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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Avid Technology Inc | NASDAQ:AVID | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 27.04 | 27.04 | 27.30 | 0 | 01:00:00 |
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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, 2019
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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)
|
|
04-2977748
(I.R.S. Employer
Identification No.)
|
|
|
Large Accelerated Filer
¨
Non-accelerated Filer
¨
|
|
Accelerated Filer
x
Smaller Reporting Company
¨
Emerging growth company
¨
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|
|
Title of each class
|
|
Trading Symbol
|
|
Name of each exchange on which registered
|
|
||
Common Stock,
|
$.01
|
par value
|
|
AVID
|
|
Nasdaq Global Select Market
|
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Page
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•
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our ability to successfully implement our strategy, including our cost saving strategies;
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•
|
the anticipated trends and developments in our markets and the success of our products in these markets;
|
•
|
our ability to develop, market and sell new products and services;
|
•
|
our business strategies and market positioning;
|
•
|
our ability to achieve our goal of expanding our market positions;
|
•
|
our ability to accelerate growth of our Cloud-enabled platform;
|
•
|
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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•
|
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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•
|
our anticipated benefits and synergies from, and the anticipated financial impact of, any acquired business;
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•
|
the anticipated performance of our products;
|
•
|
changes in inventory levels;
|
•
|
plans regarding repatriation of foreign earnings;
|
•
|
the outcome, impact, costs and expenses of any litigation or government inquiries to which we are or become subject;
|
•
|
the effect of the continuing worldwide macroeconomic uncertainty on our business and results of operations, including Brexit;
|
•
|
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;
|
•
|
our ability to refinance our convertible notes due 2020 through our pending tender offer or other means;
|
•
|
seasonal factors;
|
•
|
fluctuations in foreign exchange and interest rates;
|
•
|
the risk of restatement of our financial statements;
|
•
|
estimated asset and liability values and amortization of our intangible assets;
|
•
|
our capital resources and the adequacy thereof; and
|
•
|
worldwide political uncertainty, in particular the risk that the United States may withdraw from or materially modify NAFTA or other international trade agreements, and the effects of such actions on our supply chain, results of operations and financial condition.
|
ITEM 1.
|
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net revenues:
|
|
|
|
||||
Products
|
$
|
54,396
|
|
|
$
|
46,410
|
|
Services
|
48,923
|
|
|
51,527
|
|
||
Total net revenues
|
103,319
|
|
|
97,937
|
|
||
|
|
|
|
||||
Cost of revenues:
|
|
|
|
||||
Products
|
27,600
|
|
|
26,295
|
|
||
Services
|
12,487
|
|
|
13,985
|
|
||
Amortization of intangible assets
|
1,950
|
|
|
1,950
|
|
||
Total cost of revenues
|
42,037
|
|
|
42,230
|
|
||
Gross profit
|
61,282
|
|
|
55,707
|
|
||
|
|
|
|
||||
Operating expenses:
|
|
|
|
||||
Research and development
|
16,285
|
|
|
15,685
|
|
||
Marketing and selling
|
24,878
|
|
|
26,132
|
|
||
General and administrative
|
13,788
|
|
|
13,955
|
|
||
Amortization of intangible assets
|
363
|
|
|
363
|
|
||
Restructuring costs, net
|
558
|
|
|
2,907
|
|
||
Total operating expenses
|
55,872
|
|
|
59,042
|
|
||
|
|
|
|
|
|
||
Operating income (loss)
|
5,410
|
|
|
(3,335
|
)
|
||
|
|
|
|
|
|
||
Interest and other expense, net
|
(5,185
|
)
|
|
(5,359
|
)
|
||
Income (loss) before income taxes
|
225
|
|
|
(8,694
|
)
|
||
Provision for income taxes
|
438
|
|
|
255
|
|
||
Net loss
|
$
|
(213
|
)
|
|
$
|
(8,949
|
)
|
|
|
|
|
||||
Net loss per common share – basic and diluted
|
$(0.01)
|
|
$(0.22)
|
||||
|
|
|
|
||||
Weighted-average common shares outstanding – basic and diluted
|
42,046
|
|
|
41,404
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(213
|
)
|
|
$
|
(8,949
|
)
|
|
|
|
|
||||
Other comprehensive (loss) income:
|
|
|
|
||||
Foreign currency translation adjustments
|
(548
|
)
|
|
1,148
|
|
||
|
|
|
|
||||
Comprehensive loss
|
$
|
(761
|
)
|
|
$
|
(7,801
|
)
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
55,326
|
|
|
$
|
56,103
|
|
Restricted cash
|
9,020
|
|
|
8,500
|
|
||
Accounts receivable, net of allowances of $1,339 and $1,339 at March 31, 2019 and December 31, 2018, respectively.
