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(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
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OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM __________ TO __________
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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04-2977748
(I.R.S. Employer
Identification No.)
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Title of Each Class
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Common Stock, $.01 Par Value
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Large Accelerated Filer
¨
Non-accelerated Filer
¨
(Do not check if smaller reporting company)
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Accelerated Filer
x
Smaller Reporting Company
¨
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Page
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•
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our ability to mitigate and remediate effectively the material weaknesses in our internal controls over financial reporting;
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•
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the development, marketing and selling of new products and services;
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•
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our ability to successfully implement our
Avid Everywhere
strategic plan;
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•
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anticipated trends relating to our sales, financial condition or results of operations;
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•
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our goal of expanding our market positions;
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•
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our capital resources and the adequacy thereof;
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•
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the anticipated trends and development of our markets and the success of our products in these markets;
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•
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our plans regarding the relisting of our common stock on The NASDAQ Stock Market, or NASDAQ, and the liquidity of our stock;
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•
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the risk of restatement of our financial statements;
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•
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the anticipated performance of our products;
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•
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business strategies and market positioning;
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•
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the impact and costs and expenses of any litigation and government inquiries we may be subject to now or in the future;
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•
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the effect of the continuing worldwide macroeconomic uncertainty on our business and results of operation;
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•
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estimated asset and liability values and amortization of our intangible assets;
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•
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our compliance with covenants contained in our indebtedness;
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•
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changes in inventory levels;
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•
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seasonal factors;
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•
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plans regarding repatriation of foreign earnings;
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•
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transactions and valuations of investments and derivative instruments; and
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•
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fluctuations in foreign exchange and interest rates.
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Goodwill balance at December 31, 2010, as previously reported
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$
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246,997
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Effect of restatement
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172,371
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Goodwill balance at December 31, 2010, as restated
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419,368
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Cumulative-effect adjustment due to the adoption of ASU No. 2010-28
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(419,368
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)
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Goodwill balance at December 31, 2011, as restated
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$
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—
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Common Stock
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Additional Paid-in Capital
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Accumulated Deficit
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Treasury Stock
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Accumulated Other Comprehensive Income
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Total Stockholders’ Equity (Deficit)
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||||||||||||
Balances at December 31, 2010, as previously reported
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$
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423
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$
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1,005,198
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$
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(495,254
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)
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$
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(91,025
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)
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$
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7,268
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$
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426,610
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Revenue recognition adjustments
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—
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—
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(897,835
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)
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—
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957
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(896,878
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)
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||||||
Goodwill adjustments
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—
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—
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172,371
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—
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—
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172,371
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||||||
Restructuring adjustments
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—
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—
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(1,452
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)
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—
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—
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(1,452
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)
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||||||
Income tax adjustments
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—
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—
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(6,280
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)
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—
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683
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(5,597
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)
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||||||
Stock-based compensation adjustments
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—
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12,204
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(12,204
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)
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—
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—
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—
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||||||
Other adjustments
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—
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—
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(5,693
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)
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—
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303
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(5,390
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)
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Balances at December 31, 2010, as restated
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$
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423
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$
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1,017,402
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$
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(1,246,347
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)
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$
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(91,025
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)
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$
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9,211
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$
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(310,336
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)
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Type of Financial Information
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Date or Period
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Consolidated statements of operations, comprehensive income, stockholders' deficit, and cash flows
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Year ended December 31, 2011
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Selected financial data
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Years ended and as of December 31, 2011, 2010 and 2009
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Unaudited quarterly financial information
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Quarters ended September 30, 2012, June 30, 2012 and March 31, 2012
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Management's discussion and analysis of financial condition and results of operations
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As of and for the year ended December 31, 2011
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ITEM 1.
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BUSINESS
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•
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Artist Suite
encompasses all of our products and tools used to create content, including digital audio workstations (DAW), music notation software, control surfaces, live sound systems, video editing solutions, and graphics creation systems.
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•
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Media Suite
includes all of our tools and services used to manage, protect, distribute, and monetize media, including solutions for newsroom management, asset management, and multiplatform distribution. Over time, we plan to expand the Media Suite to include metadata tagging, protection and encryption, and analytics.
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•
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Storage Suite
refers to all of our products and tools used to capture, store, and deliver media, including online storage, nearline storage, and ingest/playout servers.
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•
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streamline disparate workflows using the
MediaCentral Platform;
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•
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access media everywhere with powerful asset management solutions;
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•
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collaborate using cloud-enabled video production;
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•
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distribute content to a variety of web, mobile, and social channels; and
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•
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deploy and scale workgroups as needed using traditional perpetual, flexible subscription and floating licenses.
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•
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expand their productions using the
MediaCentral Platform;
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•
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manage large amounts of media using advanced media management solutions;
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•
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leverage talent everywhere by collaborating via the cloud;
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•
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accelerate high-resolution editorial workflows; and
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•
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deploy and scale workgroups as needed using flexible subscription and floating licenses.
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•
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collaborate via the cloud;
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•
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monetize their content through an interactive, online audio marketplace that facilitates connections, creation, and commerce;
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•
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manage, track, and document assets using an open, universal metadata schema; and
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•
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store and archive work locally or in the cloud.
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•
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Broadcast and Media.
This market consists of broadcast, government, sports and other organizations that acquire, create, process, and/or distribute audio and video content to a large audience for communication, entertainment, analysis, and/or forensic purposes. Customers in this industry rely on workflows that span content acquisition, creation, editing, distribution, sales and redistribution and utilize all content distribution platforms, including web, mobile, internet protocol television, cable, satellite, on-air and various other proprietary platforms. For this market, we offer a range of open products and solutions including hardware- and software-based video- and audio-editing tools, collaborative workflow and asset management solutions, and graphics-creation and automation tools, as well as scalable media storage options. Our domain expertise also allows us to provide customers in this market with a range of professional and consulting services. We sell into this market through our direct sales force and resellers.
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•
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Video and Audio Post and Professional
. This market is made up of individual artists and entities that create audio and video media as a paid service, but do not currently distribute media to end consumers on a large scale. This industry spans a wide-ranging target audience that includes: independent video editors, facilities and filmmakers that produce video media as a business but are not broadcasters; professional sound designers, editors and mixers and facilities that specialize in the creation of audio for picture; songwriters, musicians, producers, film composers and engineers who compose and record music professionally; technicians, engineers, rental companies and facilities that present, record and broadcast audio and video for live performances; and students and teachers in career technical education programs in high schools, colleges and universities, as well as in post-secondary vocational schools, that prepare students for professional media production careers in the digital workplace. For this market, we offer a range of products and solutions based on the
Avid MediaCentral Platform
, including
hardware- and software-based creative production tools, scalable media storage options and collaborative workflows. Our domain expertise also allows us to provide customers in this market with a broad range of professional services. We sell into this market through storefront and on-line retailers, as well as through our direct sales force and resellers.
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•
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Avid Media Composer 7, a nonlinear-editing solution;
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•
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Pro Tools 11, a digital audio workstation;
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•
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Avid Interplay Production 3.0 for media production and asset management;
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•
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Avid Interplay Pulse for multi-platform distribution (rebranded to Media | Distribute in 2014);
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•
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ISIS 5500 and 7500 shared storage systems;
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•
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Avid S6, a state-of-the-art modular control surface for sound recording, editing and mixing; and
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•
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Avid S3L, a portable and compact live sound system.
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Year Ended December 31,
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||||||||||
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2011
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||||||
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2013
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2012
|
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(Restated)
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||||||
Video products and solutions net revenues
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$
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243,173
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$
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276,909
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$
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298,633
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Audio products and solutions net revenues
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152,358
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201,921
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362,087
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|||
Products and solutions net revenues
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395,531
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478,830
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660,720
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|||
Services net revenues
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167,881
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156,873
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106,165
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|||
Total net revenues
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$
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563,412
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$
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635,703
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$
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766,885
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Year Ended December 31,
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|||||||
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2011
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|||
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2013
|
|
2012
|
|
(Restated)
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|||
Video products and solutions net revenues
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43
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%
|
|
44
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%
|
|
39
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%
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Audio products and solutions net revenues
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27
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%
|
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32
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%
|
|
47
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%
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Total products and solutions net revenues
|
70
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%
|
|
75
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%
|
|
86
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%
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Services net revenues
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30
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%
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|
25
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%
|
|
14
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%
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Total net revenues
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100
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%
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|
100
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%
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100
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%
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•
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Broadcast and Media: The Associated Press Inc., Belden Inc., Bitcentral Inc., Dalet S.A., EVS Corporation, Harmonic Inc., Imagine Communications Corp, Ross Video Limited and Vizrt Ltd., among others.
|
•
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Audio and Video Post and Professional: Ableton AG, Autodesk Inc., Blackmagic Design Pty Ltd, Harman International Industries Inc., Steinberg Media Technologies GmbH, Universal Audio Inc. and Yamaha Corporation, among others.
|
ITEM 1A.
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RISK FACTORS
|
•
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make changes to our finance organization;
|
•
|
adopt new accounting and reporting processes and procedures;
|
•
|
enhance our revenue recognition and other existing accounting policies and procedures;
|
•
|
introduce new or enhanced accounting systems and processes; and
|
•
|
improve our internal control over financial reporting.
|
•
|
the financial and administrative burdens associated with compliance with a myriad of environmental, tax and export laws, as well as other business regulations in foreign jurisdictions, including high compliance costs, inconsistencies among jurisdictions, and a lack of administrative or judicial interpretative guidance;
|
•
|
reduced or varied protection for intellectual property rights in some countries;
|
•
|
regional economic downturns;
|
•
|
economic, social and political instability abroad and international security concerns in general;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
longer collection cycles for accounts receivable payment cycles and difficulties in enforcing contracts;
|
•
|
difficulties in managing and staffing international implementations and operations, and executing our business strategy internationally;
|
•
|
potentially adverse tax consequences, including the complexities of foreign value added or other tax systems and restrictions on the repatriation of earnings;
|
•
|
increased financial accounting and reporting burdens and complexities;
|
•
|
compliance with the applicable laws and regulations, including, for example, the U.S. Foreign Corrupt Practices Act, or FCPA, and the U.K. Bribery Act, particularly in emerging market countries;
|
•
|
difficulties in maintaining effective internal controls over financial reporting and disclosure controls;
|
•
|
costs and delays associated with developing products in multiple languages; and
|
•
|
foreign exchange controls that may prevent or limit our ability to repatriate income earned in foreign markets.
|
•
|
failure to realize anticipated returns on investment, cost savings and synergies;
|
•
|
difficulty in assimilating the operations, policies and personnel of the acquired company;
|
•
|
combining product offerings and entering into new markets in which we may not have experience;
|
•
|
distraction of management’s attention from normal business operations;
|
•
|
potential loss of key employees of the acquired company;
|
•
|
difficulty implementing effective internal controls over financial reporting and disclosure controls and procedures;
|
•
|
impairment of relationships with customers or suppliers;
|
•
|
possibility of incurring impairment losses related to goodwill and intangible assets; and
|
•
|
unidentified issues not discovered in due diligence, which may include product quality issues or legal or other contingencies.
|
•
|
cease selling or using products or services that incorporate the challenged intellectual property;
|
•
|
make substantial payments for legal fees, settlement payments or other costs or damages;
|
•
|
obtain a license, which may not be available on reasonable terms, to sell or use the relevant technology, which such license could require royalties that would significantly increase our cost of goods sold; or
|
•
|
redesign products or services to avoid infringement, which such redesign could involve significant costs and result in delayed and/or reduced sales of the affected products.
|
•
|
the timing of large or enterprise-wide sales and our ability to recognize revenues from such sales;
|
•
|
demand planning and logistics;
|
•
|
reliance on third-party reseller and distribution channels;
|
•
|
changes in operating expenses;
|
•
|
price protections and provisions for inventory obsolescence extended to resellers and distributors;
|
•
|
seasonal factors, such as higher consumer demand at year-end; and
|
•
|
complex accounting rules for revenue recognition.
|
•
|
period-to-period variations in our revenues or operating results;
|
•
|
our failure to accurately forecast revenues or operating results;
|
•
|
our ability to produce accurate and timely financial statements;
|
•
|
whether our results meet analysts’ expectations;
|
•
|
market reaction to significant corporate initiatives or announcements;
|
•
|
our ability to innovate;
|
•
|
our relative competitive position within our markets;
|
•
|
shifts in markets or demand for our solutions;
|
•
|
changes in our relationships with suppliers, resellers, distributors or customers;
|
•
|
our commencement of, or involvement in, litigation;
|
•
|
short sales, hedging or other derivative transactions involving shares of our common stock; and
|
•
|
shifts in financial markets.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
2013
|
|
2012
|
||||
|
High
|
|
Low
|
|
High
|
|
Low
|
First Quarter
|
$7.99
|
|
$6.27
|
|
$12.01
|
|
$8.61
|
Second Quarter
|
$7.01
|
|
$5.88
|
|
$11.03
|
|
$6.68
|
Third Quarter
|
$6.30
|
|
$5.22
|
|
$9.95
|
|
$7.00
|
Fourth Quarter
|
$8.89
|
|
$6.16
|
|
$9.78
|
|
$5.87
|
•
|
the NASDAQ Composite Index (all companies traded on NASDAQ Capital, Global or Global Select Markets),
|
•
|
the Old Avid Peer Group Index (see details following the graph), and
|
•
|
the New Avid Peer Group Index (see details following the graph).
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
|
2010 (Restated)
|
|
2009 (Restated)
|
|||||||||||
Net revenues (1)
|
$
|
563,412
|
|
|
$
|
635,703
|
|
|
$
|
766,885
|
|
|
$
|
403,518
|
|
|
$
|
506,478
|
|
|
Cost of revenues
|
223,909
|
|
|
249,008
|
|
|
261,718
|
|
|
264,860
|
|
|
245,975
|
|
||||||
Gross profit
|
339,503
|
|
|
386,695
|
|
|
505,167
|
|
|
138,658
|
|
|
260,503
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Research and development
|
95,249
|
|
|
98,879
|
|
|
111,129
|
|
|
113,682
|
|
|
114,294
|
|
||||||
Marketing and selling
|
133,890
|
|
|
153,481
|
|
|
163,204
|
|
|
161,963
|
|
|
158,468
|
|
||||||
General and administrative
|
77,578
|
|
|
52,066
|
|
|
50,732
|
|
|
56,479
|
|
|
60,318
|
|
||||||
Amortization of intangible assets
|
2,648
|
|
|
4,254
|
|
|
8,528
|
|
|
9,743
|
|
|
10,511
|
|
||||||
Restructuring costs, net
|
5,370
|
|
|
24,838
|
|
|
6,534
|
|
|
20,167
|
|
|
28,608
|
|
||||||
Total operating expenses
|
314,735
|
|
|
333,518
|
|
|
340,127
|
|
|
362,034
|
|
|
372,199
|
|
||||||
Operating income (loss) from continuing operations
|
24,768
|
|
|
53,177
|
|
|
165,040
|
|
|
(223,376
|
)
|
|
(111,696
|
)
|
||||||
Other expense, net
|
(676
|
)
|
|
(2,041
|
)
|
|
(1,945
|
)
|
|
(513
|
)
|
|
(122
|
)
|
||||||
Income (loss) from continuing operations before income taxes
|
24,092
|
|
|
51,136
|
|
|
163,095
|
|
|
(223,889
|
)
|
|
(111,818
|
)
|
||||||
Provision for income taxes, net
|
2,939
|
|
|
4,049
|
|
|
635
|
|
|
1,796
|
|
|
256
|
|
||||||
Income (loss) from continuing operations, net of tax (1)
|
21,153
|
|
|
47,087
|
|
|
162,460
|
|
|
(225,685
|
)
|
|
(112,074
|
)
|
||||||
Discontinued operations: (2)
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gain on divestiture of consumer business
|
—
|
|
|
37,972
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|||||
Income from divested operations
|
—
|
|
|
7,832
|
|
|
63,907
|
|
—
|
|
38,150
|
|
|
62,853
|
|
|||||
Income from discontinued operations
|
—
|
|
|
45,804
|
|
|
63,907
|
|
|
|
38,150
|
|
|
62,853
|
|
|||||
Net income (loss)
|
$
|
21,153
|
|
|
$
|
92,891
|
|
|
$
|
226,367
|
|
|
$
|
(187,535
|
)
|
|
$
|
(49,221
|
)
|
|
Income (loss) per share - basic:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) per share from continuing operations, net of tax – basic
|
$
|
0.54
|
|
|
$
|
1.21
|
|
|
$
|
4.23
|
|
|
(5.96
|
)
|
|
(3.01
|
)
|
|||
Income per share from discontinued operations – basic
|
—
|
|
|
1.18
|
|
|
1.66
|
|
|
1.01
|
|
|
1.69
|
|
||||||
Net income (loss) per common share – basic
|
$
|
0.54
|
|
|
$
|
2.39
|
|
|
$
|
5.89
|
|
|
$
|
(4.95
|
)
|
|
$
|
(1.32
|
)
|
|
Income (loss) per share - diluted:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) per share from continuing operations, net of tax – diluted
|
$
|
0.54
|
|
|
$
|
1.21
|
|
|
$
|
4.22
|
|
|
(5.96
|
)
|
|
(3.01
|
)
|
|||
Income per share from discontinued operations – diluted
|
—
|
|
|
1.18
|
|
|
1.65
|
|
|
1.01
|
|
|
1.69
|
|
||||||
Net income (loss) per common share – diluted
|
$
|
0.54
|
|
|
$
|
2.39
|
|
|
$
|
5.87
|
|
|
$
|
(4.95
|
)
|
|
$
|
(1.32
|
)
|
|
Weighted-average common shares outstanding – basic
|
39,044
|
|
|
38,804
|
|
|
38,435
|
|
|
37,895
|
|
|
37,293
|
|
||||||
Weighted-average common shares outstanding (net income) – diluted
|
39,070
|
|
|
38,836
|
|
|
38,534
|
|
|
37,895
|
|
|
37,293
|
|
(1)
|
Our revenues and operating results for the years ended December 31, 2013 and 2012 and our restated revenues and operating results for the year ended December 31, 2011 have been affected by the deferral of revenues from customer transactions occurring prior to 2011. On January 1, 2011, we adopted ASU No. 2009-14. Substantially all revenue arrangements prior to January 1, 2011 were generally recognized on a ratable basis over the service period of Implied Maintenance Release PCS. Subsequent to January 1, 2011, product revenues are generally recognized upon delivery and
|
(2)
|
On July 2, 2012, we exited our consumer business through a sale of the assets of that business in two separate transactions. As described further in Note I to our Consolidated Financial Statements in Item 8, the disposition of our consumer business qualified for presentation as discontinued operations. The accompanying financial statements have been reclassified for all periods presented to report the consumer business as a discontinued operation.
|
|
As of December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
|
2010 (Restated)
|
|
2009 (Restated)
|
||||||||||
Cash, cash equivalents and marketable securities
|
$
|
48,203
|
|
|
$
|
70,390
|
|
|
$
|
32,855
|
|
|
$
|
42,782
|
|
|
$
|
108,877
|
|
Working capital deficit
|
(133,009
|
)
|
|
(95,997
|
)
|
|
(227,544
|
)
|
|
(311,649
|
)
|
|
(201,793
|
)
|
|||||
Total assets (1)
|
235,142
|
|
|
294,361
|
|
|
340,590
|
|
|
784,643
|
|
|
772,248
|
|
|||||
Deferred revenues (current and long-term amounts)
|
466,832
|
|
|
558,485
|
|
|
697,124
|
|
|
937,624
|
|
|
793,640
|
|
|||||
Long-term liabilities
|
270,580
|
|
|
346,871
|
|
|
346,862
|
|
|
520,709
|
|
|
433,183
|
|
|||||
Total stockholders’ deficit (1)
|
(359,335
|
)
|
|
(385,592
|
)
|
|
(490,874
|
)
|
|
(310,335
|
)
|
|
(148,702
|
)
|
(1)
|
Effective January 1, 2011, the Company adopted ASU No. 2010-28, which required the Company to evaluate goodwill for impairment when a reporting unit has negative carrying value, and recorded an impairment totaling $419.4 million. For a further discussion of the adoption of ASU No. 2010-28, see Note B to our Consolidated Financial Statements in Item 8 of this Form 10-K.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Goodwill balance at December 31, 2010, as previously reported
|
$
|
246,997
|
|
Effect of restatement
|
172,371
|
|
|
Goodwill balance at December 31, 2010, as restated
|
419,368
|
|
|
Cumulative-effect adjustment due to the adoption of ASU No. 2010-28
|
(419,368
|
)
|
|
Goodwill balance at December 31, 2011, as restated
|
$
|
—
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income
|
|
Total Stockholders’ Equity (Deficit)
|
||||||||||||
Balances at December 31, 2010, as previously reported
|
$
|
423
|
|
|
$
|
1,005,198
|
|
|
$
|
(495,254
|
)
|
|
$
|
(91,025
|
)
|
|
$
|
7,268
|
|
|
$
|
426,610
|
|
Revenue recognition adjustments
|
—
|
|
|
—
|
|
|
(897,835
|
)
|
|
—
|
|
|
957
|
|
|
(896,878
|
)
|
||||||
Goodwill adjustments
|
—
|
|
|
—
|
|
|
172,371
|
|
|
—
|
|
|
—
|
|
|
172,371
|
|
||||||
Restructuring adjustments
|
—
|
|
|
—
|
|
|
(1,452
|
)
|
|
—
|
|
|
—
|
|
|
(1,452
|
)
|
||||||
Income tax adjustments
|
—
|
|
|
—
|
|
|
(6,280
|
)
|
|
—
|
|
|
683
|
|
|
(5,597
|
)
|
||||||
Stock-based compensation adjustments
|
—
|
|
|
12,204
|
|
|
(12,204
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other adjustments
|
—
|
|
|
—
|
|
|
(5,693
|
)
|
|
—
|
|
|
303
|
|
|
(5,390
|
)
|
||||||
Balances at December 31, 2010, as restated
|
$
|
423
|
|
|
$
|
1,017,402
|
|
|
$
|
(1,246,347
|
)
|
|
$
|
(91,025
|
)
|
|
$
|
9,211
|
|
|
$
|
(310,336
|
)
|
•
|
allow us to focus on the Broadcast and Media market and the Video and Audio Post and Professional market,
|
•
|
reduce complexity from our operations to improve operational efficiencies, and
|
•
|
allow us to change our cost structure, by moving away from lower growth, lower margin sectors to drive improved financial performance.
