☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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Delaware
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04-2977748
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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75 Network Drive
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Burlington
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Massachusetts
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01803
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Address of Principal Executive Offices, Including Zip Code
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $.01 par value
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AVID
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Nasdaq Global Select Market
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Large accelerated filer
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o
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Accelerated Filer
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x
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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•
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the effects that the COVID-19 pandemic and its related consequences may have on the national and global economy and on our business and operations, revenues, cash flows and profitability, and capital resources;
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•
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our ability to successfully implement our strategy, including our cost saving measures and other actions implemented in response to the COVID-19 pandemic;
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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 develop, market, and sell new products and services;
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•
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our ability to achieve our goal of expanding our market positions;
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our ability to accelerate growth of our Cloud-enabled platform;
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•
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anticipated trends relating to our sales, financial condition or results of operations, including our shift to a recurring revenue model and complex enterprise sales with long sales cycles;
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•
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the expected timing of recognition of revenue backlog as revenue, and the timing of recognition of revenues from subscription offerings;
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•
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our ability to successfully consummate acquisitions, or investment transactions and successfully integrate acquired businesses;
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the anticipated performance of our products;
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•
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our ability to maintain adequate supplies of products and components, including through sole-source supply arrangements;
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our plans to repatriate foreign earnings;
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the outcome, impact, costs, and expenses of any litigation or government inquiries to which we are or become subject;
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the effect of the continuing worldwide macroeconomic uncertainty on our business and results of operations, including Brexit;
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our compliance with covenants contained in the agreements governing our indebtedness;
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our ability to service our debt and meet the obligations thereunder, including our ability to satisfy our conversion and repurchase obligations under our convertible notes due 2020;
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seasonal factors;
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•
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fluctuations in foreign exchange and interest rates;
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estimated asset and liability values and amortization of our intangible assets;
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our ability to protect and enforce our intellectual property rights;
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the expected availability of cash to fund our business and our ability to maintain adequate liquidity and capital resources, generally and in the wake of the COVID-19 pandemic; and
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•
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worldwide political uncertainty, in particular the risk that the United States may withdraw from or materially modify international trade agreements.
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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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2020
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2019
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||||
Net revenues:
|
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Products
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$
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34,711
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$
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54,396
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Services
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51,742
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48,923
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Total net revenues
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86,453
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103,319
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Cost of revenues:
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Products
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20,962
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27,600
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Services
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12,340
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12,487
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Amortization of intangible assets
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—
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1,950
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Total cost of revenues
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33,302
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42,037
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Gross profit
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53,151
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61,282
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Operating expenses:
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Research and development
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15,425
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16,285
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Marketing and selling
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25,289
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24,878
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General and administrative
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12,744
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13,788
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Amortization of intangible assets
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—
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363
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Restructuring costs, net
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145
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558
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Total operating expenses
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53,603
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55,872
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Operating (loss) income
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(452
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)
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5,410
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Interest and other expense, net
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(5,283
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)
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(5,185
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)
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(Loss) income before income taxes
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(5,735
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)
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225
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Provision for income taxes
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122
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|
438
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Net loss
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$
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(5,857
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)
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$
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(213
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)
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Net loss per common share – basic and diluted
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$(0.14)
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$(0.01)
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Weighted-average common shares outstanding – basic and diluted
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43,254
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42,046
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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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2020
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2019
|
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Net loss
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$
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(5,857
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)
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$
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(213
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)
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Other comprehensive loss:
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Foreign currency translation adjustments
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(815
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)
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(548
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)
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Comprehensive loss
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$
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(6,672
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)
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$
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(761
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)
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March 31,
2020 |
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December 31,
2019 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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81,182
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$
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69,085
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Restricted cash
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1,663
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1,663
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Accounts receivable, net of allowances of $1,453 and $958 at March 31, 2020 and December 31, 2019, respectively.
