Avid Technology, Inc.
AVID TECHNOLOGY, INC. (Form: 8-K, Received: 03/23/2017 06:38:13)




            
        


        


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): March 23, 2017

AVID TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
1-36254
 
04-2977748
(State or Other Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)

75 Network Drive, Burlington, Massachusetts  01803
(Address of Principal Executive Offices)   (Zip Code)

(978) 640-6789
(Registrant’s Telephone Number, Including Area Code)

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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))










Item 2.02. Results of Operations and Financial Condition.

On March 23, 2017, the Company issued a press release announcing its financial results for the fiscal year and fiscal quarter ended December 31, 2016. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.01 Regulation FD Disclosure.

The disclosure under item 2.02 of this report is incorporated by reference herein.

Non-GAAP and Operational Measures.  The attached press release includes non-GAAP operating expenses, non-GAAP revenue, non-GAAP gross margin, non-GAAP adjusted EBITDA, and non-GAAP adjusted free cash flow. Non-GAAP operating income (loss), non-GAAP operating expenses, non-GAAP gross margin and non-GAAP net income per share exclude restructuring costs, stock based compensation, amortization and impairment of intangibles as well as other unusual items such as costs related to the restatement, M&A related activity, efficiency program and impact of significant legal settlements. Avid defines non-GAAP revenue as GAAP revenue plus revenue eliminated through the application of purchase accounting which requires acquired deferred revenue to be recorded at fair value rather than the amount paid by customers. Avid defines adjusted EBITDA as non-GAAP operating income (loss) excluding depreciation and all amortization expense. Avid defines non-GAAP adjusted free cash flow as GAAP operating cash flow less capital expenditures and excludes from free cash flow payments or receipts related to M&A, significant legal settlements, restructuring, restatement or other non-operational or non-recurring events. The attached press release also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA, non-GAAP Operating Expenses and Adjusted Free Cash Flow. Reconciliations of these forward-looking non-GAAP financial measures were not included in the attached press release due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible at this time. As a result, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.

These non-GAAP measures reflect how Avid manages its businesses internally. Avid’s non-GAAP measures may vary from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP.  Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.

The attached press release also includes operational measures, such as bookings, recurring revenue bookings and revenue backlog. Definitions of these measures are included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.

Limitation on Incorporation by Reference.  The information furnished in Item 2.02 and 7.01, including the press release attached hereto as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Cautionary Note Regarding Forward-Looking Statements.  Except for historical information contained in this Form 8-K, and the press release attached as Exhibit 99.1 hereto, the Form 8-K, and press release contain forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary notes in the press release regarding these forward-looking statements.

Item 9.01  Financial Statements and Exhibits.

(d)                   Exhibits .
Exhibit
Number
Description
99.1
Press Release announcing financial results, dated March 23, 2017








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 hereunto duly authorized.



 
AVID TECHNOLOGY, INC.
 
(Registrant)
 
 
 
 
Date: March 23 , 2017
By:   /s/ Brian E. Agle                       
Name: Brian E. Agle   
Title: Senior Vice President and CFO





Exhibit 99.1


Avid Technology Announces Q4 2016 Results and Issues Q1 and FY 2017 Guidance
Met or Exceeded Guidance for All Metrics and Delivered Positive Adjusted Free Cash Flow in Q4
Strong Sequential Bookings Growth
Efficiency Program Reduces Operating Expenses 29% Year-over-Year in Q4
Positive Adjusted Free Cash Flow Expected in 2017

BURLINGTON, MA, March 23, 2017 Avid ® ( NASDAQ:AVID ) announced its fourth quarter and full year 2016 financial results today and provided financial guidance for first quarter and full year 2017.