|
•
|
the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis;
|
•
|
contractually stated prices for deliverables that are intended to be sold on a standalone basis;
|
•
|
the pricing of standalone sales that may not qualify as VSOE of fair value due to limited volumes or variation in prices; and
|
•
|
other pricing factors, such as the geographical region in which the products are sold and expected discounts based on the customer size and type.
|
Product Group
|
|
BESP of Implied Maintenance Release PCS (as a % of Product BESP)
|
|
Estimated Service Period
|
Professional video creative tools
|
|
1% to 13%
|
|
18 to 72 months
|
Video storage and workflow solutions
|
|
1% to 2%
|
|
72 months
|
Media management solutions
|
|
1% to 3%
|
|
12 to 72 months
|
Consumer video-editing software
|
|
1% to 6%
|
|
12 to 36 months
|
Digital audio software and workstations solutions
|
|
1% to 8%
|
|
12 to 36 months
|
Control surfaces, consoles and live-sound systems
|
|
1% to 5%
|
|
12 to 96 months
|
Notation software
|
|
4% to 8%
|
|
12 to 46 months
|
Consumer audio products
|
|
2%
|
|
24 months
|
|
Year Ended December 31,
|
|||||||
|
|
|
|
|
2011
|
|||
|
2013
|
|
2012
|
|
(Restated)
|
|||
Net revenues:
|
|
|
|
|
|
|||
Product revenues
|
70.2
|
%
|
|
75.3
|
%
|
|
86.2
|
%
|
Services revenues
|
29.8
|
%
|
|
24.7
|
%
|
|
13.8
|
%
|
Total net revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
39.7
|
%
|
|
39.2
|
%
|
|
34.1
|
%
|
Gross margin
|
60.3
|
%
|
|
60.8
|
%
|
|
65.9
|
%
|
Operating expenses:
|
|
|
|
|
|
|||
Research and development
|
16.9
|
%
|
|
15.6
|
%
|
|
14.5
|
%
|
Marketing and selling
|
23.8
|
%
|
|
24.1
|
%
|
|
21.3
|
%
|
General and administrative
|
13.8
|
%
|
|
8.2
|
%
|
|
6.6
|
%
|
Amortization of intangible assets
|
0.5
|
%
|
|
0.7
|
%
|
|
1.1
|
%
|
Restructuring costs, net
|
1.0
|
%
|
|
3.9
|
%
|
|
0.9
|
%
|
Total operating expenses
|
55.9
|
%
|
|
52.5
|
%
|
|
44.4
|
%
|
Operating income
|
4.4
|
%
|
|
8.3
|
%
|
|
21.5
|
%
|
Interest and other income (expense), net
|
(0.1
|
)%
|
|
(0.3
|
)%
|
|
(0.3
|
)%
|
Income from continuing operations before income taxes
|
4.3
|
%
|
|
8.0
|
%
|
|
21.2
|
%
|
Provision for income taxes
|
0.5
|
%
|
|
0.6
|
%
|
|
0.1
|
%
|
Income from continuing operations, net of tax
|
3.8
|
%
|
|
7.4
|
%
|
|
21.1
|
%
|
Income from discontinued operations
|
—
|
%
|
|
7.2
|
%
|
|
8.3
|
%
|
Net income
|
3.8
|
%
|
|
14.6
|
%
|
|
29.4
|
%
|
Net Revenues from Continuing Operations for the Years Ended December 31, 2013 and 2012
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2013
|
|
Change
|
|
2012
|
||||||||
|
Net Revenues
|
|
$
|
|
%
|
|
Net Revenues
|
||||||
Video products and solutions net revenues
|
$
|
243,173
|
|
|
$
|
(33,736
|
)
|
|
(12.2)%
|
|
$
|
276,909
|
|
Audio products and solutions net revenues
|
152,358
|
|
|
(49,563
|
)
|
|
(24.5)%
|
|
201,921
|
|
|||
Products and solutions net revenues
|
395,531
|
|
|
(83,299
|
)
|
|
(17.4)%
|
|
478,830
|
|
|||
Services net revenues
|
167,881
|
|
|
11,008
|
|
|
7.0%
|
|
156,873
|
|
|||
Total net revenues
|
$
|
563,412
|
|
|
$
|
(72,291
|
)
|
|
(11.4)%
|
|
$
|
635,703
|
|
Net Revenues from Continuing Operations for the Years Ended December 31, 2012 and 2011 (Restated)
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2012
|
|
Change
|
|
2011
|
||||||||
|
Net Revenues
|
|
$
|
|
%
|
|
Net Revenues (Restated)
|
||||||
Video products and solutions revenues
|
$
|
276,909
|
|
|
$
|
(21,724
|
)
|
|
(7.3)%
|
|
$
|
298,633
|
|
Audio products and solutions revenues
|
201,921
|
|
|
(160,166
|
)
|
|
(44.2)%
|
|
362,087
|
|
|||
Total products and solutions revenues
|
478,830
|
|
|
(181,890
|
)
|
|
(27.5)%
|
|
660,720
|
|
|||
Services revenues
|
156,873
|
|
|
50,708
|
|
|
47.8%
|
|
106,165
|
|
|||
Total net revenues
|
$
|
635,703
|
|
|
$
|
(131,182
|
)
|
|
(17.1)%
|
|
$
|
766,885
|
|
|
Year Ended December 31,
|
||||
|
|
|
|
|
2011
|
|
2013
|
|
2012
|
|
(Restated)
|
United States
|
39%
|
|
39%
|
|
41%
|
Other Americas
|
7%
|
|
7%
|
|
8%
|
Europe, Middle East and Africa
|
38%
|
|
39%
|
|
35%
|
Asia-Pacific
|
16%
|
|
15%
|
|
16%
|
|
For the Year Ending December 31,
|
|
|
||||||||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
||||||||||||||
Orders executed prior to January 1, 2011
|
$
|
92,336
|
|
|
$
|
58,171
|
|
|
$
|
24,521
|
|
|
$
|
952
|
|
|
$
|
144
|
|
|
$
|
—
|
|
|
$
|
176,124
|
|
Orders executed or materially modified on or after January 1, 2011
|
200,892
|
|
|
86,678
|
|
|
53,032
|
|
|
27,536
|
|
|
14,674
|
|
|
135
|
|
|
382,947
|
|
|||||||
|
$
|
293,228
|
|
|
$
|
144,849
|
|
|
$
|
77,553
|
|
|
$
|
28,488
|
|
|
$
|
14,818
|
|
|
$
|
135
|
|
|
$
|
559,071
|
|
•
|
the procurement of components and finished goods;
|
•
|
the assembly, testing and distribution of finished products;
|
•
|
warehousing;
|
•
|
customer support costs related to maintenance contract revenues and other services;
|
•
|
royalties for third-party software and hardware included in our products;
|
•
|
amortization of technology; and
|
•
|
providing professional services and training.
|
Costs of Revenues for the Years Ended December 31, 2013 and 2012
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2013
|
|
Change
|
|
2012
|
||||||||
|
Costs
|
|
$
|
|
%
|
|
Costs
|
||||||
Costs of products revenues
|
$
|
159,264
|
|
|
$
|
(23,500
|
)
|
|
(12.9)%
|
|
$
|
182,764
|
|
Costs of services revenues
|
63,177
|
|
|
(493
|
)
|
|
(0.8)%
|
|
63,670
|
|
|||
Amortization of intangible assets
|
1,468
|
|
|
(1,106
|
)
|
|
(43.0)%
|
|
2,574
|
|
|||
Total cost of revenues
|
223,909
|
|
|
(25,099
|
)
|
|
(10.1)%
|
|
249,008
|
|
|||
|
|
|
|
|
|
|
|
||||||
Gross profit
|
$
|
339,503
|
|
|
$
|
(47,192
|
)
|
|
(12.2)%
|
|
$
|
386,695
|
|
Costs of Revenues for the Years Ended December 31, 2012 and 2011 (Restated)
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2012
|
|
Change
|
|
2011
|
||||||||
|
Costs
|
|
$
|
|
%
|
|
Costs (Restated)
|
||||||
Costs of products revenues
|
$
|
182,764
|
|
|
$
|
(5,453
|
)
|
|
(2.9)%
|
|
$
|
188,217
|
|
Costs of services revenues
|
63,670
|
|
|
(7,138
|
)
|
|
(10.1)%
|
|
70,808
|
|
|||
Amortization of intangible assets
|
2,574
|
|
|
(119
|
)
|
|
(4.4)%
|
|
2,693
|
|
|||
Total costs of revenues
|
249,008
|
|
|
(12,710
|
)
|
|
(4.9)%
|
|
261,718
|
|
|||
|
|
|
|
|
|
|
|
||||||
Gross profit
|
$
|
386,695
|
|
|
$
|
(118,472
|
)
|
|
(23.5)%
|
|
$
|
505,167
|
|
Gross Margin % for the Years Ended December 31, 2013, 2012 and 2011 (Restated)
|
|||||||||
|
2013 Gross
Margin %
|
|
(Decrease) Increase in
Gross Margin %
|
|
2012 Gross
Margin %
|
|
(Decrease) Increase in
Gross Margin %
|
|
2011 Gross
Margin % (Restated)
|
Products
|
59.7%
|
|
(2.1)%
|
|
61.8%
|
|
(9.7)%
|
|
71.5%
|
Services
|
62.4%
|
|
3.0%
|
|
59.4%
|
|
26.1%
|
|
33.3%
|
Total
|
60.3%
|
|
(0.5)%
|
|
60.8%
|
|
(5.1)%
|
|
65.9%
|
Operating Expenses and Operating Income for the Years Ended December 31, 2013 and 2012
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2013
|
|
Change
|
|
2012
|
||||||||
|
Expenses
|
|
$
|
|
%
|
|
Expenses
|
||||||
Research and development expenses
|
$
|
95,249
|
|
|
$
|
(3,630
|
)
|
|
(3.7)%
|
|
$
|
98,879
|
|
Marketing and selling expenses
|
133,890
|
|
|
(19,591
|
)
|
|
(12.8)%
|
|
153,481
|
|
|||
General and administrative expenses
|
77,578
|
|
|
25,512
|
|
|
49.0%
|
|
52,066
|
|
|||
Amortization of intangible assets
|
2,648
|
|
|
(1,606
|
)
|
|
(37.8)%
|
|
4,254
|
|
|||
Restructuring costs, net
|
5,370
|
|
|
(19,468
|
)
|
|
(78.4)%
|
|
24,838
|
|
|||
Total operating expenses
|
$
|
314,735
|
|
|
$
|
(18,783
|
)
|
|
(5.6)%
|
|
$
|
333,518
|
|
|
|
|
|
|
|
|
|
||||||
Operating income
|
$
|
24,768
|
|
|
$
|
(28,409
|
)
|
|
(53.4)%
|
|
$
|
53,177
|
|
Operating Expenses and Operating Income for the Years Ended December 31, 2012 and 2011 (Restated)
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2012
|
|
Change
|
|
2011
|
||||||||
|
Expenses
|
|
$
|
|
%
|
|
Expenses (Restated)
|
||||||
Research and development expenses
|
$
|
98,879
|
|
|
$
|
(12,250
|
)
|
|
(11.0)%
|
|
$
|
111,129
|
|
Marketing and selling expenses
|
153,481
|
|
|
(9,723
|
)
|
|
(6.0)%
|
|
163,204
|
|
|||
General and administrative expenses
|
52,066
|
|
|
1,334
|
|
|
2.6%
|
|
50,732
|
|
|||
Amortization of intangible assets
|
4,254
|
|
|
(4,274
|
)
|
|
(50.1)%
|
|
8,528
|
|
|||
Restructuring costs, net
|
24,838
|
|
|
18,304
|
|
|
280.1%
|
|
6,534
|
|
|||
Total operating expenses
|
$
|
333,518
|
|
|
$
|
(6,609
|
)
|
|
(1.9)%
|
|
$
|
340,127
|
|
|
|
|
|
|
|
|
|
||||||
Operating income
|
$
|
53,177
|
|
|
$
|
(111,863
|
)
|
|
(67.8)%
|
|
$
|
165,040
|
|
Year-Over-Year Change in Research and Development Expenses for the Years Ended December 31, 2013 and 2012
|
|||||||||||
(dollars in thousands)
|
|||||||||||
|
2013 (Decrease)/Increase
From 2012
|
|
2012 (Decrease)/Increase
From 2011 (Restated)
|
||||||||
|
$
|
|
%
|
|
$
|
|
%
|
||||
Personnel-related expenses
|
(1,282
|
)
|
|
(2.2)%
|
|
(7,886
|
)
|
|
(11.8)%
|
||
Facilities and information technology infrastructure costs
|
(949
|
)
|
|
(5.1)%
|
|
(1,361
|
)
|
|
(6.4)%
|
||
Consulting and outside services
|
(867
|
)
|
|
(5.9)%
|
|
(1,536
|
)
|
|
(8.9)%
|
||
Computer hardware and supplies expenses
|
455
|
|
|
15.7%
|
|
(1,524
|
)
|
|
(32.4)%
|
||
Other expenses
|
(987
|
)
|
|
(24.8)%
|
|
57
|
|
|
1.4%
|
||
Total research and development expenses decrease
|
$
|
(3,630
|
)
|
|
(3.7)%
|
|
$
|
(12,250
|
)
|
|
(11.0)%
|
Year-Over-Year Change in Marketing and Selling Expenses for Years Ended December 31, 2013 and 2012
|
|||||||||||
(dollars in thousands)
|
|||||||||||
|
2013 (Decrease)/Increase
From 2012
|
|
2012 (Decrease)/Increase
From 2011 (Restated)
|
||||||||
|
$
|
|
%
|
|
$
|
|
%
|
||||
Personnel-related expenses
|
$
|
(9,996
|
)
|
|
(6.9)%
|
|
$
|
(7,307
|
)
|
|
(4.8)%
|
Consulting and outside services costs
|
(4,221
|
)
|
|
(22.9)%
|
|
(517
|
)
|
|
(2.7)%
|
||
Facilities and information technology infrastructure costs
|
(3,484
|
)
|
|
(10.9)%
|
|
(748
|
)
|
|
(2.3)%
|
||
Tradeshow and other promotional expenses
|
(2,400
|
)
|
|
(21.2)%
|
|
(2,034
|
)
|
|
(15.3)%
|
||
Foreign exchange (gains) losses
|
(509
|
)
|
|
(73.1)%
|
|
1,189
|
|
|
241.3%
|
||
Bad debt expense
|
126
|
|
|
434.1%
|
|
(1,149
|
)
|
|
(97.5)%
|
||
Other expenses
|
893
|
|
|
1.6%
|
|
843
|
|
|
1.5%
|
||
Total marketing and selling expenses decrease
|
$
|
(19,591
|
)
|
|
(12.8)%
|
|
$
|
(9,723
|
)
|
|
(6.0)%
|
Year-Over-Year Change in Amortization of Intangible Assets for the Years Ended December 31, 2013 and 2012
|
|||||||||||
(dollars in thousands)
|
|||||||||||
|
2013 Decrease
From 2012
|
|
2012 Decrease
From 2011 (Restated)
|
||||||||
|
$
|
|
%
|
|
$
|
|
%
|
||||
Amortization of intangible assets recorded in cost of revenues
|
$
|
(1,106
|
)
|
|
(43.0)%
|
|
$
|
(119
|
)
|
|
(4.4)%
|
Amortization of intangible assets recorded in operating expenses
|
(1,606
|
)
|
|
(37.8)%
|
|
(4,274
|
)
|
|
(50.1)%
|
||
Total amortization of intangible assets
|
$
|
(2,712
|
)
|
|
(39.7)%
|
|
$
|
(4,393
|
)
|
|
(39.1)%
|
Interest and Other Income (Expense) for the Years Ended December 31, 2013 and 2012
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2013
|
|
Change
|
|
2012
|
||||||||
|
Income
(Expense)
|
|
$
|
|
%
|
|
Income
(Expense)
|
||||||
Interest income
|
$
|
555
|
|
|
$
|
345
|
|
|
164.3%
|
|
$
|
210
|
|
Interest expense
|
(1,574
|
)
|
|
(26
|
)
|
|
(1.7)%
|
|
(1,548
|
)
|
|||
Other income (expense), net
|
343
|
|
|
1,046
|
|
|
148.8%
|
|
(703
|
)
|
|||
Total interest and other income (expense), net
|
$
|
(676
|
)
|
|
$
|
1,365
|
|
|
66.9%
|
|
$
|
(2,041
|
)
|
Interest and Other Income (Expense) for the Years Ended December 31, 2012 and 2011 (Restated)
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2012
|
|
Change (Restated)
|
|
2011
|
||||||||
|
Income
(Expense)
|
|
$
|
|
%
|
|
Income
(Expense) (Restated)
|
||||||
Interest income
|
$
|
210
|
|
|
$
|
68
|
|
|
47.9%
|
|
$
|
142
|
|
Interest expense
|
(1,548
|
)
|
|
380
|
|
|
19.7%
|
|
(1,928
|
)
|
|||
Other income (expense), net
|
(703
|
)
|
|
(544
|
)
|
|
(342.1)%
|
|
(159
|
)
|
|||
Total interest and other income (expense), net
|
$
|
(2,041
|
)
|
|
$
|
(96
|
)
|
|
(4.9)%
|
|
$
|
(1,945
|
)
|
Provision for Income Taxes, Net for the Years Ended December 31, 2013 and 2012
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2013
|
|
Change
|
|
2012
|
||||||||
|
Provision
|
|
$
|
|
%
|
|
Provision
|
||||||
Provision for income taxes, net
|
$
|
2,939
|
|
|
$
|
(1,110
|
)
|
|
(27.4)%
|
|
$
|
4,049
|
|
|
2012
|
|
2011 (Restated)
|
||||
Net revenues
|
$
|
46,101
|
|
|
$
|
155,870
|
|
Costs of revenues
|
33,265
|
|
|
68,671
|
|
||
Gross profit
|
12,836
|
|
|
87,199
|
|
||
Operating expenses
|
5,004
|
|
|
23,292
|
|
||
Income from divested operations
|
7,832
|
|
|
63,907
|
|
||
Gain on divestiture of consumer business
|
37,972
|
|
|
—
|
|
||
Income from discontinued operations
|
$
|
45,804
|
|
|
$
|
63,907
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
2011
|
||||||
|
2013
|
|
2012
|
|
(Restated)
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(9,145
|
)
|
|
$
|
34,709
|
|
|
$
|
2,967
|
|
Net cash (used in) provided by investing activities
|
(11,536
|
)
|
|
1,697
|
|
|
(12,192
|
)
|
|||
Net cash (used in) provided by financing activities
|
(96
|
)
|
|
354
|
|
|
2,026
|
|
|||
Effect of foreign currency exchange rates on cash and cash equivalents
|
(1,410
|
)
|
|
775
|
|
|
(2,728
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(22,187
|
)
|
|
$
|
37,535
|
|
|
$
|
(9,927
|
)
|
|
Total
|
|
Less than
1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
After
5 Years
|
||||||||||
Operating leases
|
$
|
85,075
|
|
|
$
|
20,183
|
|
|
$
|
25,965
|
|
|
$
|
20,427
|
|
|
$
|
18,500
|
|
Unconditional purchase obligations (a)
|
27,607
|
|
|
27,607
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
112,682
|
|
|
$
|
47,790
|
|
|
$
|
25,965
|
|
|
$
|
20,427
|
|
|
$
|
18,500
|
|
(a)
|
At
December 31, 2013
, we had entered into purchase commitments for certain inventory and other goods and services used in our normal operations. The purchase commitments covered by these agreements are generally for a period of less than
one
year.
