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(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2015
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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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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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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 and other strategic initiatives, including our cost saving strategies;
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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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the anticipated performance of our products;
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•
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our business strategies and market positioning;
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•
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our ability to successfully consummate acquisitions, including our recently announced acquisition of Orad Hi-Tech Ltd (“Orad”), or investment transactions and successfully integrate acquired businesses into our operations;
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•
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anticipated benefits and synergies from and the anticipated financial impact of any acquired business (including Orad);
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•
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the anticipated trends and developments in our markets and the success of our products in these markets;
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•
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our ability to mitigate and remediate effectively the material weaknesses in our internal control over financial reporting, and the expected timing thereof;
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•
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our ability to complete the proposed financing contemplated under the commitment letter entered into in connection with the Orad acquisition, and the terms of such committed financing and any refinancing of our existing working capital loan;
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•
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the effects of potential acquisitions, including Orad, including effects on our future financial and operating results;
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•
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the risk of restatement of our financial statements;
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•
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our capital resources and the adequacy thereof;
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•
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the outcome, impact, costs and expenses of any litigation or government inquiries to which we are subject;
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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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the expected timing of recognition of revenue backlog as revenue;
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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 in 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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ITEM 1.
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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Three Months Ended
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||||||
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March 31,
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||||||
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2015
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2014
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||||
Net revenues:
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||||
Products
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$
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80,029
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$
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94,570
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Services
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39,557
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40,412
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Total net revenues
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119,586
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134,982
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Cost of revenues:
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Products
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31,797
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34,994
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Services
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15,695
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15,671
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Amortization of intangible assets
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—
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50
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Total cost of revenues
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47,492
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50,715
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Gross profit
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72,094
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84,267
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Operating expenses:
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Research and development
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23,173
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22,954
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Marketing and selling
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28,045
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32,815
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General and administrative
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19,387
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18,331
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Amortization of intangible assets
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374
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480
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Total operating expenses
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70,979
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74,580
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Operating income
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1,115
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9,687
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Interest income
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34
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20
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Interest expense
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(372
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)
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(373
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)
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Other (expense) income, net
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(385
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)
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2
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Income before income taxes
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392
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9,336
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Provision for income taxes
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561
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440
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Net (loss) income
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$
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(169
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)
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$
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8,896
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Net (loss) income per common share – basic and diluted
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$
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0.00
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$
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0.23
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Weighted-average common shares outstanding – basic
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39,387
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39,099
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Weighted-average common shares outstanding – diluted
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39,387
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39,122
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Three Months Ended
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||||||
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March 31,
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||||||
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2015
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2014
|
||||
Net (loss) income
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$
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(169
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)
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$
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8,896
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|
||||
Other comprehensive (loss) income:
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Foreign currency translation adjustments
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(5,881
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)
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393
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Comprehensive (loss) income
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$
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(6,050
