Avid 2008 Annual Report Download - page 27

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Financial Summary
The following table sets forth certain items from our consolidated statements of operations as a percentage of net
revenues for the periods indicated:
For the Year Ended December 31,
2008 2007 2006
Product revenues 84.5% 86.7% 88.8%
Services revenues 15.5% 13.3% 11.2%
Total revenues 100.0% 100.0% 100.0%
Cost of revenues 53.6% 51.7% 51.2%
Gross profit 46.4% 48.3% 48.8%
Operating expenses:
Research and development 17.6% 16.2% 15.5%
Marketing and selling 24.7% 22.7% 22.4%
General and administrative 9.3% 8.3% 6.9%
Amortization of intangible assets 1.5% 1.5% 1.6%
Impairment of goodwill and intangible assets 15.4%
—
5.8%
Restructuring costs, net 3.0% 1.0% 0.3%
In-process research and development —
—
0.1%
Gain on sale of assets (1.6%)
—
—
Total operating expenses 69.9% 49.7% 52.6%
Operating loss (23.5%) (1.4%) (3.8%)
Interest and other income (expense), net 0.3% 0.8% 0.8%
Loss before income taxes (23.2%) (0.6%) (3.0%)
Provision for income taxes 0.3% 0.3% 1.7%
N
et loss (23.5%) (0.9%) (4.7%)
Total net revenues for the year ended December 31, 2008 were $844.9 million, a decrease of $84.7 million, or 9%,
compared to the year ended December 31, 2007. Compared to 2007, Professional Video revenues decreased 10%,
Audio revenues decreased 8% and Consumer Video revenues decreased 10%. The revenues of each business unit are
discussed in further detail in the section titled “Results of Operations” below.
For the year ended December 31, 2008, we incurred a net loss of $198.2 million, compared to a net loss of $8.0 million
for 2007. The net loss for 2008 includes charges of $130.0 million for impairment of acquisition-related goodwill and
intangible assets, $20.4 million of acquisition-related costs for intangible asset amortization expenses and $27.3 million
of restructuring costs. The net loss for 2007 includes $30.6 million of acquisition-related intangible amortization costs
and $13.7 million of restructuring costs. The increases in impairment and restructuring costs in 2008 were partially
offset by gains totaling $13.3 million related to product line divestitures.
The 2008 charges of $130.0 million for impairment of acquisition-related goodwill and intangible assets was composed
of goodwill impairment losses of $54.6 million and $64.3 million for our Consumer Video and Audio segments,
respectively, and impairment losses for Consumer Video intangible assets of $11.1 million. See Note G to our
Consolidated Financial Statements in Item 8 for further information regarding our 2008 impairment losses.
In November 2008, we sold our Softimage 3D animation product line, which was part of our Professional Video
segment, to Autodesk, Inc. We received $26.5 million of the $33.5 million dollar purchase price in the fourth quarter of
2008, with the remaining balance to be held in escrow with scheduled distribution dates in 2009 and 2010. We
recognized a gain of approximately $11.5 million as a result of this transaction, which does not include the proceeds
held in escrow. This product line accounted for approximately $10.7 million of our 2008 revenues.