|
|
Total
|
|
Less than
1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
After
5 Years
|
|
Other (a)
|
||||||||||||
Unrecognized tax positions and related interest
|
$
|
800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
800
|
|
Stand-by letters of credit
|
5,723
|
|
|
1,869
|
|
|
1,288
|
|
|
—
|
|
|
2,566
|
|
|
—
|
|
||||||
|
$
|
6,523
|
|
|
$
|
1,869
|
|
|
$
|
1,288
|
|
|
$
|
—
|
|
|
$
|
2,566
|
|
|
$
|
800
|
|
(a)
|
At
December 31, 2013
, unrecognized tax benefits and related interest totaled
$24.7 million
, of which
$0.8 million
would result in cash payments. We are unable to reasonably estimate the timing of the liability in any particular year due to uncertainties in the timing of the effective settlement of the positions.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 8:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
||||||
Net revenues:
|
|
|
|
|
|
||||||
Products
|
$
|
395,531
|
|
|
$
|
478,830
|
|
|
$
|
660,720
|
|
Services
|
167,881
|
|
|
156,873
|
|
|
106,165
|
|
|||
Total net revenues
|
563,412
|
|
|
635,703
|
|
|
766,885
|
|
|||
Cost of revenues:
|
|
|
|
|
|
||||||
Products
|
159,264
|
|
|
182,764
|
|
|
188,217
|
|
|||
Services
|
63,177
|
|
|
63,670
|
|
|
70,808
|
|
|||
Amortization of intangible assets
|
1,468
|
|
|
2,574
|
|
|
2,693
|
|
|||
Total cost of revenues
|
223,909
|
|
|
249,008
|
|
|
261,718
|
|
|||
Gross profit
|
339,503
|
|
|
386,695
|
|
|
505,167
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
95,249
|
|
|
98,879
|
|
|
111,129
|
|
|||
Marketing and selling
|
133,890
|
|
|
153,481
|
|
|
163,204
|
|
|||
General and administrative
|
77,578
|
|
|
52,066
|
|
|
50,732
|
|
|||
Amortization of intangible assets
|
2,648
|
|
|
4,254
|
|
|
8,528
|
|
|||
Restructuring costs, net
|
5,370
|
|
|
24,838
|
|
|
6,534
|
|
|||
Total operating expenses
|
314,735
|
|
|
333,518
|
|
|
340,127
|
|
|||
Operating income
|
24,768
|
|
|
53,177
|
|
|
165,040
|
|
|||
Interest income
|
555
|
|
|
210
|
|
|
142
|
|
|||
Interest expense
|
(1,574
|
)
|
|
(1,548
|
)
|
|
(1,928
|
)
|
|||
Other income (expense), net
|
343
|
|
|
(703
|
)
|
|
(159
|
)
|
|||
Income from continuing operations before income taxes
|
24,092
|
|
|
51,136
|
|
|
163,095
|
|
|||
Provision for income taxes, net
|
2,939
|
|
|
4,049
|
|
|
635
|
|
|||
Income from continuing operations, net of tax
|
21,153
|
|
|
47,087
|
|
|
162,460
|
|
|||
Discontinued operations:
|
|
|
|
|
|
||||||
Gain on divestiture of consumer business
|
—
|
|
|
37,972
|
|
|
—
|
|
|||
Income from divested operations
|
—
|
|
|
7,832
|
|
|
63,907
|
|
|||
Income from discontinued operations
|
—
|
|
|
45,804
|
|
|
63,907
|
|
|||
Net income
|
$
|
21,153
|
|
|
$
|
92,891
|
|
|
$
|
226,367
|
|
|
|
|
|
|
|
||||||
Income per common share – basic:
|
|
|
|
|
|
||||||
Income per share from continuing operations, net of tax – basic
|
$
|
0.54
|
|
|
$
|
1.21
|
|
|
$
|
4.23
|
|
Income per share from discontinued operations – basic
|
—
|
|
|
1.18
|
|
|
1.66
|
|
|||
Net income per common share – basic
|
$
|
0.54
|
|
|
$
|
2.39
|
|
|
$
|
5.89
|
|
|
|
|
|
|
|
||||||
Income per common share – diluted:
|
|
|
|
|
|
||||||
Income per share from continuing operations, net of tax – diluted
|
$
|
0.54
|
|
|
$
|
1.21
|
|
|
$
|
4.22
|
|
Income per share from discontinued operations – diluted
|
—
|
|
|
1.18
|
|
|
1.65
|
|
|||
Net income per common share – diluted
|
$
|
0.54
|
|
|
$
|
2.39
|
|
|
$
|
5.87
|
|
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding – basic
|
39,044
|
|
|
38,804
|
|
|
38,435
|
|
|||
Weighted-average common shares outstanding – diluted
|
39,070
|
|
|
38,836
|
|
|
38,534
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
||||||
Net income
|
$
|
21,153
|
|
|
$
|
92,891
|
|
|
$
|
226,367
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Net change in defined benefit plan
|
—
|
|
|
—
|
|
|
146
|
|
|||
Foreign currency translation adjustments
|
(1,717
|
)
|
|
606
|
|
|
(2,319
|
)
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
$
|
19,436
|
|
|
$
|
93,497
|
|
|
$
|
224,194
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
48,203
|
|
|
$
|
70,390
|
|
Accounts receivable, net of allowances of $13,963 and $20,977 at December 31, 2013 and 2012, respectively
|
56,770
|
|
|
67,956
|
|
||
Inventories
|
60,122
|
|
|
69,143
|
|
||
Deferred tax assets, net
|
522
|
|
|
586
|
|
||
Prepaid expenses
|
7,778
|
|
|
9,060
|
|
||
Other current assets
|
17,493
|
|
|
19,950
|
|
||
Total current assets
|
190,888
|
|
|
237,085
|
|
||
Property and equipment, net
|
35,186
|
|
|
41,441
|
|
||
Intangible assets, net
|
4,260
|
|
|
9,217
|
|
||
Long-term deferred tax assets, net
|
2,415
|
|
|
2,825
|
|
||
Other long-term assets
|
2,393
|
|
|
3,793
|
|
||
Total assets
|
$
|
235,142
|
|
|
$
|
294,361
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
33,990
|
|
|
$
|
35,425
|
|
Accrued compensation and benefits
|
30,342
|
|
|
25,177
|
|
||
Accrued expenses and other current liabilities
|
41,273
|
|
|
34,003
|
|
||
Income taxes payable
|
6,875
|
|
|
7,969
|
|
||
Deferred tax liabilities, net
|
14
|
|
|
203
|
|
||
Deferred revenues
|
211,403
|
|
|
230,305
|
|
||
Total current liabilities
|
323,897
|
|
|
333,082
|
|
||
Long-term deferred tax liabilities, net
|
565
|
|
|
713
|
|
||
Long-term deferred revenues
|
255,429
|
|
|
328,180
|
|
||
Other long-term liabilities
|
14,586
|
|
|
17,978
|
|
||
Total liabilities
|
594,477
|
|
|
679,953
|
|
||
|
|
|
|
||||
Commitments and contingencies (Notes L and O)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ deficit:
|
|
|
|
||||
Preferred stock, $0.01 par value, 1,000 shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 100,000 shares authorized; 42,339 shares and 42,339 shares issued and 39,082 shares and 38,936 shares outstanding at December 31, 2013 and 2012, respectively
|
423
|
|
|
423
|
|
||
Additional paid-in capital
|
1,043,384
|
|
|
1,039,562
|
|
||
Accumulated deficit
|
(1,336,526
|
)
|
|
(1,357,679
|
)
|
||
Treasury stock at cost, net of reissuances, 3,257 shares and 3,403 shares at December 31, 2013 and 2012, respectively
|
(72,543
|
)
|
|
(75,542
|
)
|
||
Accumulated other comprehensive income
|
5,927
|
|
|
7,644
|
|
||
Total stockholders’ deficit
|
(359,335
|
)
|
|
(385,592
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
235,142
|
|
|
$
|
294,361
|
|
|
Shares of
Common Stock
|
|
|
Additional
|
|
|
Accumulated
Other
|
Total
|
|||||||||
|
Issued
|
In
Treasury
|
|
Common
Stock
|
Paid-in
Capital
|
Accumulated
Deficit
|
Treasury
Stock
|
Comprehensive
Income
|
Stockholders’
Equity (Deficit)
|
||||||||
Balances at December 31, 2010 (As reported)
|
42,339
|
|
(4,164
|
)
|
|
$423
|
$1,005,198
|
$(495,254)
|
$(91,025)
|
$7,268
|
$426,610
|
||||||
Cumulative prior period adjustments resulting from restatement and other revisions
|
|
|
|
|
|
|
|
12,204
|
|
(751,093
|
)
|
|
|
1,943
|
|
(736,946
|
)
|
Balances at December 31, 2010 (Restated)
|
42,339
|
|
(4,164
|
)
|
|
423
|
|
1,017,402
|
|
(1,246,347
|
)
|
(91,025
|
)
|
9,211
|
|
(310,336
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cumulative-effect adjustments due to adoption of ASU No. 2010-28
|
|
|
|
|
|
(419,368
|
)
|
|
|
(419,368
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Stock issued pursuant to employee stock plans
|
|
430
|
|
|
|
(1,213
|
)
|
(5,485
|
)
|
8,724
|
|
|
2,026
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation (Restated)
|
|
|
|
|
12,609
|
|
|
|
|
12,609
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (Restated)
|
|
|
|
|
|
226,367
|
|
|
|
226,367
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss (Restated)
|
|
|
|
|
|
|
|
(2,173
|
)
|
(2,173
|
)
|
||||||
Balances at December 31, 2011 (Restated)
|
42,339
|
|
(3,734
|
)
|
|
423
|
|
1,028,798
|
|
(1,444,833
|
)
|
(82,301
|
)
|
7,038
|
|
(490,875
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock issued pursuant to employee stock plans
|
|
331
|
|
|
|
(668
|
)
|
(5,737
|
)
|
6,759
|
|
|
354
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
|
|
|
|
11,432
|
|
|
|
|
11,432
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
|
|
|
|
92,891
|
|
|
|
92,891
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
606
|
|
606
|
|
||||||
Balances at December 31, 2012
|
42,339
|
|
(3,403
|
)
|
|
423
|
|
1,039,562
|
|
(1,357,679
|
)
|
(75,542
|
)
|
7,644
|
|
(385,592
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock issued pursuant to employee stock plans
|
|
146
|
|
|
|
(3,095
|
)
|
|
2,999
|
|
|
(96
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
|
|
|
|
6,917
|
|
|
|
|
6,917
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
|
|
|
|
21,153
|
|
|
|
21,153
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(1,717
|
)
|
(1,717
|
)
|
||||||
Balances at December 31, 2013
|
42,339
|
|
(3,257
|
)
|
|
$423
|
$1,043,384
|
$(1,336,526)
|
$(72,543)
|
$5,927
|
$(359,335)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
2011
|
||||||
|
2013
|
|
2012
|
|
(Restated)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
21,153
|
|
|
$
|
92,891
|
|
|
$
|
226,367
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
22,767
|
|
|
27,495
|
|
|
31,983
|
|
|||
Provision for doubtful accounts
|
157
|
|
|
125
|
|
|
1,473
|
|
|||
Non-cash provision for restructuring
|
—
|
|
|
1,459
|
|
|
326
|
|
|||
(Gain) loss on sales of assets
|
(125
|
)
|
|
(252
|
)
|
|
597
|
|
|||
Gain on divestiture of consumer business
|
—
|
|
|
(37,972
|
)
|
|
—
|
|
|||
Stock-based compensation expense
|
6,917
|
|
|
11,432
|
|
|
12,609
|
|
|||
Non-cash interest expense
|
294
|
|
|
294
|
|
|
301
|
|
|||
Foreign currency transaction (gains) losses
|
(10
|
)
|
|
(1,251
|
)
|
|
1,818
|
|
|||
Provision for deferred taxes
|
730
|
|
|
(400
|
)
|
|
(1,994
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
11,030
|
|
|
26,765
|
|
|
(3,804
|
)
|
|||
Inventories
|
9,021
|
|
|
20,844
|
|
|
(3,317
|
)
|
|||
Prepaid expenses and other current assets
|
4,393
|
|
|
(3,745
|
)
|
|
(223
|
)
|
|||
Accounts payable
|
(1,416
|
)
|
|
(7,111
|
)
|
|
(4,533
|
)
|
|||
Accrued expenses, compensation and benefits and other liabilities
|
8,932
|
|
|
(3,300
|
)
|
|
(17,436
|
)
|
|||
Income taxes payable
|
(1,324
|
)
|
|
676
|
|
|
(640
|
)
|
|||
Deferred revenues
|
(91,664
|
)
|
|
(93,241
|
)
|
|
(240,560
|
)
|
|||
Net cash (used in) provided by operating activities
|
(9,145
|
)
|
|
34,709
|
|
|
2,967
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(11,625
|
)
|
|
(9,703
|
)
|
|
(10,795
|
)
|
|||
Capitalized software development costs
|
—
|
|
|
—
|
|
|
(1,242
|
)
|
|||
Change in other long-term assets
|
(36
|
)
|
|
(40
|
)
|
|
(155
|
)
|
|||
Proceeds from divestiture of consumer business
|
—
|
|
|
11,440
|
|
|
—
|
|
|||
Proceeds from sale of assets
|
125
|
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
(11,536
|
)
|
|
1,697
|
|
|
(12,192
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from the issuance of common stock under employee stock plans
|
177
|
|
|
1,022
|
|
|
3,239
|
|
|||
Common stock repurchases for tax withholdings for net settlement of equity awards
|
(273
|
)
|
|
(668
|
)
|
|
(1,213
|
)
|
|||
Proceeds from revolving credit facilities
|
—
|
|
|
14,000
|
|
|
21,000
|
|
|||
Payments on revolving credit facilities
|
—
|
|
|
(14,000
|
)
|
|
(21,000
|
)
|
|||
Net cash (used in) provided by financing activities
|
(96
|
)
|
|
354
|
|
|
2,026
|
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(1,410
|
)
|
|
775
|
|
|
(2,728
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(22,187
|
)
|
|
37,535
|
|
|
(9,927
|
)
|
|||
Cash and cash equivalents at beginning of year
|
70,390
|
|
|
32,855
|
|
|
42,782
|
|
|||
Cash and cash equivalents at end of year
|
$
|
48,203
|
|
|
$
|
70,390
|
|
|
$
|
32,855
|
|
|
|
|
|
|
|
||||||
Cash paid for income taxes, net of refunds
|
$
|
2,173
|
|
|
$
|
6,554
|
|
|
$
|
3,805
|
|
Cash paid for interest
|
1,281
|
|
|
1,224
|
|
|
1,508
|
|
A.
|
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
•
|
the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis;
|
•
|
contractually stated prices for deliverables that are intended to be sold on a standalone basis;
|
•
|
the pricing of standalone sales that may not qualify as VSOE of fair value due to limited volumes or variation in prices; and
|
•
|
other pricing factors, such as the geographical region in which products are sold and expected discounts based on the customer size and type.
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
||||||
Allowance for sales returns and exchanges
–
beginning of year
|
$
|
19,460
|
|
|
$
|
22,767
|
|
|
$
|
23,658
|
|
Adjustments to the allowance
|
9,243
|
|
|
11,402
|
|
|
22,161
|
|
|||
Deductions against the allowance
|
(16,184
|
)
|
|
(14,709
|
)
|
|
(23,052
|
)
|
|||
Allowance for sales returns and exchanges
–
end of year
|
$
|
12,519
|
|
|
$
|
19,460
|
|
|
$
|
22,767
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
||||||
Allowance for doubtful accounts
–
beginning of year
|
$
|
1,517
|
|
|
$
|
2,401
|
|
|
$
|
2,928
|
|
Additions to the allowance
|
157
|
|
|
125
|
|
|
1,473
|
|
|||
Deductions against the allowance
|
(230
|
)
|
|
(1,009
|
)
|
|
(2,000
|
)
|
|||
Allowance for doubtful accounts
–
end of year
|
$
|
1,444
|
|
|
$
|
1,517
|
|
|
$
|
2,401
|
|
|
|
Depreciable Life (years)
|
||
|
|
Minimum
|
|
Maximum
|
Computer and video equipment and software
|
|
2
|
|
5
|
Manufacturing tooling and testbeds
|
|
3
|
|
5
|
Office equipment
|
|
3
|
|
5
|
Furniture, fixtures and other
|
|
3
|
|
8
|
B.
|
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
|
Goodwill balance at December 31, 2010, as previously reported
|
$
|
246,997
|
|
Effect of restatement
|
172,371
|
|
|
Goodwill balance at December 31, 2010, as restated
|
419,368
|
|
|
Cumulative-effect adjustment due to the adoption of ASU No. 2010-28
|
(419,368
|
)
|
|
Goodwill balance at December 31, 2011, as restated
|
$
|
—
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income
|
|
Total Stockholders’ Equity (Deficit)
|
||||||||||||
Balances at December 31, 2010, as previously reported
|
$
|
423
|
|
|
$
|
1,005,198
|
|
|
$
|
(495,254
|
)
|
|
$
|
(91,025
|
)
|
|
$
|
7,268
|
|
|
$
|
426,610
|
|
Revenue recognition adjustments
|
—
|
|
|
—
|
|
|
(897,835
|
)
|
|
—
|
|
|
957
|
|
|
(896,878
|
)
|
||||||
Goodwill adjustments
|
—
|
|
|
—
|
|
|
172,371
|
|
|
—
|
|
|
—
|
|
|
172,371
|
|
||||||
Restructuring adjustments
|
—
|
|
|
—
|
|
|
(1,452
|
)
|
|
—
|
|
|
—
|
|
|
(1,452
|
)
|
||||||
Income tax adjustments
|
—
|
|
|
—
|
|
|
(6,280
|
)
|
|
—
|
|
|
683
|
|
|
(5,597
|
)
|
||||||
Stock-based compensation adjustments
|
—
|
|
|
12,204
|
|
|
(12,204
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other adjustments
|
—
|
|
|
—
|
|
|
(5,693
|
)
|
|
—
|
|
|
303
|
|
|
(5,390
|
)
|
||||||
Balances at December 31, 2010, as restated
|
$
|
423
|
|
|
$
|
1,017,402
|
|
|
$
|
(1,246,347
|
)
|
|
$
|
(91,025
|
)
|
|
$
|
9,211
|
|
|
$
|
(310,336
|
)
|
|
Balances at December 31, 2011, as Previously Reported
|
|
Cumulative Effect of Prior Period Adjustments as of December 31, 2010
|
|
Stock-Based Compensation Adjustments
|
|
Other Adjustments
|
|
Balances at December 31, 2011, as Restated
|
||||||||||
Additional paid-in capital
|
$
|
1,018,604
|
|
|
$
|
12,204
|
|
|
$
|
(2,010
|
)
|
|
$
|
—
|
|
|
$
|
1,028,798
|
|
Accumulated other comprehensive income
|
4,807
|
|
|
1,943
|
|
|
—
|
|
|
288
|
|
|
7,038
|
|
|
Year Ended December 31, 2011
|
||||||||||||||
|
As Previously Reported
|
Revenue Restatement Adjustments
|
Other Restatement Adjustments
|
Discontinued Operations
|
As Restated
|
||||||||||
Net revenues:
|
|
|
|
|
|
||||||||||
Products
|
$
|
546,371
|
|
$
|
270,219
|
|
$
|
—
|
|
$
|
(155,870
|
)
|
$
|
660,720
|
|
Services
|
131,565
|
|
(25,400
|
)
|
—
|
|
—
|
|
106,165
|
|
|||||
Total net revenues
|
677,936
|
|
244,819
|
|
—
|
|
(155,870
|
)
|
766,885
|
|
|||||
Cost of revenues:
|
|
|
|
|
|
||||||||||
Products
|
255,735
|
|
—
|
|
1,153
|
|
(68,671
|
)
|
188,217
|
|
|||||
Services
|
62,482
|
|
—
|
|
8,326
|
|
—
|
|
70,808
|
|
|||||
Amortization of intangible assets
|
2,693
|
|
—
|
|
—
|
|
—
|
|
2,693
|
|
|||||
Total cost of revenues
|
320,910
|
|
—
|
|
9,479
|
|
(68,671
|
)
|
261,718
|
|
|||||
Gross profit
|
357,026
|
|
244,819
|
|
(9,479
|
)
|
(87,199
|
)
|
505,167
|
|
|||||
Operating expenses:
|
|
|
|
|
|
||||||||||
Research and development
|
118,108
|
|
—
|
|
252
|
|
(7,231
|
)
|
111,129
|
|
|||||
Marketing and selling
|
183,865
|
|
—
|
|
(9,897
|
)
|
(10,764
|
)
|
163,204
|
|
|||||
General and administrative
|
58,448
|
|
—
|
|
(2,419
|
)
|
(5,297
|
)
|
50,732
|
|
|||||
Amortization of intangible assets
|
8,528
|
|
—
|
|
—
|
|
—
|
|
8,528
|
|
|||||
Restructuring costs, net
|
8,858
|
|
—
|
|
(2,324
|
)
|
—
|
|
6,534
|
|
|||||
Total operating expenses
|
377,807
|
|
—
|
|
(14,388
|
)
|
(23,292
|
)
|
340,127
|
|
|||||
Operating (loss) income
|
(20,781
|
)
|
244,819
|
|
4,909
|
|
(63,907
|
)
|
165,040
|
|
|||||
Interest income
|
144
|
|
—
|
|
(2
|
)
|
—
|
|
142
|
|
|||||
Interest expense
|
(2,053
|
)
|
—
|
|
125
|
|
—
|
|
(1,928
|
)
|
|||||
Other expense, net
|
(159
|
)
|
—
|
|
—
|
|
—
|
|
(159
|
)
|
|||||
(Loss) income from continuing operations before income taxes
|
(22,849
|
)
|
244,819
|
|
5,032
|
|
(63,907
|
)
|
163,095
|
|
|||||
Provision for income taxes, net
|
942
|
|
—
|
|
(307
|
)
|
—
|
|
635
|
|
|||||
(Loss) income from continuing operations, net of tax
|
(23,791
|
)
|
244,819
|
|
5,339
|
|
(63,907
|
)
|
162,460
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
||||||||||
Income from divested operations
|
—
|
|
—
|
|
—
|
|
63,907
|
|
63,907
|
|
|||||
Income from discontinued operations
|
—
|
|
—
|
|
—
|
|
63,907
|
|
63,907
|
|
|||||
Net (loss) income
|
$
|
(23,791
|
)
|
$
|
244,819
|
|
$
|
5,339
|
|
$
|
—
|
|
$
|
226,367
|
|
(Loss) income per common share – basic:
|
|
|
|
|
|
||||||||||
(Loss) income per share from continuing operations, net of tax – basic
|
$
|
(0.62
|
)
|
|
|
|
$
|
4.23
|
|
||||||
Income per share from discontinued operations – basic
|
—
|
|
|
|
|
1.66
|
|
||||||||
Net (loss) income per common share – basic
|
$
|
(0.62
|
)
|
|
|
|
$
|
5.89
|
|
||||||
(Loss) income per common share – diluted:
|
|
|
|
|
|
||||||||||
(Loss) income per share from continuing operations, net of tax – diluted
|
$
|
(0.62
|
)
|
|
|
|
$
|
4.22
|
|
||||||
Income per share from discontinued operations – diluted
|
—
|
|
|
|
|
1.67
|
|
||||||||
Net (loss) income per common share – diluted
|
$
|
(0.62
|
)
|
|
|
|
$
|
5.87
|
|
||||||
|
|
|
|
|
|
||||||||||
Weighted-average common shares outstanding – basic
|
38,435
|
|
|
|
|
38,435
|
|
||||||||
Weighted-average common shares outstanding – diluted
|
38,435
|
|
|
|
|
38,534
|
|
|
Year Ended December 31, 2011
|
||||||||||||||
|
As Previously Reported
|
Revenue Restatement Adjustments
|
Other Restatement Adjustments
|
Discontinued Operations
|
As Restated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||||||
Net (loss) income
|
$
|
(23,791
|
)
|
244,819
|
|
$
|
5,339
|
|
—
|
|
$
|
226,367
|
|
||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
31,983
|
|
—
|
|
—
|
|
—
|
|
31,983
|
|
|||||
Provision for doubtful accounts
|
1,561
|
|
—
|
|
(88
|
)
|
—
|
|
1,473
|
|
|||||
Non-cash provision for restructuring
|
326
|
|
—
|
|
—
|
|
—
|
|
326
|
|
|||||
Loss on sales of assets
|
597
|
|
—
|
|
—
|
|
—
|
|
597
|
|
|||||
Gain on disposal of fixed assets
|
(24
|
)
|
—
|
|
24
|
|
—
|
|
—
|
|
|||||
Stock-based compensation expense
|
14,619
|
|
—
|
|
(2,010
|
)
|
—
|
|
12,609
|
|
|||||
Non-cash interest expense
|
301
|
|
—
|
|
—
|
|
—
|
|
301
|
|
|||||
Foreign currency transaction (gains) losses
|
(135
|
)
|
—
|
|
1,953
|
|
—
|
|
1,818
|
|
|||||
Provision for deferred taxes
|
(1,658
|
)
|
—
|
|
(336
|
)
|
—
|
|
(1,994
|
)
|
|||||
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|||||||||
Accounts receivable
|
(4,904
|
)
|
1,353
|
|
(253
|
)
|
—
|
|
(3,804
|
)
|
|||||
Inventories
|
(3,475
|
)
|
—
|
|
158
|
|
—
|
|
(3,317
|
)
|
|||||
Prepaid expenses and other current assets
|
(298
|
)
|
—
|
|
75
|
|
—
|
|
(223
|
)
|
|||||
Accounts payable
|
(4,769
|
)
|
—
|
|
236
|
|
—
|
|
(4,533
|
)
|
|||||
Accrued expenses, compensation and benefits and other liabilities
|
(14,323
|
)
|
—
|
|
(3,113
|
)
|
—
|
|
(17,436
|
)
|
|||||
Income taxes payable
|
(757
|
)
|
—
|
|
117
|
|
—
|
|
(640
|
)
|
|||||
Deferred revenues
|
5,611
|
|
(246,172
|
)
|
1
|
|
—
|
|
(240,560
|
)
|
|||||
Net cash provided by operating activities
|
864
|
|
—
|
|
2,103
|
|
—
|
|
2,967
|
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(10,771
|
)
|
—
|
|
(24
|
)
|
—
|
|
(10,795
|
)
|
|||||
Capitalized software development costs
|
—
|
|
—
|
|
(1,242
|
)
|
—
|
|
(1,242
|
)
|
|||||
Change in other long-term assets
|
(1,099
|
)
|
—
|
|
944
|
|
—
|
|
(155
|
)
|
|||||
Net cash used in investing activities
|
(11,870
|
)
|
—
|
|
(322
|
)
|
—
|
|
(12,192
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||||||
Proceeds from the issuance of common stock under employee stock
|
2,026
|
|
—
|
|
1,213
|
|
—
|
|
3,239
|
|
|||||
Common stock repurchases for tax withholdings for net settlement of equity awards
|
—
|
|
—
|
|
(1,213
|
)
|
—
|
|
(1,213
|
)
|
|||||
Proceeds from revolving credit facilities
|
21,000
|
|
—
|
|
—
|
|
—
|
|
21,000
|
|
|||||
Payments on revolving credit facilities
|
(21,000
|
)
|
—
|
|
—
|
|
—
|
|
(21,000
|
)
|
|||||
Net cash provided by financing activities
|
2,026
|
|
—
|
|
—
|
|
—
|
|
2,026
|
|
|||||
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(947
|
)
|
—
|
|
(1,781
|
)
|
—
|
|
(2,728
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(9,927
|
)
|
—
|
|
—
|
|
—
|
|
(9,927
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
42,782
|
|
—
|
|
—
|
|
—
|
|
42,782
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
32,855
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
32,855
|
|
C.