|
61,318
|
|
|
67,754
|
|
||
Inventories
|
34,328
|
|
|
32,956
|
|
||
Prepaid expenses
|
11,985
|
|
|
8,853
|
|
||
Contract assets
|
18,677
|
|
|
16,513
|
|
||
Other current assets
|
6,685
|
|
|
5,917
|
|
||
Total current assets
|
197,339
|
|
|
196,596
|
|
||
Property and equipment, net
|
20,918
|
|
|
21,582
|
|
||
Intangible assets, net
|
2,120
|
|
|
4,432
|
|
||
Goodwill
|
32,643
|
|
|
32,643
|
|
||
Right of use assets
|
36,031
|
|
|
—
|
|
||
Long-term deferred tax assets, net
|
1,163
|
|
|
1,158
|
|
||
Other long-term assets
|
9,456
|
|
|
9,432
|
|
||
Total assets
|
$
|
299,670
|
|
|
$
|
265,843
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
38,438
|
|
|
$
|
39,239
|
|
Accrued compensation and benefits
|
24,727
|
|
|
21,967
|
|
||
Accrued expenses and other current liabilities
|
41,402
|
|
|
37,547
|
|
||
Income taxes payable
|
2,088
|
|
|
1,853
|
|
||
Short-term debt
|
1,405
|
|
|
1,405
|
|
||
Deferred revenue
|
87,927
|
|
|
85,662
|
|
||
Total current liabilities
|
195,987
|
|
|
187,673
|
|
||
Long-term debt
|
218,201
|
|
|
220,590
|
|
||
Long-term deferred revenue
|
13,361
|
|
|
13,939
|
|
||
Long-term lease liabilities
|
33,817
|
|
|
—
|
|
||
Other long-term liabilities
|
5,391
|
|
|
10,302
|
|
||
Total liabilities
|
466,757
|
|
|
432,504
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ deficit:
|
|
|
|
||||
Common stock
|
423
|
|
|
423
|
|
||
Additional paid-in capital
|
1,024,028
|
|
|
1,028,924
|
|
||
Accumulated deficit
|
(1,187,223
|
)
|
|
(1,187,010
|
)
|
||
Treasury stock at cost
|
—
|
|
|
(5,231
|
)
|
||
Accumulated other comprehensive loss
|
(4,315
|
)
|
|
(3,767
|
)
|
||
Total stockholders’ deficit
|
(167,087
|
)
|
|
(166,661
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
299,670
|
|
|
$
|
265,843
|
|
|
Shares of
Common Stock
|
|
|
Additional
|
|
|
Accumulated
Other
|
Total
|
|||||||||
|
Issued
|
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
|
)
|
|
Shares of
Common Stock
|
|
|
Additional
|
|
|
Accumulated
Other
|
Total
|
|||||||||
|
Issued
|
In
Treasury
|
|
Common
Stock
|
Paid-in
Capital
|
Accumulated
Deficit
|
Treasury
Stock
|
Comprehensive
Income (Loss)
|
Stockholders’
Deficit
|
||||||||
Balances at January 1, 2018
|
42,339
|
|
(983
|
)
|
|
423
|
|
1,035,808
|
|
(1,284,703
|
)
|
(17,672
|
)
|
(2,426
|
)
|
(268,570
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cumulative-effect adjustment due to adoption of ASC Topic 606
|
|
|
|
|
|
104,550
|
|
|
|
104,550
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Stock issued pursuant to employee stock plans
|
|
127
|
|
|
|
(3,649
|
)
|
|
3,158
|
|
|
(491
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
|
|
|
|
703
|
|
|
|
|
703
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
|
|
(8,949
|
)
|
|
|
(8,949
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
1,148
|
|
1,148