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59,965
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73,773
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Inventories
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32,601
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29,166
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Prepaid expenses
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10,101
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9,425
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Contract assets
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22,162
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19,494
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Other current assets
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7,147
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6,125
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Total current assets
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214,821
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208,731
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Property and equipment, net
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18,873
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19,580
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Goodwill
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32,643
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32,643
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Right of use assets
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29,002
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29,747
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Long-term deferred tax assets, net
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7,640
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7,479
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Other long-term assets
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5,456
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6,113
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Total assets
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$
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308,435
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$
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304,293
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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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34,989
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$
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39,888
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Accrued compensation and benefits
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19,185
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19,524
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Accrued expenses and other current liabilities
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33,044
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36,759
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Income taxes payable
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1,964
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1,945
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Short-term debt
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31,400
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30,554
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Deferred revenue
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82,441
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83,589
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Total current liabilities
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203,023
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212,259
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Long-term debt
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220,426
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199,034
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Long-term deferred revenue
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12,971
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|
14,312
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Long-term lease liabilities
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28,063
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|
28,127
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Other long-term liabilities
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5,414
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5,646
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Total liabilities
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469,897
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459,378
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Commitments and contingencies (Note 7)
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Stockholders’ deficit:
|
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|
||||
Common stock
|
434
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|
|
430
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|
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Additional paid-in capital
|
1,028,115
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1,027,824
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Accumulated deficit
|
(1,185,266
|
)
|
|
(1,179,409
|
)
|
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Accumulated other comprehensive loss
|
(4,745
|
)
|
|
(3,930
|
)
|
||
Total stockholders’ deficit
|
(161,462
|
)
|
|
(155,085
|
)
|
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Total liabilities and stockholders’ deficit
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$
|
308,435
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|
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$
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304,293
|
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Three Months Ended March 31, 2020
|
|||||||||||||||||
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Shares of
Common Stock
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|
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Additional
|
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Accumulated
Other
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Total
|
|||||||||
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Outstanding
|
In
Treasury
|
|