|
NET INCOME PER SHARE
|
|
Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Options
|
5,193
|
|
|
6,069
|
|
|
5,987
|
|
Non-vested restricted stock units
|
352
|
|
|
638
|
|
|
494
|
|
Anti-dilutive potential common shares
|
5,545
|
|
|
6,707
|
|
|
6,481
|
|
D.
|
FOREIGN CURRENCY CONTRACTS
|
Derivatives Not Designated as Hedging Instruments Under
Accounting Standards Codification (
“
ASC
”
) Topic 815
|
|
Balance Sheet Classification
|
|
Fair Value at December 31, 2013
|
|
Fair Value at December 31, 2012
|
Financial assets:
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Other current assets
|
|
$59
|
|
$157
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Accrued expenses and other current liabilities
|
|
$228
|
|
$337
|
Derivatives Not Designated as Hedging
Instruments Under ASC Topic 815
|
|
Net (Loss) Gain Recorded in Marketing and Selling Expenses
|
||||
|
2013
|
|
2012
|
|
2011 (Restated)
|
|
Foreign currency contracts
|
|
$(187)
|
|
$(707)
|
|
$525
|
E.
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31,
2013 |
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation assets
|
$
|
1,920
|
|
|
$
|
1,271
|
|
|
$
|
649
|
|
|
$
|
—
|
|
Foreign currency contracts
|
59
|
|
|
—
|
|
|
59
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
228
|
|
|
$
|
—
|
|
|
$
|
228
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31, 2012
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation assets
|
$
|
1,680
|
|
|
$
|
1,097
|
|
|
$
|
583
|
|
|
$
|
—
|
|
Foreign currency contracts
|
157
|
|
|
—
|
|
|
157
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
337
|
|
|
$
|
—
|
|
|
$
|
337
|
|
|
$
|
—
|
|
F.
|
ACCOUNTS RECEIVABLE
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Accounts receivable
|
$
|
70,733
|
|
|
$
|
88,933
|
|
Less:
|
|
|
|
||||
Allowance for doubtful accounts
|
(1,444
|
)
|
|
(1,517
|
)
|
||
Allowance for sales returns and rebates
|
(12,519
|
)
|
|
(19,460
|
)
|
||
Total
|
$
|
56,770
|
|
|
$
|
67,956
|
|
G.
|
INVENTORIES
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Raw materials
|
$
|
10,142
|
|
|
$
|
11,095
|
|
Work in process
|
338
|
|
|
293
|
|
||
Finished goods
|
49,642
|
|
|
57,755
|
|
||
Total
|
$
|
60,122
|
|
|
$
|
69,143
|
|
H.
|
PROPERTY AND EQUIPMENT
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Computer and video equipment and software
|
|
$
|
107,464
|
|
|
$
|
103,209
|
|
Manufacturing tooling and testbeds
|
|
2,548
|
|
|
1,611
|
|
||
Office equipment
|
|
4,737
|
|
|
4,746
|
|
||
Furniture, fixtures and other
|
|
10,909
|
|
|
11,122
|
|
||
Leasehold improvements
|
|
33,310
|
|
|
32,080
|
|
||
|
|
158,968
|
|
|
152,768
|
|
||
Less: Accumulated depreciation and amortization
|
|
123,782
|
|
|
111,327
|
|
||
Total
|
|
$
|
35,186
|
|
|
$
|
41,441
|
|
I.
|
DISCONTINUED OPERATIONS
|
•
|
allow the Company to focus on the Broadcast and Media market and the Video and Audio Post and Professional market;
|
•
|
reduce complexity from the Company's operations to improve operational efficiencies; and
|
•
|
allow the Company to change its cost structure, by moving away from lower growth, lower margin sectors to drive improved financial performance.
|
Proceeds from sale of consumer business
|
|
$
|
14,841
|
|
Less: assets disposed of
|
|
|
||
Intangible assets
|
|
(3,474
|
)
|
|
Inventory, net
|
|
(16,500
|
)
|
|
Fixed assets
|
|
(507
|
)
|
|
Capitalized software
|
|
(372
|
)
|
|
Other assets
|
|
(23
|
)
|
|
Plus: liabilities disposed of
|
|
|
||
Deferred revenues (Restated)
|
|
45,401
|
|
|
Warranty accrual
|
|
507
|
|
|
Net assets sold
|
|
25,032
|
|
|
Costs to sell
|
|
(1,901
|
)
|
|
Gain on divestiture of consumer business
|
|
$
|
37,972
|
|
|
2012
|
|
2011 (Restated)
|
||||
Net revenues
|
$
|
46,101
|
|
|
$
|
155,870
|
|
Costs of revenues
|
33,265
|
|
|
68,671
|
|
||
Gross profit
|
12,836
|
|
|
87,199
|
|
||
Operating expenses
|
5,004
|
|
|
23,292
|
|
||
Income from discontinued operations before income taxes
|
7,832
|
|
|
63,907
|
|
||
Gain on divestiture of consumer business
|
37,972
|
|
|
—
|
|
||
Income from discontinued operations
|
$
|
45,804
|
|
|
$
|
63,907
|
|
J.
|
INTANGIBLE ASSETS
|
|
December 31,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Completed technologies and patents
|
$
|
52,711
|
|
|
$
|
(52,659
|
)
|
|
$
|
52
|
|
|
$
|
52,720
|
|
|
$
|
(51,171
|
)
|
|
$
|
1,549
|
|
Customer relationships
|
49,627
|
|
|
(45,557
|
)
|
|
4,070
|
|
|
49,543
|
|
|
(42,828
|
)
|
|
6,715
|
|
||||||
Trade names
|
5,976
|
|
|
(5,976
|
)
|
|
—
|
|
|
5,970
|
|
|
(5,970
|
)
|
|
—
|
|
||||||
Capitalized software costs
|
5,944
|
|
|
(5,806
|
)
|
|
138
|
|
|
5,938
|
|
|
(4,985
|
)
|
|
953
|
|
||||||
Total
|
$
|
114,258
|
|
|
$
|
(109,998
|
)
|
|
$
|
4,260
|
|
|
$
|
114,171
|
|
|
$
|
(104,954
|
)
|
|
$
|
9,217
|
|
K.
|
OTHER LONG-TERM LIABILITIES
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Long-term deferred rent
|
$
|
8,361
|
|
|
$
|
8,923
|
|
Long-term accrued restructuring
|
2,335
|
|
|
5,119
|
|
||
Long-term deferred compensation
|
3,890
|
|
|
3,936
|
|
||
Total
|
$
|
14,586
|
|
|
$
|
17,978
|
|
Year Ending December 31,
|
|
||
2014
|
$
|
20,183
|
|
2015
|
13,462
|
|
|
2016
|
12,503
|
|
|
2017
|
11,301
|
|
|
2018
|
9,126
|
|
|
Thereafter
|
18,500
|
|
|
Total
|
$
|
85,075
|
|
Accrual balance at December 31, 2010 (Restated)
|
$
|
4,849
|
|
Accruals for product warranties (Restated)
|
8,544
|
|
|
Cost of warranty claims (Restated)
|
(8,293
|
)
|
|
Accrual balance at December 31, 2011 (Restated)
|
5,100
|
|
|
Accruals for product warranties
|
7,737
|
|
|
Cost of warranty claims
|
(7,854
|
)
|
|
Allocation to divested consumer business
|
(507
|
)
|
|
Accrual balance at December 31, 2012
|
4,476
|
|
|
Accruals for product warranties
|
5,346
|
|
|
Cost of warranty claims
|
(6,321
|
)
|
|
Accrual balance at December 31, 2013
|
$
|
3,501
|
|
M.
|
CAPITAL STOCK
|
|
Time-Based Shares
|
Performance-Based Shares
|
Total Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||
Options outstanding at January 1, 2013
|
4,099,144
|
|
1,300,155
|
|
5,399,299
|
|
$17.68
|
|
|
Granted
|
208,000
|
|
1,088,000
|
|
1,296,000
|
|
$7.85
|
|
|
Exercised
|
—
|
|
—
|
|
—
|
|
$—
|
|
|
Forfeited or canceled
|
(1,069,229
|
)
|
(899,655
|
)
|
(1,968,884
|
)
|
$19.60
|
|
|
Options outstanding at December 31, 2013
|
3,237,915
|
|
1,488,500
|
|
4,726,415
|
|
$14.18
|
3.67
|
$411
|
Options vested at December 31, 2013 or expected to vest
|
|
|
4,626,329
|
|
$14.24
|
3.66
|
$402
|
||
Options exercisable at December 31, 2013
|
|
|
2,488,278
|
|
$17.36
|
2.44
|
$31
|
|
|
Year Ended December 31,
|
||||
|
|
|
|
|
|
2011
|
|
|
2013
|
|
2012
|
|
(Restated)
|
Expected dividend yield
|
|
0.00%
|
|
0.00%
|
|
0.00%
|
Risk-free interest rate
|
|
0.87%
|
|
0.94%
|
|
2.03%
|
Expected volatility
|
|
50.1%
|
|
52.8%
|
|
41.4%
|
Expected life (in years)
|
|
4.68
|
|
4.56
|
|
4.48
|
Weighted-average fair value of options granted (per share)
|
|
$3.33
|
|
$4.89
|
|
$7.54
|
|
Non-Vested Restricted Stock Units
|
||||||||
|
Time-Based Shares
|
Performance-Based Shares
|
Total Shares
|
Weighted-
Average
Grant-Date
Fair Value
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||
Non-vested at January 1, 2013
|
261,406
|
|
401,750
|
|
663,156
|
|
$15.73
|
|
|
Granted
|
175,000
|
|
10,000
|
|
185,000
|
|
$7.84
|
|
|
Vested
|
(155,286
|
)
|
—
|
|
(155,286
|
)
|
$14.04
|
|
|
Forfeited
|
(75,887
|
)
|
(294,250
|
)
|
(370,137
|
)
|
$16.36
|
|
|
Non-vested at December 31, 2013
|
205,233
|
|
117,500
|
|
322,733
|
|
$11.30
|
3.91
|
$2,627
|
Expected to vest
|
|
|
297,751
|
|
$11.53
|
4.07
|
$2,424
|
|
Year Ended
|
|
December 31, 2011
|
|
(Restated)
|
Expected dividend yield
|
0.00%
|
Risk-free interest rate
|
3.90%
|
Expected volatility
|
41.5%
|
Expected life (in years)
|
3.04
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
2011
|
||||||
|
2013
|
|
2012
|
|
(Restated)
|
||||||
Cost of products revenues
|
$
|
360
|
|
|
$
|
410
|
|
|
$
|
487
|
|
Cost of services revenues
|
436
|
|
|
582
|
|
|
714
|
|
|||
Research and development expenses
|
582
|
|
|
986
|
|
|
1,638
|
|
|||
Marketing and selling expenses
|
1,778
|
|
|
3,754
|
|
|
4,306
|
|
|||
General and administrative expenses
|
3,761
|
|
|
5,700
|
|
|
5,464
|
|
|||
Total
|
$
|
6,917
|
|
|
$
|
11,432
|
|
|
$
|
12,609
|
|
N.
|
EMPLOYEE BENEFIT PLANS
|
O.
|
INCOME TAXES
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
2011
|
||||||
|
2013
|
|
2012
|
|
(Restated)
|
||||||
Income (loss) from continuing operations before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
(16,414
|
)
|
|
$
|
19,198
|
|
|
$
|
121,632
|
|
Foreign
|
40,506
|
|
|
31,938
|
|
|
41,463
|
|
|||
Total income from continuing operations before income taxes
|
$
|
24,092
|
|
|
$
|
51,136
|
|
|
$
|
163,095
|
|
Provision for (benefit from) income taxes:
|
|
|
|
|
|
||||||
Current tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
$
|
(104
|
)
|
|
$
|
(750
|
)
|
|
$
|
406
|
|
State
|
114
|
|
|
102
|
|
|
48
|
|
|||
Foreign benefit of net operating losses
|
(170
|
)
|
|
(154
|
)
|
|
(629
|
)
|
|||
Other foreign
|
2,369
|
|
|
5,251
|
|
|
2,804
|
|
|||
Total current tax expense
|
2,209
|
|
|
4,449
|
|
|
2,629
|
|
|||
Deferred tax expense (benefit):
|
|
|
|
|
|
||||||
Other foreign
|
730
|
|
|
(400
|
)
|
|
(1,994
|
)
|
|||
Total deferred tax expense (benefit)
|
730
|
|
|
(400
|
)
|
|
(1,994
|
)
|
|||
Total provision for income taxes
|
$
|
2,939
|
|
|
$
|
4,049
|
|
|
$
|
635
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Tax credit and net operating loss carryforwards
|
$
|
244,379
|
|
|
$
|
217,549
|
|
Allowances for bad debts
|
277
|
|
|
1,010
|
|
||
Difference in accounting for:
|
|
|
|
||||
Revenues
|
98,838
|
|
|
116,725
|
|
||
Costs and expenses
|
29,784
|
|
|
33,066
|
|
||
Inventories
|
9,209
|
|
|
9,774
|
|
||
Acquired intangible assets
|
17,726
|
|
|
24,090
|
|
||
Gross deferred tax assets
|
400,213
|
|
|
402,214
|
|
||
Valuation allowance
|
(396,143
|
)
|
|
(395,645
|
)
|
||
Deferred tax assets after valuation allowance
|
4,070
|
|
|
6,569
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Difference in accounting for:
|
|
|
|
||||
Revenues
|
—
|
|
|
(2,959
|
)
|
||
Costs and expenses
|
(1,712
|
)
|
|
(623
|
)
|
||
Acquired intangible assets
|
—
|
|
|
(492
|
)
|
||
Gross deferred tax liabilities
|
(1,712
|
)
|
|
(4,074
|
)
|
||
Net deferred tax assets
|
$
|
2,358
|
|
|
$
|
2,495
|
|
Recorded as:
|
|
|
|
||||
Current deferred tax assets, net
|
522
|
|
|
586
|
|
||
Long-term deferred tax assets, net
|
2,415
|
|
|
2,825
|
|
||
Current deferred tax liabilities, net
|
(14
|
)
|
|
(203
|
)
|
||
Long-term deferred tax liabilities, net
|
(565
|
)
|
|
(713
|
)
|
||
Net deferred tax assets
|
$
|
2,358
|
|
|
$
|
2,495
|
|
|
Year Ended December 31,
|
|||||||
|
|
|
|
|
2011
|
|||
|
2013
|
|
2012
|
|
(Restated)
|
|||
Statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Tax credits
|
(6.2
|
)%
|
|
(1.2
|
)%
|
|
(0.6
|
)%
|
Foreign operations
|
(43.8
|
)%
|
|
(12.7
|
)%
|
|
(8.8
|
)%
|
Non-deductible expenses and other
|
2.1
|
%
|
|
1.4
|
%
|
|
0.9
|
%
|
Increase (decrease) in valuation allowance
|
25.1
|
%
|
|
(14.6
|
)%
|
|
(26.1
|
)%
|
Effective tax rate
|
12.2
|
%
|
|
7.9
|
%
|
|
0.4
|
%
|
Unrecognized tax benefits at January 1, 2011 (Restated)
|
$
|
18,424
|
|
Increases for tax positions taken during a prior period
|
3,056
|
|
|
Decreases related to settlements
|
(900
|
)
|
|
Decreases related to the lapse of applicable statutes of limitations
|
(400
|
)
|
|
Unrecognized tax benefits at December 31, 2011 (Restated)
|
20,180
|
|
|
Increases for tax positions taken during a prior period
|
3,198
|
|
|
Decreases related to the lapse of applicable statutes of limitations
|
(749
|
)
|
|
Unrecognized tax benefits at December 31, 2012
|
22,629
|
|
|
Increases for tax positions taken during a prior period
|
2,205
|
|
|
Decreases related to the lapse of applicable statutes of limitations
|
(105
|
)
|
|
Unrecognized tax benefits at December 31, 2013
|
$
|
24,729
|
|
P.
|
RESTRUCTURING COSTS AND ACCRUALS
|
|
Non-Acquisition-Related
Restructuring
Liabilities
|
|
Acquisition-Related
Restructuring
Liabilities
|
|
|
||||||||||||||
|
Employee-
Related
|
|
Facilities-
Related
& Other
|
|
Employee-
Related
|
|
Facilities-
Related
|
|
Total
|
||||||||||
Accrual balance at January 1, 2011 (Restated)
|
$
|
11,194
|
|
|
$
|
9,150
|
|
|
$
|
202
|
|
|
$
|
828
|
|
|
$
|
21,374
|
|
New restructuring charges – operating expenses
|
9,873
|
|
|
998
|
|
|
—
|
|
|
125
|
|
|
10,996
|
|
|||||
Revisions of estimated liabilities
|
(4,158
|
)
|
|
(251
|
)
|
|
(30
|
)
|
|
(23
|
)
|
|
(4,462
|
)
|
|||||
Accretion
|
—
|
|
|
226
|
|
|
—
|
|
|
9
|
|
|
235
|
|
|||||
Cash payments for employee-related charges
|
(13,209
|
)
|
|
—
|
|
|
(178
|
)
|
|
—
|
|
|
(13,387
|
)
|
|||||
Cash payments for facilities
|
—
|
|
|
(3,394
|
)
|
|
—
|
|
|
(425
|
)
|
|
(3,819
|
)
|
|||||
Non-cash write-offs
|
—
|
|
|
(200
|
)
|
|
—
|
|
|
(126
|
)
|
|
(326
|
)
|
|||||
Foreign exchange impact on ending balance
|
345
|
|
|
(68
|
)
|
|
6
|
|
|
2
|
|
|
285
|
|
|||||
Accrual balance at December 31, 2011 (Restated)
|
4,045
|
|
|
6,461
|
|
|
—
|
|
|
390
|
|
|
10,896
|
|
|||||
New restructuring charges – operating expenses
|
14,751
|
|
|
8,081
|
|
|
—
|
|
|
—
|
|
|
22,832
|
|
|||||
Revisions of estimated liabilities
|
(841
|
)
|
|
2,229
|
|
|
—
|
|
|
618
|
|
|
2,006
|
|
|||||
Accretion
|
—
|
|
|
382
|
|
|
—
|
|
|
22
|
|
|
404
|
|
|||||
Cash payments for employee-related charges
|
(14,082
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,082
|
)
|
|||||
Cash payments for facilities
|
—
|
|
|
(4,893
|
)
|
|
—
|
|
|
(435
|
)
|
|
(5,328
|
)
|
|||||
Non-cash write-offs
|
—
|
|
|
(1,459
|
)
|
|
—
|
|
|
—
|
|
|
(1,459
|
)
|
|||||
Foreign exchange impact on ending balance
|
425
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
462
|
|
|||||
Accrual balance at December 31, 2012
|
4,298
|
|
|
10,838
|
|
|
—
|
|
|
595
|
|
|
15,731
|
|
|||||
New restructuring charges – operating expenses
|
3,539
|
|
|
|
|
|
—
|
|
|
—
|
|
|
3,539
|
|
|||||
Revisions of estimated liabilities
|
50
|
|
|
2,060
|
|
|
—
|
|
|
(279
|
)
|
|
1,831
|
|
|||||
Accretion
|
—
|
|
|
586
|
|
|
—
|
|
|
26
|
|
|
612
|
|
|||||
Cash payments for employee-related charges
|
(5,469
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,469
|
)
|
|||||
Cash payments for facilities
|
—
|
|
|
(7,394
|
)
|
|
—
|
|
|
(342
|
)
|
|
(7,736
|
)
|
|||||
Non-cash write-offs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Foreign exchange impact on ending balance
|
(19
|
)
|
|
12
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Accrual balance at December 31, 2013
|
$
|
2,399
|
|
|
$
|
6,102
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,501
|
|
Q.
