Avid Technology Inc. (AVID, Financial) filed Quarterly Report for the period ended 2009-09-30.
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 $451.97 million; its shares were traded at around $12.09 with and P/S ratio of 0.53.
Our operating expenses for the three- and nine-month periods ended September 30, 2009 were $100.1 million and $286.5 million, respectively, compared to $167.9 million and $401.1 million for the same periods in 2008. Operating expenses for the 2008 periods included charges of $51.3 million for the impairment of goodwill and an intangible asset recorded in the third quarter of 2008. The remaining decreases of $16.5 million and $63.3 million, respectively, were primarily the result of our business transformation, including product line divestitures and a restructuring plan initiated in the fourth quarter of 2008. Prior to the third quarter of 2009, this restructuring plan had resulted in a reduction in force of more than 500 positions, including employees associated with product line divestitures, and the closure of all or parts of twelve facilities worldwide.
During the third quarter of 2009, as a result of increased economic pressures and the expansion of our global development program, we broadened the restructuring plan to include an additional reduction in force of approximately 150 positions and the closure of one floor of our Audio segments Daly City, California facility. As a result, we recorded new restructuring charges of $8.2 million in the third quarter of 2009, which included a non-cash charge of $1.0 million related to the retirement of fixed assets in Daly City. As a result of the Daly City facility action, we anticipate that additional restructuring charges of approximately $4 million, including additional non-cash charges of $1 million, will be recorded in the fourth quarter of 2009.
In connection with restructuring actions initiated in the fourth quarter of 2008 and the first nine months of 2009, we have incurred or expect to incur total restructuring charges of approximately $45 million, which primarily represent cash expenditures. We expect annual cost savings of approximately $65 million to result from these actions, some of which are already reflected in our 2009 results. Cash expenditures resulting from restructuring obligations totaled approximately $21.6 million during the first nine months of 2009. We may engage in additional cost reduction programs, including restructuring actions, in the future as a result of changing economic conditions as well as our ongoing business transformation.
Video services revenues are derived primarily from maintenance contracts, professional and installation services, and training. The decreases in Video services revenues for the three- and nine-month periods ended September 30, 2009, compared to the same periods in 2008, included decreases of $1.9 million and $5.2 million, respectively, related to divested or exited product lines. The remaining decreases of $3.3 million and $7.6 million for the three- and nine-month periods, respectively, were largely the result of decreases in both maintenance and professional services revenues. The decreases in maintenance revenues were primarily the result of changes in currency exchange rates, while the decreases in professional services revenues were largely due to lower volumes of services provided.
The decreases in research and development expenses for the three- and nine-month periods ended September 30, 2009, compared to the same periods in 2008, were primarily due to decreased personnel-related costs of $6.4 million and $19.9 million, respectively, both resulting from reduced headcount. In addition, a $2.5 million decrease in computer hardware and supplies expenses was a contributing factor to the improvement for the nine-month period. The increases in research and development expenses as a percentage of revenues for both the three- and nine-month periods ended September 30, 2009 were the result of the decreases in revenues for the periods compared to the same periods in 2008.
Read the The complete ReportAVID is in the portfolios of Private Capital 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 $451.97 million; its shares were traded at around $12.09 with and P/S ratio of 0.53.
Highlight of Business Operations:
Our revenues for the three months ended September 30, 2009 were $152.1 million, a decrease of 30% compared to the same period last year. By business unit, Video revenues decreased 36% and Audio revenues decreased 18%. Our revenues for the nine months ended September 30, 2009 were $454.3 million, a decrease of 29% compared to the same period last year. By business unit, Video revenues decreased 36% and Audio revenues decreased 16%. Of the $148.6 million decrease in Video revenues during the first nine months of 2009, decreases of $43.2 million and $5.2 million for Video product revenues and Video services revenues, respectively, were attributable to divested or exited product lines.Our operating expenses for the three- and nine-month periods ended September 30, 2009 were $100.1 million and $286.5 million, respectively, compared to $167.9 million and $401.1 million for the same periods in 2008. Operating expenses for the 2008 periods included charges of $51.3 million for the impairment of goodwill and an intangible asset recorded in the third quarter of 2008. The remaining decreases of $16.5 million and $63.3 million, respectively, were primarily the result of our business transformation, including product line divestitures and a restructuring plan initiated in the fourth quarter of 2008. Prior to the third quarter of 2009, this restructuring plan had resulted in a reduction in force of more than 500 positions, including employees associated with product line divestitures, and the closure of all or parts of twelve facilities worldwide.
During the third quarter of 2009, as a result of increased economic pressures and the expansion of our global development program, we broadened the restructuring plan to include an additional reduction in force of approximately 150 positions and the closure of one floor of our Audio segments Daly City, California facility. As a result, we recorded new restructuring charges of $8.2 million in the third quarter of 2009, which included a non-cash charge of $1.0 million related to the retirement of fixed assets in Daly City. As a result of the Daly City facility action, we anticipate that additional restructuring charges of approximately $4 million, including additional non-cash charges of $1 million, will be recorded in the fourth quarter of 2009.
In connection with restructuring actions initiated in the fourth quarter of 2008 and the first nine months of 2009, we have incurred or expect to incur total restructuring charges of approximately $45 million, which primarily represent cash expenditures. We expect annual cost savings of approximately $65 million to result from these actions, some of which are already reflected in our 2009 results. Cash expenditures resulting from restructuring obligations totaled approximately $21.6 million during the first nine months of 2009. We may engage in additional cost reduction programs, including restructuring actions, in the future as a result of changing economic conditions as well as our ongoing business transformation.
Video services revenues are derived primarily from maintenance contracts, professional and installation services, and training. The decreases in Video services revenues for the three- and nine-month periods ended September 30, 2009, compared to the same periods in 2008, included decreases of $1.9 million and $5.2 million, respectively, related to divested or exited product lines. The remaining decreases of $3.3 million and $7.6 million for the three- and nine-month periods, respectively, were largely the result of decreases in both maintenance and professional services revenues. The decreases in maintenance revenues were primarily the result of changes in currency exchange rates, while the decreases in professional services revenues were largely due to lower volumes of services provided.
The decreases in research and development expenses for the three- and nine-month periods ended September 30, 2009, compared to the same periods in 2008, were primarily due to decreased personnel-related costs of $6.4 million and $19.9 million, respectively, both resulting from reduced headcount. In addition, a $2.5 million decrease in computer hardware and supplies expenses was a contributing factor to the improvement for the nine-month period. The increases in research and development expenses as a percentage of revenues for both the three- and nine-month periods ended September 30, 2009 were the result of the decreases in revenues for the periods compared to the same periods in 2008.
Read the The complete ReportAVID is in the portfolios of Private Capital of Private Capital Management, PRIMECAP Management.
