Avid Technology Inc. (AVID, Financial) filed Quarterly Report for the period ended 2009-03-31.
Avid Technology Inc. develops markets sells and supports a wide range of software and systems for creating and manipulating digital media content. Digital media are media elements whether video or audio or graphics in which the image sound or picture is recorded and stored asdigital values as opposed to analog signals. The company's systems are designed to improve the productivity of video and film editors by enabling them to edit moving pictures and sound in a faster easier and more cost-effective manner than traditional analog tape-based systems. Avid Technology Inc. has a market cap of $468.4 million; its shares were traded at around $12.55 with and P/S ratio of 0.5.
The restructuring plan includes a reduction in force of approximately 500 positions, including employees related to our product line divestitures, and the closure of all or parts of some of our worldwide facilities. The restructuring plan is intended to improve operational efficiencies. In connection with this plan, we have incurred or expect to incur total restructuring charges of approximately $30 million, which primarily represent cash expenditures. During the fourth quarter of 2008, we recorded restructuring charges of $22.8 million related to this plan. During the first quarter of 2009, we recorded new restructuring charges totaling $3.6 million under the plan, of which $2.8 million related to the closure of all or part of six facilities and $0.8 million, recorded in cost of revenues, related to the write-down of PCTV inventory. Also during the first quarter of 2009, we recorded revisions to previously recorded restructuring estimates totaling $1.4 million. We expect annual cost savings of approximately $50 million to result from actions taken under this restructuring plan. Cash expenditures resulting from restructuring obligations totaled approximately $9.9 million in the first quarter of 2009.
The decrease in marketing and selling expenses for the three-month period ended March 31, 2009, compared to the same period in 2008, was largely due to lower personnel-related costs; decreased advertising, tradeshow and other promotional expenses; lower corporate facility and information technology infrastructure allocations; and favorable foreign exchange translations, partially offset by increased bad debt expenses. Personnel-related costs decreased $4.7 million, primarily due to decreased headcount; advertising, tradeshow and other promotional expenses decreased $1.5 million; and corporate facility and infrastructure allocations decreased by $1.0 million. Also, net foreign exchange gains (specifically, remeasurement gains and losses on net monetary assets denominated in foreign currencies, offset by hedging gains and losses), which are included in marketing and selling expenses, were $1.8 million, compared to net foreign exchange gains of $0.8 million in the comparable 2008 period. Bad debt expense increased $1.0 million, primarily due to increased lease defaults. The increase in marketing and selling expenses as a percentage of revenues was the result of the decrease in revenues for the period compared to the same period in 2008.
The decrease in general and administrative expenses for the three-month period ended March 31, 2009, compared to the same period in 2008, was due to decreased consulting and outside services costs of $3.2 million and lower personnel-related costs of $2.5 million. The decrease in consulting and outside services costs was largely the result of the absence of consulting costs, present in the first quarter of 2008, related to the strategic review and transformation of our business. The lower personnel-related costs were the result of reduced headcount. The decrease in general and administrative expenses as a percentage of revenues for the three-month period ended March 31, 2009 was the result of the decrease in expenses for the period compared to the same period in 2008.
In October 2008, we initiated a company-wide restructuring plan that included a reduction in force of approximately 500 positions, including employees related to our product line divestitures, and the closure of all or parts of some of our worldwide facilities. The restructuring plan is intended to improve operational efficiencies. In connection with the plan, during the fourth quarter of 2008, we recorded restructuring charges of $20.4 million related to employee termination costs and $0.5 million for the closure of three small facilities. In addition, as a result of the decision to sell the PCTV product line, we recorded a non-cash restructuring charge of $1.9 million in cost of revenues related to the write-down of inventory. During the first quarter of 2009, we recorded new restructuring charges totaling $3.6 million under the plan, of which $2.8 million was related to the closure of all or part of six facilities and $0.8 million, recorded in cost of revenues, related to the write-down of PCTV inventory. Also during the first quarter of 2009, we recorded revisions to previously recorded restructuring estimates of $1.3 million and $0.1 million, respectively, for severance and facility obligations related to the plan. We expect annual cost savings of approximately $50 million to result from actions taken under this restructuring plan.
During the first quarter of 2008, we initiated restructuring plans within our Video business unit and corporate operations to eliminate duplicative business functions and improve operational efficiencies. During the first quarter of 2008, we recorded restructuring charges of $1.2 million under these plans related to employee termination costs for 20 employees, primarily in the marketing and selling teams and general and administrative teams. During the second quarter of 2008, we recorded restructuring charges of $1.0 million under these plans primarily related to employee termination costs for 26 employees, primarily in the research and development teams and sales and marketing teams. During the third quarter of 2008, we recorded restructuring charges of $2.0 million under these plans primarily related to employee termination costs for 45 employees, primarily in the research and development teams and general and administrative teams.
Read the The complete ReportAVID is in the portfolios of Bruce Sherman of Private Capital Management, PRIMECAP Management.
Avid Technology Inc. develops markets sells and supports a wide range of software and systems for creating and manipulating digital media content. Digital media are media elements whether video or audio or graphics in which the image sound or picture is recorded and stored asdigital values as opposed to analog signals. The company's systems are designed to improve the productivity of video and film editors by enabling them to edit moving pictures and sound in a faster easier and more cost-effective manner than traditional analog tape-based systems. Avid Technology Inc. has a market cap of $468.4 million; its shares were traded at around $12.55 with and P/S ratio of 0.5.