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Partial retirement of convertible senior notes conversion feature
|
|
|
|
|
(22
|
)
|
|
|
|
(22
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Partial unwind capped call cash receipt
|
|
|
|
|
2
|
|
|
|
|
2
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Balances at March 31, 2018
|
42,339
|
|
(856
|
)
|
|
423
|
|
1,032,842
|
|
(1,189,102
|
)
|
(14,514
|
)
|
(1,278
|
)
|
(171,629
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(213
|
)
|
|
$
|
(8,949
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,740
|
|
|
5,674
|
|
||
(Recovery from) provision for doubtful accounts
|
(9
|
)
|
|
57
|
|
||
Stock-based compensation expense
|
1,738
|
|
|
703
|
|
||
Non-cash interest expense
|
3,359
|
|
|
3,546
|
|
||
Unrealized foreign currency transaction (gains) losses
|
(586
|
)
|
|
1,323
|
|
||
Benefit from deferred taxes
|
(1
|
)
|
|
(2
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
6,444
|
|
|
8,596
|
|
||
Inventories
|
(1,372
|
)
|
|
(482
|
)
|
||
Prepaid expenses and other assets
|
(3,861
|
)
|
|
(396
|
)
|
||
Accounts payable
|
(810
|
)
|
|
(2,112
|
)
|
||
Accrued expenses, compensation and benefits and other liabilities
|
(2,837
|
)
|
|
(1,355
|
)
|
||
Income taxes payable
|
261
|
|
|
190
|
|
||
Deferred revenue and contract assets
|
(477
|
)
|
|
(1,423
|
)
|
||
Net cash provided by operating activities
|
6,376
|
|
|
5,370
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(1,767
|
)
|
|
(2,080
|
)
|
||
Increase in other long-term assets
|
—
|
|
|
(8
|
)
|
||
Net cash used in investing activities
|
(1,767
|
)
|
|
(2,088
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of debt
|
(3,928
|
)
|
|
(3,212
|
)
|
||
Proceeds from the issuance of common stock under employee stock plans
|
309
|
|
|
6
|
|
||
Common stock repurchases for tax withholdings for net settlement of equity awards
|
(1,690
|
)
|
|
(497
|
)
|
||
Partial retirement of the Notes conversion feature and capped call option unwind
|
(22
|
)
|
|
(20
|
)
|
||
Net cash used in financing activities
|
(5,331
|
)
|
|
(3,723
|
)
|
||
|
|
|
|
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(55
|
)
|
|
15
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(777
|
)
|
|
(426
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
68,094
|
|
|
60,433
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
67,317
|
|
|
$
|
60,007
|
|
Supplemental information:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
55,326
|
|
|
$
|
48,016
|
|
Restricted cash
|
9,020
|
|
|
8,500
|
|
||
Restricted cash included in other long-term assets
|
2,971
|
|
|
3,491
|
|
||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
67,317
|
|
|
$
|
60,007
|
|
|
|
|
|
||||
Cash paid (refunded) for income taxes
|
$
|
203
|
|
|
$
|
(2,469
|
)
|
Cash paid for interest
|
$
|
2,041
|
|
|
$
|
1,919
|
|
1.