Common
Stock
|
Paid-in
Capital
|
Accumulated
Deficit
|
Treasury
Stock
|
Comprehensive
Income (Loss)
|
Stockholders’
Deficit
|
||||||||
Balances at January 1, 2020
|
43,150
|
|
—
|
|
|
430
|
|
1,027,824
|
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(1,179,409
|
)
|
—
|
|
(3,930
|
)
|
(155,085
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock issued pursuant to employee stock plans
|
398
|
|
—
|
|
|
4
|
|
(1,818
|
)
|
—
|
|
—
|
|
—
|
|
(1,814
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
—
|
|
—
|
|
|
—
|
|
2,109
|
|
—
|
|
—
|
|
—
|
|
2,109
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(5,857
|
)
|
—
|
|
—
|
|
(5,857
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(815
|
)
|
(815
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balances at March 31, 2020
|
43,548
|
|
—
|
|
|
434
|
|
1,028,115
|
|
(1,185,266
|
)
|
—
|
|
(4,745
|
)
|
(161,462
|
)
|
Three Months Ended March 31, 2019
|
|||||||||||||||||
|
Shares of
Common Stock
|
|
|
Additional
|
|
|
Accumulated
Other
|
Total
|
|||||||||
|
Outstanding
|
In
Treasury
|
|
Common
Stock
|
Paid-in
Capital
|
Accumulated
Deficit
|
Treasury
Stock
|
Comprehensive
Income (Loss)
|
Stockholders’
Deficit
|
||||||||
Balances at January 1, 2019
|
42,339
|
|
(391
|
)
|
|
423
|
|
1,028,924
|
|
(1,187,010
|
)
|
(5,231
|
)
|
(3,767
|
)
|
(166,661
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock issued pursuant to employee stock plans
|
—
|
|
391
|
|
|
—
|
|
(6,612
|
)
|
—
|
|
5,231
|
|
—
|
|
(1,381
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
—
|
|
—
|
|
|
—
|
|
1,738
|
|
—
|
|
—
|
|
—
|
|
1,738
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(213
|
)
|
—
|
|
—
|
|
(213
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(548
|
)
|
(548
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Partial retirement of convertible senior notes conversion feature
|
—
|
|
—
|
|
|
—
|
|
(23
|
)
|
—
|
|
—
|
|
—
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Partial unwind capped call cash receipt
|
—
|
|
—
|
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balances at March 31, 2019
|
42,339
|
|
—
|
|
|
423
|
|
1,024,028
|
|
(1,187,223
|
)
|
—
|
|
(4,315
|
)
|
(167,087
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(5,857
|
)
|
|
$
|
(213
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,142
|
|
|
4,740
|
|
||
Allowance for (recovery from) doubtful accounts
|
497
|
|
|
(9
|
)
|
||
Stock-based compensation expense
|
2,109
|
|
|
1,738
|
|
||
Non-cash interest expense
|
2,820
|
|
|
3,359
|
|
||
Unrealized foreign currency transaction losses (gains)
|
51
|
|
|
(586
|
)
|
||
Benefit from deferred taxes
|
(207
|
)
|
|
(1
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
13,311
|
|
|
6,444
|
|
||
Inventories
|
(3,435
|
)
|
|
(1,372
|
)
|
||
Prepaid expenses and other assets
|
(1,631
|
)
|
|
(3,861
|
)
|
||
Accounts payable
|
(4,858
|
)
|
|
(810
|
)
|
||
Accrued expenses, compensation and benefits and other liabilities
|
(5,323
|
)
|
|
(2,837
|
)
|
||
Income taxes payable
|
40
|
|
|
261
|
|
||
Deferred revenue and contract assets
|
(5,264
|
)
|
|
(477
|
)
|
||
Net cash (used in) provided by operating activities
|
(5,605
|
)
|
|
6,376
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(1,479
|
)
|
|
(1,767
|
)
|
||
Net cash used in investing activities
|
(1,479
|
)
|
|
(1,767
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from revolving line of credit
|
22,000
|
|
|
—
|
|
||
Repayment of debt
|
(351
|
)
|
|
(3,928
|
)
|
||
Proceeds from the issuance of common stock under employee stock plans
|
—
|
|
|
309
|
|
||
Common stock repurchases for tax withholdings for net settlement of equity awards
|
(1,818
|
)
|
|
(1,690
|
)
|
||
Partial unwind capped call cash receipt
|
—
|
|
|
(22
|
)
|
||
Net cash provided by (used in) financing activities
|
19,831
|
|
|
(5,331
|
)
|
||
|
|
|
|
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(402
|
)
|
|
(55
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
12,345
|
|
|
(777
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
72,575
|
|
|
68,094
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
84,920
|
|
|
$
|
67,317
|
|
Supplemental information:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
81,182
|
|
|
$
|
55,326
|
|
Restricted cash
|
1,663
|
|
|
9,020
|
|
||
Restricted cash included in other long-term assets
|
2,075
|
|
|
2,971
|
|
||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
84,920
|
|
|
$
|
67,317
|
|
|
|
|
|
||||
Cash paid for income taxes
|
$
|
391
|
|
|
$
|
203
|
|
Cash paid for interest
|
$
|
4,450
|
|
|
$
|
2,041
|
|
1.
|
FINANCIAL INFORMATION
|
2.
|
NET LOSS PER SHARE
|
|
March 31, 2020
|
|
March 31, 2019
|
||
Options
|
465
|
|
|
772
|
|
Non-vested restricted stock units
|
3,069
|
|
|
2,881
|
|
Anti-dilutive potential common shares
|
3,534
|
|
|
3,653
|
|
3.
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
March 31,
2020 |
|
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
|
$
|
813
|
|
|
$
|
207
|
|
|
$
|
606
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31, 2019
|
|
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
|
$
|
1,156
|
|
|
$
|
338
|
|
|
$
|
818
|
|
|
$
|
—
|
|
4.
|
INVENTORIES
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Raw materials
|
$
|
8,358
|
|
|
$
|
9,036
|
|
Work in process
|
398
|
|
|
371
|
|
||
Finished goods
|
23,845
|
|
|
19,759
|
|
||
Total
|
$
|
32,601
|
|
|
$
|
29,166
|
|
5.
|
LEASES
|
Year Ending December 31,
|
Operating Leases
|
||
2020 (excluding three months ended March 31, 2020)
|
$
|
6,235
|
|
2021
|
6,148
|
|
|
2022
|
5,384
|
|
|
2023
|
4,519
|
|
|
2024
|
4,402
|
|
|
Thereafter
|
15,340
|
|
|
Total future minimum lease payments
|
$
|
42,028
|
|
Less effects of discounting
|
(7,847
|
)
|
|
Total lease liabilities
|
$
|
34,181
|
|
|
|
||
Reported as of March 31, 2020
|
|
||
Accrued expenses and other current liabilities
|
$
|
6,118
|
|
Long-term lease liabilities
|
28,063
|
|
|
Total lease liabilities
|
$
|
34,181
|
|
6.
|
OTHER LONG-TERM LIABILITIES
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Deferred compensation
|
5,087
|
|
|
5,186
|
|
||
Other
|
327
|
|
|
460
|
|
||
Total
|
$
|
5,414
|
|
|
$
|
5,646
|
|
7.
|
COMMITMENTS AND CONTINGENCIES
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Accrual balance at beginning of year
|
$
|
1,337
|
|
|
$
|
1,706
|
|
Accruals for product warranties
|
384
|
|
|
227
|
|
||
Costs of warranty claims
|
(357
|
)
|
|
(338
|
)
|
||
Accrual balance at end of period
|
$
|
1,364
|
|
|
$
|
1,595
|
|
8.