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)
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$
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9,289
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March 31,
2015 |
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December 31,
2014 |
||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$
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25,491
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$
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25,056
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Accounts receivable, net of allowances of $9,753 and $10,692 at March 31, 2015 and December 31, 2014, respectively
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51,764
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54,655
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Inventories
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39,724
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48,001
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Deferred tax assets, net
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316
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322
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Prepaid expenses
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10,635
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6,892
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Other current assets
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15,912
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17,932
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Total current assets
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143,842
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152,858
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Property and equipment, net
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31,241
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32,136
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Intangible assets, net
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2,072
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2,445
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Long-term deferred tax assets, net
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1,718
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1,886
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Other long-term assets
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3,163
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2,274
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Total assets
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$
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182,036
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$
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191,599
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||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current liabilities:
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Accounts payable
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$
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29,436
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$
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32,951
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Accrued compensation and benefits
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33,008
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32,636
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Accrued expenses and other current liabilities
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32,484
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32,353
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Income taxes payable
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5,381
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5,480
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Deferred revenues
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209,214
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206,608
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Total current liabilities
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309,523
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310,028
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Long-term deferred tax liabilities, net
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136
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136
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Long-term deferred revenues
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203,463
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208,232
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Other long-term liabilities
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13,646
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14,273
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|
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Total liabilities
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526,768
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|
532,669
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|
||||
Contingencies (Note 8)
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||||
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|
||||
Stockholders’ deficit:
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|
||||
Common stock
|
423
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423
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|
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Additional paid-in capital
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1,048,567
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1,049,969
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Accumulated deficit
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(1,321,967
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)
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(1,321,798
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)
|
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Treasury stock at cost
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(64,261
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)
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(68,051
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)
|
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Accumulated other comprehensive loss
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(7,494
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)
|
|
(1,613
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)
|
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Total stockholders’ deficit
|
(344,732
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)
|
|
(341,070
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
182,036
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|
|
$
|
191,599
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|
|
Three Months Ended
|
||||||
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March 31,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(169
|
)
|
|
$
|
8,896
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
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|
||||
Depreciation and amortization
|
4,051
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|
|
4,914
|
|
||
Recovery from doubtful accounts
|
(206
|
)
|
|
(108
|
)
|
||
Stock-based compensation expense
|
2,461
|
|
|
1,262
|
|
||
Non-cash interest expense
|
—
|
|
|
73
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|
||
Unrealized foreign currency transaction (gains) losses
|
(6,690
|
)
|
|
48
|
|
||
Provision for deferred taxes
|
5
|
|
|
(15
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
3,097
|
|
|
(1,541
|
)
|
||
Inventories
|
8,276
|
|
|
1,877
|
|
||
Prepaid expenses and other current assets
|
(2,510
|
)
|
|
(2,015
|
)
|
||
Accounts payable
|
(3,440
|
)
|
|
(4,148
|
)
|
||
Accrued expenses, compensation and benefits and other liabilities
|
1,627
|
|
|
(17,543
|
)
|
||
Income taxes payable
|
267
|
|
|
(671
|
)
|
||
Deferred revenues
|
(2,139
|
)
|
|
(15,021
|
)
|
||
Net cash provided by (used in) operating activities
|
4,630
|
|
|
(23,992
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(2,940
|
)
|
|
(3,515
|
)
|
||
Proceeds from divestiture of consumer business
|
—
|
|
|
1,500
|
|
||
Increase in other long-term assets
|
(13
|
)
|
|
(20
|
)
|
||
Net cash used in investing activities
|
(2,953
|
)
|
|
(2,035
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from the issuance of common stock under employee stock plans
|
719
|
|
|
—
|
|
||
Common stock repurchases for tax withholdings for net settlement of equity awards
|
(793
|
)
|
|
(108
|
)
|
||
Proceeds from revolving credit facilities
|
8,000
|
|
|
—
|
|
||
Payments on revolving credit facilities
|
(8,000
|
)
|
|
—
|
|
||
Payments for credit facility issuance costs
|
(582
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(656
|
)
|
|
(108
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(586
|
)
|
|
176
|
|
||
Net increase (decrease) in cash and cash equivalents
|
435
|
|
|
(25,959
|
)
|
||
Cash and cash equivalents at beginning of period
|
25,056
|
|
|
48,203
|
|
||
Cash and cash equivalents at end of period
|
$
|
25,491
|
|
|
$
|
22,244
|
|
|
|
|
|
||||
Supplemental information:
|
|
|
|
||||
Cash paid for income taxes, net of refunds
|
$
|
279
|
|
|
$
|
524
|
|
Cash paid for interest
|
372
|
|
|
300
|
|
1.
|
FINANCIAL INFORMATION
|
2.
|
NET (LOSS) INCOME PER SHARE
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2015
|
|
2014
|
||
Options
|
5,452
|
|
|
4,132
|
|
Non-vested restricted stock units
|
1,352
|
|
|
240
|
|
Anti-dilutive potential common shares
|
6,804
|
|
|
4,372
|
|
3.
|
FOREIGN CURRENCY CONTRACTS
|
Derivatives Not Designated as Hedging Instruments under Accounting Standard Codification (“ASC”) Topic 815
|
|
Balance Sheet Classification
|
|
Fair Value at March 31, 2015
|
|
Fair Value at December 31, 2014
|
Financial liabilities:
|
|
|
|
|
|
|
Foreign currency contracts
|
|
Accrued expenses and other current liabilities
|
|
$—
|
|
$518
|
|
|
Three Months Ended March 31,
|
||
|
2015
|
|
2014
|
|
Net foreign exchange gain (loss) recorded in marketing and selling expenses
|
|
$1,306
|
|
$(908)
|
4.