Highlight of Business Operations:
Our revenues for the three months ended March 31, 2009 were $151.6 million, a decrease of 24% compared to the same period last year. By business unit, Video revenues decreased 30% and Audio revenues decreased 12%. Of the $37.5 million decrease in Video revenues, decreases of $15.9 million and $1.6 million for Video product revenues and Video services revenues, respectively, were attributable to divested or exited product lines. Unfavorable currency exchange rates and macroeconomic conditions had a significant negative impact on our first quarter 2009 Video and Audio revenues when compared to the first quarter of 2008. The revenues of each business unit are discussed in further detail in the section titled Results of Operations below.The restructuring plan includes a reduction in force of approximately 500 positions, including employees related to our product line divestitures, and the closure of all or parts of some of our worldwide facilities. The restructuring plan is intended to improve operational efficiencies. In connection with this plan, we have incurred or expect to incur total restructuring charges of approximately $30 million, which primarily represent cash expenditures. During the fourth quarter of 2008, we recorded restructuring charges of $22.8 million related to this plan. During the first quarter of 2009, we recorded new restructuring charges totaling $3.6 million under the plan, of which $2.8 million related to the closure of all or part of six facilities and $0.8 million, recorded in cost of revenues, related to the write-down of PCTV inventory. Also during the first quarter of 2009, we recorded revisions to previously recorded restructuring estimates totaling $1.4 million. We expect annual cost savings of approximately $50 million to result from actions taken under this restructuring plan. Cash expenditures resulting from restructuring obligations totaled approximately $9.9 million in the first quarter of 2009.
The decrease in marketing and selling expenses for the three-month period ended March 31, 2009, compared to the same period in 2008, was largely due to lower personnel-related costs; decreased advertising, tradeshow and other promotional expenses; lower corporate facility and information technology infrastructure allocations; and favorable foreign exchange translations, partially offset by increased bad debt expenses. Personnel-related costs decreased $4.7 million, primarily due to decreased headcount; advertising, tradeshow and other promotional expenses decreased $1.5 million; and corporate facility and infrastructure allocations decreased by $1.0 million. Also, net foreign exchange gains (specifically, remeasurement gains and losses on net monetary assets denominated in foreign currencies, offset by hedging gains and losses), which are included in marketing and selling expenses, were $1.8 million, compared to net foreign exchange gains of $0.8 million in the comparable 2008 period. Bad debt expense increased $1.0 million, primarily due to increased lease defaults. The increase in marketing and selling expenses as a percentage of revenues was the result of the decrease in revenues for the period compared to the same period in 2008.
The decrease in general and administrative expenses for the three-month period ended March 31, 2009, compared to the same period in 2008, was due to decreased consulting and outside services costs of $3.2 million and lower personnel-related costs of $2.5 million. The decrease in consulting and outside services costs was largely the result of the absence of consulting costs, present in the first quarter of 2008, related to the strategic review and transformation of our business. The lower personnel-related costs were the result of reduced headcount. The decrease in general and administrative expenses as a percentage of revenues for the three-month period ended March 31, 2009 was the result of the decrease in expenses for the period compared to the same period in 2008.
In October 2008, we initiated a company-wide restructuring plan that included a reduction in force of approximately 500 positions, including employees related to our product line divestitures, and the closure of all or parts of some of our worldwide facilities. The restructuring plan is intended to improve operational efficiencies. In connection with the plan, during the fourth quarter of 2008, we recorded restructuring charges of $20.4 million related to employee termination costs and $0.5 million for the closure of three small facilities. In addition, as a result of the decision to sell the PCTV product line, we recorded a non-cash restructuring charge of $1.9 million in cost of revenues related to the write-down of inventory. During the first quarter of 2009, we recorded new restructuring charges totaling $3.6 million under the plan, of which $2.8 million was related to the closure of all or part of six facilities and $0.8 million, recorded in cost of revenues, related to the write-down of PCTV inventory. Also during the first quarter of 2009, we recorded revisions to previously recorded restructuring estimates of $1.3 million and $0.1 million, respectively, for severance and facility obligations related to the plan. We expect annual cost savings of approximately $50 million to result from actions taken under this restructuring plan.
During the first quarter of 2008, we initiated restructuring plans within our Video business unit and corporate operations to eliminate duplicative business functions and improve operational efficiencies. During the first quarter of 2008, we recorded restructuring charges of $1.2 million under these plans related to employee termination costs for 20 employees, primarily in the marketing and selling teams and general and administrative teams. During the second quarter of 2008, we recorded restructuring charges of $1.0 million under these plans primarily related to employee termination costs for 26 employees, primarily in the research and development teams and sales and marketing teams. During the third quarter of 2008, we recorded restructuring charges of $2.0 million under these plans primarily related to employee termination costs for 45 employees, primarily in the research and development teams and general and administrative teams.
Read the The complete ReportAVID is in the portfolios of Bruce Sherman of Private Capital Management, PRIMECAP Management.