|
RESTRUCTURING COSTS AND ACCRUALS
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Employee
|
$
|
145
|
|
|
$
|
535
|
|
Facility
|
—
|
|
|
5
|
|
||
Total facility and employee charges
|
145
|
|
|
540
|
|
||
Other
|
—
|
|
|
18
|
|
||
Total restructuring charges, net
|
$
|
145
|
|
|
$
|
558
|
|
|
Employee
|
||
Accrual balance as of December 31, 2019
|
$
|
155
|
|
Restructuring charges and revisions
|
145
|
|
|
Cash payments
|
(110
|
)
|
|
Accrual balance as of March 31, 2020
|
$
|
190
|
|
Less: current portion
|
190
|
|
|
Long-term accrual balance as of March 31, 2020
|
$
|
—
|
|
9.
|
REVENUE
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Products and solutions net revenues
|
$
|
34,711
|
|
|
$
|
54,396
|
|
Subscription services
|
13,958
|
|
|
9,282
|
|
||
Support services
|
31,794
|
|
|
32,019
|
|
||
Professional services, training and other services
|
5,990
|
|
|
7,622
|
|
||
Total net revenues
|
$
|
86,453
|
|
|
$
|
103,319
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
||||
United States
|
$
|
36,090
|
|
|
$
|
39,479
|
|
Other Americas
|
5,450
|
|
|
6,801
|
|
||
Europe, Middle East and Africa
|
33,235
|
|
|
37,153
|
|
||
Asia-Pacific
|
11,678
|
|
|
19,886
|
|
||
Total net revenues
|
$
|
86,453
|
|
|
$
|
103,319
|
|
|
March 31, 2020
|
||
Contract asset at January 1, 2020
|
$
|
19,494
|
|
Revenue in excess of billings
|
7,878
|
|
|
Customer billings
|
(5,210
|
)
|
|
Contract asset at March 31, 2020
|
$
|
22,162
|
|
Less: long-term portion (recorded in other long-term assets)
|
—
|
|
|
Contract asset, current portion
|
$
|
22,162
|
|
|
March 31, 2020
|
||
Deferred revenue at January 1, 2020
|
$
|
97,901
|
|
Billings deferred
|
28,687
|
|
|
Recognition of prior deferred revenue
|
(31,176
|
)
|
|
Deferred revenue at March 31, 2020
|
$
|
95,412
|
|
|
March 31, 2020
|
||
Product
|
$
|
5,311
|
|
Subscription
|
1,501
|
|
|
Support contracts
|
73,465
|
|
|
Implied PCS
|
10,769
|
|
|
Professional services, training and other
|
4,366
|
|
|
Deferred revenue at March 31, 2020
|
$
|
95,412
|
|
10.
|
LONG-TERM DEBT AND CREDIT AGREEMENT
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Term Loan, net of unamortized debt issuance costs of $3,090 at March 31, 2020 and $3,334 at December 31, 2019
|
$
|
200,031
|
|
|
$
|
200,105
|
|
Notes, net of unamortized original issue discount and debt issuance costs of $312 at March 31, 2020 and $680 at December 31, 2019
|
28,555
|
|
|
28,187
|
|
||
Revolving credit facility
|
22,000
|
|
|
—
|
|
||
Other long-term debt
|
1,240
|
|
|
1,296
|
|
||
Total debt
|
251,826
|
|
|
229,588
|
|
||
Less: current portion
|
31,400
|
|
|
30,554
|
|
||
Total long-term debt
|
$
|
220,426
|
|
|
$
|
199,034
|
|
Fiscal Year
|
Term Loan
|
|
Revolving Credit Facility
|
|
Notes
|
|
Other Long-Term Debt
|
|
Total
|
||||||||||
2020
|
$
|
1,913
|
|
|
$
|
—
|
|
|
$
|
28,867
|
|
|
$
|
102
|
|
|
$
|
30,881
|
|
2021
|
4,781
|
|
|
—
