a graphical layout capability or by hand coding in HTML or both. from Avid products push-button (electronics) push-button - A roughly fingertip-sized plastic cover attached to a spring-loaded, normally-open switch, which, when pressed, closes the switch. Typical examples are the keys on a computer or calculator keyboard and mouse buttons. simple and to create the services and technology for collaborative, distributed post-production.&uot; &uot;We are also focused on delivering a complete solution for Web media production and delivery, based on Avid Unity(TM), Avid Media Composer, Avid Xpress DV Avid Xpress DV is a popular non-linear video editing application available to professionals on Microsoft Windows and Apple Macintosh computers. See also
A contract for the purchase or sale of an MBS to be delivered at an agreed-upon future date but does not include a specified pool number and number of pools or precise amount to be delivered. publishing product,&uot; Krall added. &uot;Our Avid Unity shared storage product has the ability to serve many simultaneous high quality video streams at low cost and and is already being sold for media storage and delivery in the edge server Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the infrastructure, as well as in our core market. We are also aggressively attacking the professional new media creation market, beginning with Avid Xpress DV, which is being released this month. Avid Xpress DV brings Avid video editing See nonlinear video editing and video editor. to an affordable and easy-to-use turnkey See turnkey system. solution on an IBM IntelliStation The IBM IntelliStation workstation class personal computer was announced March 1997 as the follow-on to the IBM PC Series 360 and 365. In February 2002 POWER processor based workstations, which where previously sold directly under the eServer pSeries brand, where also placed under which offers a wide range of digital distribution options, including all major streaming formats. Additionally, at NAB in April, we will unveil a comprehensive solution for editing and publishing to the Internet.&uot; &uot;In our core markets, we are committed to developing key features for our products, and have already announced the next releases of Media Composer and Symphony symphony [Gr.,=sounding together], a sonata for orchestra. The Italian operatic overture, called sinfonia, was standardized by Alessandro Scarlatti at the end of the 17th cent. (TM) for the second half of 2000. Media Composer 10.0 will be Avid's first cross-platform release and will offer full feature parity parity or space parity, in physics, quantity that refers to the relationship between an object or process and the image that it can produce in a mirror. on both the Macintosh and Windows NT (Windows New Technology) A 32-bit operating system from Microsoft for Intel x86 CPUs. NT is the core technology in Windows 2000 and Windows XP (see Windows). Available in separate client and server versions, it includes built-in networking and preemptive multitasking. platforms. Features include 24P Universal Offline Editing, 24fps feature film editing, and a key online finishing feature -- real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. moving mattes. Our Symphony 3.0 release will provide the next level of nonlinear A system in which the output is not a uniform relationship to the input. nonlinear - (Scientific computation) A property of a system whose output is not proportional to its input. finishing and mastering tools for high-end television work, including a brand-new real-time keyer, for high-quality real-time keying, and real-time moving mattes. The Media Composer 10.0 and Symphony 3.0 releases will also allow the ability to output streaming formats, a critical component for digital mastering to the Web. Overall, we are extremely excited about the prospects for Avid solutions in both our core market and Internet publishing and distribution,&uot; Krall concluded. The above includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements about the anticipated results of operations during the year 2000. There are a number of factors that could cause actual events or results of operations to differ materially from those indicated by such forwarding-looking statements, such as the benefits ultimately derived from the Company's 1999 restructuring efforts and market acceptance of the Company's products and the other factors set forth under the caption &uot;Certain Factors That May Affect Future Results&uot; in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for 1998 and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for September 30, 1999, filed with the SEC. Avid Technology, Inc. is an international, industry-leading provider of digital audio and video solutions for information and entertainment applications. The company's products are used by a variety of customers worldwide including film, television and interactive content producers, TV news broadcasters, corporate communicators, and consumers. For more information, visit Avid's website at www.avid.com. (c) 2000 Avid Technology, Inc. All rights reserved. Product specifications are subject to change without notice. Avid, Avid Xpress, Digidesign, Media Composer and Pro Tools are registered trademarks and Avid Unity, Avid Production Network, Digi 001 and Symphony are trademarks of Avid Technology, Inc. All other trademarks contained herein are the property of their respective owners.
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
1999 1998 1999 1998
(unaudited) (unaudited)
Net revenues $111,640 $144,598 $452,555 $482,377
Cost of revenues 55,872 54,256 205,877 190,249
Gross profit 55,768 90,342 246,678 292,128
Operating expenses:
Research and development 21,417 25,102 88,932 88,787
Marketing and selling 30,237 36,035 129,889 125,280
General and
administrative 7,538 8,618 28,147 28,549
Restructuring and
other charges 14,469 -- 14,469 28,373
Amortization of
acquisition-related
intangible assets 19,792 20,503 79,879 34,204
Total operating
expenses 93,453 90,258 341,316 305,193
Operating income (loss) (37,685) 84 (94,638) (13,065)
Interest and other
income, net 857 1,371 3,459 8,636
Income (loss) before
income taxes (36,828) 1,455 (91,179) (4,429)
Provision for (benefit
from) income taxes 68,110 451 46,369 (796)
Net income (loss) ($104,938) $1,004 ($137,548) ($3,633)
Net income (loss) per
common share - basic ($4.42) $0.04 ($5.75) ($0.15)
Net income (loss) per
common share - diluted ($4.42) $0.04 ($5.75) ($0.15)
Weighted average common
shares
outstanding - basic 23,731 24,378 23,918 23,644
Weighted average common
shares
outstanding - diluted 23,731 26,703 23,918 23,644
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
1999 1998
ASSETS:
Current assets:
Cash and marketable securities $ 72,806 $111,826
Accounts receivable, net of
allowances of $8,954 and $7,171
in 1999 and 1998, respectively 76,172 89,754
Inventories 14,969 11,093
Current deferred tax asset 2,114 17,771
Other current assets 10,378 11,203
Total current assets 176,439 241,647
Property and equipment, net 32,748 35,398
Long-term deferred tax assets -- 23,891
Acquisition-related intangible assets 95,073 181,631
Other assets 7,764 4,148
Total assets $312,024 $486,715
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 23,998 $ 24,311
Accrued expenses 58,051 75,454
Deferred revenue and other
current liabilities 24,046 22,917
Total current liabilities 106,095 122,682
Long term liabilities, less
current portion 14,220 13,261
Purchase consideration 23,786 60,461
Total stockholders' equity 167,923 290,311
Total liabilities and stockholders' equity $312,024 $486,715
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