|
FINANCIAL INFORMATION
|
|
As of January 1, 2019
|
||||||||||
|
As Previously Reported
|
|
Impact of Adoption of Topic 842
|
|
As Adjusted
|
||||||
Assets:
|
|
|
|
|
|
||||||
Property and equipment, net
|
$
|
21,582
|
|
|
$
|
256
|
|
|
$
|
21,838
|
|
Right of use assets
|
$
|
—
|
|
|
$
|
37,749
|
|
|
$
|
37,749
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Accrued expenses and other current liabilities
|
$
|
37,547
|
|
|
$
|
6,957
|
|
|
$
|
44,504
|
|
Long-term lease liabilities
|
—
|
|
|
35,694
|
|
|
35,694
|
|
|||
Other long-term liabilities
|
$
|
10,302
|
|
|
$
|
(4,646
|
)
|
|
$
|
5,656
|
|
2.
|
NET INCOME PER SHARE
|
|
March 31, 2019
|
|
March 31, 2018
|
||
Options
|
772
|
|
|
2,262
|
|
Non-vested restricted stock units
|
2,881
|
|
|
3,172
|
|
Anti-dilutive potential common shares
|
3,653
|
|
|
5,434
|
|
3.
|
FAIR VALUE MEASUREMENTS
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
March 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
|
$
|
1,430
|
|
|
$
|
312
|
|
|
$
|
1,118
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31, 2018
|
|
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
|
$
|
1,372
|
|
|
$
|
386
|
|
|
$
|
986
|
|
|
$
|
—
|
|
4.
|
INVENTORIES
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
$
|
11,253
|
|
|
$
|
10,520
|
|
Work in process
|
486
|
|
|
527
|
|
||
Finished goods
|
22,589
|
|
|
21,909
|
|
||
Total
|
$
|
34,328
|
|
|
$
|
32,956
|
|
5.
|
INTANGIBLE ASSETS AND GOODWILL
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Completed technologies and patents
|
$
|
58,212
|
|
|
$
|
(56,424
|
)
|
|
$
|
1,788
|
|
|
$
|
58,246
|
|
|
$
|
(54,508
|
)
|
|
$
|
3,738
|
|
Customer relationships
|
54,947
|
|
|
(54,615
|
)
|
|
332
|
|
|
54,986
|
|
|
(54,292
|
)
|
|
694
|
|
||||||
Trade names
|
1,346
|
|
|
(1,346
|
)
|
|
—
|
|
|
1,346
|
|
|
(1,346
|
)
|
|
—
|
|
||||||
Capitalized software costs
|
4,911
|
|
|
(4,911
|
)
|
|
—
|
|
|
4,911
|
|
|
(4,911
|
)
|
|
—
|
|
||||||
Total
|
$
|
119,416
|
|
|
$
|
(117,296
|
)
|
|
$
|
2,120
|
|
|
$
|
119,489
|
|
|
$
|
(115,057
|
)
|
|
$
|
4,432
|
|
Year Ending December 31,
|
Operating Leases
|
||
2019 (excluding three months ended March 31, 2019)
|
$
|
7,301
|
|
2020
|
8,877
|
|
|
2021
|
6,298
|
|
|
2022
|
5,533
|
|
|
2023
|
4,309
|
|
|
Thereafter
|
19,034
|
|
|
Total future minimum lease payments
|
$
|
51,352
|
|
Less effects of discounting
|
(10,083
|
)
|
|
Total lease liabilities
|
$
|
41,269
|
|
|
|
||
Reported as of March 31, 2019
|
|
||
Accrued expenses and other current liabilities
|
$
|
7,452
|
|
Long-term lease liabilities
|
33,817
|
|
|
Total lease liabilities
|
$
|
41,269
|
|
Year Ending December 31,
|
|
||
2019
|
$
|
11,225
|
|
2020
|
9,784
|
|
|
2021
|
6,850
|
|
|
2022
|
5,982
|
|
|
2023
|
4,754
|
|
|
Thereafter
|
20,040
|
|
|
Total
|
$
|
58,635
|
|
7.
|
OTHER LONG-TERM LIABILITIES
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Deferred rent
|
$
|
—
|
|
|
$
|
5,122
|
|
Accrued restructuring
|
159
|
|
|
188
|
|
||
Deferred compensation
|
4,839
|
|
|
4,992
|
|
||
Other
|
393
|
|
|
—
|
|
||
Total
|
$
|
5,391
|
|
|
$
|
10,302
|
|
8.