|
SEGMENT INFORMATION
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
2011
|
||||||
|
2013
|
|
2012
|
|
(Restated)
|
||||||
Video products and solutions net revenues
|
$
|
243,173
|
|
|
$
|
276,909
|
|
|
$
|
298,633
|
|
Audio products and solutions net revenues
|
152,358
|
|
|
201,921
|
|
|
362,087
|
|
|||
Products and solutions net revenues
|
395,531
|
|
|
478,830
|
|
|
660,720
|
|
|||
Services net revenues
|
167,881
|
|
|
156,873
|
|
|
106,165
|
|
|||
Total net revenues
|
$
|
563,412
|
|
|
$
|
635,703
|
|
|
$
|
766,885
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
2011
|
||||||
|
2013
|
|
2012
|
|
(Restated)
|
||||||
Revenues:
|
|
|
|
|
|
||||||
United States
|
$
|
218,154
|
|
|
$
|
249,364
|
|
|
$
|
316,553
|
|
Other Americas
|
43,131
|
|
|
47,817
|
|
|
62,162
|
|
|||
Europe, Middle East and Africa
|
214,441
|
|
|
245,189
|
|
|
267,678
|
|
|||
Asia-Pacific
|
87,686
|
|
|
93,333
|
|
|
120,492
|
|
|||
Total net revenues
|
$
|
563,412
|
|
|
$
|
635,703
|
|
|
$
|
766,885
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Long-lived assets:
|
|
|
|
||||
United States
|
$
|
33,193
|
|
|
$
|
39,948
|
|
Other countries
|
4,385
|
|
|
5,286
|
|
||
Total long-lived assets
|
$
|
37,578
|
|
|
$
|
45,234
|
|
R.
|
CREDIT AGREEMENT
|
(In thousands, except per share data)
|
Quarter Ended
|
||||||||||||||||||||||||||||||
2013
|
|
2012
|
|||||||||||||||||||||||||||||
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
Mar. 31
|
|
Dec. 31
|
|
Sept. 30 (Restated)
|
|
June 30 (Restated)
|
|
Mar. 31 (Restated)
|
||||||||||||||||
Net revenues
|
$
|
147,103
|
|
|
$
|
138,893
|
|
|
$
|
141,345
|
|
|
$
|
136,071
|
|
|
$
|
160,469
|
|
|
$
|
150,607
|
|
|
$
|
165,476
|
|
|
$
|
159,151
|
|
Cost of revenues
|
59,801
|
|
|
56,055
|
|
|
54,294
|
|
|
52,291
|
|
|
64,210
|
|
|
55,019
|
|
|
67,312
|
|
|
59,893
|
|
||||||||
Amortization of intangible assets
|
158
|
|
|
158
|
|
|
501
|
|
|
651
|
|
|
646
|
|
|
634
|
|
|
644
|
|
|
650
|
|
||||||||
Gross profit
|
87,144
|
|
|
82,680
|
|
|
86,550
|
|
|
83,129
|
|
|
95,613
|
|
|
94,954
|
|
|
97,520
|
|
|
98,608
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Research and development
|
24,556
|
|
|
23,239
|
|
|
23,847
|
|
|
23,607
|
|
|
22,951
|
|
|
23,207
|
|
|
26,261
|
|
|
26,460
|
|
||||||||
Marketing and selling
|
34,566
|
|
|
31,512
|
|
|
33,903
|
|
|
33,909
|
|
|
35,385
|
|
|
33,941
|
|
|
42,282
|
|
|
41,873
|
|
||||||||
General and administrative
|
23,135
|
|
|
22,715
|
|
|
16,131
|
|
|
15,597
|
|
|
13,462
|
|
|
10,905
|
|
|
13,351
|
|
|
14,348
|
|
||||||||
Amortization of intangible assets
|
667
|
|
|
660
|
|
|
658
|
|
|
663
|
|
|
755
|
|
|
782
|
|
|
1,106
|
|
|
1,611
|
|
||||||||
Restructuring costs, net
|
2,491
|
|
|
688
|
|
|
1,918
|
|
|
273
|
|
|
126
|
|
|
9,831
|
|
|
14,437
|
|
|
444
|
|
||||||||
Total operating expenses
|
85,415
|
|
|
78,814
|
|
|
76,457
|
|
|
74,049
|
|
|
72,679
|
|
|
78,666
|
|
|
97,437
|
|
|
84,736
|
|
||||||||
Operating Income
|
1,729
|
|
|
3,866
|
|
|
10,093
|
|
|
9,080
|
|
|
22,934
|
|
|
16,288
|
|
|
83
|
|
|
13,872
|
|
||||||||
Other income (expense), net
|
192
|
|
|
(363
|
)
|
|
(247
|
)
|
|
(258
|
)
|
|
(1,150
|
)
|
|
(318
|
)
|
|
(379
|
)
|
|
(194
|
)
|
||||||||
Income (loss) from continuing operations before income taxes
|
1,921
|
|
|
3,503
|
|
|
9,846
|
|
|
8,822
|
|
|
21,784
|
|
|
15,970
|
|
|
(296
|
)
|
|
13,678
|
|
||||||||
Provision for (benefit from) income taxes, net
|
792
|
|
|
921
|
|
|
669
|
|
|
557
|
|
|
1,119
|
|
|
1,194
|
|
|
(936
|
)
|
|
2,672
|
|
||||||||
Income from continuing operations
|
1,129
|
|
|
2,582
|
|
|
9,177
|
|
|
8,265
|
|
|
20,665
|
|
|
14,776
|
|
|
640
|
|
|
11,006
|
|
||||||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gain on divestiture of consumer business
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,972
|
|
|
—
|
|
|
—
|
|
||||||||
Income from divested operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,773
|
|
|
5,059
|
|
||||||||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,972
|
|
|
2,773
|
|
|
5,059
|
|
||||||||
Net income
|
$
|
1,129
|
|
|
$
|
2,582
|
|
|
$
|
9,177
|
|
|
$
|
8,265
|
|
|
$
|
20,665
|
|
|
$
|
52,748
|
|
|
$
|
3,413
|
|
|
$
|
16,065
|
|
Income per share – basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income per share from continuing operations – basic
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.24
|
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
$
|
0.38
|
|
|
$
|
0.02
|
|
|
$
|
0.29
|
|
Income per share from discontinued operations – basic
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.98
|
|
|
0.07
|
|
|
0.13
|
|
||||||||
Net income per share – basic
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.24
|
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
$
|
1.36
|
|
|
$
|
0.09
|
|
|
$
|
0.42
|
|
Income per share – diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income per share from continuing operations – diluted
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.23
|
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
$
|
0.38
|
|
|
$
|
0.02
|
|
|
$
|
0.28
|
|
Income per share from discontinued operations – diluted
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.98
|
|
|
0.07
|
|
|
0.13
|
|
||||||||
Net income per share – diluted
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.23
|
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
$
|
1.36
|
|
|
$
|
0.09
|
|
|
$
|
0.41
|
|
Weighted-average common shares outstanding – basic
|
39,080
|
|
|
39,075
|
|
|
39,040
|
|
|
38,977
|
|
|
38,916
|
|
|
38,859
|
|
|
38,778
|
|
|
38,662
|
|
||||||||
Weighted-average common shares outstanding – diluted
|
39,111
|
|
|
39,076
|
|
|
39,069
|
|
|
39,034
|
|
|
38,937
|
|
|
38,890
|
|
|
38,798
|
|
|
38,721
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
(1)
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
(2)
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
(3)
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
|
•
|
Control Environment
- We did not maintain an effective control environment, which is the foundation for the discipline and structure necessary for effective internal control over financial reporting, as evidenced by: (i) an insufficient number of personnel appropriately qualified to perform control monitoring activities, including the recognition of the risks and complexities of our transactions and business operations, (ii) an insufficient number of personnel with an appropriate level of GAAP knowledge and experience or ongoing training in the application of GAAP commensurate with our financial reporting requirements, which resulted in erroneous judgments regarding the proper application of GAAP, and (iii) insufficient corporate involvement to adequately exercise appropriate oversight of accounting judgments and estimates.
|
•
|
Risk Assessment
- We did not have an effective risk assessment process. From a governance perspective, the Company historically did not have a formal process to identify, update and assess risks, including changes in the Company’s business practices, that could significantly impact the Company’s consolidated financial statements as well as the system of internal control over financial reporting.
|
•
|
Control Activities
- We did not have control activities that were designed and operating effectively. Control activities that were historically in place (i) did not always address relevant risks, (ii) were sometimes performed with incomplete information and (iii) were not performed on all relevant transactions. In addition, the level of precision of the management review controls was not sufficient to identify all potential errors.
|
•
|
Information and Communications
- We did not implement appropriate information technology controls related to change management and access for certain information systems that are relevant to the preparation of the consolidated financial statements and the Company’s system of internal control over financial reporting.
|
•
|
Monitoring Activities
- We did not maintain effective monitoring of controls related to the financial close and reporting process.
|
•
|
Control Procedures
- The new models of revenue recognition required to be followed by the Company necessitated the preparation of a substantial amount of information that was not required under the historical revenue recognition models, which were applied in error. This newly required information had not been subject to contemporaneous preventive controls at the time of the original transactions.
|
•
|
Information Technology Systems
- Some information required by the new revenue recognition models was obtained from systems that were not originally thought to be financially relevant and, as a result, information technology controls had not been contemporaneously evaluated; therefore, management could not assert effective information technology controls over these systems for the periods in which the information was being accumulated. In addition, the Company implemented a new, customized revenue recognition system that processed revenue recognition for a period of nine years. As the revenue recognition system was designed during the restatement process, it had not been operational for a sufficient period of time to allow management to conclude that information technology controls surrounding this system were operating effectively.
|
•
|
It was not possible to implement contemporaneous, preventive controls over transactions that had already occurred.
|
•
|
The massive level of effort and attention required to effect the restatement, requiring the Company to conduct restatement efforts and design new processes and controls concurrently, did not allow us sufficient time to fully implement new controls for new accounting models.
|
•
|
There was an insufficient amount of time to demonstrate that enhancements made to the control environment were operating effectively.
|
•
|
Continuing to improve the control environment through (i) staffing the Company with sufficient number of personnel appropriately qualified to perform control monitoring activities, (ii) increasing the level of GAAP knowledge and experience through ongoing training and staffing adjustments, and (iii) implementing and formalizing corporate oversight of accounting judgments and estimates;
|
•
|
Implementing a formal risk assessment process;
|
•
|
Formalizing and implementing controls over the inputs inherent in the Company’s new revenue recognition models;
|
•
|
Implementing control activities that address relevant risks and assure that all transactions are subject to such control activities;
|
•
|
Ensuring all information systems that impact revenue recognition and other financial information and disclosures have effective general computer controls, including access and change management controls; and
|
•
|
Implementing additional monitoring activities over the financial close and reporting process.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Executive Officer
|
|
Age
|
|
Position(s) with our company
|
Louis Hernandez, Jr.
|
|
47
|
|
President and Chief Executive Officer
|
John W. Frederick
|
|
50
|
|
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
Christopher C. Gahagan
|
|
50
|
|
Senior Vice President of Products and Technology
|
Jeff Rosica
|
|
52
|
|
Senior Vice President of Worldwide Field Operations
|
Jason A. Duva
|
|
41
|
|
Vice President, General Counsel and Corporate Secretary
|
•
|
Our board consists of eight members, seven of whom are independent directors within the meaning of NASDAQ’s listing standards;
|
•
|
All members of our board’s committees are independent directors;
|
•
|
Our corporate governance guidelines require that any nominee for director who does not receive a majority vote in an uncontested election must promptly tender his or her resignation to the board, which will consider whether to accept the resignation;
|
•
|
We have corporate governance guidelines that are published on our website at ir.avid.com and that among others, lay out the responsibilities and qualification standards for directors, the criteria for director nominations, the board meeting process, our directors’ access to officers and employees and independent advisers, and the duties of our chairman and if applicable lead independent director;
|
•
|
We have stock ownership guidelines for our CEO, our other executive officers and our non-employee directors that are described below under “Stock Ownership Requirements” and “Director Compensation - Stock Ownership Requirements for Outside Directors;”
|
•
|
Our independent directors hold regularly convened meetings without management present;
|
•
|
Our independent directors approve director nominations and executive officer compensation;
|
•
|
Our audit committee reviews and approves all related-party transactions;
|
•
|
Our code of business conduct and ethics is distributed annually to all of our employees; and
|
•
|
Any waiver of our code of business conduct and ethics given to our executive officers or directors must be approved by our board of directors and disclosed publicly.
|
Independent Director(1)
|
|
Audit
|
|
Compensation
|
|
Nominating and Governance
|
|
Strategy
|
Robert M. Bakish
|
|
|
|
Chair
|
|
|
|
x
|
George H. Billings (2)
|
|
x
|
|
|
|
Chair
|
|
Chair
|
Elizabeth M. Daley
|
|
x
|
|
x
|
|
|
|
|
Nancy Hawthorne
|
|
x
|
|
|
|
x
|
|
|
Youngme E. Moon
|
|
|
|
|
|
x
|
|
x
|
David B. Mullen
|
|
Chair
|
|
x
|
|
|
|
|
John H. Park
|
|
|
|
|
|
x
|
|
x
|
(1)
|
In connection with Mr. Hernandez’s appointment as our President and CEO in February 2013, he stepped down from his service as the lead director and member of our compensation committee and our nominating and governance committee. Mr. Hernandez continues to serve on our board.
|
(2)
|
Mr. Billings was appointed chairman of our board in connection with Mr. Hernandez’s appointment as President and CEO.
|
•
|
appointing, as well as approving the compensation and assessing the independence of, our independent registered public accounting firm;
|
•
|
overseeing the work of our independent registered public accounting firm, including reviewing certain reports required to be made to the audit committee by the independent registered public accounting firm;
|
•
|
overseeing the work of our internal audit function, including approving the internal audit annual plan submitted by the internal auditing staff;
|
•
|
reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
|
•
|
reviewing, approving and ratifying related person transactions;
|
•
|
monitoring our internal controls over financial reporting, disclosure controls and procedures; and
|
•
|
meeting independently with our internal auditing staff, our independent registered public accounting firm and management.
|
•
|
administering our executive officer compensation programs;
|
•
|
annually reviewing and approving an appropriate peer group against which executive compensation is compared;
|
•
|
annually reviewing and approving corporate financial performance goals and individual performance goals relevant to the compensation of our executive officers;
|
•
|
overseeing performance evaluations of our executive officers;
|
•
|
administering our equity incentive plans and other equity based plans;
|
•
|
reviewing and discussing the Compensation Discussion and Analysis;
|
•
|
evaluating compensation policies and practices in relation to risk management; and
|
•
|
reviewing and making recommendations to our board with respect to director compensation.
|
•
|
identifying individuals qualified to become members of our board;
|
•
|
recommending to our board persons to be nominated for election as directors and to each of the committees of our board;
|
•
|
developing and recommending to our board corporate governance principles; and
|
•
|
overseeing an evaluation of our board.
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
•
|
Louis Hernandez, Jr.
, President and Chief Executive Officer as of February 11, 2013;
|
•
|
John W. Frederick
, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer as of April 22, 2013 after having originally joined Avid as Chief of Staff on February 11, 2013;
|
•
|
Christopher C. Gahagan
, Senior Vice President of Products and Solutions;
|
•
|
Jeff Rosica
, Senior Vice President Worldwide Field Operations as of January 7, 2013;
|
•
|
Jason A. Duva
, Vice President and General Counsel;
|
•
|
Gary G. Greenfield
, who served as our President and CEO until February 11, 2013; and
|
•
|
Kenneth A. Sexton
, who served as our Executive Vice President, Chief Financial Officer and Chief Administrative Officer until April 22, 2013.
|
•
|
Glover H. Lawrence
, who served as our Vice President Corporate Development until June 27, 2013;
|
•
|
Kirk E. Arnold
, who served as our Executive Vice President and Chief Operating Officer until July 2012; and
|
•
|
James M. Vedda
, who served as our Senior Vice President of Worldwide Sales until November 2012.
|
•
|
we reached out to our top stockholders representing approximately 72% of the then outstanding shares to discuss stockholder concerns, and ultimately held discussions with stockholders representing approximately 40% of our then-outstanding shares;
|
•
|
in our discussions, we sought to understand the concerns raised by some stockholders regarding the design of our executive compensation program and policies, including the salary of our former President and CEO, tax gross ups for certain executives and concerns regarding the alignment between pay and performance, as well as some provisions of our equity incentive plan; and
|
•
|
our compensation committee undertook a review of these topics as well as critiques offered by the stockholder advisory firms Institutional Shareholder Services and Glass Lewis with respect to our fiscal year 2011 executive compensation program.
|
•
|
Long Term Incentives.
Our practice has been to provide a significant portion of our executive compensation in the form of equity awards, both in the form of time and performance-based options and restricted stock units. In line with this practice, the NEOs who joined in 2013 received approximately 68% of their total direct compensation (base salary, annual cash incentive compensation and grant date fair value of equity awards) in the form of equity awards and a majority of these awards are subject to performance-based vesting conditions.
|
•
|
Compensation Packages for our New Executives.
In line with our focus on long term and performance-based incentives, our compensation committee designed compensation packages for our new executives in 2013 in consultation with its independent compensation consultant that were heavily weighted towards performance-based compensation. The compensation committee also considered each candidate’s qualifications, current compensation package, and market data. Based on this review, Messrs. Hernandez’s and Frederick’s base salaries were set near the 50
th
percentile as compared to our peers ($650,000 and $425,000 respectively), and their compensation elements were heavily weighted towards compensation based on performance. Their annual incentive bonus targets were equal to 100% of their annual base salaries (with a maximum of 200% and 135%, respectively) and they received long term
|
•
|
Limited Base Salary Increases.
In 2013, Mr. Duva was the only continuing NEO who received an increase in base salary, based on individual performance, time in his role, and the fact that his salary prior to the increase was below the 25th percentile of the 2013 Peer Group.
|
•
|
No Discretionary Bonuses.
No discretionary bonuses were awarded in 2013 or 2012.
|
•
|
Programs to Retain and Attract Key Executives During a Transformative Year.
|
◦
|
2013 Executive Bonus Programs.
We invested to recruit, develop and retain executive management that we believe best positions Avid for long-term growth and stockholder value. As a part of this, we restructured our annual executive incentive program in 2013 (“2013 Annual Incentive Program”). Under the 2013 Annual Incentive Program, payouts required that certain free cash flow metrics were met and payouts, if any, depended on the amount of our bookings and achieving operational goals related to our strategic initiatives. The purpose of the program was to make sure that the executive team’s compensation opportunities were better aligned with our goals to transform our company through a set of common strategic, business and cultural goals, ultimately designed to increase stockholder value. Target amounts ranged from 35% to 100% for our NEOs and maximum payouts were generally set at 125% (other than for executives with different maximum payouts provided for in their employment agreements) as compared to the 200% maximum in 2012.
|
◦
|
2013 Remediation Bonus Plan
. We also implemented a retention bonus program designed to retain certain key executives and employees during our comprehensive restatement process. Payouts under this plan to our executives were conditioned on the completion of the restatement and compensation committee approval.
|
•
|
Independent Compensation Consultant.
The compensation committee engaged an outside, independent executive compensation consultant, Pearl Meyer & Partners (or PM&P), to advise and counsel on key compensation decisions and actions during 2013 and 2012.
|
•
|
S
ignificant Performance-Based Awards Balanced Over the Short-Term and Long-Term.
Our compensation programs focus on pay-for-performance, and reward management for achievement of our annual performance goals, which are specifically designed to enhance stockholder value. Our program uses short-and long-term compensation arrangements, many of which are payable only if certain financial and individual business objectives are achieved.
|
•
|
No Guaranteed Bonuses, Limited Perquisites.
We do not offer guaranteed bonuses and we provide few fringe benefits. We do not offer access to company jets, car allowances, personal security, financial planning advice, tax preparation services or club memberships.
|
•
|
No Excise Tax Gross-Ups.
Following the changes in our executive management in 2013, none of our NEOs is entitled to Internal Revenue Code Section 280G tax gross-ups or gross ups for other compensation elements, including for deferred compensation, with the exception of a legacy gross up for COBRA payments to one of our executives.
|
•
|
Double Trigger Change in Control Provisions.
Each of the change in control severance agreements that we maintain with our NEOs provide for “double-trigger” payments or benefits, which means that change in control benefits are payable only in the event of a qualifying termination of employment within a specified period of time after a change in control.
|
•
|
No Option Repricing.
Our 2005 Amended and Restated Stock Incentive Plan does not permit repricing of stock options or other equity awards without stockholder approval.
|
•
|
Annual Advisory Vote to Approve Executive Compensation.
We seek to obtain an advisory approval of our executive compensation at each annual meeting of stockholders.
|
•
|
Appropriate Peer Group and Market Referencing.
We utilize a group of peer companies that are appropriate from the perspectives of size (based on, among others revenue and market capitalization), industry and competitiveness in the labor market. We review and adjust our peer group annually and updated our peer group in 2013 to, among other things, ensure that our
peer companies had revenues in the approximate range of 0.5 to 2 times that of Avid and a market capitalization in the range of approximately 0.25 to 4 times that of Avid’s at the time the compensation committee dete
rmined the group.
|
•
|
Risk Assessment.
We have conducted a comprehensive risk assessment of our compensation programs and believe that our programs are structured in a manner to motivate strong performance with appropriate risk taking while discouraging excessive risk taking. The details of this risk assessment can be found in the section of this Annual Report on Form 10-K under “
Item 10, Directors, Executive Officers and Corporate Governance
.”
|
•
|
Stock Ownership Guidelines.