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
March 31,
2015 |
|
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
|
$
|
1,756
|
|
|
$
|
1,199
|
|
|
$
|
557
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31, 2014
|
|
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
|
$
|
1,859
|
|
|
$
|
1,245
|
|
|
$
|
614
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
518
|
|
|
$
|
—
|
|
|
$
|
518
|
|
|
$
|
—
|
|
5.
|
INVENTORIES
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Raw materials
|
$
|
9,797
|
|
|
$
|
9,942
|
|
Work in process
|
228
|
|
|
248
|
|
||
Finished goods
|
29,699
|
|
|
37,811
|
|
||
Total
|
$
|
39,724
|
|
|
$
|
48,001
|
|
6.
|
INTANGIBLE ASSETS
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Completed technologies and patents
|
$
|
51,277
|
|
|
$
|
(51,277
|
)
|
|
$
|
—
|
|
|
$
|
51,950
|
|
|
$
|
(51,950
|
)
|
|
$
|
—
|
|
Customer relationships
|
48,864
|
|
|
(46,792
|
)
|
|
2,072
|
|
|
49,216
|
|
|
(46,771
|
)
|
|
2,445
|
|
||||||
Trade names
|
5,901
|
|
|
(5,901
|
)
|
|
—
|
|
|
5,936
|
|
|
(5,936
|
)
|
|
—
|
|
||||||
Capitalized software costs
|
5,028
|
|
|
(5,028
|
)
|
|
—
|
|
|
5,043
|
|
|
(5,043
|
)
|
|
—
|
|
||||||
Total
|
$
|
111,070
|
|
|
$
|
(108,998
|
)
|
|
$
|
2,072
|
|
|
$
|
112,145
|
|
|
$
|
(109,700
|
)
|
|
$
|
2,445
|
|
7.
|
OTHER LONG-TERM LIABILITIES
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Long-term deferred rent
|
$
|
7,877
|
|
|
$
|
8,236
|
|
Long-term accrued restructuring
|
1,200
|
|
|
1,334
|
|
||
Long-term deferred compensation
|
4,569
|
|
|
4,703
|
|
||
Total
|
$
|
13,646
|
|
|
$
|
14,273
|
|
8.
|
CONTINGENCIES
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Accrual balance at beginning of year
|
$
|
2,792
|
|
|
$
|
3,501
|
|
Accruals for product warranties
|
502
|
|
|
1,270
|
|
||
Costs of warranty claims
|
(820
|
)
|
|
(1,335
|
)
|
||
Accrual balance at end of period
|
$
|
2,474
|
|
|
$
|
3,436
|
|
9.
|
RESTRUCTURING COSTS AND ACCRUALS
|
|
Employee-
Related
|
|
Facilities/ Other-
Related
|
|
Total
|
||||||
Accrual balance at December 31, 2014
|
$
|
58
|
|
|
$
|
2,285
|
|
|
$
|
2,343
|
|
Accretion
|
—
|
|
|
51
|
|
|
51
|
|
|||
Cash payments
|
(52
|
)
|
|
(376
|
)
|
|
(428
|
)
|
|||
Foreign exchange impact on ending balance
|
—
|
|
|
(44
|
)
|
|
(44
|
)
|
|||
Accrual balance at March 31, 2015
|
$
|
6
|
|
|
$
|
1,916
|
|
|
$
|
1,922
|
|
10.
|
PRODUCT AND GEOGRAPHIC INFORMATION
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Video products and solutions net revenues
|
$
|
47,117
|
|
|
$
|
60,078
|
|
Audio products and solutions net revenues
|
32,912
|
|
|
34,492
|
|
||
Products and solutions net revenues
|
80,029
|
|
|
94,570
|
|
||
Services net revenues
|
39,557
|
|
|
40,412
|
|
||
Total net revenues
|
$
|
119,586
|
|
|
$
|
134,982
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenues:
|
|
|
|
||||
United States
|
$
|
45,162
|
|
|
$
|
45,079
|
|
Other Americas
|
7,549
|
|
|
14,479
|
|
||
Europe, Middle East and Africa
|
49,253
|
|
|
55,424
|
|
||
Asia-Pacific
|
17,622
|
|
|
20,000
|
|
||
Total net revenues
|
$
|
119,586
|
|
|
$
|
134,982
|
|
11.
|
CREDIT AGREEMENT
|
12.
