Avid 2009 Annual Report Download - page 25

20
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,
2009
2008
2007
Net revenues:
Product revenues
81.0
%
84.5
%
86.7
%
Services revenues
19.0
%
15.5
%
13.3
%
Total revenues
100.0
%
100.0
%
100.0
%
Cost of revenues
48.6
%
53.6
%
51.7
%
Gross margin
51.4
%
46.4
%
48.3
%
Operating expenses:
Research and development
19.2
%
17.6
%
16.2
%
Marketing and selling
27.6
%
24.7
%
22.7
%
General and administrative
9.7
%
9.3
%
8.3
%
Amortization of intangible assets
1.7
%
1.5
%
1.5
%
Impairment of goodwill and intangible assets
—
15.4
%
—
Restructuring costs, net
4.3
%
3.0
%
1.0
%
Gain on sale of assets
(0.0
%)
(1.6
%)
—
Total operating expenses
62.5
%
69.9
%
49.7
%
Operating loss
(11.1
%)
(23.5
%)
(1.4
%)
Interest and other income (expense), net
(0.0
%)
0.3
%
0.8
%
Loss before income taxes
(11.1
%)
(23.2
%)
(0.6
%)
(Benefit from) provision for income taxes
(0.2
%)
0.3
%
0.3
%
Net loss
(10.9
%)
(23.5
%)
(0.9
%)
Total net revenues for the year ended December 31, 2009 were $629.0 million, a decrease of $215.9 million, or 26%,
compared to the year ended December 31, 2008. Compared to 2008, Video revenues decreased 32% and Audio
revenues decreased 13%. Of the $176.7 million decrease in 2009 Video revenues, $59.6 million was attributable to
divested or exited product lines, including our Softimage 3D animation and PCTV product lines divested in the fourth
quarter of 2008. We believe the remaining Video decrease of $117.1 million and the Audio decrease of $39.2 million,
both primarily due to lower sales volumes, were largely attributable to unfavorable macroeconomic conditions. The
revenues of each business unit are discussed in further detail in the section titled ―Results of Operations‖ below.
Our gross margin for the year ended December 31, 2009 improved to 51.4%, compared to 46.4% for 2008. This
improvement was largely the result of our transition to a single company-wide production and delivery organization and
the divestiture of lower-margin products discussed above. Revised estimates for royalty accruals resulting in favorable
adjustments in 2009 were also a significant contributing factor to the gross margin improvement.
For the year ended December 31, 2009, we incurred a net loss of $68.4 million, compared to a net loss of $198.2 million
for 2008. The net loss for 2009 included charges of $12.5 million for acquisition-related intangible asset amortization,
$27.7 million for restructuring costs and $4.2 million related to acquisition activities. The net loss for 2008 included
charges of $130.0 million for impairment of acquisition-related goodwill and intangible assets, $20.4 million for
acquisition-related intangible asset amortization and $27.3 million for restructuring costs, partially offset by gains
related to product divestitures totaling $13.3 million. The 2008 charges of $130.0 million for impairment of acquisition-
related goodwill and intangible assets were composed of goodwill impairment losses of $54.6 million and $64.3 million
for our former Consumer Video segment and Audio segment, 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.