Our NEOs are subject to stock ownership guidelines, which further align the interests of our NEOs with our stockholders and encourage our NEOs to manage from an owner’s perspective.
|
•
|
reviewing our peer group to determine the appropriateness of its composition;
|
•
|
preparing executive compensation pay studies and competitive assessments to compare our executive compensation to our peer group and published industry survey data;
|
•
|
reviewing various compensation options available for companies in the midst of a transformation; and
|
•
|
in connection with our executive officer change in control benefits, providing analysis with respect to the applicability of excise taxes under Sections 280G and 4999 of the Internal Revenue Code.
|
Dolby Laboratories, Inc.
|
Pegasystems Inc.
|
RealNetworks Inc.
|
Harmonic Inc.
|
Progress Software Corporation
|
Rovi Corporation
|
Imation Corp
|
Qlogic Corporation
|
Synaptics, Inc.
|
Mentor Graphics Corporation
|
Quantum Corporation
|
Verint Systems Inc.
|
National Instruments Corporation
|
RealD Inc.
|
|
Element
|
Description
|
Base Salary
|
Fixed annual cash amount based on competitive salary data
|
Annual Performance-Based Cash Bonuses
|
Variable annual cash payment based on the achievement of pre-established company goals designed to drive growth, improve profitability and cash flow and ultimately stockholder value.
|
Long-Term Equity Awards
|
Time-based and performance-based equity awards.
|
Other Benefits and Perquisites
|
Limited non-cash compensation designed to attract and retain NEOs and provide a competitive compensation package
|
Post-Employment Payments
|
Contingent in nature and payable only if a NEO’s employment is terminated as specified in employment agreements and offer letters.
|
Incentive Awards Designed to Address Turnaround Situations
|
To appropriately incentivize executives to complete a significant turnaround when other incentive programs may not properly address the retention concern.
|
Levels
|
Bookings (weighted at 20%)(in millions)
|
Pro Forma Cost Savings from Strategic Initiatives (weighted at 60%) (in millions)
|
Non-Cost Related Strategic Initiatives (weighted at 20%)
|
Threshold
|
$506.0
|
$15.0
|
4 out of 10
|
Target
|
$520.0
|
$20.0
|
8 out of 10
|
Maximum
|
$530.0
|
In excess of $20.0
|
10 out of 10
|
NEO
|
2013 Annual Incentive Payout Target
|
Target
(% of base salary)
|
Actual 2013 Annual Incentive Payout
|
Remediation Bonus
(to be paid following the filing of this Form 10-K)
|
Current NEOs
|
|
|
|
|
Louis Hernandez, Jr.,
President and CEO
|
$650,000
|
100%
|
$637,000
|
$650,000
|
John W. Frederick
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
$425,000
|
100%
|
$416,500
|
$425,000
|
Christopher C. Gahagan
Sr. Vice President of Products and Technology
|
$412,000
|
100%
|
$403,760
|
—
|
Jeff Rosica
Sr. Vice President of Worldwide Field Operations
|
$375,000
|
100%
|
$361,459
|
—
|
Jason A. Duva
Vice President, General Counsel and Secretary
|
$130,000
|
50%
|
$127,400
|
$130,000
|
Former NEOs
|
|
|
|
|
Gary G. Greenfield
Former President and CEO
|
$936,000
|
100%
|
N/A
(1)
|
—
|
Kenneth A. Sexton
Former Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
$400,000
|
100%
|
$163,333
(2)
|
—
|
Glover H. Lawrence
Former Vice President Corporate Development
|
$272,950
|
60%
|
$78,268
(3)
|
—
|
NEO
|
Payout Target
|
Target
(% of based salary)
|
Actual 2012 Annual Incentive Payout
|
Current NEOs
|
|
|
|
Christopher C. Gahagan
1
Sr. Vice President of Products and Technology
|
$412,000
|
100%
|
$117,173
|
Jason A. Duva
2
Vice President, General Counsel and Secretary
|
$91,000
|
35%
|
$23,150
|
Former NEOs
3
|
|
|
|
Gary G. Greenfield
4
Former President and CEO
|
$936,000
|
100%
|
$144,518
|
Kenneth A. Sexton
5
Former Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
$400,000
|
100%
|
$132,160
|
Kirk E. Arnold
4,6
Former Executive Vice President and Chief Operating Officer
|
$367,500
|
100%
|
$56,742
|
James M. Vedda
6,7
Former Senior Vice President of Worldwide Sales
|
$306,854
|
100%
|
$47,378
|
Glover H. Lawrence
8
Former Vice President Corporate Development
|
$163,770
|
100%
|
$58,032
|
|
|
Time-Based
1
|
|
Performance-Based
2
|
||
NEO
|
|
Options
|
RSUs
|
|
Options
|
RSUs
|
Louis Hernandez, Jr.
President and CEO
|
|
100,000
|
100,000
|
|
625,000
|
—
|
John W. Frederick,
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
|
65,000
|
65,000
|
|
400,000
|
—
|
Jeff Rosica,
Sr. Vice President of Worldwide Field Operations
|
|
37,000
|
10,000
|
|
63,000
|
10,000
|
ROE Percentage Point Improvement in Calendar Year Compared to Baseline
|
Percentage of Options to Vest
|
14%
|
100%
|
12%
|
90%
|
10%
|
75%
|
8%
|
60%
|
6%
|
45%
|
4%
|
30%
|
2%
|
15%
|
0%
|
0%
|
|
|
Time-Based
1
|
|
Performance-Based
2
|
||
NEO
|
|
Options
|
RSUs
|
|
Options
|
RSUs
|
Current NEOs
3
|
|
|
|
|
|
|
Christopher C. Gahagan
Sr. Vice President of Products and Technology
|
|
100,000
|
15,000
|
|
—
|
15,000
|
Jason A. Duva
Vice President, General Counsel and Secretary
|
|
25,000
|
10,000
|
|
25,000
|
10,000
|
Former NEOs
|
|
|
|
|
|
|
Gary G. Greenfield
4
Former President and CEO
|
|
380,000
|
50,000
|
|
—
|
50,000
|
Kenneth A. Sexton
4
Former Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
|
120,000
|
20,000
|
|
—
|
20,000
|
Kirk E. Arnold
4
Former Executive Vice President and Chief Operating Officer
|
|
200,000
|
25,000
|
|
—
|
25,000
|
James M. Vedda
4
Former Senior Vice President of Worldwide Sales
|
|
50,000
|
10,000
|
|
—
|
10,000
|
Glover H. Lawrence
5
Former Vice President Corporate Development
|
|
30,000
|
3,750
|
|
—
|
3,750
|
Annual ROE Target
|
Equity Award to Vest
|
Annual Operating Margin
|
Percentage of Equity Award to Vest
|
15%
|
100%
|
10%
|
100%
|
13%
|
84%
|
7.5%
|
66.66%
|
11%
|
68%
|
5%
|
33.33%
|
9%
|
52%
|
|
|
7%
|
36%
|
|
|
5%
|
20%
|
|
|
NEO
|
2014 Options
1
|
2013 Catch-up Options
1
|
Louis Hernandez, Jr.,
President and CEO
|
348,750
|
—
|
John W. Frederick,
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
210,000
|
—
|
Christopher C. Gahagan,
Sr. Vice President of Products and Technology
|
180,000
|
180,000
|
Jeff Rosica,
Sr. Vice President of Worldwide Field Operations
|
180,000
|
—
|
Jason A. Duva,
Vice President, General Counsel and Secretary
|
105,000
|
105,000
|
•
|
An initial stock option grant of 100,000 options (grant date valuation of approximately $0.3 million) with time-based vesting over four years in 6.25% installments every three months;
|
•
|
An initial restricted stock unit grant of 100,000 shares of our common stock (grant date valuation of $0.8 million) with time-based vesting, with 25% on the first anniversary of the date of grant and 6.25% vesting every three months thereafter; and
|
•
|
An initial stock option grant of 625,000 options (grant date valuation of approximately $2.1 million), vesting based upon improvement in the company’s Return on Equity, or ROE, in calendar year periods, commencing with calendar year 2013 compared to the baseline set for December 31, 2012.
|
•
|
An initial stock option grant of 65,000 options (grant date valuation of approximately $0.2 million) with time-based vesting over four years in 6.25% installments every three months;
|
•
|
An initial restricted stock unit grant of 65,000 shares of Avid common stock (grant date valuation of $0.5 million) with time-based vesting, with 25% on the first anniversary of the date of grant and 6.25% vesting every three months thereafter;
|
•
|
An initial stock option grant of 400,000 options (grant date valuation of approximately $1.3 million), vesting based upon improvement in the company's Return on Equity, or ROE, in calendar year periods, commencing with calendar year 2013 compared to the baseline set for December 31, 2012.
|
|
Compensation Committee
Robert M. Bakish,
Chair
Elizabeth M. Daley
David B. Mullen
|
Name and Principal Position
|
Year
|
Salary
|
Bonus (1)
|
Stock Awards (2) (10)
|
Option Awards (3) (10)
|
Non-Equity Incentive Plan Compensation (4)
|
All Other Compensation (5)
|
Total
|
||||
Current NEOs
|
|
|
|
|
|
|
|
|
||||
Louis Hernandez, Jr.(6)
President and Chief Executive Officer
|
2013
|
$562,500
|
$435,000
|
$786,000
|
$2,418,624
|
$637,000
|
$389,890
|
$5,229,014
|
||||
John W. Frederick (6)
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
2013
|
$367,788
|
$150,000
|
$510,900
|
$1,551,232
|
$416,500
|
$166,531
|
$3,162,951
|
||||
Christopher C. Gahagan
Senior Vice President of Products and Solutions
|
2013
|
$412,000
|
—
|
|
—
|
|
—
|
|
$403,760
|
$1,393
|
$817,153
|
|
2012
|
$412,000
|
—
|
|
$351,000
|
$609,840
|
$117,173
|
$1,393
|
$1,491,406
|
||||
2011
|
$400,000
|
—
|
|
$946,475
|
—
|
|
$186,192
|
$1,170
|
$1,533,837
|
|||
Jeff Rosica (6)
|
2013
|
$360,577
|
—
|
|
$153,000
|
$327,574
|
$361,459
|
$274,420
|
$1,477,030
|
|||
Senior Vice President of Worldwide Field Operations
|
|
|
|
|
|
|
|
|
||||
Jason A. Duva (7)
|
2013
|
$259,538
|
—
|
|
—
|
|
—
|
|
$127,400
|
$8,203
|
$395,141
|
|
Vice President, General Counsel and Corporate Secretary
|
2012
|
$240,000
|
—
|
|
$234,000
|
$262,450
|
$23,150
|
$7,964
|
$767,564
|
|||
Former NEOs
|
|
|
|
|
|
|
|
|
||||
Gary G. Greenfield
|
2013
|
$129,600
|
—
|
|
—
|
|
—
|
|
—
|
|
$2,297,712
|
$2,427,312
|
Former Chairman, President and Chief Executive Officer
|
2012
|
$936,000
|
—
|
|
$1,170,000
|
$1,979,952
|
$144,518
|
$16,902
|
$4,247,372
|
|||
2011
|
$936,000
|
—
|
|
$3,507,525
|
—
|
|
$398,248
|
$13,154
|
$4,854,927
|
|||
Kenneth A. Sexton
|
2013
|
$132,308
|
—
|
|
—
|
|
—
|
|
—
|
|
$814,563
|
$946,871
|
Former Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
2012
|
$400,000
|
—
|
|
$468,000
|
$625,248
|
$132,160
|
$172,903
|
$1,798,311
|
|||
2011
|
$400,000
|
—
|
|
$1,670,250
|
—
|
|
$158,192
|
$171,784
|
$2,400,226
|
|||
Kirk E. Arnold (8)
|
|
|
|
|
|
|
|
|
||||
Former Executive Vice President and Chief Operating Officer
|
2012
|
$382,846
|
—
|
|
$585,000
|
$1,082,041
|
$56,742
|
$730,285
|
$2,836,914
|
|||
2011
|
$630,000
|
—
|
|
$2,950,775
|
—
|
|
$268,051
|
$9,144
|
$3,857,970
|
|||
Glover H. Lawrence (9)
Former Vice President of Corporate Development
|
2013
|
$140,674
|
—
|
|
—
|
|
—
|
|
—
|
|
$410,728
|
$551,402
|
2012
|
$272,950
|
—
|
|
$87,750
|
$156,312
|
$58,032
|
$8,171
|
$583,215
|
||||
2011
|
$265,000
|
—
|
|
$167,025
|
$167,025
|
$79,500
|
$7,647
|
$686,197
|
||||
James M. Vedda (8)
|
|
|
|
|
|
|
|
|
||||
Former Senior Vice President of Worldwide Sales
|
2012
|
$312,813
|
—
|
|
$234,000
|
$260,520
|
$47,378
|
$376,130
|
$1,230,841
|
|||
2011
|
$295,000
|
—
|
|
$333,725
|
$562,482
|
$129,840
|
$1,780
|
$1,322,827
|
Name
|
Year
|
Relocation Benefit(a)
|
Reimbursement for Taxes(b)
|
Lodging(c)
|
Commuter Allowance(d)
|
Company Match on 401(k)
|
Imputed Income for Group Term Life Insurance
|
Other(e)
|
||||||
Current NEOs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis Hernandez, Jr.
|
2013
|
$365,000
|
—
|
|
—
|
|
—
|
|
$4,500
|
$1,719
|
$18,671
|
|||
John W. Frederick
|
2013
|
$50,000
|
—
|
|
$51,708
|
$63,000
|
—
|
|
$1,823
|
—
|
|
|||
Christopher C. Gahagan
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$1,393
|
—
|
|
|
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$1,393
|
—
|
|
|
2011
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$1,170
|
—
|
|
Jeff Rosica
|
2013
|
$173,131
|
$99,474
|
—
|
|
—
|
|
—
|
|
$1,815
|
—
|
|
||
Jason A. Duva
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,650
|
$553
|
—
|
|
|
|
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,500
|
$464
|
—
|
|
|
Former NEOs
|
|
|
|
|
|
|
|
|
||||||
Gary G. Greenfield
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
$1,296
|
$1,627
|
$2,294,789
|
||
|
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,500
|
$9,402
|
—
|
|
|
|
2011
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,350
|
$3,354
|
$2,450
|
||
Kenneth A. Sexton
|
2013
|
—
|
|
$5,383
|
$20,595
|
$24,000
|
$3,969
|
$1,489
|
$759,127
|
|||||
|
2012
|
—
|
|
$21,733
|
$67,800
|
$72,000
|
$7,500
|
$3,870
|
—
|
|
||||
|
2011
|
—
|
|
$24,820
|
$62,050
|
$72,000
|
$7,350
|
$3,483
|
$2,081
|
|||||
Kirk E. Arnold
|
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,286
|
$2,055
|
$720,944
|
||
|
2011
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,350
|
$1,794
|
—
|
|
|
Glover H. Lawrence
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
$4,220
|
$498
|
$406,010
|
||
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,286
|
$885
|
—
|
|
||
2011
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,071
|
$576
|
—
|
|
||
James M. Vedda
|
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
$7,500
|
$1,020
|
$367,610
|
||
|
2011
|
—
|
|
—
|
|
—
|
|
—
|
|
$825
|
$955
|
—
|
|
Name
|
Grant Date
|
Approval Date
|
Estimated Potential Payout Under Non-Equity Incentive Plan Awards(1)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards(2)
|
All Other Stock Awards: Number of Shares of Stock or Units
|
All Other Option Awards: Number of Securities Underlying Options
|
Exercise or Base Price of Option Awards ($/Sh)
|
Grant Date Total Fair Value of Stock and Option Awards (9)
|
|||||||
Threshold
|
Target
|
Maximum
|
|
Threshold
|
Target
|
Maximum
|
||||||||||
Current NEOs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Louis Hernandez, Jr.
|
N/A
|
|
$130,000
|
$650,000
|
$1,300,000
|
|
|
|
|
|
|
|
|
|||
|
2/11/2013
|
2/11/2013
|
|
|
|
|
|
625,000(3)
|
|
|
|
$7.87
|
$2,089,324
|
|||
|
2/11/2013
|
2/11/2013
|
|
|
|
|
|
|
|
100,000(6)
|
|
|
$786,000
|
|||
|
2/11/2013
|
2/11/2013
|
|
|
|
|
|
|
|
|
100,000(7)
|
$7.87
|
$329,300
|
|||
John W. Frederick
|
N/A
|
|
$85,000
|
$425,000
|
$573,750
|
|
|
|
|
|
|
|
|
|||
|
2/11/2013
|
2/11/2013
|
|
|
|
|
|
400,000(3)
|
|
|
|
$7.87
|
$1,337,167
|
|||
|
2/11/2013
|
2/11/2013
|
|
|
|
|
|
|
|
65,000(6)
|
|
|
$510,900
|
|||
|
2/11/2013
|
2/11/2013
|
|
|
|
|
|
|
|
|
65,000(7)
|
$7.87
|
$214,065
|
|||
Christopher C. Gahagan
|
N/A
|
|
$82,400
|
$412,000
|
$556,200
|
|
|
|
|
|
|
|
|
|||
Jeff Rosica
|
N/A
|
|
$75,000
|
$375,000
|
$468,750
|
|
|
|
|
|
|
|
|
|||
|
1/7/2013
|
1/7/2013
|
|
|
|
|
|
10,000(4)
|
|
|
|
|
$76,500
|
|||
|
1/7/2013
|
1/7/2013
|
|
|
|
|
|
|
|
10,000(6)
|
|
|
$76,500
|
|||
|
1/7/2013
|
1/7/2013
|
|
|
|
|
|
63,000(5)
|
|
|
|
$7.66
|
$207,505
|
|||
|
1/7/2013
|
1/7/2013
|
|
|
|
|
|
|
|
|
37,000(8)
|
$7.66
|
$120,069
|
|||
Jason A. Duva
|
N/A
|
|
$26,000
|
$130,000
|
$162,500
|
|
|
|
|
|
|
|
|
|||
Former NEOs(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gary G. Greenfield
|
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
Kenneth A. Sexton
|
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
Glover H. Lawrence
|
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
Name
|
Grant Date
|
Approval Date
|
Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1)
|
Estimated Future Payouts Under Equity Incentive Plan Awards(2)
|
All Other Stock Awards: Number of Shares of Stock or Units (5)
|
All Other Option Awards: Number of Securities Underlying Options (6)
|
Exercise or Base Price of Option Awards ($/Sh)
|
Grant Date Total Fair Value of Stock and Option Awards (7)
|
||||||
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
|||||||||
Current NEOs
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher C. Gahagan
|
N/A
|
|
$82,400
|
$412,000
|
$824,000
|
|
|
|
|
|
|
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
15,000(3)
|
|
|
|
|
$175,500
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
15,000
|
|
|
|
$175,500
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
100,000
|
|
|
$521,040
|
|
Jason A. Duva
|
N/A
|
|
$52,000
|
$91,000
|
$182,000
|
|
|
|
|
|
|
|
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
10,000(3)
|
|
|
|
|
|
|
$117,000
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
25,000(4)
|
|
|
|
|
|
|
$132,190
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
10,000
|
|
|
|
|
$117,000
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
|
25,000
|
|
|
$130,260
|
Former NEOs (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary G. Greenfield
|
N/A
|
|
$187,200
|
$936,000
|
$1,872,000
|
|
|
|
|
|
|
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
50,000(3)
|
|
|
|
|
$585,000
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
50,000
|
|
|
|
$585,000
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
380,000
|
|
|
$1,979,952
|
|
Kenneth A. Sexton
|
N/A
|
|
$80,000
|
$400,000
|
$800,000
|
|
|
|
|
|
|
|
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
20,000(3)
|
|
|
|
|
|
|
$234,000
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
20,000
|
|
|
|
|
$234,000
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
|
120,000
|
|
|
$625,248
|
Kirk E. Arnold
|
N/A
|
|
$126,000
|
$630,000
|
$1,260,000
|
|
|
|
|
|
|
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
25,000(3)
|
|
|
|
|
$292,500
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
25,000
|
|
|
|
$292,500
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
200,000
|
|
|
$1,042,080
|
|
James M. Vedda
|
N/A
|
|
$65,000
|
$325,000
|
$650,000
|
|
|
|
|
|
|
|
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
10,000(3)
|
|
|
|
|
|
|
$117,000
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
10,000
|
|
|
|
|
$117,000
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$260,520
|
Glover H. Lawrence
|
N/A
|
|
$54,590
|
$272,950
|
$545,900
|
|
|
|
|
|
|
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
3,750(3)
|
|
|
|
|
$43,875
|
||
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
3,750
|
|
|
|
$43,875
|
|
|
2/24/2012
|
2/24/2012
|
|
|
|
|
|
|
|
30,000
|
|
|
$156,312
|
Name
|
Number of Securities Underlying Unexercised Options-Exercisable
|
Number of Securities Underlying Unexercised Options-Unexercisable (2)
|
Equity Incentive Plan Award: Number of Securities Underlying Unexercised Unearned Options(3)
|
Option Exercise Price
|
Option Expiration Date
|
|
Current NEOs
|
|
|
|
|
|
|
Louis Hernandez, Jr.