|
STOCK-BASED COMPENSATION
|
|
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, 2015
|
5,564,111
|
|
—
|
|
5,564,111
|
|
$11.20
|
|
|
Granted
|
—
|
|
—
|
|
—
|
|
$—
|
|
|
Exercised
|
(39,361
|
)
|
—
|
|
(39,361
|
)
|
$11.96
|
|
|
Forfeited or canceled
|
(73,078
|
)
|
—
|
|
(73,078
|
)
|
$24.00
|
|
|
Options outstanding at March 31, 2015
|
5,451,672
|
|
—
|
|
5,451,672
|
|
$11.02
|
4.60
|
$27,893
|
Options vested at March 31, 2015 or expected to vest
|
|
|
5,274,698
|
|
$11.13
|
4.55
|
$26,637
|
||
Options exercisable at March 31, 2015
|
|
|
3,773,237
|
|
$12.38
|
4.06
|
$16,193
|
|
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, 2015
|
811,880
|
|
—
|
|
811,880
|
|
$10.01
|
|
|
Granted
|
369,597
|
|
342,697
|
|
712,294
|
|
$15.17
|
|
|
Vested
|
(171,938
|
)
|
—
|
|
(171,938
|
)
|
$10.31
|
|
|
Forfeited
|
—
|
|
—
|
|
—
|
|
$—
|
|
|
Non-vested at March 31, 2015
|
1,009,539
|
|
342,697
|
|
1,352,236
|
|
$12.69
|
1.05
|
$20,135
|
Expected to vest
|
|
|
1,213,944
|
|
$12.64
|
1.00
|
$18,076
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Cost of products revenues
|
$
|
95
|
|
|
$
|
76
|
|
Cost of services revenues
|
159
|
|
|
77
|
|
||
Research and development expenses
|
107
|
|
|
127
|
|
||
Marketing and selling expenses
|
690
|
|
|
292
|
|
||
General and administrative expenses
|
1,410
|
|
|
690
|
|
||
|
$
|
2,461
|
|
|
$
|
1,262
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
||||
|
2015
|
|
2014
|
||
Net revenues:
|
|
|
|
||
Product
|
66.9
|
%
|
|
70.1
|
%
|
Services
|
33.1
|
%
|
|
29.9
|
%
|
Total net revenues
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
39.7
|
%
|
|
37.6
|
%
|
Gross margin
|
60.3
|
%
|
|
62.4
|
%
|
Operating expenses:
|
|
|
|
||
Research and development
|
19.4
|
%
|
|
17.0
|
%
|
Marketing and selling
|
23.5
|
%
|
|
24.3
|
%
|
General and administrative
|
16.1
|
%
|
|
13.6
|
%
|
Amortization of intangible assets
|
0.3
|
%
|
|
0.3
|
%
|
Total operating expenses
|
59.3
|
%
|
|
55.2
|
%
|
Operating income
|
1.0
|
%
|
|
7.2
|
%
|
Interest and other income (expense), net
|
(0.6
|
)%
|
|
(0.3
|
)%
|
Income before income taxes
|
0.4
|
%
|
|
6.9
|
%
|
Provision for income taxes
|
0.4
|
%
|
|
0.3
|
%
|
Net income
|
0.0
|
%
|
|
6.6
|
%
|
Net Revenues for the Three Months Ended March 31, 2015 and 2014
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2015
|
|
Change
|
|
2014
|
||||||||
|
Net Revenues
|
|
$
|
|
%
|
|
Net Revenues
|
||||||
Video products and solutions
|
$
|
47,117
|
|
|
$
|
(12,961
|
)
|
|
(21.6)%
|
|
$
|
60,078
|
|
Audio products and solutions
|
32,912
|
|
|
(1,580
|
)
|
|
(4.6)%
|
|
34,492
|
|
|||
Products and solutions
|
80,029
|
|
|
(14,541
|
)
|
|
(15.4)%
|
|
94,570
|
|
|||
Services
|
39,557
|
|
|
(855
|
)
|
|
(2.1)%
|
|
40,412
|
|
|||
Total net revenues
|
$
|
119,586
|
|
|
$
|
(15,396
|
)
|
|
(11.4)%
|
|
$
|
134,982
|
|
|
Three Months Ended March 31,
|
||
|
2015
|
|
2014
|
United States
|
38%
|
|
33%
|
Other Americas
|
6%
|
|
11%
|
Europe, Middle East and Africa
|
41%
|
|
41%
|
Asia-Pacific
|
15%
|
|
15%
|
•
|
procurement of components and finished goods;
|
•
|
assembly, testing and distribution of finished products;
|
•
|
warehousing;
|
•
|
customer support related to maintenance;
|
•
|
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 Three Months Ended March 31, 2015 and 2014
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2015
|
|
Change
|
|
2014
|
||||||||
|
Costs
|
|
$
|
|
%
|
|
Costs
|
||||||
Products
|
$
|
31,797
|
|
|
$
|
(3,197
|
)
|
|
(9.1)%
|
|
$
|
34,994
|
|
Services
|
15,695
|
|
|
24
|
|
|
0.2%
|
|
15,671
|
|
|||
Amortization of intangible assets
