Avid Technology (AVID) 8-K Avid Announces Results for Second Quarter 2012

EXHIBIT 99.1

Avid Announces Results for Second Quarter 2012

Reports Year-on-Year Revenue Growth for Non-divested Business

BURLINGTON, MA- July 30, 2012-Avid® (NASDAQ: AVID) today reported GAAP revenues of $157.4 million for the three-month period ended June 30, 2012, compared to $161.8 million for the same period in 2011. The GAAP net loss for the second quarter was $39.0 million, or $1.01 per share, compared to a GAAP net loss of $11.1 million, or $0.29 per share, in the second quarter of 2011.

Excluding revenue from the consumer product lines divested on July 2nd, the revenue for the three-month period ended June 30, 2012 was $143.7 million and the revenue on the same basis for the three-month period ended June 30, 2011 was $137.3 million.

The GAAP net loss for the second quarter of 2012 and 2011 included amortization of intangible assets, stock-based compensation, restructuring costs and costs and allowances related to divestitures, acquisition and other costs, losses on assets held for sale and asset sales, legal settlement for 2011 only and related tax adjustments collectively totaling $34.9 million and $7.8 million, respectively. Excluding these items, the non-GAAP net loss for the second quarter of 2012 was $4.1 million, or $0.11 per share, compared to non-GAAP net loss of $3.4 million, or $0.09 per share, for the second quarter of 2011.

The GAAP operating loss for the second quarter of 2012 was $37.8 million and excluding the items identified above, except tax adjustments, the non-GAAP operating loss for the second quarter was $2.1 million.

“Our results for the second quarter were encouraging with 5% year-on-year revenue growth for our ongoing business and a $10 million sequential increase in our cash balance,” said Gary Greenfield, chairman and CEO of Avid.   “This performance reinforced the strategic direction we took earlier this month and we are excited about our prospects for the second half of the year.”

Revenues for the six-month period ended June 30, 2012 were $309.6 million, compared to revenues of $327.5 million for the same period in 2011. The GAAP net loss for the first six months of 2012 was $52.0 million, or $1.34 per share, compared to a GAAP net loss of $15.9 million, or $0.42 per share, for the same period in 2011. The GAAP net loss for the six-month period ended June 30, 2012 included $40.5 million of amortization of intangible assets, stock-based compensation, restructuring costs and costs and allowances related to divestitures, acquisition and other costs, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss was $11.5 million, or $0.30 per share, for the first half of 2012. The GAAP net loss for the six-month period ended June 30, 2011 included $13.2 million of amortization of intangible assets, stock-based compensation, restructuring costs, legal settlement, acquisition-related costs, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss for the six-month period ended June 30, 2011 was $2.7 million or $0.07 per share.

A reconciliation of GAAP to non-GAAP results is included in the tables attached to this release.

The company's cash balance on June 30, 2012 was $59.4 million. The quarter-end cash balance excludes the proceeds from the sale of consumer product lines of $14.5 million, a portion of which is being held in escrow. It is expected that these proceeds will offset the majority of cash cost associated with the Company's 2012 restructuring plan.

The company continues to review certain estimates associated with the divestiture of consumer product lines and estimates related to the restructuring costs and costs and allowances related to divestitures.  A change in those estimates could result in adjustments to the company's financial statements in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, which could be material. 

Conference Call

A conference call to discuss Avid's second quarter 2012 financial results will be held today, July 30, 2012 at 5:00 p.m. ET. The call will be open to the public and can be accessed by dialing 719.457.2617 and referencing confirmation code 4569475. The call and subsequent replay will also be available on Avid's website. To join the webcast via this alternative, go to the Investors tab at www.avid.com for complete details prior to the start of the conference call.

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. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. 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.  Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The reconciliation of the GAAP to non-GAAP financial measures is in the tables attached to this press release.

Management considers both GAAP and non-GAAP financial results in managing our business. Non-GAAP financial measures are used internally, for example, in establishing annual operating budgets, in assessing operating performance and for measuring performance under incentive compensation plans. Non-GAAP financial measures are also used in operating and financial decision-making because we believe these measures reflect our ongoing business and allow meaningful period-to-period comparisons. We believe it is useful for investors and others to also review both GAAP and non-GAAP measures in order to understand and evaluate our current operating performance and future prospects in the same manner as management and to compare in a consistent manner the company's current financial results with past financial performance. The primary limitations associated with our use of non-GAAP financial measures are that they may not include all items of income and expense that affect our operations and that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, terms referring to non-GAAP financial measures used in this press release, such as non-GAAP net loss, do not have standardized meanings. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for this limitation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.