Highlights of Fourth Quarter 2016 Results
GAAP and Non-GAAP Revenue was $115.3 million, in-line with guidance and down $23.5 million and $24.4 million year-over-year for GAAP and Non-GAAP, respectively. GAAP and Non-GAAP Revenue was down $3.7 million sequentially.
GAAP Gross Margin was 60.3%, up 1.2 percentage points year-over-year and down 3.1 percentage points sequentially; non-GAAP Gross Margin was 61.9%, up 1.1 percentage points year-over-year and down 3.2 percentage points sequentially.
GAAP Operating Expenses were $58.5 million, down $23.8 million year-over-year and down $8.4 million sequentially; Non-GAAP Operating Expenses were $50.1 million, below the guidance range, down $21.2 million year-over-year and down $8.3 million sequentially.
GAAP Net Income was $5.2 million, up $9.6 million year-over-year and down $3.9 million sequentially; Adjusted EBITDA was $25.2 million, above the guidance range, up $8.2 million year-over-year and up $2.4 million sequentially.
GAAP Net Cash used in Operating Activities was $270 thousand, down $2.3 million year-over-year and an improvement of $3.6 million sequentially; Adjusted Free Cash Flow was $2.0 million, in-line with guidance, down $0.3 million year-over-year and an improvement of $4.6 million sequentially.
Bookings and Constant Currency Bookings were $125.3 million and $134.5 million, in-line with guidance and down $67.8 million and $66.5 million year-over-year, respectively. The declines were attributable to the large Sinclair Enterprise deal booked in December 2015. Bookings and Constant Currency Bookings were up sequentially $35.7 million and $39.7 million, respectively.

Avid Everywhere Momentum Continues
More than 42,700 enterprise users on the MediaCentral platform at the end of 2016, a 29% increase from the beginning of the year
More than 60,700 paying individual, cloud-enabled subscribers, a substantial majority of whom are new customers to Avid, at the end of 2016, a 2.4x increase since the beginning of the year
Added more than 10,700 paying subscribers in Q4, representing a 21% increase from the end of Q3 2016, and largest quarterly paying subscriber increase in Avid’s history
Digital bookings in Q4 2016 increased 27% year-over-year and 46% sequentially; digital bookings in 2016 increased 43% from 2015.





Bookings attributable to recurring revenue represented 45% of total bookings in Q4 2016, up from 39% in Q3 2016; bookings attributable to recurring revenue represented 38% of total bookings in 2016, flat from 2015, which included the impact of the large Sinclair Enterprise deal.

“Thanks to strong execution in key focus areas we met or exceeded quarterly guidance for all of our metrics and delivered positive Adjusted Free Cash Flow,” said Louis Hernandez, Jr, Chairman and CEO of Avid. “We saw sequential bookings growth across all customer tiers and geographies. This performance included a rebound in storage, an improvement in Orad applications, continued growth of cloud-enabled subscribers and digital sales, and traction on enterprise deals such as the global enterprise and cloud agreement with Al Jazeera. Execution on our efficiency program drove a 29% year-over-year reduction in operating expenses. We are confident that we can complete the remaining efficiency program in 2017, which includes more than $30 million of additional annual savings.

Our Q4 results reveal an emerging financial model that will be more predictable and have a significantly improved Adjusted Free Cash Flow conversion of Adjusted EBITDA. This is a direct result of our achievements with the transformation: the roll-off of non-marketed products; completion of the efficiency program; and the cessation by the second quarter of 2017 of pre-2011 amortization and elimination of implied PCS revenue. As Avid’s transformation comes to a close, we are quickly preparing for the next phase of our plan by focusing on investments and partnerships that will drive our cloud-enabled growth strategy, Mr. Hernandez concluded.

Financial Guidance
Avid’s first quarter and full year 2017 financial guidance are set forth in the table below.
The guidance range for Q1 includes the impact of the commercial agreement we announced with Beijing Jetsen Technology Co., Ltd. (“Jetsen”) on January 31, 2017. As our exclusive distributor in the region, Jetsen has committed to minimum bookings and cash payments of $76 million over three years, which includes annual growth of approximately 15%. Guidance ranges for revenue are informed by our recurring revenue and revenue backlog, as well as expectations for our bookings performance. Additional cost savings related to the continued execution of our efficiency program are reflected in the guidance ranges for Non-GAAP Operating Expenses, Adjusted EBITDA and Adjusted Free Cash Flow. Guidance ranges imply a significantly improved Adjusted Free Cash Flow conversion of Adjusted EBITDA, due to our improving core operating margins and reduction of the impact related to pre-2011 amortization and elimination of implied PCS revenue.
“As we head into 2017, we are encouraged by the core trends in our Q4 performance which provides important visibility into our guidance for 2017. We believe our amended noteholder agreement will provide Avid with greater financial flexibility as we complete the transformation and deliver a scalable and sustainably profitable business,” said Brian E. Agle, Avid’s Senior Vice President and Chief Financial Officer.