|
—
|
|
|
(50
|
)
|
|
(100.0)%
|
|
50
|
|
|||
Total cost of revenues
|
$
|
47,492
|
|
|
$
|
(3,223
|
)
|
|
(6.4)%
|
|
$
|
50,715
|
|
|
|
|
|
|
|
|
|
||||||
Gross profit
|
$
|
72,094
|
|
|
$
|
(12,173
|
)
|
|
(14.4)%
|
|
$
|
84,267
|
|
Operating Expenses and Operating Income for the Three Months Ended March 31, 2015 and 2014
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2015
|
|
Change
|
|
2014
|
||||||||
|
Expenses
|
|
$
|
|
%
|
|
Expenses
|
||||||
Research and development
|
$
|
23,173
|
|
|
$
|
219
|
|
|
1.0%
|
|
$
|
22,954
|
|
Marketing and selling
|
28,045
|
|
|
(4,770
|
)
|
|
(14.5)%
|
|
32,815
|
|
|||
General and administrative
|
19,387
|
|
|
1,056
|
|
|
5.8%
|
|
18,331
|
|
|||
Amortization of intangible assets
|
374
|
|
|
(106
|
)
|
|
(22.1)%
|
|
480
|
|
|||
Total operating expenses
|
$
|
70,979
|
|
|
$
|
(3,601
|
)
|
|
(4.8)%
|
|
$
|
74,580
|
|
|
|
|
|
|
|
|
|
||||||
Operating income
|
$
|
1,115
|
|
|
$
|
(8,572
|
)
|
|
(88.5)%
|
|
$
|
9,687
|
|
Change in R&D Expenses for the Three Months Ended March 31, 2015 and 2014
|
||||||
(dollars in thousands)
|
||||||
|
2015 Increase
(Decrease)
From 2014
|
|||||
|
$
|
|
%
|
|||
Personnel-related
|
$
|
(1,209
|
)
|
|
(8.7
|
)%
|
Consulting and outside services
|
590
|
|
|
17.1
|
%
|
|
Computer hardware and supplies
|
590
|
|
|
64.0
|
%
|
|
Facilities and information technology
|
243
|
|
|
6.2
|
%
|
|
Other
|
5
|
|
|
0.7
|
%
|
|
Total research and development expenses increase
|
$
|
219
|
|
|
1.0
|
%
|
Change in Marketing and Selling Expenses for the Three Months Ended March 31, 2015 and 2014
|
||||||
(dollars in thousands)
|
||||||
|
2015 Increase
(Decrease)
From 2014
|
|||||
|
$
|
|
%
|
|||
Foreign exchange (gains) losses
|
$
|
(2,215
|
)
|
|
(243.7
|
)%
|
Personnel-related
|
(1,121
|
)
|
|
(5.8
|
)%
|
|
Facilities and information technology
|
(1,043
|
)
|
|
(16.2
|
)%
|
|
Consulting and outside services
|
(231
|
)
|
|
(18.1
|
)%
|
|
Other
|
(160
|
)
|
|
(3.4
|
)%
|
|
Total marketing and selling expenses decrease
|
$
|
(4,770
|
)
|
|
(14.5
|
)%
|
Provision for Income Taxes for the Three Months Ended March 31, 2015 and 2014
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2015
|
|
Change
|
|
2014
|
||||||||
|
Provision
|
|
$
|
|
%
|
|
Provision
|
||||||
Provision for income taxes
|
$
|
561
|
|
|
$
|
121
|
|
|
27.5%
|
|
$
|
440
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net cash provided by (used in) operating activities
|
$
|
4,630
|
|
|
$
|
(23,992
|
)
|
Net cash used in investing activities
|
(2,953
|
)
|
|
(2,035
|
)
|
||
Net cash used in financing activities
|
(656
|
)
|
|
(108
|
)
|
||
Effect of foreign currency exchange rates on cash and cash equivalents
|
(586
|
)
|
|
176
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
435
|
|
|
$
|
(25,959
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
require us to dedicate a greater percentage of our cash flow from operations to payments on our debt, thereby reducing the availability of cash flow to fund capital expenditures, pursue other acquisitions or investments, and use for general corporate purposes;
|
•
|
increase our vulnerability to general adverse economic conditions, including increases in interest rates when borrowings bear interest at variable rates or when such indebtedness is being refinanced;
|
•
|
limit our ability to obtain additional financing; and
|
•
|
limit our flexibility in planning for, or reacting to, changes in or challenges relating to our business and industry, creating competitive disadvantages compared to other competitors with lower debt levels and borrowing costs.