|
|
|
—
|
|
|
144
|
|
|
4,925
|
|
|||||
2022
|
6,375
|
|
|
—
|
|
|
—
|
|
|
154
|
|
|
6,529
|
|
|||||
2023
|
190,052
|
|
|
22,000
|
|
|
—
|
|
|
165
|
|
|
212,217
|
|
|||||
2024
|
—
|
|
|
—
|
|
|
—
|
|
|
177
|
|
|
177
|
|
|||||
Thereafter
|
—
|
|
|
—
|
|
|
—
|
|
|
499
|
|
|
499
|
|
|||||
Total before unamortized discount
|
203,120
|
|
|
22,000
|
|
|
28,867
|
|
|
1,241
|
|
|
255,228
|
|
|||||
Less: unamortized discount and issuance costs
|
3,090
|
|
|
—
|
|
|
312
|
|
|
—
|
|
|
3,402
|
|
|||||
Less: current portion of long-term debt
|
2,709
|
|
|
—
|
|
|
28,555
|
|
|
136
|
|
|
31,400
|
|
|||||
Total long-term debt
|
$
|
197,321
|
|
|
$
|
22,000
|
|
|
$
|
—
|
|
|
$
|
1,105
|
|
|
$
|
220,426
|
|
|
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, 2020
|
565,000
|
|
—
|
|
565,000
|
|
$7.57
|
|
|
Granted
|
—
|
|
—
|
|
—
|
|
$—
|
|
|
Exercised
|
(100,000
|
)
|
—
|
|
(100,000
|
)
|
$7.66
|
|
|
Forfeited or canceled
|
—
|
|
—
|
|
—
|
|
$—
|
|
|
Options outstanding at March 31, 2020
|
465,000
|
|
—
|
|
465,000
|
|
$7.56
|
1.17
|
$—
|
Options vested at March 31, 2020 or expected to vest
|
|
|
465,000
|
|
$7.56
|
1.17
|
$—
|
||
Options exercisable at March 31, 2020
|
|
|
465,000
|
|
$7.56
|
1.17
|
$—
|
|
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, 2020
|
2,087,933
|
|
554,265
|
|
2,642,198
|
|
$6.40
|
|
|
Granted
|
555,523
|
|
578,316
|
|
1,133,839
|
|
$6.46
|
|
|
Vested
|
(333,743
|
)
|
(328,673
|
)
|
(662,416
|
)
|
$5.58
|
|
|
Forfeited
|
(44,750
|
)
|
—
|
|
(44,750
|
)
|
$7.54
|
|
|
Non-vested at March 31, 2020
|
2,264,963
|
|
803,908
|
|
3,068,871
|
|
$6.58
|
1.25
|
$20,623
|
Expected to vest
|
|
|
3,068,871
|
|
$6.58
|
1.25
|
$20,623
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cost of products revenues
|
$
|
102
|
|
|
$
|
51
|
|
Cost of services revenues
|
98
|
|
|
18
|
|
||
Research and development expenses
|
294
|
|
|
195
|
|
||
Marketing and selling expenses
|
441
|
|
|
294
|
|
||
General and administrative expenses
|
1,174
|
|
|
1,180
|
|
||
|
$
|
2,109
|
|
|
$
|
1,738
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Software licenses
|
$
|
19,331
|
|
|
$
|
17,412
|
|
Maintenance
|
31,794
|
|
|
32,019
|
|
||
Software licenses and maintenance
|
51,125
|
|
|
49,431
|
|
||
% of total revenue
|
59
|
%
|
|
48
|
%
|
||
Integrated solutions
|
29,338
|
|
|
46,265
|
|
||
Professional services & training
|
5,990
|
|
|
7,623
|
|
||
Total revenue
|
$
|
86,453
|
|
|
$
|
103,319
|
|
•
|
the postponement or cancellation of film and television productions, major sporting events, and music festivals;
|
•
|
delays in purchasing and projects by our enterprise customers and channel partners;
|
•
|
disruption to the supply chain caused by distribution and other logistical issues, including disruptions arising from government restrictions; and
|
•
|
decreased productivity due to travel ban, work-from-home policies or shelter-in-place orders.