Use of Forward-Looking Statements

The financial results included in this release are preliminary and unaudited. The contents of this release are subject to the completion and filing of our Quarterly Report on Form 10-Q. This release may include forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. Statements in this press release that relate to future results or events are forward-looking statements and are based on Avid's current estimates and assumptions.  Forward-looking statements may be identified by the use of forward-looking words, such as “anticipate,” “believe,” “should,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “feel,” “could,” “will,” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: adjustments that may be made to Avid's preliminary financial results included in this release as a result of the review of certain estimates associated with the sale of Avid's consumer audio and video product lines and restructuring costs and costs and allowances related to divestitures; Avid's ability to execute its strategic plan and meet customer needs; Avid's ability to realize operational and financial benefits from the sale of its consumer audio and video product lines and the reduction in workforce

announced earlier this month; Avid's ability to sell its professional products through retail sales channels following the divestiture of consumer products sold through those sales channels; its ability to produce innovative products in response to changing market demand, particularly in the media industry; competitive factors; fluctuations in its revenue, based on, among other things, Avid's performance in particular geographies or markets, fluctuations in foreign currency exchange rates, and seasonal factors; adverse changes in economic conditions; Avid's liquidity; and other risk factors and uncertainties 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 estimates only as of today and should not be relied upon as representing the company's estimates 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

Avid creates the digital audio and video technology used to make the most listened to, most watched and most loved media in the world - from the most prestigious and award-winning feature films, music recordings, television shows, to live concert tours and news broadcasts. Some of Avid's most influential and pioneering solutions include Media Composer®, Pro Tools®, Interplay®, ISIS®, VENUE, Sibelius®, and System 5.For more information about Avid solutions and services, visit www.avid.com, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2012 Avid Technology, Inc. All rights reserved. Product features, specifications, system requirements and availability are subject to change without notice.  All prices are MSRP for the U.S. and Canada only and are subject to change without notice.  Contact your local Avid office or reseller for prices outside the U.S. and Canada.  Avid, the Avid logo, Fast Track, Media Composer, Pro Tools, Interplay, ISIS, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of the Interplay Entertainment Corp. which bears no responsibility for Avid products.  All other trademarks are the property of their respective owners.

###

AVID TECHNOLOGY, INC.

Condensed Consolidated Statements of Operations

(in thousands except per share data, unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net revenues:
Products	$	125,874		$	129,488		$	245,812		$	266,234
Services	34,405			32,295			66,607			61,301
Less allowances related to divestitures	(2,848		)				(2,848		)
Total net revenues	157,431			161,783			309,571			327,535
Cost of revenues:
Products	66,637			64,023			127,850			127,888
Services	14,325			14,706			27,042			28,760
Amortization of intangible assets	649			685			1,294			1,351
Restructuring costs	1,913						1,913
Total cost of revenues	83,524			79,414			158,099			157,999
Gross profit	73,907			82,369			151,472			169,536
Operating expenses:
Research and development	26,900			30,453			54,381			60,426
Marketing and selling	43,454			45,851			89,380			90,917
General and administrative	14,324			14,234			29,214			29,219
Amortization of intangible assets	1,105			2,161			2,717			4,306
Restructuring costs (recoveries), net	15,841			162			16,009			(1,314		)
Loss on sales of assets	10,045			597			9,793			597
Total operating expenses	111,669			93,458			201,494			184,151
Operating loss	(37,762		)	(11,089		)	(50,022		)	(14,615		)
Interest and other income (expense), net	(379		)	(645		)	(573		)	(945		)
Loss before income taxes	(38,141		)	(11,734		)	(50,595		)	(15,560		)
Provision for income taxes, net	903			(590		)	1,426			367
Net loss	$	(39,044	)	$	(11,144	)	$	(52,021	)	$	(15,927	)
Net loss per common share – basic and diluted	$	(1.01	)	$	(.29	)	$	(1.34	)	$	(.42	)
Weighted-average common shares outstanding – basic and diluted	38,778			38,413			38,720			38,323

AVID TECHNOLOGY, INC.