|
10,000(4)
|
|
|
|
$24.59
|
2/27/2018
|
|
7,000 (4)
|
|
|
|
$14.15
|
5/28/2016
|
|
7,000(4)
|
|
|
|
$14.69
|
5/4/2017
|
|
3,000(4)
|
|
|
|
$16.5
|
6/10/2018
|
|
3,000(4)
|
|
|
|
$7.22
|
5/15/2019
|
|
18,750
|
|
81,250(5)
|
625,000(12)
|
$7.87
|
2/11/2020
|
John W. Frederick
|
12,188
|
|
52,812(6)
|
400,000(12)
|
$7.87
|
2/11/2020
|
Christopher C. Gahagan
|
50,000
|
|
|
150,000(13)
|
$12.84
|
7/21/2016
|
|
43,750
|
|
56,250(7)
|
|
$11.71
|
2/24/2019
|
Jeff Rosica
|
|
37,000(8)
|
63,000(14)
|
$7.66
|
1/7/2020
|
|
Jason A. Duva
|
3,500
|
|
|
|
$25.46
|
12/17/2017
|
|
4,000
|
|
|
|
$13.41
|
6/15/2016
|
|
3,208
|
|
292(9)
|
|
$17.04
|
4/15/2017
|
|
4,000
|
|
2,000(10)
|
|
$22.05
|
4/1/2018
|
|
10,938
|
|
14,062(11)
|
25,000(14)
|
$11.71
|
2/24/2019
|
Former NEOs(1)
|
|
|
|
|
|
|
Gary G. Greenfield
|
100,000
|
|
|
|
$25.42
|
3/11/2014
|
|
150,000
|
|
|
|
$13.99
|
3/11/2014
|
|
190,000
|
|
|
|
$11.71
|
3/11/2014
|
Kenneth A. Sexton
|
50,000
|
|
|
|
$26.15
|
5/22/2014
|
|
75,000
|
|
|
|
$13.99
|
5/22/2014
|
|
60,000
|
|
|
|
$11.71
|
5/22/2014
|
Glover H. Lawrence
|
10,000
|
|
|
|
$23.10
|
6/27/2014
|
|
20,000
|
|
|
|
$13.99
|
6/27/2014
|
|
16,875
|
|
|
|
$11.71
|
6/27/2014
|
|
|
|
20,000(15)
|
$23.10
|
8/25/2015
|
|
|
|
|
15,000(16)
|
$23.10
|
8/25/2015
|
ROE Percentage Point Improvement in Calendar Year Compared to Baseline
|
Percentage of Options to Vest
|
14%
|
100%
|
12%
|
90%
|
10%
|
75%
|
8%
|
60%
|
6%
|
45%
|
4%
|
30%
|
2%
|
15%
|
0%
|
—%
|
ROE Percentage Point Improvement in Calendar Year
|
% of ROE Shares
To Vest
|
$35 / $50
|
|
15%
|
100%
|
13%
|
84%
|
11%
|
68%
|
9%
|
52%
|
7%
|
36%
|
5%
|
20%
|
ROE % Point Improvement
Compared to Baseline
|
% of ROE Shares
To Vest
|
$101.68
|
|
14%
|
100%
|
12%
|
90%
|
10%
|
75%
|
8%
|
60%
|
6%
|
45%
|
4%
|
30%
|
2%
|
15%
|
ROE Percentage Point Improvement in Calendar Year
|
Equity Award to Vest
|
Annual Operating Margin
|
Percentage of Equity Award to Vest
|
15%
|
100%
|
10%
|
100%
|
13%
|
84%
|
7.5%
|
66.66%
|
11%
|
68%
|
5%
|
33.33%
|
9%
|
52%
|
|
|
7%
|
36%
|
|
|
5%
|
20%
|
|
|
ROE Percentage Point Improvement in Calendar Year ($50.84)
|
|
Percentage of
Equity Award
to Vest
|
|
ROE Percentage Point Improvement in Calendar Year ($76.26)
|
10%
|
|
100%
|
|
15%
|
8.75%
|
|
75%
|
|
13.75%
|
7.50%
|
|
50%
|
|
12.50%
|
6.25%
|
|
35%
|
|
11.25%
|
5%
|
|
20%
|
|
10%
|
Name (1)
|
Number of Securities Underlying Unexercised Options—Exercisable
|
Number of Securities Underlying Unexercised Options—Unexercisable (1)
|
Equity Incentive Plan Award: Number of Securities Underlying Unexercised Unearned Options(2)
|
Option Exercise Price
|
Option Expiration Date
|
Current NEOs
|
|
|
|
|
|
Christopher C. Gahagan
|
40,625
|
9,375(3)
|
|
$12.84
|
7/21/2016
|
|
|
|
150,000(11)
|
$12.84
|
7/21/2016
|
|
|
100,000(4)
|
|
$11.71
|
2/24/2019
|
Jason A. Duva
|
3,500
|
|
|
$25.46
|
12/17/2017
|
|
3,500
|
500(5)
|
|
$13.41
|
6/15/2016
|
|
2,333
|
1,167(6)
|
|
$17.04
|
4/15/2017
|
|
2,500
|
3,500(7)
|
|
$22.05
|
4/1/2018
|
|
|
25,000 (4)
|
|
$11.71
|
2/24/2019
|
|
|
|
25,000(12)
|
$11.71
|
2/24/2019
|
Former NEOs
|
|
|
|
|
|
Gary G. Greenfield
|
100,000
|
|
|
$25.42
|
12/19/2014
|
|
|
|
300,000(13)
|
$25.42
|
12/19/2014
|
|
|
|
325,000(14)
|
$25.42
|
12/19/2014
|
|
103,125
|
46,875(8)
|
|
$13.99
|
3/2/2017
|
|
|
380,000(4)
|
|
$11.71
|
2/24/2019
|
Kenneth A. Sexton
|
50,000
|
|
|
$26.15
|
1/28/2015
|
|
|
|
100,000(13)
|
$26.15
|
1/28/2015
|
|
|
|
110,000(14)
|
$26.15
|
1/28/2015
|
|
51,563
|
23,437(8)
|
|
$13.99
|
3/2/2017
|
|
|
120,000(4)
|
|
$11.71
|
2/24/2019
|
Kirk E. Arnold (9)
|
35,000
|
|
|
$20.98
|
8/1/2013
|
|
22,500
|
|
|
$12.84
|
8/1/2013
|
|
83,333
|
|
|
$13.99
|
8/1/2013
|
|
62,500
|
|
|
$11.71
|
8/1/2013
|
James M. Vedda (10)
|
18,906
|
|
|
$19.08
|
11/30/2013
|
|
21,875
|
|
|
$11.71
|
11/30/2013
|
Glover H. Lawrence
|
10,000
|
|
|
$23.10
|
8/25/2015
|
|
|
|
20,000(15)
|
$23.10
|
8/25/2015
|
|
|
|
15,000(14)
|
$23.10
|
8/25/2015
|
|
13,750
|
6,250(8)
|
|
$13.99
|
3/2/2017
|
|
|
30,000(4)
|
|
$11.71
|
2/24/2019
|
Name
|
Number of Shares or Units of Stock that Have Not Vested(2)(4)
|
Market Value of Shares or Units of Stock that Have Not Vested(3)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3)
|
||||
Current NEOs
|
|
|
|
|
||||
Louis Hernandez, Jr.
|
100,000
|
|
$814,000
|
—
|
|
—
|
|
|
John W. Frederick
|
65,000
|
|
$529,100
|
—
|
|
—
|
|
|
Christopher C. Gahagan
|
15,077
|
|
$122,727
|
36,250(6)
|
|
$295,075
|
||
Jeff Rosica
|
10,000
|
|
$81,400
|
10,000(7)
|
|
$81,400
|
||
Jason A. Duva
|
5,625
|
|
$45,788
|
10,000(7)
|
|
$81,400
|
||
Former NEOs (1)
|
|
|
|
|
||||
Gary G. Greenfield
|
—
|
|
—
|
|
—
|
|
—
|
|
Kenneth A. Sexton
|
—
|
|
—
|
|
—
|
|
—
|
|
Glover H. Lawrence
|
—
|
|
—
|
|
21,250(8)
|
|
$172,975
|
Name
|
Number of Shares or Units of Stock that Have Not Vested(1)(3)
|
Market Value of Shares or Units of Stock that Have Not Vested(2)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (4)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2)
|
||||
Current NEOs
|
|
|
|
|
||||
Christopher C. Gahagan
|
34,453
|
|
$261,154
|
36,250(7)
|
|
$274,775
|
||
Jason a. Duva
|
10,000
|
|
$75,800
|
10,000(8)
|
|
$75,800
|
||
Former NEOs
|
|
|
|
|
||||
Gary G. Greenfield
|
94,296
|
|
$714,764
|
203,750(9)
|
|
$1,544,425
|
||
Kenneth A. Sexton
|
41,094
|
|
$311,493
|
82,500(10)
|
|
$625,350
|
||
Kirk E. Arnold (5)
|
—
|
|
—
|
|
—
|
|
—
|
|
James M. Vedda (6)
|
—
|
|
—
|
|
—
|
|
—
|
|
Glover H. Lawrence
|
7,969
|
|
$60,405
|
21,250(11)
|
|
$161,075
|
|
Stock Awards
|
|||
Name
|
Number of Shares Acquired on Vesting
|
Value Realized on Vesting
|
||
Current NEOs
|
|
|
||
Louis Hernandez, Jr. (1)
|
6,000
|
|
$41,640
|
|
John W. Frederick
|
—
|
|
—
|
|
Christopher C. Gahagan (2)
|
19,376
|
|
$132,497
|
|
Jeff Rosica
|
—
|
|
—
|
|
Jason A. Duva (3)
|
4,375
|
|
$32,094
|
|
Former NEOs
|
|
|
||
Gary G. Greenfield (4)
|
49,610
|
|
$389,439
|
|
Kenneth A. Sexton (5)
|
24,063
|
|
$162,050
|
|
Glover H. Lawrence(6)
|
4,923
|
|
$32,755
|
|
Stock Awards
|
|
Name
|
Number of Shares Acquired on Vesting
|
Value Realized on Vesting
|
Current NEOs
|
|
|
Christopher C. Gahagan (1)
|
16,797
|
$148,728
|
Jason A. Duva (2)
|
375
|
$3,941
|
Former NEOs
|
|
|
Gary G. Greenfield (3)
|
34,454
|
$344,934
|
Kenneth A. Sexton (4)
|
19,531
|
$195,196
|
Kirk E. Arnold (5)
|
52,266
|
$492,749
|
James M. Vedda (6)
|
8,751
|
$65,634
|
Glover H. Lawrence (7)
|
4,531
|
$44,225
|
Named Executive Officer
|
Severance Amount(1)
|
Early Vesting of Stock Options(2)
|
Early Vesting of Restricted Stock and Restricted Stock Units(3)
|
Other(4)
|
Total
|
||
Louis Hernandez, Jr.
|
$1,300,000
|
$7,000
|
$152,625
|
$49,809
|
$1,509,434
|
||
John W. Frederick
|
$850,000
|
$4,550
|
$99,210
|
$38,353
|
$992,113
|
||
Christopher C. Gahagan
|
$824,000
|
—
|
|
$55,328
|
$25,287
|
$904,615
|
|
Jeff Rosica
|
$375,000
|
—
|
|
—
|
|
$13,984
|
$388,984
|
Jason A. Duva
|
$130,000
|
—
|
|
—
|
|
$6,973
|
$136,973
|
Named Executive Officer
|
Severance Amount(1)
|
Early Vesting of Stock Options(2)
|
Early Vesting of Restricted Stock and Restricted Stock Units(3)
|
Estimated Tax Gross Up
|
Other(4)
|
Total
|
Louis Hernandez, Jr.
|
$2,600,000
|
$197,750
|
$814,000
|
—
|
$67,214
|
$3,678,964
|
John W. Frederick
|
$1,700,000
|
$126,787
|
$529,100
|
—
|
$50,029
|
$2,405,916
|
Christopher C. Gahagan
|
$1,236,000
|
—
|
$417,802
|
—
|
$40,769
|
$1,694,571
|
Jeff Rosica
|
$562,500
|
$12,500
|
$40,700
|
—
|
$13,984
|
$629,684
|
Jason A. Duva
|
$260,000
|
—
|
$31,797
|
—
|
$6,973
|
$298,770
|
•
|
an employee of our company or any subsidiary of our company;
|
•
|
a significant stockholder, meaning the beneficial owner of 10% or more of our outstanding common stock; or
|
•
|
a controlling stockholder, member or partner of a significant stockholder.
|
|
Lead Director
|
|
Chair
|
|
Other Members
|
|||
|
Retainer
|
Meeting
|
|
Retainer
|
Meeting
|
|
Retainer
|
Meeting
|
Board of Directors
|
$75,000
|
$2,000
|
|
$75,000
|
$2,000
|
|
$45,000
|
$2,000
|
Audit Committee
|
—
|
—
|
|
$25,000
|
$2,000
|
|
$7,500
|
$2,000
|
Compensation Committee
|
—
|
—
|
|
$15,000
|
$2,000
|
|
$5,000
|
$2,000
|
Nominating and Governance Committee
|
—
|
—
|
|
$15,000
|
$2,000
|
|
$5,000
|
$2,000
|
Strategy Committee
|
—
|
—
|
|
$15,000
|
$2,000
|
|
$5,000
|
$2,000
|
•
|
upon election to our board, an option for up to 15,000 shares of common stock or a restricted stock award or a restricted stock unit award for up to 7,500 shares of common stock; and
|
•
|
annually on the date of our annual meeting, if the outside director has served a minimum of six months on our board, an option for up to 15,000 shares of common stock or a restricted stock award or a restricted stock unit award for up to 7,500 shares of common stock.
|
•
|
6,000 restricted stock units, and
|
•
|
an option to purchase 3,000 shares of common stock at an exercise price of $7.22, equal to the closing price of our common stock on NASDAQ on the grant date.
|
|
Lead Director
|
|
Chair
|
|
Other Members
|
|||
|
Retainer
|
Meeting
|
|
Retainer
|
Meeting
|
|
Retainer
|
Meeting
|
Board of Directors
|
$80,000
|
—
|
|
$80,000
|
—
|
|
$50,000
|
—
|
Audit Committee
|
—
|
—
|
|
$26,000
|
—
|
|
$12,000
|
—
|
Compensation Committee
|
—
|
—
|
|
$18,750
|
—
|
|
$9,000
|
—
|
Nominating and Governance Committee
|
—
|
—
|
|
$12,500
|
—
|
|
$5,250
|
—
|
Strategy Committee
|
—
|
—
|
|
$18,750
|
—
|
|
$9,000
|
—
|
•
|
stock owned outright, including stock owned jointly with a spouse or separately by a spouse and/or children;
|
•
|
shares held in a trust for the economic benefit of the outside director or his or her spouse or children;
|
•
|
restricted stock and restricted stock units; and
|
•
|
shares underlying fully‑vested options.
|
Name
|
|
Year
|
|
Fees Earned
or Paid in
Cash(1)
|
|
Option
Awards(2)
|
|
Restricted
Stock Unit
Awards(3)
|
|
Total
|
Robert M. Bakish
|
|
2013
2012
|
|
$107,000
$111,000
|
|
—
$9,375
|
|
—
$43,260
|
|
$107,000
$163,635
|
George H. Billings
|
|
2013
2012
|
|
$151,138
$146,043
|
|
—
$9,375
|
|
—
$43,260
|
|
$151,138
$198,678
|
Elizabeth M. Daley
|
|
2013
2012
|
|
$115,500
$127,500
|
|
—
$9,375
|
|
—
$43,260
|
|
$115,500
$180,135
|
Gary G. Greenfield(4)
|
|
2013
2012
|
|
$19,589
—
|
|
—
—
|
|
—
—
|
|
$19,589
—
|
Nancy Hawthorne
|
|
2013
2012
|
|
$103,500
$117,353
|
|
—
$9,375
|
|
—
$43,260
|
|
$103,500
$169,988
|
Louis Hernandez, Jr. (5)
|
|
2013
2012
|
|
$18,671
$187,000
|
|
—
$9,375
|
|
—
$43,260
|
|
$18,671
$239,635
|
Youngme E. Moon
|
|
2013
2012
|
|
$87,000
$91,923
|
|
—
$9,375
|
|
—
$43,260
|
|
$87,000
$144,558
|
David B. Mullen
|
|
2013
2012
|
|
$131,000
$138,498
|
|
—
$9,375
|
|
—
$43,260
|
|
$131,000
$191,133
|
John H. Park(6)
|
|
2013
2012
|
|
$89,000
$13,083
|
|
—
—
|
—
—
|
—
—
|
|
$89,000
$13,083
|
(1)
|
Cash amounts included in the table above represent the portion of the annual board/committee member fees and board/committee chair fees earned during our 2012 and 2013 fiscal years. In December 2012, our board approved a special retainer to be paid to Messrs. Hernandez ($50,000) and Billings ($15,000) in recognition of the additional work they have assumed as lead director and chair of the strategy committee, respectively.
|
(2)
|
The amount shown represents the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation-Stock Compensation
, of options granted to each of our outside directors in 2012. The grant date fair value was determined by using the Black-Scholes option pricing model. The options for our outside directors were granted on May 15, 2012. No stock options were granted to our independent directors in fiscal year 2013, due to the restatement and the fact that we did not hold an annual meeting in 2013. Mr. Hernandez was granted stock options in connection with his appointment as our President and CEO in February 2013. Please see “
Executive Compensation - Analysis of 2013 and 2012 Executive Compensation Decisions and Actions - Long-Term Equity Incentive Compensation - Fiscal Year 2013 Equity Incentive Compensation
” for a description of these grants. As of December 31, 2013, the outside directors held options for the following numbers of shares: Mr. Bakish, 20,000; Mr. Billings, 37,000; Dr. Daley, 37,000; Ms. Hawthorne, 56,689; Dr. Moon, 47,000; and Mr. Mullen, 20,000. Please see Note M, “Capital Stock,” to our consolidated financial statements included in this Form 10-K regarding the assumptions and methodologies used to value these options.
|
(3)
|
The amount shown represents the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation-Stock Compensation
, of restricted stock unit awards granted to each of our outside directors in 2012. The grant date fair value was determined by multiplying the total number of shares of common stock underlying the restricted stock units by $7.22, the closing price of our common stock on NASDAQ on the grant date, May 15, 2012, and subtracting $.01 par value per share. No restricted stock units were awarded to our independent directors in fiscal year 2013, due to the restatement and the fact that we did not hold an annual meeting in 2013. Mr. Hernandez was awarded restricted stock units in connection with his appointment as our President and CEO in February 2013. Please see “
Executive Compensation - Analysis of 2013 and 2012 Executive Compensation Decisions and Actions - Long-Term Equity Incentive Compensation - Fiscal Year 2013 Equity Incentive Compensation
” for a description of these grants. As of December 31, 2013, the outside directors held the following restricted stock units: Mr. Bakish 16,000; Mr. Billings, 17,000; Dr. Daley, 17,000; Ms. Hawthorne, 17,000; Dr. Moon, 17,000; and Mr. Mullen, 16,000. Please see Note M, “Capital Stock,” to our consolidated financial statements included in this Form 10-K regarding the assumptions and methodologies used to value these restricted stock units.
|
(4)
|
Mr. Greenfield did not receive compensation as a member of our board while serving as our President and CEO. All of Mr. Greenfield’s compensation information for 2012 is reported in the
Summary Compensation Table
in the
Executive Compensation
section below. On February 11, 2013, Mr. Greenfield resigned as President and CEO but served as an outside director and was compensated for his services on our board from February 11, 2013 until his resignation on May 15, 2013.
|
(5)
|
Following the appointment of Mr. Hernandez as our President and CEO in February 2013, he no longer qualifies as an outside director and as such is not entitled to and did not receive compensation for his service on our board. All of Mr. Hernandez’s compensation information for 2013 is reported in the
Summary Compensation Table
in the
Executive Compensation
section above.
|
(6)
|
From his appointment to our board in June 2007 through June 2011 and reappointment from May 2012 to November 2012, Mr. Park was not an outside director and did not receive compensation for his service on our board. As of November 2012, Mr. Park was determined to be an independent director and entitled to compensation as an outside director. However, due to the restatement, no equity awards were made to him in 2012 in connection with such determination. He was subsequently in May 2014 granted an option to purchase 15,000 shares of our common stock, valued at $49,856.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)
|
Weighted‑Average Exercise Price of Outstanding Options, Warrants and Rights(2)
|
Number of Securities Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
|
Equity Compensation Plans Approved by Security Holders(3)
|
4,801,932
|
$13.27
|
3,775,078
|
Equity Compensation Plans Not Approved by Security Holders(4)
|
247,216
|
$30.74
|
0
|
Total
|
5,049,148
|
$13.55
|
3,775,078
|
•
|
each person known by us to beneficially own (or have a right to acquire within 60 days) more than 5% of the outstanding shares of our common stock;
|
•
|
each of our directors;
|
•
|
each named executive officer for 2013 named in the
Summary Compensation Table
; and
|
•
|
all of our directors and executive officers as a group.
|
Beneficial Owner
|
|
Number of Shares
Beneficially Owned(1)
|
|
|
Percentage of
Common Stock
Outstanding(1)(2)
|
|
Greater than 5% Stockholders
|
|
|
|
|
||
Blum Capital Partners, L.P.
(3)
|
|
7,241,549
|
|
|
18.6
|
%
|
909 Montgomery Street, Suite 400
|
|
|
|
|
||
San Francisco, CA 94133
|
|
|
|
|
||
Wells Fargo & Company
(4)
|
|
4,165,402
|
|
|
10.7
|
%
|
420 Montgomery Street
|
|
|
|
|
||
San Francisco, CA 94104
|
|
|
|
|
||
Dimensional Fund Advisors LP
(5)
|
|
2,611,800
|
|
|
6.71%
|
|
Palisades West, Building One
|
|
|
|
|
||
6300 Bee Cave Road
|
|
|
|
|
||
Austin, TX 78746
|
|
|
|
|
||
Directors (6)
|
|
|
|
|
||
Robert M. Bakish
|
|
56,000
|
|
|
*
|
|
George H. Billings
|
|
54,000
|
|
|
*
|
|
Elizabeth M. Daley
|
|
54,000
|
|
|
*
|
|
Nancy Hawthorne
|
|
73,689
|
|
|
*
|
|
Youngme E. Moon
|
|
64,000
|
|
|
*
|
|
David B. Mullen
|
|
36,000
|
|
|
*
|
|
John H. Park
|
|
16,493
|
|
|
|
|
2013 Named Executive Officers (6)
|
|
|
|
|
||
Louis Hernandez, Jr.
|
|
108,640
|
|
|
*
|
|
John F. Frederick
|
|
41,287
|
|
|
*
|
|
Christopher C. Gahagan
|
|
146,210
|
|
|
*
|
|
Jeff Rosica
|
|
16,274
|
|
|
*
|
|
Jason A. Duva
|
|
37,424
|
|
|
*
|
|
Gary G. Greenfield (former President and CEO)
|
|
137,382
|
|
|
*
|
|
Kenneth A. Sexton (former CFO and Chief Administrative Officer)
|
|
134,133
|
|
|
*
|
|
Glover H. Lawrence (former Vice President of Corporate Development)
|
|
11,736
|
|
|
*
|
|
All directors and 2013 executive officers as a group
|
|
987,268
|
|
|
2.52
|
%
|
*
|
Less than 1%
|
(1)
|
The inclusion of any shares of common stock deemed beneficially owned does not constitute a n admission of beneficial ownership of those shares. The persons named in the table have, to our knowledge, sole voting and investment power with respect to all shares shown as beneficially owned by them, except as noted in the footnotes below.
|
(2)
|
Percentage ownership calculations are based on 39,123,854 shares of common stock outstanding as of July 31, 2014. Any shares that a person or entity has the right to acquire within 60 days after July 31, 2014 are deemed to be outstanding for the purpose of calculating the percentage of outstanding common stock owned by that person or entity, but not for the purpose of calculating the percentage ownership of any other person or entity. However, this does not include (i) any options granted in 2013 or 2014 the vesting of which is subject to the Company having an effective registration statement in place, or (ii) the vesting, if any, of awards based on performance determined based on the Company’s financial statements for fiscal years 2012 or 2013, which has not been determined as of the filing of this Form 10-K.
|
(3)
|
Amount and nature of ownership listed is based solely upon information contained in a Schedule 13D/A filed with the SEC by Blum Capital Partners LP and various affiliated entities on October 2, 2012. As of September 28, 2012, Blum Capital Partners LP and various affiliated entities had shared dispositive power over 7,241,549 shares and also shared voting power over such shares.
|
(4)
|
Amount and nature of ownership listed is based solely upon information contained in a Schedule 13G/A filed with the SEC by Wells Fargo & Company and various affiliated entities on April 10, 2014. As of March 31, 2014, Wells Fargo & Company and various affiliated entities had shared dispositive power over 4,164,901 shares and shared voting power over 3,685,901 shares.
|
(5)
|
Amount and nature of ownership listed is based solely upon information contained in a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP on February 10, 2014. As of December 31, 2013, Dimensional Fund Advisors LP had shared dispositive power over 2,611,800 shares and shared voting power over 2,562,398 shares.
|
(6)
|
Includes the following shares of Common Stock subject to options exercisable or restricted stock units vesting within 60 days after July 31, 2014: Mr. Bakish - 20,000; Mr. Billings - 37,000; Dr. Daley - 37,000; Ms. Hawthorne - 56,689; Ms. Moon - 47,000; Mr. Mullen - 20,000; Mr. Hernandez - 71,731; Mr, Frederick - 27,257; Mr. Gahagan - 114,031; Mr. Rosica - 13,875; Mr. Duva - 32,298; and all current directors, and executive officers as a group – 476,881.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
•
|
the related person’s interest in the transaction;
|
•
|
the approximate dollar value of the transaction;
|
•
|
the approximate dollar value of the related person’s interest in the transaction;
|
•
|
whether the transaction was undertaken in the ordinary course of business;
|
•
|
whether the terms of the transaction are no less favorable to our company than terms that could be reached with an unrelated third party;
|
•
|
the purpose, and the potential benefits to our company, of the transaction; and
|
•
|
any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
|
2013
|
||
|
(in thousands)
|
||
Audit Fees
|
$
|
9,275
|
|
Audit-Related Fees
|
—
|
|
|
Tax Fees
|
—
|
|
|
All Other Fees
|
—
|
|
|
Total
|
$
|
9,275
|
|
|
Audit Committee
|
|
David B. Mullen, Chair
George H. Billings
Elizabeth M. Daley
Nancy Hawthorne
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a) 1.
|
FINANCIAL STATEMENTS
|
(a) 3.
|
LISTING OF EXHIBITS. The list of exhibits, which are filed or furnished with this report or are incorporated herein by reference, is set forth in the Exhibit Index immediately preceding the exhibits and is incorporated herein by reference.
|
By:
|
/s/ Louis Hernandez, Jr.
|
|
Louis Hernandez, Jr.