|
COMMITMENTS AND CONTINGENCIES
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrual balance at beginning of year
|
$
|
1,706
|
|
|
$
|
2,545
|
|
Accruals for product warranties
|
227
|
|
|
505
|
|
||
Costs of warranty claims
|
(338
|
)
|
|
(568
|
)
|
||
Accrual balance at end of period
|
$
|
1,595
|
|
|
$
|
2,482
|
|
9.
|
RESTRUCTURING COSTS AND ACCRUALS
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Employee
|
$
|
535
|
|
|
$
|
168
|
|
Facility
|
5
|
|
|
2,690
|
|
||
Total facility and employee charges
|
540
|
|
|
2,858
|
|
||
Other
|
18
|
|
|
49
|
|
||
Total restructuring charges, net
|
$
|
558
|
|
|
$
|
2,907
|
|
|
Employee
|
|
Facility
|
|
Total
|
||||||
Accrual balance as of December 31, 2018
|
$
|
2,541
|
|
|
$
|
318
|
|
|
$
|
2,859
|
|
Restructuring charges and revisions
|
535
|
|
|
5
|
|
|
540
|
|
|||
Accretion
|
—
|
|
|
4
|
|
|
4
|
|
|||
Cash payments
|
(1,398
|
)
|
|
(39
|
)
|
|
(1,437
|
)
|
|||
Foreign exchange impact on ending balance
|
(12
|
)
|
|
1
|
|
|
(11
|
)
|
|||
Accrual balance as of March 31, 2019
|
$
|
1,666
|
|
|
$
|
289
|
|
|
$
|
1,955
|
|
Less: current portion
|
1,666
|
|
|
130
|
|
|
1,796
|
|
|||
Long-term accrual balance as of March 31, 2019
|
$
|
—
|
|
|
$
|
159
|
|
|
$
|
159
|
|
10.
|
REVENUE
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Products and solutions net revenues
|
54,396
|
|
|
46,410
|
|
||
Subscription services
|
9,282
|
|
|
8,465
|
|
||
Support services
|
32,019
|
|
|
33,760
|
|
||
Professional services, training and other services
|
7,622
|
|
|
9,302
|
|
||
Total net revenues
|
$
|
103,319
|
|
|
$
|
97,937
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
||||
United States
|
$
|
39,479
|
|
|
$
|
37,548
|
|
Other Americas
|
6,801
|
|
|
6,386
|
|
||
Europe, Middle East and Africa
|
37,153
|
|
|
40,763
|
|
||
Asia-Pacific
|
19,886
|
|
|
13,240
|
|
||
Total net revenues
|
$
|
103,319
|
|
|
$
|
97,937
|
|
|
March 31, 2019
|
||
Contract asset at January 1, 2019
|
$
|
16,513
|
|
Revenue in excess of billings
|
7,086
|
|
|
Customer billings
|
(4,922
|
)
|
|
Contract asset at March 31, 2019
|
$
|
18,677
|
|
Less: long-term portion (recorded in other long-term assets)
|
—
|
|
|
Contract asset, current portion
|
$
|
18,677
|
|
|
March 31, 2019
|
||
Deferred revenue at January 1, 2019
|
$
|
99,601
|
|
Billings deferred
|
30,369
|
|
|
Recognition of prior deferred revenue
|
(28,682
|
)
|
|
Deferred revenue at March 31, 2019
|
$
|
101,288
|
|
|
March 31, 2019
|
||
Product
|
$
|
8,470
|
|
Subscription
|
993
|
|
|
Support Contracts
|
74,464
|
|
|
Implied PCS
|
15,237
|
|
|
Professional services, training and other
|
2,124
|
|
|
Deferred revenue at March 31, 2019
|
$
|
101,288
|
|
11.