(in thousands except per share data, unaudited)

Reconciliations of GAAP financial measures to Non-GAAP financial measures:
			Three Months Ended June 30, 2012
						Gross		Operating			Operating			Tax			Net
	Revenues		COGS			Profit		Expenses			Loss			Provision			Loss
GAAP	$	157,431	$	83,524		$	73,907	$	111,669		$	(37,762	)	$	903		$	(39,044	)
Amortization of intangible assets			(649		)	649		(1,105		)	1,754						1,754
Restructuring costs, and costs and allowances related to divestitures	2,848		(1,913		)	4,761		(15,841		)	20,602						20,602
Acquisition and other costs (a)								(974		)	974						974
Loss on assets held for sale								(10,045		)	10,045						10,045
Tax adjustment														674			(674		)
Stock-based compensation included in:
Cost of products revenues			(110		)	110					110						110
Cost of services revenues			(151		)	151					151						151
Research and development expenses								(268		)	268						268
Marketing and selling expenses								63			(63		)				(63		)
General and administrative expenses								(1,776		)	1,776						1,776
Non-GAAP	$	160,279	$	80,701		$	79,578	$	81,723		$	(2,145	)	$	1,577		$	(4,101	)
Weighted-average shares outstanding - diluted																	38,778
Non-GAAP net loss per share - diluted																	$	(0.11	)
(a) Represents costs included in general and administrative expenses
			Three Months Ended June 30, 2011
						Gross		Operating			Operating			Tax			Net
	Revenues		COGS			Profit		Expenses			(Loss) Income			Provision			Loss
GAAP	$	161,783	$	79,414		$	82,369	$	93,458		$	(11,089	)	$	(590	)	$	(11,144	)
Amortization of intangible assets			(685		)	685		(2,161		)	2,846						2,846
Restructuring recoveries, net								(162		)	162						162
Legal settlement and acquisition-related costs(a)								(392		)	392						392
Loss on sale of assets								(597		)	597						597
Tax adjustment														245			(245		)
Stock-based compensation included in:
Cost of products revenues			(111		)	111					111						111
Cost of services revenues			(277		)	277					277						277
Research and development expenses								(427		)	427						427
Marketing and selling expenses								(1,356		)	1,356						1,356
General and administrative expenses								(1,846		)	1,846						1,846
Non-GAAP	$	161,783	$	78,341		$	83,442	$	86,517		$	(3,075	)	$	(345	)	$	(3,375	)
Weighted-average shares outstanding - diluted																	38,413
Non-GAAP net loss per share - diluted																	$	(0.09	)

Reconciliations of GAAP financial measures to Non-GAAP financial measures:
						Six Months Ended June 30, 2012
						Gross		Operating			Operating			Tax		Net
	Revenues		COGS			Profit		Expenses			Loss			Provision		Loss
GAAP	$	309,571	$	158,099		$	151,472	$	201,494		$	(50,022	)	$	1,426	$	(52,021	)
Amortization of intangible assets			(1,294		)	1,294		(2,717		)	4,011					4,011
Restructuring costs, and costs and allowances related to divestitures	2,848		(1,913		)	4,761		(16,009		)	20,770					20,770
Acquisition and other costs (a)								(1,457		)	1,457					1,457
Loss on assets held for sale								(9,793		)	9,793					9,793
Tax adjustment														926		(926		)
Stock-based compensation included in:
Cost of products revenues			(204		)	204					204					204
Cost of services revenues			(308		)	308					308					308
Research and development expenses								(575		)	575					575
Marketing and selling expenses								(1,198		)	1,198					1,198
General and administrative expenses								(3,091		)	3,091					3,091
Non-GAAP	$	312,419	$	154,380		$	158,039	$	166,654		$	(8,615	)	$	2,352	$	(11,540	)
Weighted-average shares outstanding - diluted																38,720
Non-GAAP net loss per share - diluted																$	(0.30	)
(a) Represents costs included in general and administrative expenses
						Six Months Ended June 30, 2011
						Gross		Operating			Operating			Tax		Net
	Revenues		COGS			Profit		Expenses			(Loss) Income			Provision		Loss
GAAP	$	327,535	$	157,999		$	169,536	$	184,151		$	(14,615	)	$	367	$	(15,927	)
Amortization of intangible assets			(1,351		)	1,351		(4,306		)	5,657					5,657
Restructuring recoveries, net								1,314			(1,314		)			(1,314		)
Legal settlement and acquisition-related costs(a)								(989		)	989					989
Tax adjustment														300		(300		)
Stock-based compensation included in:
Cost of products revenues			(249		)	249					249					249
Cost of services revenues			(545		)	545					545					545
Research and development expenses								(899		)	899					899
Marketing and selling expenses								(2,574		)	2,574					2,574
General and administrative expenses								(3,882		)	3,882					3,882
Non-GAAP	$	327,535	$	155,854		$	171,681	$	172,815		$	(1,134	)	$	667	$	(2,746	)
Weighted-average shares outstanding - diluted																38,323
Non-GAAP net loss per share - diluted																$	(0.07	)