Q1 and Full Year 2017 Guidance
(in $ millions)
Q1 2017
Full Year 2017
Bookings (Constant Currency)
$162-$176
 
Bookings
$154-$168
 
Revenue
$100-$110
$405-$435
Non-GAAP Operating Expenses
$54-$58
$205-$220
Adjusted EBITDA
$8-$14
$45-$55
Adjusted Free Cash Flow
($2)-$6
$7-$20

All guidance presented by the Company is inherently uncertain and subject to numerous risks and uncertainties. Avid’s actual future results of operations and cash flows could differ materially from those shown in the tables above. For a discussion of some of the key assumptions underlying the guidance, as well as the key risks and uncertainties associated with these forward-looking statements, please see “Forward Looking Statements” below as well as the Avid Technology Fourth Quarter and Full Year 2016 Business Update presentation posted on Avid’s investor relations website.

Avid includes non-GAAP financial measures in this press release, including non-GAAP Revenue, Adjusted EBITDA, Adjusted Free Cash Flow, non-GAAP Operating Income (loss), non-GAAP Operating Expenses and non-GAAP Gross Margin. The Company also includes the operational metric of bookings, revenue backlog and recurring revenue bookings in this release. Avid believes the non-GAAP financial measures and operational metrics provided in this release provide helpful information to investors with respect to evaluating the Company’s performance. Unless noted, all financial information is reported based on actual exchange rates. Definitions of the non-GAAP financial measures are included in our Form 8-K filed today. Reconciliations of the non-GAAP financial measures in this release to the Company's comparable GAAP financial measures for the periods presented are set forth below and are also included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com, which also includes definitions of the operational metrics.

The earnings release also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA, non-GAAP Operating Expenses and Adjusted Free Cash Flow. Reconciliations of these forward-looking non-GAAP financial measures were not included in the Earnings Release due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible at this time. As a result, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.

Conference Call

A conference call to discuss Avid's financial results for the fourth quarter and full year 2016 will be held on Thursday, March 23, 2017 at 5:00 p.m. ET. The call will be open to the public and can be accessed by dialing 719-325-2278 and referencing confirmation code 2768857. You may also listen to the call on the Avid Investor Relations website. To listen via the website, go to the events tab at ir.avid.com for complete details prior to the start of the conference call. A replay of the call will also be available on the Avid Investor Relations website shortly after the completion of the call.






Forward-Looking Statements

Certain information provided in this press release, including the tables attached hereto, include forward-looking statements that involve risks and uncertainties, including projections and statements about our anticipated plans, objectives, expectations and intentions. Among other things, this press release includes estimated results of operations for 2017, which estimates are based on a variety of assumptions about key factors and metrics that will determine our future results of operations, including, for example, anticipated market uptake of new products, realization of identified efficiency programs and market based cost inflation. Other forward-looking statements include, without limitation, statements based upon or otherwise incorporating judgments or estimates relating to future performance such as future operating results and expenses; earnings; bookings; backlog; revenue backlog conversion rate; product mix and free cash flow; our long-term and recent cost savings initiatives and the anticipated benefits therefrom; our future strategy and business plans; our product plans, including products under development, such as cloud and subscription based offerings; our liquidity and ability to raise capital; the anticipated benefits of the Orad acquisition, including estimated synergies, including effects on future financial and operating results; and our liquidity. The projected future results of operations, and the other forward-looking statements in this release are based on current expectations as of the date of this release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to the effect on our sales, operations and financial performance resulting from: our liquidity; our ability to execute our strategic plan, including cost savings initiatives, and meet customer needs; our ability to retain and hire key personnel; our ability to produce innovative products in response to changing market demand, particularly in the media industry; our ability to successfully accomplish our product development plans; competitive factors; history of losses; fluctuations in our revenue, based on, among other things, our performance and risks in particular geographies or markets; our higher indebtedness and ability to service it and meet the obligations thereunder; restrictions in our credit facilities; our move to a subscription model and related effect on our revenues and ability to predict future revenues; elongated sales cycles; fluctuations in foreign currency exchange rates; seasonal factors; adverse changes in economic conditions; variances in our revenue backlog and the realization thereof; the identified material weaknesses in our internal control over financial reporting; and the possibility of legal proceedings adverse to our company. Moreover, the business may be adversely affected by future legislative, regulatory or changes, including tax law changes, as well as other economic, business and/or competitive factors. The risks included above are not exhaustive. Other factors that could adversely affect our business and prospects are set forth in our public filings with the SEC. Forward-looking statements contained herein are made only as to the date of this press release and we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