|
LONG-TERM DEBT AND CREDIT AGREEMENT
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Term Loan, net of unamortized debt issuance costs of $2,465 at March 31, 2019 and $2,613 at December 31, 2018
|
$
|
122,641
|
|
|
$
|
122,811
|
|
Notes, net of unamortized original issue discount and debt issuance costs of $7,283 at March 31, 2019 and $9,022 at December 31, 2018, respectively
|
95,570
|
|
|
97,731
|
|
||
Other long-term debt
|
1,395
|
|
|
1,453
|
|
||
Total debt
|
219,606
|
|
|
221,995
|
|
||
Less: current portion
|
1,405
|
|
|
1,405
|
|
||
Total long-term debt
|
$
|
218,201
|
|
|
$
|
220,590
|
|
Fiscal Year
|
Term Loan
|
|
Notes
|
|
Other Long-Term Debt
|
|
Total
|
||||||||
2019
|
$
|
956
|
|
|
$
|
—
|
|
|
$
|
97
|
|
|
$
|
1,053
|
|
2020
|
2,231
|
|
|
102,853
|
|
|
137
|
|
|
105,221
|
|
||||
2021
|
4,781
|
|
|
—
|
|
|
147
|
|
|
4,928
|
|
||||
2022
|
6,375
|
|
|
—
|
|
|
157
|
|
|
6,532
|
|
||||
2023
|
110,763
|
|
|
—
|
|
|
168
|
|
|
110,931
|
|
||||
Thereafter
|
—
|
|
|
—
|
|
|
689
|
|
|
689
|
|
||||
Total before unamortized discount
|
125,106
|
|
|
102,853
|
|
|
1,395
|
|
|
229,354
|
|
||||
Less: unamortized discount and issuance costs
|
2,465
|
|
|
7,283
|
|
|
—
|
|
|
9,748
|
|
||||
Less: current portion of long-term debt
|
1,275
|
|
|
—
|
|
|
130
|
|
|
1,405
|
|
||||
Total long-term debt
|
$
|
121,366
|
|
|
$
|
95,570
|
|
|
$
|
1,265
|
|
|
$
|
218,201
|
|
|
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, 2019
|
891,892
|
|
—
|
|
891,892
|
|
$8.46
|
|
|
Granted
|
—
|
|
—
|
|
—
|
|
$—
|
|
|
Exercised
|
(41,250
|
)
|
—
|
|
(41,250
|
)
|
$7.34
|
|
|
Forfeited or canceled
|
(78,804
|
)
|
—
|
|
(78,804
|
)
|
$10.82
|
|
|
Options outstanding at March 31, 2019
|
771,838
|
|
—
|
|
771,838
|
|
$8.28
|
1.52
|
$18
|
Options vested at March 31, 2019 or expected to vest
|
|
|
771,838
|
|
$8.28
|
1.52
|
$18
|
||
Options exercisable at March 31, 2019
|
|
|
771,838
|
|
$8.28
|
1.52
|
$18
|
|
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, 2019
|
1,978,676
|
|
966,143
|
|
2,944,819
|
|
$4.91
|
|
|
Granted
|
434,147
|
|
411,043
|
|
845,190
|
|
$6.54
|
|
|
Vested
|
(221,555
|
)
|
(467,923
|
)
|
(689,478
|
)
|
$4.99
|
|
|
Forfeited
|
(79,639
|
)
|
(139,414
|
)
|
(219,053
|
)
|
$4.67
|
|
|
Non-vested at March 31, 2019
|
2,111,629
|
|
769,849
|
|
2,881,478
|
|
$5.39
|
1.25
|
$21,438
|
Expected to vest
|
|
|
2,682,950
|
|
$5.52
|
1.25
|
$19,961
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cost of products revenues
|
$
|
51
|
|
|
$
|
19
|
|
Cost of services revenues
|
18
|
|
|
34
|
|
||
Research and development expenses
|
195
|
|
|
152
|
|
||
Marketing and selling expenses
|
294
|
|
|
360
|
|
||
General and administrative expenses
|
1,180
|
|
|
138
|
|
||
|
$
|
1,738
|
|
|
$
|
703
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Software licenses
|
$
|
17,412
|
|
|
$
|
17,147