Chief Executive Officer and President
(Principal Executive Officer)
|
|
|
Date:
|
September 11, 2014
|
By:
|
/s/ Louis Hernandez, Jr.
|
|
By:
|
/s/ John W. Frederick
|
|
By:
|
/s/ Ryan H. Murray
|
|
|
Louis Hernandez, Jr.
Chief Executive Officer and President
(Principal Executive Officer) |
|
|
John W. Frederick
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
(Principal Financial Officer)
|
|
|
Ryan H. Murray
Vice President of Finance and Chief Accounting Officer
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
Date:
|
September 11, 2014
|
|
Date:
|
September 11, 2014
|
|
Date:
|
September 11, 2014
|
|
NAME
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ George H. Billings
|
|
|
|
|
George H. Billings
|
|
Chairman of the Board of Directors
|
|
September 11, 2014
|
|
|
|
|
|
/s/ Robert M. Bakish
|
|
|
|
|
Robert M. Bakish
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
/s/ Elizabeth M. Daley
|
|
|
|
|
Elizabeth M. Daley
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
/s/ Nancy Hawthorne
|
|
|
|
|
Nancy Hawthorne
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
/s/ Louis Hernandez, Jr.
|
|
|
|
|
Louis Hernandez, Jr.
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
/s/ Youngme E. Moon
|
|
|
|
|
Youngme E. Moon
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
/s/ David B. Mullen
|
|
|
|
|
David B. Mullen
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
/s/ John H. Park
|
|
|
|
|
John H. Park
|
|
Director
|
|
September 11, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
No.
|
|
Description
|
|
Filed with
this Form
10-K
|
|
Form or
Schedule
|
|
SEC Filing
Date
|
|
SEC File
Number
|
3.1
|
|
Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation of the Registrant
|
|
|
|
8-K
|
|
July 27, 2005
|
|
000-21174
|
3.2
|
|
Third Amended and Restated Certificate of Incorporation of the Registrant
|
|
|
|
10-Q
|
|
November 14, 2005
|
|
000-21174
|
3.3
|
|
Amended and Restated By-Laws of the Registrant, as amended
|
|
|
|
8-K
|
|
October 21, 2011
|
|
000-21174
|
3.4
|
|
Amended Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred Stock
|
|
|
|
8-K
|
|
January 7, 2014
|
|
000-21174
|
4.1
|
|
Specimen Certificate representing the Registrant’s Common Stock
|
|
|
|
S-1
|
|
March 11, 1993*
|
|
033-57796
|
4.2
|
|
Rights Agreement, dated as of January 6, 2014, between Registrant and Computershare Trust Company, N.A. as Rights Agent, including all exhibits thereto
|
|
|
|
8-K
|
|
January 7, 2014
|
|
000-21174
|
10.1
|
|
Credit Agreement by and among Avid Technology, Inc., Avid Technology International B. V., Pinnacle Systems, Inc., Avid General Partner B.V., each of the lenders party thereto, and Wells Fargo Capital Finance, LLC, as agent, dated October 1, 2010
|
|
|
|
8-K
|
|
October 7, 2010
|
|
000-21174
|
10.2
|
|
Amendment #1 to Credit Agreement dated August 16, 2011 by and among Avid Technology, Inc., Avid Technology International B. V., Pinnacle Systems, Inc., Avid General Partner B.V., each of the lenders party thereto, and Wells Fargo Capital Finance, LLC, as agent, dated October 1, 2010
|
|
|
|
10-Q
|
|
November 10, 2011
|
|
000-21174
|
10.3
|
|
Amendment #2 to Credit Agreement dated March 16, 2012 by and among Avid Technology, Inc., Avid Technology International B. V., Pinnacle Systems, Inc., Avid General Partner B.V., each of the lenders party thereto, and Wells Fargo Capital Finance, LLC, as agent, dated October 1, 2010
|
|
|
|
10-Q
|
|
May 10, 2012
|
|
000-21174
|
10.4
|
|
Amendment #3 to Credit Agreement dated November 20, 2012 by and among Avid Technology, Inc., Avid Technology International B. V., Pinnacle Systems, Inc., Avid General Partner B.V., each of the lenders party thereto, and Wells Fargo Capital Finance, LLC, as agent, dated October 1, 2010
|
|
X
|
|
|
|
|
|
|
10.5
|
|
Amendment #13 to Credit Agreement dated August 29, 2014 by and among Avid Technology, Inc., Avid Technology International B. V., Pinnacle Systems, Inc., Avid General Partner B.V., each of the lenders party thereto, and Wells Fargo Capital Finance, LLC, as agent, dated October 1, 2010
|
|
|
|
8-K
|
|
September 4, 2014
|
|
000-21174
|
10.6
|
|
Network Drive at Northwest Park Office Lease dated as of November 20, 2009 between Avid Technology, Inc. and Netview 5 and 6 LLC (for premises at 65 Network Drive, Burlington, Massachusetts)
|
|
|
|
8-K
|
|
November 25, 2009
|
|
000-21174
|
10.7
|
|
Network Drive at Northwest Park Office Lease dated as of November 20, 2009 between Avid Technology, Inc. and Netview 1,2,3,4 & 9 LLC (for premises at 75 Network Drive, Burlington, Massachusetts)
|
|
|
|
8-K
|
|
November 25, 2009
|
|
000-21174
|
#10.8
|
|
1993 Director Stock Option Plan, as amended
|
|
|
|
10-K
|
|
February 29, 2008
|
|
000-21174
|
#10.9
|
|
Second Amended and Restated 1996 Employee Stock Purchase Plan, as amended
|
|
|
|
10-K
|
|
March 16, 2010
|
|
000-21174
|
#10.10
|
|
Amendment No #2 to Second Amended and Restated 1996 Employee Stock Purchase Plan, as amended
|
|
X
|
|
|
|
|
|
|
#10.11
|
|
1997 Stock Option Plan
|
|
|
|
10-K
|
|
March 27, 1998
|
|
000-21174
|
#10.12
|
|
1997 Stock Incentive Plan, as amended
|
|
|
|
10-Q
|
|
May 14, 1997
|
|
000-21174
|
#10.13
|
|
Second Amended and Restated Non-Qualified Deferred Compensation Plan
|
|
|
|
10-K
|
|
February 29, 2008
|
|
000-21174
|
#10.14
|
|
1998 Stock Option Plan
|
|
|
|
10-K
|
|
March 16, 2005
|
|
000-21174
|
#10.15
|
|
Amended and Restated 1999 Stock Option Plan
|
|
|
|
10-K
|
|
March 16, 2005
|
|
000-21174
|
#10.16
|
|
Amended and Restated 2005 Stock Incentive Plan
|
|
|
|
10-Q
|
|
August 7, 2008
|
|
000-21174
|
#10.17
|
|
Amendment No. 1 to Amended and Restated 2005 Stock Incentive Plan
|
|
X
|
|
|
|
|
|
|
#10.18
|
|
Form of Incentive Stock Option Agreement under the Registrant’s Amended and Restated 2005 Stock Incentive Plan
|
|
X
|
|
|
|
|
|
|
#10.19
|
|
Form of Nonstatutory Stock Option Agreement under the Registrant’s Amended and Restated 2005 Stock Incentive Plan
|
|
X
|
|
|
|
|
|
|
#10.20
|
|
Form of Nonstatutory Stock Option Agreement for Outside Directors under the Registrant’s Amended and Restated 2005 Stock Incentive Plan
|
|
|
|
8-K
|
|
July 8, 2008
|
|
000-21174
|
#10.21
|
|
Form of Restricted Stock Unit Agreement under the Registrant’s Amended and Restated 2005 Stock Incentive Plan
|
|
|
|
8-K
|
|
July 8, 2008
|
|
000-21174
|
#10.22
|
|
Form of Restricted Stock Unit Agreement for Outside Directors under the Registrant’s Amended and Restated 2005 Stock Incentive Plan
|
|
|
|
8-K
|
|
July 8, 2008
|
|
000-21174
|
#10.23
|
|
Form of Stock Option Agreement for UK Employees under the HM Revenue and Customs Approved Sub-Plan for UK Employees under the Registrant’s Amended and Restated 2005 Stock Incentive Plan
|
|
|
|
8-K
|
|
July 8, 2008
|
|
000-21174
|
#10.24
|
|
Form of Nonstatutory Stock Option Grant Terms and Conditions (under the 1997 Stock Incentive Plan)
|
|
|
|
8-K
|
|
February 21, 2007
|
|
000-21174
|
#10.25
|
|
Form of Incentive Stock Option Grant Terms and Conditions (under the 1997 Stock Incentive Plan)
|
|
|
|
8-K
|
|
February 21, 2007
|
|
000-21174
|
#10.26
|
|
2012 Executive Bonus Plan
|
|
|
|
8-K
|
|
February 28, 2012
|
|
000-21174
|
#10.27
|
|
Amended and Restated Executive Employment Agreement dated March 14, 2011 between the Registrant and Gary G. Greenfield (typographical errors corrected)
|
|
X
|
|
|
|
|
|
|
#10.28
|
|
Nonstatutory Stock Option Agreement dated December 19, 2007 between the Registrant and Gary G. Greenfield
|
|
|
|
8-K
|
|
December 19, 2007
|
|
000-21174
|
#10.29
|
|
Restricted Stock Agreement dated December 19, 2007 between the Registrant and Gary G. Greenfield
|
|
|
|
8-K
|
|
December 19, 2007
|
|
000-21174
|
#10.30
|
|
Separation Agreement dated February 6, 2013 between Registrant and Gary G. Greenfield
|
|
|
|
8-K/A
|
|
February 12, 2013
|
|
000-21174
|
#10.31
|
|
Amended and Restated Executive Employment Agreement dated December 20, 2010 between the Registrant and Kenneth A. Sexton
|
|
|
|
10-K
|
|
March 14, 2011
|
|
000-21174
|
#10.32
|
|
Restricted Stock Unit Award Agreement dated January 28, 2008 between the Registrant and Kenneth A. Sexton
|
|
|
|
8-K
|
|
January 28, 2008
|
|
000-21174
|
#10.33
|
|
Nonstatutory Stock Option Agreement dated January 28, 2008 between the Registrant and Kenneth A. Sexton
|
|
|
|
8-K
|
|
January 28, 2008
|
|
000-21174
|
#10.34
|
|
Consulting and Separation Agreement dated April 22, 2013 between the Registrant and Kenneth A Sexton
|
|
|
|
10-Q
|
|
September 11, 2014
|
|
000-21174
|
#10.35
|
|
Amended and Restated Executive Employment Agreement dated December 20, 2010 between the Registrant and Kirk E. Arnold
|
|
|
|
10-K
|
|
March 14, 2011
|
|
000-21174
|
#10.36
|
|
Amended and Restated Executive Employment Agreement dated December 22, 2010 between the Registrant and Christopher C. Gahagan
|
|
|
|
10-K
|
|
March 14, 2011
|
|
000-21174
|
#10.37
|
|
Form of Executive Officer Employment Letter as of January 1, 2012
|
|
|
|
10-K
|
|
February 29, 2012
|
|
000-21174
|
#10.38
|
|
Executive Officer Employment Agreement dated February 4, 2011 between the Registrant and James Vedda
|
|
X
|
|
|
|
|
|
|
#10.39
|
|
Amended and Restated Employment Agreement dated December 20, 2010 between the Registrant and Glover Lawrence
|
|
X
|
|
|
|
|
|
|
#10.40
|
|
Summary of 2013 Annual Executive Incentive Program
|
|
X
|
|
|
|
|
|
|
#10.41
|
|
Executive Employment Agreement dated February 11, 2013 between the Registrant and Louis Hernandez, Jr.
|
|
|
|
8-K/A
|
|
February 12, 2013
|
|
000-21174
|
#10.42
|
|
Amended and Restated Executive Employment Agreement dated April 22, 2013 between the Registrant and John Frederick
|
|
|
|
10-Q
|
|
September 11, 2014
|
|
000-21174
|
#10.43
|
|
Consulting and Severance Agreement dated July 19, 2013 between the Registrant and Karl Johnsen
|
|
|
|
8-K
|
|
July 25, 2013
|
|
000-21174
|
#10.44
|
|
2013 Remediation Bonus Plan
|
|
|
|
8-K
|
|
July 25, 2013
|
|
000-21174
|
21
|
|
Subsidiaries of the Registrant
|
|
X
|
|
|
|
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP
|
|
X
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
32.1
|
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
**100.INS
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
**100.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
**100.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
**100.DEF
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
**100.LAB
|
|
XBRL Taxonomy Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
**100.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
#
|
Management contract or compensatory plan identified pursuant to Item 15(a)3.
|
|
*
|
Effective date of Form S-1.
|
|
**
|
Pursuant to Rule 406T of Regulation S-T, XBRL (Extensible Business Reporting Language) information is deemed not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934 and otherwise is not subject to liability under these sections.
|
(a)
|
Amendment of the Plan.
The Board may at any time, and from time to time, amend this Plan in any respect, except that (i) if Section 423 of the Code requires that such amendment be approved by the shareholders of the Company is required by, such amendment shall not be effected without such approval, and (b) in no event may any amendment be made which would cause the Plan to fail to comply with Section 423 of the Code.
|
(b)
|
Suspension of the Plan
. The Board may, at any time, suspend the Plan;
provided
that the Company shall provide notice to the Participants prior to the effectiveness of such suspension. The Board may resume the operation of the Plan following any such suspension;
provided
that the Company shall provide notice to the Participants prior to the date of termination of the suspension period. A Participant shall remain a Participant in the Plan during any suspension period (unless he or she withdraws pursuant to Section 8), however no Options shall be granted or exercised, and no payroll deductions shall be made in respect of any Participant during the suspension period.
|
Notice of Grant of Time-Based Stock
Option under Amended and Restated
2005 Stock Incentive Plan
|
|
|
[NAME]
[ADDRESS]
|
Grant Number(s):
Employee ID:
Plan:
|
Amended and Restated 2005 Stock Incentive Plan
|
Notice of Grant of Time-Based Stock
Option under Amended and Restated
2005 Stock Incentive Plan
|
|
|
[NAME]
[ADDRESS]
|
Grant Number(s):
Employee ID:
Plan:
|
__
___
__
|
2.
|
Vesting Schedule
. Except as otherwise provided herein, this option may be exercised in whole or in part prior to the seventh anniversary (the “Final Exercise Date”) of the Grant Date, subject to the vesting schedule provided in the Notice. The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all NSO Shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 or the Plan.
|
ROE Percentage Point
Improvement in Calendar
Year Compared to
Baseline
|
Percentage of
ROE Option
Shares to Vest
|
14%
|
100%
|
12%
|
90%
|
10%
|
75%
|
8%
|
60%
|
6%
|
45%
|
4%
|
30%
|
2%
|
15%
|
0%
|
0%
|
(a)
|
the sum of (A) Executive's accrued but unpaid Base Salary through the Date of Termination, plus (B) the Annual Incentive Bonus for the fiscal year preceding the fiscal year in which the Date of Termination occurs, if earned and unpaid, plus (C) the product of (1) Executive's Termination Bonus Amount, and (2) the Pro Ration Percentage, plus (D) any accrued but unused vacation pay; and
|
(b)
|
the amount equal to one and a half (1.5) times the sum of (A) Executive's Base Salary in effect as of the Date of Termination, plus (B) Executive's Termination Bonus Amount.
|
(a)
|
If to the Company:
|
(b)
|
If to Executive, at the latest address on the personnel records of the Company
|
ROE Percentage Point
Improvement in Calendar
Year Compared to
Baseline
|
Percentage of
ROE Option
Shares to Vest
|
14%
|
100%
|
12%
|
90%
|
10%
|
75%
|
8%
|
60%
|
6%
|
45%
|
4%
|
30%
|
2%
|
15%
|
0%
|
0%
|
(a)
|
the sum of (A) Executive's accrued but unpaid Base Salary through the Date of Termination, plus (B) the Annual Incentive Bonus for the fiscal year preceding the fiscal year in which the Dale of Termination occurs, if earned and unpaid, plus (C) the product of (1) Executive's Termination Bonus Amount, and (2) the Pro Ration Percentage, plus (D) any accrued but unused vacation pay; and
|
(b)
|
the amount equal to one and a half (1.5) times the sum of (A) Executive's Base Salary in effect as of the Date of Termination, plus (B) Executive's Termination Bonus Amount.
|
(a)
|
If to the Company:
|
(b)
|
If to Executive, at the latest address on the personnel records of the Company
|
•
|
On October 28, 2013, the Compensation Committee (the “Committee”) of the Board of Directors of Avid Technology, Inc. (the “Company”) adopted a 2013 Annual Incentive Program (the “2013 Program”).
|
•
|
All of the Company’s executive officers and certain other officers designated by the Committee are eligible to participate in the Program.
|
•
|
The Committee administers and has final authority on all matters relating to the 2013 Program and all decisions under the 2014 Program with respect to the Company’s executive officers, including payouts, are subject to prior approval by the Committee and are made in the Committee's sole discretion.
|
•
|
Incentive amounts, if any, will be determined and paid by March 15, 2014. In order to receive an incentive payout, if any, under the 2013 Program, a participant must be employed by the Company as of the day incentive amounts are paid unless otherwise provided in such participant’s employment agreement, offer letter or other agreement.
|
•
|
The Committee approved three metrics for purposes of determining performance goals and payouts under the 2013 Program, each measured separately and weighted as follows:
|
◦
|
Cost-related strategic initiatives (60% of payout) focused on achieving pro forma cost savings through savings in indirect procurement, product profitability/cost refinement and service profitability;
|
◦
|
Completion of ten non-cost-related strategic initiatives (20% of payout), with each initiative assessed independently, with a weighting of 12.5% each; and
|
◦
|
Bookings (20% of payout).
|
•
|
Payouts under the 2013 Program are contingent on the company achieving a free cash flow threshold with free cash flow defined as operating cash flow (excluding restructuring, management change and certain one-time charges).
|
•
|
Each participant’s target incentive opportunity (based on a percentage of base salary paid
in
2013) is the same target opportunity as set forth in the participant's employment agreement or offer letter.
|
•
|
Each of the performance objectives has a threshold, target and maximum level of payment opportunity. Upon achievement of the thresholds, participant is eligible to receive 50% of the portion of his or her target bonus relating to that metric. Upon the achievement of the targets, each participant is eligible to receive 100% of the portion of his or her target bonus relating to that metric, up to a maximum of 125% for achievement in excess of the target results. Results that fall between the threshold and maximum are paid out on a linear basis between 50% and 125% of the portion of a participant’s target bonus relating to each metric.
|
•
|
For executive officers whose employment agreements provide for maximum payouts of in excess of 125% of their respective base payouts in excess of the maximum of 125% under the 2013 Program also require that the Committee assess their individual performance.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Avid Technology, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date:
|
September 11, 2014
|
/s/ Louis Hernandez, Jr.
|
|
|
|
|
Louis Hernandez, Jr.
|
|
|
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Avid Technology, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date:
|
September 11, 2014
|
/s/ John W. Frederick
|
|
|
|
|
John W. Frederick
|
|
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
and Chief Administrative Officer
(Principal Financial Officer)
|
|
Date:
|
September 11, 2014
|
/s/ Louis Hernandez, Jr.
|
|
|
|
Louis Hernandez, Jr.
|
|
|
|
Chief Executive Officer and President
|
|
|
|
(Principal Executive Officer)
|
|
Date:
|
September 11, 2014
|
/s/ John W. Frederick
|
|
|
|
John W. Frederick
|
|
|
|
Executive Vice President, Chief Financial
|
|
|
|
Officer and Chief Administrative Officer
(Principal Financial Officer)
|
|