About Avid
Through   Avid Everywhere™ , Avid delivers the most open and efficient media platform, connecting content creation with collaboration, asset protection, distribution and consumption. Avid’s preeminent customer community uses Avid’s comprehensive tools and workflow solutions to create, distribute and monetize the most watched, loved and listened to media in the world-from prestigious and award-winning feature films, to popular television shows, news programs and televised sporting events, and celebrated music recordings and live concerts. With the most flexible deployment and pricing options, Avid’s industry-leading solutions include Pro Tools®, Media Composer®, Avid NEXIS™, Interplay®, ProSet™ and RealSet™, Maestro™, PlayMaker™, and Sibelius®. For more information about Avid





solutions and services, visit  www.avid.com , connect with Avid on  Facebook Instagram , Twitter , YouTube LinkedIn , or subscribe to  Avid Blogs .

© 2017 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid Everywhere, Avid NEXIS, iNEWS, Interplay, AirSpeed, MediaCentral, Media Composer, PhaseFind, Pro Tools, ScriptSync and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of the Interplay Entertainment Corp. which bears no responsibility for Avid products. Product features, specifications, system requirements and availability are subject to change without notice.

PR Contact:
Sara Griggs
Avid
sara.griggs@avid.com
310-907-6909

Investor Contact:
Robert Roose
Avid
robert.roose@avid.com








AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands except per share data)
 
Three Months Ended

Twelve Months Ended
 
December 31,

December 31,
 
2016

2015

2016

2015
Net revenues:
 
 
 
 
 
 
 
Products
$
59,269

 
$
91,247

 
$
283,110

 
$
336,371

Services
56,026

 
47,559

 
228,820

 
169,224

Total net revenues
115,295

 
138,806

 
511,930

 
505,595

 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
Products
29,174

 
39,465

 
111,579

 
131,881

Services
14,702

 
15,447

 
59,828

 
61,501

Amortization of intangible assets
1,950

 
1,950

 
7,800

 
4,063

Total cost of revenues
45,826

 
56,862

 
179,207

 
197,445

Gross profit
69,469

 
81,944

 
332,723

 
308,150

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
18,773

 
24,190

 
81,564

 
95,898

Marketing and selling
21,311

 
30,091

 
110,338

 
122,511

General and administrative
13,112

 
21,463

 
61,471

 
74,109

Amortization of intangible assets
363

 
786

 
2,498

 
2,354

Restructuring costs, net
4,959

 
5,766

 
12,837

 
6,305

Total operating expenses
58,518

 
82,296

 
268,708

 
301,177

 
 
 
 
 
 
 
 
Operating income (loss)
10,951

 
(352
)
 
64,015

 
6,973

 
 
 
 
 
 
 
 
Interest and other expense, net
(4,622
)
 
(1,727
)
 
(18,671
)
 
(6,408
)
Income (loss) before income taxes
6,329

 
(2,079
)
 
45,344

 
565

Provision for (benefit from) income taxes
1,108

 
2,306

 
(2,875
)
 
(1,915
)
Net income (loss)
$
5,221

 
$
(4,385
)
 
$
48,219

 
$
2,480

 
 
 
 
 
 
 
 
Net income (loss) per common share – basic and diluted
$
0.13

 
$
(0.11
)
 
$
1.20

 
$
0.06

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding – basic
40,637

 
39,439

 
40,021

 
39,423

Weighted-average common shares outstanding – diluted
40,746

 
39,439

 
40,176

 
40,380

 
 
 
 
 
 
 
 







AVID TECHNOLOGY, INC.
Reconciliations of GAAP financial measures to Non-GAAP financial measures
(unaudited - in thousands)
 
Three Months Ended
 
Twelve Months Ended
 
Three Months Ended
 
Three Months Ended
 
December 31,
 
December 31,
 
September 30,
 
March 31,
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Non-GAAP revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP revenue
$
115,295