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Net revenues:
|
|
|
|
||
Product
|
40.2
|
%
|
|
52.6
|
%
|
Services
|
59.8
|
%
|
|
47.4
|
%
|
Total net revenues
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
38.5
|
%
|
|
40.7
|
%
|
Gross margin
|
61.5
|
%
|
|
59.3
|
%
|
Operating expenses:
|
|
|
|
||
Research and development
|
17.8
|
%
|
|
15.8
|
%
|
Marketing and selling
|
29.3
|
%
|
|
24.1
|
%
|
General and administrative
|
14.7
|
%
|
|
13.3
|
%
|
Amortization of intangible assets
|
—
|
%
|
|
0.4
|
%
|
Restructuring costs, net
|
0.2
|
%
|
|
0.5
|
%
|
Total operating expenses
|
62.0
|
%
|
|
54.1
|
%
|
Operating (loss) income
|
(0.5
|
)%
|
|
5.2
|
%
|
Interest and other expense, net
|
(6.1
|
)%
|
|
(5.0
|
)%
|
(Loss) income before income taxes
|
(6.6
|
)%
|
|
0.2
|
%
|
Provision for income taxes
|
0.1
|
%
|
|
0.4
|
%
|
Net loss
|
(6.7
|
)%
|
|
(0.2
|
)%
|
Net Revenues for the Three Months Ended March 31, 2020 and 2019
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2020
|
|
Change
|
|
2019
|
||||||||
|
Net Revenues
|
|
$
|
|
%
|
|
Net Revenues
|
||||||
Products and solutions
|
34,711
|
|
|
(19,685
|
)
|
|
(36.2)%
|
|
54,396
|
|
|||
Services
|
51,742
|
|
|
2,819
|
|
|
5.8%
|
|
48,923
|
|
|||
Total net revenues
|
$
|
86,453
|
|
|
$
|
(16,866
|
)
|
|
(16.3)%
|
|
$
|
103,319
|
|
|
Three Months Ended March 31,
|
||
|
2020
|
|
2019
|
United States
|
42%
|
|
38%
|
Other Americas
|
6%
|
|
7%
|
Europe, Middle East and Africa
|
38%
|
|
36%
|
Asia-Pacific
|
14%
|
|
19%
|
•
|
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 and Gross Profit for the Three Months Ended March 31, 2020 and 2019
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2020
|
|
Change
|
|
2019
|
||||||||
|
Costs
|
|
$
|
|
%
|
|
Costs
|
||||||
Products
|
$
|
20,962
|
|
|
$
|
(6,638
|
)
|
|
(24.1)%
|
|
$
|
27,600
|
|
Services
|
12,340
|
|
|
(147
|
)
|
|
(1.2)%
|
|
12,487
|
|
|||
Amortization of intangible assets
|
—
|
|
|
(1,950
|
)
|
|
(100.0)%
|
|
1,950
|
|
|||
Total cost of revenues
|
$
|
33,302
|
|
|
$
|
(8,735
|
)
|
|
(20.8)%
|
|
$
|
42,037
|
|
|
|
|
|
|
|
|
|
||||||
Gross profit
|
$
|
53,151
|
|
|
$
|
(8,131
|
)
|
|
(13.3)%
|
|
$
|
61,282
|
|
Operating Expenses and Operating Income (Loss) for the Three Months Ended March 31, 2020 and 2019
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2020
|
|
Change
|
|
2019
|
||||||||
|
Expenses
|
|
$
|
|
%
|
|
Expenses
|
||||||
Research and development
|
$
|
15,425
|
|
|
$
|
(860
|
)
|
|
(5.3)%
|
|
$
|
16,285
|
|
Marketing and selling
|
25,289
|
|
|
411
|
|
|
1.7%
|
|
24,878
|
|
|||
General and administrative
|
12,744
|
|
|
(1,044
|
)
|
|
(7.6)%
|
|
13,788
|
|
|||
Amortization of intangible assets
|
—
|
|
|
(363
|
)
|
|
(100.0)%
|
|
363
|
|
|||
Restructuring costs, net
|
145
|
|
|
(413
|
)
|
|
(74.0)%
|
|
558
|
|
|||
Total operating expenses
|
$
|
53,603
|
|
|
$
|
(2,269
|
)
|
|
(4.1)%
|
|
$
|
55,872
|
|
|
|
|
|
|
|
|
|
||||||
Operating (loss) income
|
$
|
(452
|
)
|
|
$
|
(5,862
|
)
|
|
(108.4)%
|
|
$
|
5,410
|
|
Change in R&D Expenses for the Three Months Ended March 31, 2020 and 2019
|
||||||
(dollars in thousands)
|
||||||
|
2020 Increase (Decrease)
From 2019
|
|||||
|
$
|
|
%
|
|||
Personnel-related
|
$
|
(813
|
)
|
|
(7.8
|
)%
|
Facilities and information technology
|
(264
|
)
|
|
(8.6
|
)%
|
|
Consulting and outside services
|
78
|
|
|
14.0
|
%
|
|
Other
|
139
|
|
|
26.2
|
%
|
|
Total R&D expenses decrease
|
$
|
(860
|
)
|
|
(5.3
|
)%
|
Change in Marketing and Selling Expenses for the Three Months Ended March 31, 2020 and 2019
|
||||||
(dollars in thousands)
|
||||||
|
2020 Increase (Decrease) From 2019
|
|||||
|
$
|
|
%
|
|||
Personnel-related
|
$
|
(464
|
)
|
|
(1.9
|
)%
|
Advertising and promotions
|
(278
|
)
|
|
(23.8
|
)%
|
|
Foreign exchange (gains) and losses
|
457
|
|
|
3,126.4
|
%
|
|
Other
|
696
|
|
|
3.0
|
%
|
|
Total marketing and selling expenses increase
|
$
|
411
|
|
|
1.7
|
%
|
Change in G&A Expenses for the Three Months Ended March 31, 2020 and 2019