|
|
Maintenance
|
32,019
|
|
|
33,771
|
|
||
Software licenses and maintenance
|
49,431
|
|
|
50,918
|
|
||
% of total revenue
|
48
|
%
|
|
52
|
%
|
||
Integrated solutions
|
46,265
|
|
|
37,717
|
|
||
Professional services & training
|
7,623
|
|
|
9,302
|
|
||
Total revenue
|
$
|
103,319
|
|
|
$
|
97,937
|
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
Net revenues:
|
|
|
|
||
Product
|
52.6
|
%
|
|
47.4
|
%
|
Services
|
47.4
|
%
|
|
52.6
|
%
|
Total net revenues
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
40.7
|
%
|
|
43.1
|
%
|
Gross margin
|
59.3
|
%
|
|
56.9
|
%
|
Operating expenses:
|
|
|
|
||
Research and development
|
15.8
|
%
|
|
16.0
|
%
|
Marketing and selling
|
24.1
|
%
|
|
26.7
|
%
|
General and administrative
|
13.3
|
%
|
|
14.2
|
%
|
Amortization of intangible assets
|
0.4
|
%
|
|
0.4
|
%
|
Restructuring costs, net
|
0.5
|
%
|
|
3.0
|
%
|
Total operating expenses
|
54.1
|
%
|
|
60.3
|
%
|
Operating income (loss)
|
5.2
|
%
|
|
(3.4
|
)%
|
Interest and other expense, net
|
(5.0
|
)%
|
|
(5.5
|
)%
|
Income (loss) before income taxes
|
0.2
|
%
|
|
(8.9
|
)%
|
Provision for income taxes
|
0.4
|
%
|
|
0.3
|
%
|
Net loss
|
(0.2
|
)%
|
|
(9.2
|
)%
|
Net Revenues for the Three Months Ended March 31, 2019 and 2018
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2019
|
|
Change
|
|
2018
|
||||||||
|
Net Revenues
|
|
$
|
|
%
|
|
Net Revenues
|
||||||
Products and solutions
|
54,396
|
|
|
7,986
|
|
|
17.2%
|
|
46,410
|
|
|||
Services
|
48,923
|
|
|
(2,604
|
)
|
|
(5.1)%
|
|
51,527
|
|
|||
Total net revenues
|
$
|
103,319
|
|
|
$
|
5,382
|
|
|
5.5%
|
|
$
|
97,937
|
|
|
Three Months Ended March 31,
|
||
|
2019
|
|
2018
|
United States
|
38%
|
|
38%
|
Other Americas
|
7%
|
|
6%
|
Europe, Middle East and Africa
|
36%
|
|
42%
|
Asia-Pacific
|
19%
|
|
14%
|
•
|
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, 2019 and 2018
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2019
|
|
Change
|
|
2018
|
||||||||
|
Costs
|
|
$
|
|
%
|
|
Costs
|
||||||
Products
|
$
|
27,600
|
|
|
$
|
1,305
|
|
|
5.0%
|
|
$
|
26,295
|
|
Services
|
12,487
|
|
|
(1,498
|
)
|
|
(10.7)%
|
|
13,985
|
|
|||
Amortization of intangible assets
|
1,950
|
|
|
—
|
|
|
—%
|
|
1,950
|
|
|||
Total cost of revenues
|
$
|
42,037
|
|
|
$
|
(193
|
)
|
|
(0.5)%
|
|
$
|
42,230
|
|
|
|
|
|
|
|
|
|
||||||
Gross profit
|
$
|
61,282
|
|
|
$
|
5,575
|
|
|
10.0%
|
|
$
|
55,707
|
|
Operating Expenses and Operating Income (Loss) for the Three Months Ended March 31, 2019 and 2018
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2019
|
|
Change
|
|
2018
|
||||||||
|
Expenses
|
|
$
|
|
%
|
|
Expenses
|
||||||
Research and development
|
$
|
16,285
|
|
|
$
|
600
|
|
|
3.8%
|
|
$
|
15,685
|
|
Marketing and selling
|
24,878
|
|
|
(1,254
|
)
|
|
(4.8)%
|
|
26,132
|
|
|||
General and administrative
|
13,788
|
|
|
(167