Revenues Summary:	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2012			2011		2012			2011
Video revenues	$	98,942		$	96,667	$	182,948		$	190,686
Audio revenues	61,337			65,116		129,471			136,849
Less allowances related to divestitures	(2,848		)			(2,848		)
Total net revenues	$	157,431		$	161,783	$	309,571		$	327,535

AVID TECHNOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)

	June 30, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	59,383		$	32,855
Accounts receivable, net of allowances of $19,187 and $15,985 at June 30, 2012 and December 31, 2011, respectively	89,180			104,305
Inventories	77,813			111,397
Deferred tax assets, net	1,462			1,480
Prepaid expenses	8,580			7,652
Assets held for sale (a)	12,608			—
Other current assets	15,948			14,405
Total current assets	264,974			272,094
Property and equipment, net	49,153			53,487
Intangible assets, net	10,996			18,524
Goodwill	238,338			246,592
Other assets	8,496			11,568
Total assets	$	571,957		$	602,265
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	38,990		$	42,533
Accrued compensation and benefits	26,411			31,447
Accrued expenses and other current liabilities	46,442			35,108
Income taxes payable	10,877			8,950
Deferred revenues	57,015			45,768
Total current liabilities	179,735			163,806
Long-term liabilities	29,704			27,885
Total liabilities	209,439			191,691
Stockholders’ equity:
Common stock	423			423
Additional paid-in capital	1,024,082			1,019,200
Accumulated deficit	(588,219		)	(532,477		)
Treasury stock at cost, net of reissuances	(78,008		)	(82,301		)
Accumulated other comprehensive income	4,240			5,729
Total stockholders’ equity	362,518			410,574
Total liabilities and stockholders’ equity	$	571,957		$	602,265

(a) - Assets held for sale comprise
Inventory	$	10,703
Prepaid expense	60
Capitalized Software	372
Intangibles and Goodwill	11,518
Less write down to Fair Value	(10,045		)
	$	12,608

AVID TECHNOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Cash flows from operating activities:
Net loss	$	(39,044	)	$	(11,144	)	$	(52,021	)	$	(15,927	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	10,549			7,983			18,123			15,875
Provision for doubtful accounts	15			315			(62		)	459
Non-cash provision for restructuring	(4,761		)	—			(4,761		)	125
(Gain)/Loss on Divestitures	10,045			—			10,045			—
(Gain)/Loss on Disposal of Fixed Assets	(255		)	596			(257		)	591
Compensation expense from stock grants and options	2,242			4,016			5,375			8,149
Non-cash interest expense	—			(80		)	73			—
Unrealized foreign currency transaction losses	(3,146		)	2,705			(848		)	6,490
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions	451			(4		)	823			(4		)
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable	495			(2,497		)	17,352			2,783
Inventories	28,427			(5,285		)	36,158			(22,161		)
Prepaid expenses and other current assets	(13,891		)	1,491			(14,866		)	(208		)
Accounts payable	1,845			(2,496		)	(3,531		)	(2,389		)
Accrued expenses, compensation and benefits and other liabilities	17,820			(5,002		)	5,482			(20,244		)
Income taxes payable	2,936			(1,490		)	2,170			(2,031		)
Deferred revenues	(260		)	2,916			13,171			14,460
Net cash provided by (used in) operating activities	13,468			(7,976		)	32,426			(14,032		)
Cash flows from investing activities:
Purchases of property and equipment, net	(1,901		)	(2,300		)	(5,489		)	(5,845		)
Decrease (increase) in other long-term assets	(1,321		)	156			(3		)	(461		)
Net cash used in investing activities	(3,222		)	(2,144		)	(5,492		)	(6,306		)
Cash flows from financing activities:
Proceeds from the issuance of common stock under employee stock plans	252			1,222			80			1,349
Proceeds from revolving credit facilities	—			13,000			1,000			21,000
Payments on revolving credit facilities	—			—			(1,000		)	(8,000		)
Net cash (used in) provided by financing activities	252			14,222			80			14,349
Effect of exchange rate changes on cash and cash equivalents	(796		)	235			(486		)	764
Net increase (decrease) in cash and cash equivalents	9,702			4,337			26,528			(5,225		)
Cash and cash equivalents at beginning of period	49,681			33,220			32,855			42,782
Cash and cash equivalents at end of period	$	59,383		$	37,557		$	59,383		$	37,557