|
||||||
(dollars in thousands)
|
||||||
|
2020 Decrease
From 2019
|
|||||
|
$
|
|
%
|
|||
Personnel-related
|
$
|
(495
|
)
|
|
(8.0
|
)%
|
Consulting and outside services
|
(206
|
)
|
|
(4.8
|
)%
|
|
Other
|
(343
|
)
|
|
(10.6
|
)%
|
|
Total G&A expenses decrease
|
$
|
(1,044
|
)
|
|
(7.6
|
)%
|
Provision for Income Taxes for the Three Months Ended March 31, 2020 and 2019
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2020
|
|
Change
|
|
2019
|
||||||||
|
|
|
$
|
|
%
|
|
|
||||||
Provision for income taxes
|
$
|
122
|
|
|
$
|
(316
|
)
|
|
(72.1)%
|
|
$
|
438
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net cash (used in) provided by operating activities
|
$
|
(5,605
|
)
|
|
$
|
6,376
|
|
Net cash used in investing activities
|
(1,479
|
)
|
|
(1,767
|
)
|
||
Net cash provided by (used in) financing activities
|
19,831
|
|
|
(5,331
|
)
|
||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash
|
(402
|
)
|
|
(55
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
12,345
|
|
|
$
|
(777
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
No.
|
|
Description
|
|
Filed with
this Form
10-Q
|
|
Form or
Schedule
|
|
SEC Filing
Date
|
|
SEC File
Number
|
10.1
|
|
|
X
|
|
|
|
|
|
|
|
10.2
|
|
|
X
|
|
|
|
|
|
|
|
10.3
|
|
|
X
|
|
|
|
|
|
|
|
10.4
|
|
|
X
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
32.1
|
|
|
X
|
|
|
|
|
|
|
|
101.INS
|
|
eXtensible Business Reporting Language (XBRL) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
*101.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.
|
|
|
AVID TECHNOLOGY, INC.
|
||
|
|
(Registrant)
|
||
|
|
|
|
|
Date:
|
May 7, 2020
|
By:
|
/s/ Kenneth Gayron
|
|
|
|
Name:
|
Kenneth Gayron
|
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
As of the Amendment Effective Date, Executive agrees to a temporary twenty-three percent (23%) reduction to Executive's base salary as paid to Executive immediately prior to the Amendment Effective Date. Such reduction in salary shall subsist for a minimum period of three (3) months from the Amendment Effective Date, and for so long as Avid maintains its COVID-19-related furlough program.
|
2.
|
Other than for the purposes of the amendment set forth in §1 above, the defined term "Base Salary" shall continue to mean the salary amount paid to Executive immediately prior to the Amendment Effective Date, and shall not refer to the temporary reduced salary brought about by this Amendment #1.
|
3.
|
Ratification. Except as expressly modified by this Amendment #1, the terms and provisions of the Agreement shall remain unchanged and in full force and effect and are hereby ratified and confirmed by the parties.
|
4.
|
Counterparts and Signature. This Amendment #1 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This amendment may be executed by electronic signature or by scanning the executed document for electronic transmittal.
|
Executive
|
|
Avid Technology, Inc.
|
Isl Jeff Rosica
|
|
Isl Diana Brunelle
|
Signature
|
|
Signature
|
|
|
|
Jeff Rosica
|
|
Diana Brunelle
|
Printed Name
|
|
Printed Name
|
|
|
|
Chief Executive Officer & President
|
|
Chief Human Resources Officer & SVP
|
Title
|
|
Title
|
|
|
|
April 29, 2020
|
|
April 29, 2020
|
Date
|
|
Date
|
1.
|
As of the Amendment Effective Date, Executive agrees to a temporary twenty-three percent (23%) reduction to Executive's base salary as paid to Executive immediately prior to the Amendment Effective Date. Such reduction in salary shall subsist for a minimum period of three (3) months from the Amendment Effective Date, and for so long as Avid maintains its COVID-19-related furlough program.
|
2.
|
Other than for the purposes of the amendment set forth in §1 above, the defined term "Base Salary" shall continue to mean the salary amount paid to Executive immediately prior to the Amendment Effective Date, and shall not refer to the temporary reduced salary brought about by this Amendment #1.
|
3.