|
•
|
failure to eliminate duplicative costs;
|
•
|
challenges in combining product offerings and operating in markets in which we may not have significant experience;
|
•
|
distraction of management’s attention from regular business operations;
|
•
|
difficulty in assimilating the operations, products and personnel of the acquired company;
|
•
|
potential loss of key employees of the acquired company;
|
•
|
difficulty implementing effective internal controls over financial reporting and disclosure controls and procedures with respect to the acquired business;
|
•
|
impairment of relationships with customers and/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.
|
ITEM 6.
|
EXHIBITS
|
|
|
AVID TECHNOLOGY, INC.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date: May 7, 2015
|
By:
|
/s/ John W. Frederick
|
|
|
|
Name:
Title:
|
John W. Frederick
Executive Vice President, Chief Financial
Officer and Chief Administrative Officer
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
No.
|
|
Description
|
|
Filed with
this Form
10-Q
|
|
Form or
Schedule
|
|
SEC Filing
Date
|
|
SEC File
Number
|
10.1
|
|
Summary of Avid Technology, Inc.’s 2015 Executive Bonus Plan
|
|
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
|
|
|
|
|
|
|
*
|
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.
|
•
|
On February 19, 2015, the Compensation Committee (the “Committee”) of the Board of Directors of Avid Technology, Inc. (the “Company”) adopted a 2015 Bonus Plan (the “2015 Plan”).
|
•
|
All of the Company’s executive officers and certain other officers designated by the Committee and other eligible employees participate in the 2014 Program.
|
•
|
The Committee administers the 2015 Plan and all decisions under the 2015 Plan 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 based on the Company’s audited financial statements and are targeted to be paid by March 15, 2015. In order to receive an incentive payout, if any, under the 2015 Plan, 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 objectives and payouts under the 2015 Plan, each measured separately and weighted as follows:
|
◦
|
EBITDA (defined as net income or loss before interest, taxes, depreciation, stock based compensation and amortization adjusted for certain charges including restructuring, restatement, and management change expenses as well as certain other one-time charges), at 50% weighting;
|
◦
|
Bookings, at 30% weighting; and
|
◦
|
Free Cash Flow (defined as operating cash flow less capital expenditures where operating cash flow excludes certain charges including restructuring, restatement and management change expenses as well as certain other one-time charges), at 20% weighting.
|
•
|
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% (or 125% with respect to our CEO) of the portion of his or her target bonus relating to that metric, up to a maximum of 200% for our executive and other officers for achievement in excess of the target results. Results that fall between the threshold and maximum are paid out on a linear basis. Payment in excess of 100% of a participant’s target bonus with respect to the EBITDA and free cash flow performance objectives can be made only if the threshold bookings performance objective has been met. Results that fall between the threshold and maximum are paid out on a linear basis
|
•
|
Metrics are subject to adjustment and approval by the Committee for future corporate transactions, including acquisitions.
|
•
|
The actual payment amounts under the 2015 Plan will be determined for each participating executive officer based on the Company’s results using three variables: (1) the participant’s annual incentive target opportunity, which is based on a percentage of the participant’s base salary; (2) the Committee’s assessment and certification of Company performance compared with the target for each of the above-referenced performance objectives, with any adjustments applied and (3) relative weightings for each performance objective.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q 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:
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a)
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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;
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b)
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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;
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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
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d)
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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
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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
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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.
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Date:
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May 7, 2015
|
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/s/ Louis Hernandez, Jr.
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|
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|
|
Louis Hernandez, Jr.
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|
|
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|
Chief Executive Officer and President
(Principal Executive Officer)
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1.
|
I have reviewed this Quarterly Report on Form 10-Q of Avid Technology, Inc.;
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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;
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3.
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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;
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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:
|
May 7, 2015
|
|
/s/ John W. Frederick
|
|
|
|
|
|
John W. Frederick
|
|
|
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
|
and Chief Administrative Officer
(Principal Financial Officer)
|
|
Date:
|
May 7, 2015
|
|
/s/ Louis Hernandez, Jr.
|
|
|
|
|
Louis Hernandez, Jr.
|
|
|
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
|
Date:
|
May 7, 2015
|
|
/s/ John W. Frederick
|
|
|
|
|
John W. Frederick
|
|
|
|
|
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
(Principal Financial Officer)
|
|