Avid 2006 Annual Report Download - page 44

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34
Years Ended December 31,
(in thousands)
2006 2005 2004
Product cost of revenues $ 516 $ – $ –
Services cost of revenues 801 – –
Research and development expense 4,925 272 159
Marketing and selling expense 4,833 772 434
General and administrative expense 5,766 1,403 855
$ 16,841 $ 2,447 $ 1,448
In addition, stock-based compensation totaling $180,000 was included in the caption “restructuring costs, net”
during 2006 related to stock-based compensation expense for the acceleration of vesting for certain employees
who were terminated in a restructuring program.
As of December 31, 2006, there was $21.8 million of total unrecognized compensation cost, before forfeitures,
related to non-vested stock-based compensation awards granted under our stock-based compensation plans.
This cost will be recognized over the next four years. We expect this cost to be amortized as follows: $12.0
million in 2007, $5.9 million in 2008, $3.0 million in 2009 and $0.9 million thereafter. See Footnotes B and L to our
Consolidated Financial Statements in Item 8 for further information regarding our stock-based compensation
assumptions and expenses, including pro forma disclosures for the years ended December 31, 2005 and 2004.
Net Revenues
Comparison of 2006 to 2005
Years Ended December 31, 2006 and 2005
(dollars in thousands)
2006
Net Revenues
% of
Consolidated
Net Revenues
2005
Net Revenues
% of
Consolidated
Net Revenues Change
% Change
in Revenues
Professional Video:
Product revenues $379,097 41.7% $366,074 47.2% $13,023 3.6%
Services revenues 100,286 11.0% 82,214 10.6% 18,072 22.0%
Total 479,383 52.7% 448,288 57.8% 31,095 6.9%
Audio:
Product revenues 303,072 33.3% 267,616 34.5% 35,456 13.2%
Services revenues 1,290 0.1% 442 0.1% 848 191.9%
Total 304,362 33.4% 268,058 34.6% 36,304 13.5%
Consumer Video:
Product revenues 126,833 13.9% 59,097 7.6% 67,736 NM (a)
Total 126,833 13.9% 59,097 7.6% 67,736 NM (a)
Total net revenues: $910,578 100.0% $775,443 100.0% $135,135 17.4%
(a) Comparison is not meaningful as the Consumer Video segment was formed in August 2005 with the acquisition of
Pinnacle Systems.
Professional Video product revenues increased $13.0 million from 2005 to 2006. For 2006, Pinnacle products
accounted for $47.4 million of Professional Video product revenues, compared to $31.6 million for 2005,
representing an increase of $15.8 million. The increase in Pinnacle product revenues was offset by a net decrease of
$2.8 million for all other product families, including decreased revenues from our Media Composer and broadcast
news product families, offset by increased revenues from our shared-storage systems and high-end editing systems.
For the 2006 year, we had lower than expected revenue from large solution sales, which was due to several factors,