UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 15, 2007

AVID TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

 

Registrant’s telephone number, including area code: (978) 640-6789

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

 

 

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(a)          On July 16, 2007, Avid Technology, Inc. (the “Company”) issued a press release announcing certain matters described in Items 5.02(b) and (c) below. In that press release, the Company reaffirmed its revenue and earnings-per-share guidance for the fiscal quarter ended June 30, 2007. The full text of the press release issued is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in Item 2.02 of this Form 8-K (including the information included in Exhibit 99.1 relating to results of operations) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

(b)          On July 15, 2007, David A. Krall and the Board of Directors of the Company agreed that Mr. Krall would depart as Chief Executive Officer and director of the Company, effective July 31, 2007. The Company has engaged the firm of Heidrick & Struggles to assist with the search for a new Chief Executive Officer.

 

(c)          On July 15, 2007, the Board appointed Nancy Hawthorne, a former Chairman of the Board of Directors and current director of the Company, to serve as Interim Chief Executive Officer of the Company, effective July 31, 2007, until a permanent successor is appointed. Ms. Hawthorne, age 56, became a director in October 1997. Since August 2001, Ms. Hawthorne has served as Chair and Chief Executive Officer of Clerestory, LLC, a financial advisory and investment firm. In addition, from 1996 until July 1997, Ms. Hawthorne was Chief Executive Officer and Managing Partner of Hawthorne, Krauss & Associates, LLC, a provider of consulting services to corporate management. From July 1997 until July 2001, Ms. Hawthorne was self-employed, providing a variety of financial strategy consulting services. Previously, Ms. Hawthorne served as Treasurer and Chief Financial Officer of Continental Cablevision, Inc. and, following Continental Cablevision’s merger with US West, Inc., as an Executive Vice President of the merged company, MediaOne. Ms. Hawthorne also serves as a director of the Metropolitan Series Fund, Inc., a mutual fund established by the Metropolitan Life Insurance Company.

 

Effective July 19, 2007, the Board appointed Joel Legon to serve as the Company’s Vice President and Chief Financial Officer. Since joining the Company in February 2006, Mr. Legon, age 56, had served as Vice President and Corporate Controller of the Company, and, since March 2007, he had additionally served as Acting Chief Financial Officer of the Company. Prior to joining the Company, Mr. Legon served in the following positions at Parametric Technology Corporation: from January 2004 to February 2006 as Senior Vice President of Finance and Corporate Controller; from November 1999 to January 2004 as Vice President of Finance and Corporate Controller; and from March 1998 to November 1999 as Corporate Controller. Prior to that, Mr. Legon held finance positions at Computervision Corporation, NEC America, Inc., Chesebrough-Ponds, Inc. and Richardson-Vicks Inc.

 

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(e)          In connection with Mr. Krall’s departure, the Company and Mr. Krall entered into a Separation Agreement, dated as of July 15, 2007, filed herewith as Exhibit 10.1. The Separation Agreement confirms that Mr. Krall will receive the payments and benefits provided for under his Executive Employment Agreement, dated as of July 24, 2002.

 

As Interim Chief Executive Officer, Ms. Hawthorne will receive an annual base salary of $300,000 and an option to purchase shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”) at an option exercise price equal to the NASDAQ closing price of the Common Stock on the date of grant. The shares subject to the option will vest in twelve equal and successive monthly installments beginning on August 15, 2007, but vesting shall continue only for as long as Ms. Hawthorne remains Interim Chief Executive Officer. The shares subject to the option will have an aggregate value of $500,000.

 

On July 19, 2007, the Company entered into an Executive Employment Agreement and a Change-in-Control Agreement with Mr. Legon. The material terms of Mr. Legon’s employment arrangement include the following:

 

The Change-in-Control Agreement provides that if Mr. Legon is terminated by the Company without cause, or if Mr. Legon terminates for good reason, within two years following a change in control of the Company, he will receive the following benefits:

 

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The foregoing descriptions are qualified in full by Mr. Legon’s Executive Employment Agreement and Change-in-Control Agreement.

 

 

 

 

 

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

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Exhibit Index

 

 

 

 

Exhibit 10.1

AVID TECHNOLOGY, INC.

July 15, 2007

Mr. David A. Krall

c/o Avid Technology, Inc.