|
Ratification. Except as expressly modified by this Amendment #1, the terms and provisions of the Agreement shall remain unchanged and in full force and effect and are hereby ratified and confirmed by the parties.
|
4.
|
Counterparts and Signature. This Amendment #1 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This amendment may be executed by electronic signature or by scanning the executed document for electronic transmittal.
|
Executive
|
|
Avid Technology, Inc.
|
Isl Kenneth Gayron
|
|
Isl Diana Brunelle
|
Signature
|
|
Signature
|
|
|
|
Kenneth Gayron
|
|
Diana Brunelle
|
Printed Name
|
|
Printed Name
|
|
|
|
Chief Financial Officer & Executive Vice President
|
|
Chief Human Resources Officer & SVP
|
Title
|
|
Title
|
|
|
|
May 5, 2020
|
|
April 29, 2020
|
Date
|
|
Date
|
1.
|
As of the Amendment Effective Date, Executive agrees to a temporary twenty-three percent (23%) reduction to Executive's base salary as paid to Executive immediately prior to the Amendment Effective Date. Such reduction in salary shall subsist for a minimum period of three (3) months from the Amendment Effective Date, and for so long as Avid maintains its COVID-19-related furlough program.
|
2.
|
Other than for the purposes of the amendment set forth in §1 above, the defined term "Base Salary" shall continue to mean the salary amount paid to Executive immediately prior to the Amendment Effective Date, and shall not refer to the temporary reduced salary brought about by this Amendment #1.
|
3.
|
Ratification. Except as expressly modified by this Amendment #1, the terms and provisions of the Agreement shall remain unchanged and in full force and effect and are hereby ratified and confirmed by the parties.
|
4.
|
Counterparts and Signature. This Amendment #1 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This amendment may be executed by electronic signature or by scanning the executed document for electronic transmittal.
|
Executive
|
|
Avid Technology, Inc.
|
Isl Jason Duva
|
|
Isl Diana Brunelle
|
Signature
|
|
Signature
|
|
|
|
Jason Duva
|
|
Diana Brunelle
|
Printed Name
|
|
Printed Name
|
|
|
|
Chief Legal and Administrative Officer & Executive Vice President
|
|
Chief Human Resources Officer & SVP
|
Title
|
|
Title
|
|
|
|
April 29, 2020
|
|
April 29, 2020
|
Date
|
|
Date
|
1.
|
As of the Amendment Effective Date, Executive agrees to a temporary twenty-three percent (23%) reduction to Executive's base salary as paid to Executive immediately prior to the Amendment Effective Date. Such reduction in salary shall subsist for a minimum period of three (3) months from the Amendment Effective Date, and for so long as Avid maintains its COVID- 19-related furlough program.
|
2.
|
Other than for the purposes of the amendment set forth in §1 above, the defined term "Base Salary" shall continue to mean the salary amount paid to Executive immediately prior to the Amendment Effective Date, and shall not refer to the temporary reduced salary brought about by this Amendment. For the avoidance of doubt, any benefit set forth in the Agreement that is to be calculated based on the Base Salary of the Executive, including, but not limited to, bonus, any severance payments, pension benefits, medical insurance payments, and death-in-service benefits, shall be calculated based on the Base Salary of the Executive that was in effect prior to the Amendment Effective Date.
|
3.
|
Ratification. Except as expressly modified by this Amendment, the terms and provisions of the Agreement shall remain unchanged and in full force and effect and are hereby ratified and confirmed by the parties.
|
4.
|
Counterparts and Signature. This Amendment may be signed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This amendment may be signed by electronic signature or by scanning the document for electronic transmittal.
|
Executive
|
|
Avid Technology Europe Limited
|
Isl Tom Cordiner
|
|
Isl Alessandra Melloni
|
Signature
|
|
Signature
|
|
|
|
Tom Cordiner
|
|
Alessandra Melloni
|
Printed Name
|
|
Printed Name
|
|
|
|
Chief Revenue Officer & SVP
|
|
General Counsel & VP
|
Title
|
|
Title
|
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:
|
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, 2020
|
|
/s/ Jeff Rosica
|
|
|
|
|
|
Jeff Rosica
|
|
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
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:
|
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, 2020
|
|
/s/ Kenneth Gayron
|
|
|
|
|
|
Kenneth Gayron
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
Date:
|
May 7, 2020
|
|
/s/ Jeff Rosica
|
|
|
|
|
Jeff Rosica
|
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
Date:
|
May 7, 2020
|
|
/s/ Kenneth Gayron
|
|
|
|
|
Kenneth Gayron
|
|
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|