 
$
138,806

 
$
511,930

 
$
505,595

 
$
119,019

 
$
137,436

 
$
143,547

 
$
119,586

Amortization of acquired deferred revenue

 
858

 
594

 
858

 

 

 
269

 

Non-GAAP revenue
115,295

 
139,664

 
512,524

 
506,453

 
119,019

 
137,436

 
143,816

 
119,586

Pre-2011 Revenue
2,268

 
12,017

 
24,772

 
58,543

 
5,368

 
13,635

 
9,338

 
17,483

Elim PCS
8,100

 
7,000

 
52,900

 
22,500

 
12,000

 
15,500

 
17,600

 

Non-GAAP Revenue w/o Pre-2011 and Elim
104,927

 
120,647

 
434,852

 
425,410

 
101,651

 
108,301

 
116,878

 
102,103

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP gross profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP gross profit
69,469

 
81,944

 
332,723

 
308,150

 
75,391

 
87,814

 
100,063

 
72,094

Amortization of acquired deferred revenue

 
858

 
594

 
858

 

 

 
269

 

Amortization of intangible assets
1,950

 
1,950

 
7,800

 
4,063

 
1,950

 
1,950

 
1,950

 

Stock-based compensation
(48
)
 
171

 
440

 
823

 
157

 
183

 
179

 
254

Non-GAAP gross profit
71,371

 
84,923

 
341,557

 
313,894

 
77,498

 
89,947

 
102,461

 
72,348

Pre-2011 Revenue
2,268

 
12,017

 
24,772

 
58,543

 
5,368

 
13,635

 
9,338

 
17,483

Elim PCS
8,100

 
7,000

 
52,900

 
22,500

 
12,000

 
15,500

 
17,600

 

Non-GAAP gross profit w/o Pre-2011 and Elim
61,003

 
65,906

 
263,885

 
232,851

 
60,130

 
60,812

 
75,523

 
54,865

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating expenses
58,518

 
82,296

 
268,708

 
301,177

 
66,887

 
73,409

 
74,316

 
70,979

Less Amortization of intangible assets
(363
)
 
(786
)
 
(2,498
)
 
(2,354
)
 
(567
)
 
(786
)
 
(786
)
 
(374
)
Less Stock-based compensation
(1,847
)
 
(1,612
)
 
(7,475
)
 
(8,691
)
 
(1,571
)
 
(2,206
)
 
(1,919
)
 
(2,208
)
Less Restructuring costs, net
(4,959
)
 
(5,766
)
 
(12,837
)
 
(6,305
)
 
(5,314
)
 

 
(2,777
)
 

Less Restatement costs
(109
)
 
(51
)
 
(295
)
 
(1,039
)
 
(38
)
 
(287
)
 
(80
)
 
(1,807
)
Less Acquisition, integration and other costs
(129
)
 
(1,595
)
 
(587
)
 
(9,232
)
 
336

 
(1,965
)
 
(515
)
 
(2,342
)
Less Efficiency program costs
(967
)
 
(1,144
)
 
(4,305
)
 
(1,144
)
 
(1,338
)
 

 
(716
)
 

Non-GAAP operating expenses
50,144

 
71,342

 
240,711

 
272,412

 
58,395

 
68,165

 
67,523

 
64,248

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Non-GAAP operating income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating income (loss)
10,951

 
(352
)
 
64,015

 
6,973

 
8,504

 
14,405

 
25,747

 
1,115

Amortization of acquired deferred revenue

 
858

 
594

 
858

 

 

 
269

 

Amortization of intangible assets
2,313

 
2,736

 
10,298

 
6,417

 
2,517

 
2,736

 
2,736

 
374

Stock-based compensation
1,799

 
1,783

 
7,915

 
9,514

 
1,728

 
2,389

 
2,098

 
2,462

Restructuring costs, net
4,959

 
5,766

 
12,837

 
6,305

 
5,314

 

 
2,777

 

Restatement costs
109

 
51

 
295

 
1,039

 
38

 
287

 
80

 
1,807

Acquisition, integration and other costs
129

 
1,595

 
587

 
9,232

 
(336
)
 
1,965

 
515

 
2,342

Efficiency program costs
967

 
1,144

 
4,305

 
1,144

 
1,338

 