AVID TECHNOLOGY, INC.
(unaudited - in Thousands)
Supplemental Revenue Information
	Twelve Months Ended Dec 31, 2010	Three Months Ended Mar 31, 2011	Three Months Ended Jun 30, 2011	Three Months Ended Sep 30, 2011	Three Months Ended Dec 31, 2011	Twelve Months Ended Dec 31, 2011	Three Months Ended Mar 31, 2012	Three Months Ended Jun 30, 2012	Six Months Ended Jun 30, 2012	Percentage Change Three Months Ended June 30, 2011 compared to June 30, 2012
Revenue
Video
Product	281,898	66,510	64,612	67,605	79,548	278,276	53,422	65,017	118,439	0.6	%
Services	113,429	27,508	31,001	31,829	36,177	126,515	30,584	33,048	63,632	6.6	%
Sub-Total	395,327	94,018	95,613	99,434	115,726	404,791	84,006	98,065	182,071	2.6	%
Audio
Product	279,409	70,253	65,002	64,002	67,919	267,176	66,516	58,009	124,525	(10.8	)%
Services	5,002	1,480	1,169	1,261	1,156	5,066	1,618	1,358	2,975	16.2	%
Sub-Total	284,411	71,733	66,171	65,264	69,075	272,242	68,134	59,366	127,500	(10.3	)%
Total
Product	561,307	136,763	129,614	131,608	147,467	545,452	119,938	123,026	242,964	(5.1	)%
Services	118,430	28,988	32,170	33,090	37,333	131,581	32,201	34,406	66,607	7.0	%
Total	679,737	165,751	161,783	164,698	184,800	677,033	152,139	157,431	309,571	(2.7	)%
Divested Consumer Product Lines
Video
Product	30,793	8,779	7,532	6,097	5,565	27,973	4,369	2,310	6,679	(69.3	)%
Services
Sub-Total	30,793	8,779	7,532	6,097	5,565	27,973	4,369	2,310	6,679	(69.3	)%
Audio
Product	72,694	16,258	16,939	15,364	14,881	63,442	12,884	11,392	24,276	(32.7	)%
Services
Sub-Total	72,694	16,258	16,939	15,364	14,881	63,442	12,884	11,392	24,276	(32.7	)%
Total
Product	103,487	25,037	24,471	21,461	20,446	91,415	17,253	13,702	30,955	(44.0	)%
Services
Total	103,487	25,037	24,471	21,461	20,446	91,415	17,253	13,702	30,955	(44.0	)%

AVID TECHNOLOGY, INC.
(unaudited - in Thousands)
Supplemental Revenue Information (continued)
	Twelve Months Ended Dec 31, 2010	Three Months Ended Mar 31, 2011	Three Months Ended Jun 30, 2011	Three Months Ended Sep 30, 2011	Three Months Ended Dec 31, 2011	Twelve Months Ended Dec 31, 2011	Three Months Ended Mar 31, 2012	Three Months Ended Jun 30, 2012	Six Months Ended Jun 30, 2012	Percentage Change Three Months Ended June 30, 2011 compared to June 30, 2012
Revenue
On-going Business
Video
Product	251,105	57,731	57,080	61,508	73,983	250,303	49,053	62,707	111,760	9.9	%
Services	113,429	27,508	31,001	31,829	36,177	126,515	30,584	33,048	63,632	6.6	%
Sub-Total	364,534	85,239	88,081	93,337	110,161	376,818	79,637	95,755	175,391	8.7	%
Audio
Product	206,715	53,995	48,063	48,638	53,038	203,734	53,632	46,617	100,249	(3.0	)%
Services	5,002	1,480	1,169	1,261	1,156	5,066	1,618	1,358	2,975	16.2	%
Sub-Total	211,717	55,475	49,232	49,900	54,194	208,800	55,250	47,974	103,224	(2.6	)%
Total
Product	457,820	111,726	105,143	110,147	127,021	454,037	102,685	109,323	212,008	4.0	%
Services	118,430	28,988	32,170	33,090	37,333	131,581	32,201	34,406	66,607	7.0	%
Total	576,250	140,714	137,312	143,237	164,354	585,618	134,886	143,729	278,615	4.7	%