Avid Technology Announces Record Revenue and
Operating Results for the Fourth Quarter 1998
Business Wire - February 04, 1999 16:16
TEWKSBURY, Mass.--(BUSINESS WIRE)--Feb. 4, 1999--
Tax-effected Fourth Quarter Income Before Acquisition Related Charges Rises 63% to
$15.2 Million or $0.57 Per Share
Avid Technology, Inc. (NASDAQ:AVID) today reported record revenues and operating
results for the fourth quarter ended December 31, 1998. Fourth quarter revenues were a
record $144.6 million compared to $123.7 million in the fourth quarter 1997. The Company
recorded tax-effected fourth quarter income of $15.2 million or $.57 per diluted share,
before acquisition related charges associated with the third quarter acquisition of Softimage
Inc., as compared to $9.3 million or $.37 per diluted share in the fourth quarter of 1997.
For the year ended December 31, 1998, revenues were $482.4 million, also a record, versus
$471.3 million for 1997. The Company reported record tax-effected 1998 income of $40.1
million or $1.56 per diluted share, before acquisition related charges associated with the
Softimage acquisition, as compared to $26.4 million or $1.08 per diluted share for the year
ended December 31, 1997.
William J. Miller, Avid's Chairman and CEO, commented, "I am pleased to report record
operating results for the fourth quarter. Our strong revenues reflected favorable domestic and
European demand for our film and video products and included revenues from several key
product releases. Our audio products also experienced record revenue during the fourth
quarter reflecting continuing strong demand for our Pro Tools product line. Additionally,
gross margin rose to a record 62.5% in the quarter."
"We continued to strengthen our balance sheet," Miller added. "Cash and investments
increased by $13.5 million during the fourth quarter, to end the year at $111.8 million. This
largely reflected strong operating results partly offset by $10.7 million used to buy back stock
as part of our ongoing repurchase program. We also reduced accounts receivable days sales
outstanding to 56 days and inventory levels to $11.1 million at year-end."
"This year reflects significant accomplishments which are critical to Avid's future success. The
acquisition of Softimage Inc. brought us both 3-D animation technology and
SOFTIMAGE|DS, a product and architecture for television finishing, which is central to our
future. We also formed a strategic alliance with Tektronix, Inc. to provide broadcasters with
integrated end-to-end solutions as the industry migrates to digital production. Most
importantly, we successfully completed the most comprehensive introduction of new products
in Avid's history. During the later part of 1998, we launched major new products, including
Avid Symphony, SOFTIMAGE|DS 2.1, NewsCutter DV, Avid Xpress for Windows NT
and ProTools|24 MIX, in all of our key strategic markets. Avid is now a truly multi-platform
company with products to address the full range of customer needs from the consumer to the
high-end production studio," Miller concluded.
The Company stated that it is not reporting net income at this time because it is continuing to
evaluate the need for possible adjustments to the in-process research and development
("IPR&D") charge taken in the third quarter of 1998. At that time, the Company recorded a
one-time pre-tax charge of $193.7 million for purchased IPR&D in its operating results. This
one-time charge was recorded in accordance with U.S. generally accepted accounting
principles and established industry practice, and was supported by an independent third party
valuation. Since that time, however, the Securities and Exchange Commission ("SEC") has
expressed views on valuation methods for purchased IPR&D which differ from prior industry
practice. The Company is working closely with its independent auditors to make a
determination as to the application of the SEC's recent views to the Company's IPR&D
valuation and the resulting effect on the charge taken in the third quarter as well as on the
amortization of intangible assets. Any application of the methodology now supported by the
SEC would likely result in a significantly lower IPR&D charge for the third quarter of 1998
and the creation of goodwill which would be amortized against earnings beginning with the
third quarter. An adjustment to the IPR&D valuation, if any, would have no effect upon the
financial condition or liquidity of the Company. The Company will issue a press release
announcing its final determination and any resulting accounting adjustments. The Company
said its fourth quarter and fiscal year-end 1998 operating results before acquisition related
charges are final and will not change.
Avid Technology, Inc. is an international, industry-leading provider of digital audio and video
tools for creating content for information and entertainment applications. The company's
products are used by customers ranging from corporate communications professionals to
film, television and interactive content producers to broadcast news organizations. For more
information, visit Avid's World Wide Web site at www.avid.com.
Avid and Softimage are registered trademarks and Symphony, NewsCutter,
SOFTIMAGE|DS, Pro Tools and Avid Xpress are trademarks of Avid Technology, Inc., or
its subsidiaries or divisions.
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations, before acquisition
related charges
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
(unaudited)(unaudited)(unaudited)
Net revenues $144,598 $123,735 $482,377 $471,338
Cost of revenues 54,256 54,062 190,249 221,553
Gross profit 90,342 69,673 292,128 249,785
Operating expenses:
Research and development 25,102 20,160 88,787 73,470
Marketing and selling 36,035 31,301 125,280 120,394
General and administrative 8,618 6,977 28,549 25,808
Total operating expenses 69,755 58,438 242,616 219,672
Operating income before
acquisition related charges 20,587 11,235 49,512 30,113
Interest and other income, net 1,371 2,244 8,636 8,125
Income before acquisition related
charges and income taxes 21,958 13,479 58,148 38,238
Provision for income taxes,
excluding the effect of
acquisition related charges 6,807 4,178 18,026 11,854
Tax-effected income before
acquisition related charges $ 15,151 $ 9,301 $ 40,122 $ 26,384
Tax-effected income before
acquisition related charges
per common share - diluted $ 0.57 $ 0.37 $ 1.56 $ 1.08
Weighted average common shares
outstanding - diluted 26,703 25,231 25,704 24,325
The results above do not include the effects of the third-quarter 1998 pre-tax charge for
IPR&D of $193.7 million or the amortization of acquired intangible assets related to the
Company's purchase of Softimage Inc. See attached press release for further details. |