 
716

 

Non-GAAP operating income
21,227

 
13,581

 
100,846

 
41,482

 
19,103

 
21,782

 
34,938

 
8,100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating income (from above)
21,227

 
13,581

 
100,846

 
41,482

 
19,103

 
21,782

 
34,938

 
8,100

Depreciation
3,997

 
3,416

 
15,181

 
13,672

 
3,762

 
3,168

 
3,611

 
3,677

Adjusted EBITDA
25,224

 
16,997

 
116,027

 
55,154

 
22,865

 
24,950

 
38,549

 
11,777

Pre-2011 Revenue
2,268

 
12,017

 
24,772

 
58,543

 
5,368

 
13,635

 
9,338

 
17,483

Elim PCS
8,100

 
7,000

 
52,900

 
22,500

 
12,000

 
15,500

 
17,600

 
 
Adjusted EBITDA w/o Pre-2011 and Elim
14,856

 
(2,020
)
 
38,355

 
(25,889
)
 
5,497

 
(4,185
)
 
11,611

 
(5,706
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted free cash flow
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net cash (used in) provided by operating activities
(270
)
 
2,061

 
(49,195
)
 
(34,026
)
 
(3,909
)
 
(9,873
)
 
(11,209
)
 
4,630

Capital expenditures
(1,322
)
 
(4,220
)
 
(11,003
)
 
(15,330
)
 
(2,360
)
 
(4,368
)
 
(4,518
)
 
(2,940
)
Restructuring payments
1,959

 
564

 
10,940

 
1,616

 
1,496

 
316

 
3,533

 
428

Restatement payments
153

 
321

 
153

 
3,945

 

 

 

 
2,117

Acquisition, integration and other payments
24

 
1,988

 
1,841

 
6,946

 
196

 
3,368

 
773

 

Efficiency program payments
1,412

 
1,556

 
6,942

 
1,556

 
1,947

 

 
1,981

 

Adjusted free cash flow
$
1,956

 
$
2,270

 
$
(40,322
)
 
$
(35,293
)
 
$
(2,630
)
 
$
(10,557
)
 
$
(9,440
)
 
$
4,235


These non-GAAP measures reflect how Avid manages its businesses internally. Avid’s non-GAAP measures may vary from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP.  Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.







AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
 
December 31,
2016
 
December 31,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
44,948

 
$
17,902

Accounts receivable, net of allowances of $8,618 and $9,226 at December 31, 2016 and 2015, respectively
43,520

 
58,807

Inventories
50,701

 
48,073

Prepaid expenses
6,031

 
6,548

Other current assets
5,805

 
6,119

Total current assets
151,005

 
137,449

Property and equipment, net
30,146

 
35,481

Intangible assets, net
22,932

 
33,219

Goodwill
32,643

 
32,643

Long-term deferred tax assets, net
1,245

 
2,011

Other long-term assets
11,610

 
7,123

Total assets
$
249,581

 
$
247,926

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
26,435

 
$
45,511

Accrued compensation and benefits
25,387

 
28,124

Accrued expenses and other current liabilities
34,088

 
35,354

Income taxes payable
1,012

 
1,023

Short-term debt
5,000

 
5,000

Deferred revenues
146,014

 
189,887

Total current liabilities
237,936

 
304,899

Long-term debt
188,795

 
95,950

Long-term deferred tax liabilities, net
913

 
3,443

Long-term deferred revenues
79,670

 
158,495

Other long-term liabilities
12,178

 
14,711

Total liabilities
519,492

 
577,498

 
 
 
 
Stockholders’ deficit:
 
 
 
Preferred stock, $0.01 par value, 1,000 shares authorized; no shares issued or outstanding

 

Common stock, $0.01 par value, 100,000 shares authorized; 42,339 shares issued, and 40,727 shares and 39,530 shares outstanding at December 31, 2016 and 2015, respectively
423

 
423

Additional paid-in capital
1,043,063

 
1,055,838

Accumulated deficit
(1,271,148
)
 
(1,319,318
)
Treasury stock at cost, net of reissuances, 1,612 shares and 2,809 shares at December 31, 2016 and 2015, respectively
(32,353
)
 
(58,336
)
Accumulated other comprehensive loss
(9,896
)
 