Avid Technology Park

One Park West

Tewksbury, MA 01876

Dear David:

This letter is to confirm that we have agreed that, notwithstanding anything to the contrary in the Employment Agreement dated as of July 24, 2002 (the “Employment Agreement”) between Avid Technology, Inc. (“Avid”) and you, in connection with your resignation as an officer, director and employee of Avid effective July 31, 2007, you shall be entitled to the payments and benefits set forth in Section 4.2.3 of the Employment Agreement (subject to the execution of a General Release of Claims as set forth in such Section 4.2.3), and the “Date of Termination” solely for purposes of clause (e) of Section 4.2.3 shall be July 31, 2007. In addition, you have agreed to serve as a consultant to the Company through September 30, 2007.

 

Very truly yours,

 

AVID TECHNOLOGY, INC.

 

Pamela F. Lenehan

Chairman of the Board

 

AGREED TO:

 

David A. Krall

 

 

Exhibit 99.1

 

 

 

Avid Announces Departure of CEO David Krall

 

Tewksbury, Mass. – July 16, 2007 – The board of directors of Avid Technology, Inc. (NASDAQ: AVID) today announced that David Krall will step down from his positions as President, Chief Executive Officer, and board member of the company, at the end of July. Nancy Hawthorne, current board member and former chairman, will serve as the company’s interim CEO as the board begins an immediate search for a new CEO. Krall will be available as a consultant to the company during the transition period.

 

“Avid Technology has experienced tremendous growth in recent years, through new technology introductions and strategic acquisitions that have broadened the company’s product portfolio and bolstered its position in adjacent digital content creation markets,” said Krall, who has served as president, CEO, and board member for the past seven years. “With Avid’s twenty-year track record helping customers to create and distribute the world’s most compelling media – and numerous opportunities to expand across an increasingly diverse marketplace, the time is right for new leadership at the helm. I’m proud to have played a role in helping Avid become a leading technology and services provider that truly powers the world of digital media and entertainment – and would like to thank every Avid employee, customer, shareholder, and business partner for the contributions they’ve made to the company’s success.”

 

Commenting on behalf of the board of directors, current chairman Pamela Lenehan, said, “David has been instrumental in transforming Avid Technology’s business – and keeping it at the forefront of the digital media revolution. He has helped direct the company’s efforts to revitalize its postproduction business; secure a leadership position in broadcast news production; grow its audio business through market expansion and product development; and enter the consumer video and audio markets through acquisition. His dedication and loyalty to Avid have been unwavering – and we thank him for establishing a rich foundation upon which the company can build an even brighter future.”

 

Hawthorne, who currently serves as CEO of the financial advisory and investment firm, Clerestory LLC, has been a member of the Avid board of directors since 1997 and has worked closely with Krall and the

 

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Avid senior management team as the company has diversified its business and more than doubled revenues in the last five years. “Nancy’s knowledge of Avid’s day-to-day business – plus her strong financial background and broad expertise with large companies – will serve the company well during this important leadership transition,” said Lenehan. “We’re fortunate to have Nancy engage in this role as we begin our search for a new CEO.”

 

Previously, Hawthorne was the chief financial officer of Continental Cablevision, Inc. from 1992 to 1996, where she was responsible for treasury, mergers and acquisitions, investor relations, accounting functions, and oversaw the company's financial strategy and capital markets activities. Following Continental Cablevision’s merger with US West Inc., she became an executive vice president of the merged company, MediaOne.

 

Avid, which reaffirmed its Q2 guidance of $220M to $230M in revenue and non-GAAP EPS of $0.15 to $0.20, plans to release its financial results for the second quarter ended June 30, 2007 on Thursday, July 26, 2007.

 

About Avid Technology, Inc.

Avid Technology, Inc. is the world leader in digital nonlinear media creation, management, and distribution solutions, enabling film, video, audio, animation, games, and broadcast professionals to work more efficiently, productively, and creatively. For more information about the company’s Oscar®, Grammy®, and Emmy® award-winning products and services, please visit: www.avid.com.

 

© 2007 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer and Pro Tools are either registered trademarks or trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. Avid received an Oscar statuette representing the 1998 Scientific and Technical Award for the concept, design, and engineering of the Avid® Film Composer® system for motion picture editing. Digidesign, Avid’s audio division, received an Oscar statuette representing the 2003 Scientific and Technical Award for the design, development, and implementation of its Pro Tools® digital audio workstation. Oscar is a trademark and service mark of the Academy of Motion Picture Arts and Sciences. Emmy is a registered trademark of ATAS/NATAS. Grammy is a trademark of the National Academy of Recording Arts and Sciences, Inc. All other trademarks contained herein are the property of their respective owners.