|
)
|
|
(1.2)%
|
|
13,955
|
|
|||
Amortization of intangible assets
|
363
|
|
|
—
|
|
|
—%
|
|
363
|
|
|||
Restructuring costs, net
|
558
|
|
|
(2,349
|
)
|
|
(80.8)%
|
|
2,907
|
|
|||
Total operating expenses
|
$
|
55,872
|
|
|
$
|
(3,170
|
)
|
|
(5.4)%
|
|
$
|
59,042
|
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
5,410
|
|
|
$
|
8,745
|
|
|
(262.2)%
|
|
$
|
(3,335
|
)
|
Change in R&D Expenses for the Three Months Ended March 31, 2019 and 2018
|
||||||
(dollars in thousands)
|
||||||
|
2019 Increase (Decrease)
From 2018
|
|||||
|
$
|
|
%
|
|||
Personnel-related
|
$
|
1,875
|
|
|
21.5
|
%
|
Consulting and outside services
|
(518
|
)
|
|
(20.7
|
)%
|
|
Facilities and information technology
|
(338
|
)
|
|
(9.8
|
)%
|
|
Other
|
(419
|
)
|
|
(40.6
|
)%
|
|
Total R&D expenses increase
|
$
|
600
|
|
|
3.8
|
%
|
Change in Marketing and Selling Expenses for the Three Months Ended March 31, 2019 and 2018
|
||||||
(dollars in thousands)
|
||||||
|
2019 Decrease From 2018
|
|||||
|
$
|
|
%
|
|||
Foreign exchange loss
|
$
|
(459
|
)
|
|
(96.9
|
)%
|
Advertising and promotions
|
(308
|
)
|
|
(11.1
|
)%
|
|
Consulting and outside services
|
(276
|
)
|
|
(36.0
|
)%
|
|
Facilities and information technology
|
(211
|
)
|
|
(1.0
|
)%
|
|
Total marketing and selling expenses decrease
|
$
|
(1,254
|
)
|
|
(4.8
|
)%
|
Change in G&A Expenses for the Three Months Ended March 31, 2019 and 2018
|
||||||
(dollars in thousands)
|
||||||
|
2019 Increase (Decrease)
From 2018
|
|||||
|
$
|
|
%
|
|||
Personnel-related
|
$
|
1,213
|
|
|
23.6
|
%
|
Consulting and outside services
|
(1,025
|
)
|
|
(19.4
|
)%
|
|
Other
|
(355
|
)
|
|
(10.0
|
)%
|
|
Total G&A expenses decrease
|
$
|
(167
|
)
|
|
(1.2
|
)%
|
Provision for Income Taxes for the Three Months Ended March 31, 2019 and 2018
|
|||||||||||||
(dollars in thousands)
|
|||||||||||||
|
2019
|
|
Change
|
|
2018
|
||||||||
|
|
|
$
|
|
%
|
|
|
||||||
Provision for income taxes
|
$
|
438
|
|
|
$
|
183
|
|
|
71.8%
|
|
$
|
255
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
6,376
|
|
|
$
|
5,370
|
|
Net cash used in investing activities
|
(1,767
|
)
|
|
(2,088
|
)
|
||
Net cash used in financing activities
|
(5,331
|
)
|
|
(3,723
|
)
|
||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash
|
(55
|
)
|
|
15
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(777
|
)
|
|
$
|
(426
|
)
|
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
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
32.1
|
|
|
X
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
8-K
|
|
April 11, 2019
|
|
001-36254
|
|
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 6, 2019
|
By:
|
/s/ Kenneth Gayron
|
|
|
|
Name:
|
Kenneth Gayron
|
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
1 Year Avid Technology Chart |
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