(8,179
)
Total stockholders’ deficit
(269,911
)
 
(329,572
)
Total liabilities and stockholders’ deficit
$
249,581

 
$
247,926







AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
Twelve Months Ended
 
December 31,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
48,219

 
$
2,480

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
Depreciation and amortization
25,479

 
20,088

Provision (recovery) for doubtful accounts
886

 
(23
)
Stock-based compensation expense
7,916

 
9,514

Non-cash provision for restructuring
1,137

 

Non-cash interest expense
9,620

 
2,890

Unrealized foreign currency transaction gains
(2,599
)
 
(7,013
)
Benefit from deferred taxes
(1,842
)
 
(6,693
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
14,321

 
2,442

Inventories
(2,628
)
 
3,056

Prepaid expenses and other current assets
(1,839
)
 
10,000

Accounts payable
(18,959
)
 
11,232

Accrued expenses, compensation and benefits and other liabilities
(6,280
)
 
(11,842
)
Income taxes payable
(9
)
 
(1,041
)
Deferred revenues
(122,617
)
 
(69,116
)
Net cash used in operating activities
(49,195
)
 
(34,026
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(11,003
)
 
(15,330
)
Increase in other long-term assets
(30
)
 
(43
)
Payments for business acquisitions, net of cash acquired

 
(65,967
)
Increase in restricted cash
(4,544
)
 
(456
)
Net cash used in investing activities
(15,577
)
 
(81,796
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from long-term debt, net of issuance costs
100,000

 
120,401

Repayment of debt
(3,750
)
 

Payments for repurchase of common stock

 
(7,999
)
Cash paid for capped call transaction

 
(10,125
)
Proceeds from the issuance of common stock under employee stock plans
6,184

 
5,035

Common stock repurchases for tax withholdings for net settlement of equity awards
(941
)
 
(1,559
)
Proceeds from revolving credit facilities
25,000

 
70,500

Payments on revolving credit facilities
(30,000
)
 
(65,500
)
Payments for credit facility issuance costs
(5,041
)
 
(1,195
)
Net cash provided by financing activities
91,452

 
109,558

 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
366

 
(890
)
Net increase (decrease) in cash and cash equivalents
27,046

 
(7,154
)
Cash and cash equivalents at beginning of year
17,902

 
25,056

Cash and cash equivalents at end of year
$
44,948

 
$
17,902






AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited - in thousands)
 
 
December 31,
September 30,
December 31,
 
 
 
 
 
Revenue Backlog*
2016
2016
2015
 
 
 
 
 
 
 

 
 
 
 
 
 
Pre-2011
$
1,095

$
3,364

$
25,868

 
 
 
 
 
Post-2010
$
224,589

$
236,644

$
322,514

 
 
 
 
 
Deferred Revenue
$
225,684

$
240,008

$
348,382

 
 
 
 
 
Other Backlog
$
203,625

$
197,153

$
203,704

 
 
 
 
 
  Total Revenue Backlog
$
429,309

$
437,161

$
552,086

 
 
 
 
 
 
 

 
 
 
 
 
 
Post 2010
$
428,214

$
433,797

$
526,218

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The expected timing of recognition of revenue backlog as of December 31, 2016 is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
2018
2019
Thereafter
Total
 
Orders executed prior to January 1, 2011
$
952

$
143

$

$

$
1,095

 
Orders executed or materially modified on or after January 1, 2011
$
136,090

$
43,734

$
23,306

$
21,458

$
224,589

 
Other Backlog
 
 
$
79,808

$
47,135

$
26,808

$
49,874

$
203,625

 
  Total Revenue Backlog
 
 
$
216,850

$
91,012

$
50,114

$
71,332

$
429,309

 
 
 
 
 
 
 
 
 
 
*A definition of Revenue Backlog is included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.
 
 
 
 
 
 
 
 
 
 
Note: current estimates could change based on a number of factors, including (i) the timing of delivery of products and services, (ii) customer cancellations or change order, (iii) changes in the estimated period of time Implied Maintenance Release PCS is provided to customers, including as a result of changes in business practices.


Media Contact                 
Sara Griggs                 
Avid                     
310.821.0801                 
sara.griggs@avid.com             

Investor Contact
Robert Roose
Avid
978.640.3375
robert.roose@avid.com