Avid Technology, Inc.
AVID TECHNOLOGY, INC. (Form: 8-K, Received: 03/15/2018 16:12:47)





        


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 15, 2018

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 





Item 2.02. Results of Operations and Financial Condition.

On March 15, 2018, the Company issued a press release announcing its financial results for the fiscal quarter and full year ended December 31, 2017 (the “Press Release”). 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 information contained in Item 2.02 is incorporated by reference herein.

Non-GAAP and Operational Measures.  The attached Press Release includes the following non-GAAP financial measures: non-GAAP revenue, non-GAAP operating income (loss), non-GAAP operating expenses, non-GAAP gross margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Free Cash Flow, Free Cash Flow, and Adjusted Free Cash Flow conversion of Adjusted EBITDA. Non-GAAP operating income (loss), non-GAAP operating expenses, Adjusted EBITDA and Adjusted EBITDA margin exclude restructuring costs, stock-based compensation, amortization 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 expense. Avid defines Adjusted EBITDA margin as Adjusted EBITDA divided by non-GAAP revenue. Avid defines Adjusted Free Cash Flow conversion of Adjusted EBITDA as Adjusted Free Cash Flow divided by Adjusted EBITDA. Avid defines 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. Reconciliations of these non-GAAP financial measures to their most comparable GAAP measures are contained in the tables accompanying the Press Release. The attached Press Release also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow. Reconciliations of these forward-looking non-GAAP financial measures are 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 Items 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.  This Form 8-K, and the Press Release attached as Exhibit 99.1 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 .


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 15, 2018
By:   /s/ Brian E. Agle                       
Name: Brian E. Agle   
Title: Senior Vice President and CFO





Exhibit 99.1

Avid Technology Announces Q4 and Full Year 2017 Results and
Issues Q1 and Full Year 2018 Guidance
Exceeded guidance for bookings and adjusted free cash flow, met guidance on all other metrics
Second consecutive quarter of sequential revenue and adjusted EBITDA growth
Positive free cash flow in 2017 and expect continued growth of free cash flow in 2018
BURLINGTON, Mass., March 15, 2018 Avid ® ( NASDAQ:AVID ) today announced its fourth quarter and full year 2017 financial results and provided guidance for its first quarter and full year 2018. The company posted its second consecutive quarter of sequential revenue and adjusted EBITDA growth and exceeded guidance for bookings and adjusted free cash flow while meeting guidance on all other metrics.

Highlights of Fourth Quarter 2017 Results
Bookings excluding Greater China were $140.8 million and Constant Currency Bookings were $145.9 million, both above guidance.
GAAP Revenue was $107.3 million, in line with guidance .
GAAP Gross Margin was 54.5%. Non-GAAP Gross Margin was 56.0% .
GAAP Operating Expenses were $53.7 million . Non-GAAP Operating Expenses were $48.2 million, in line with guidance.
GAAP Net Loss was $881,000.
Adjusted EBITDA was $15.0 million, in line with guidance .
GAAP Net Cash Provided by Operating Activities was $2.8 million .
Adjusted Free Cash Flow was $4.8 million, above guidance. This is the fifth consecutive quarter of positive Adjusted Free Cash Flow. For the full year 2017, Adjusted Free Cash Flow was up $59 million compared to 2016.

2017 Highlights
Grew total revenue backlog to $536.1 million as of the end of 2017, up 25% from $429.3 million the year prior.
Completed multi-year business transformation.
Launched strategic alliance with Microsoft to develop and market cloud-based solutions and services for the media and entertainment industry.
Generated positive free cash flow.

Avid Progressing on Strategic Growth Objectives
Enterprise: During the fourth quarter, Avid signed several large multi-year commercial agreements. As of December 31, 2017, total licenses for the MediaCentral platform were approximately 53,700, up 26% year-over-year.
Individual: Digital sales, primarily targeted at individual creative professionals, were up 24% year-over-year. Cloud-enabled software subscriptions are now over 93,500, up 54% year-over-year.






“Our strategy is yielding improved financial results as customers are embracing our products and solutions,” said Jeff Rosica, Chief Executive Officer and President of Avid. “Looking ahead, I’m excited about the opportunity before us and our plan to continue to improve business performance, while further leveraging the unique position we’ve established, including our ability to lead customers and the industry into the cloud.”

“We are pleased with our financial performance this year having met key objectives for 2017, including meeting or exceeding guidance on all metrics each quarter and delivering a substantial improvement in free cash flow generation,” said Brian E. Agle, Senior Vice President and Chief Financial Officer of Avid. “In the second half of 2017, our results showed improvement as we delivered two consecutive quarters of revenue and adjusted EBITDA growth, excluding the impact of pre-2011 amortization and elimination of implied PCS revenue. We look forward to building on this momentum in 2018, as we remain focused on growing revenue, managing expenses and further increasing free cash flow.”

First Quarter and Full Year 2018 Guidance
Avid’s first quarter and full year 2018 financial guidance is provided in the table below. This guidance reflects the expected estimated impact of the adoption of the new revenue recognition standard ASC 606 as of January 1, 2018. In 2018, the Company will be refining its guidance practices to focus only on Revenue, Adjusted EBITDA and Free Cash Flow. Annual Free Cash Flow guidance will replace the Adjusted Free Cash Flow guidance previously provided quarterly.
 
Guidance under ASC 606
(in $ millions)
2018
Q1 2018
Revenue
$404 - $434
$95 - $105
Adjusted EBITDA
$39 - $51
$3 - $9
Free Cash Flow (Annual)
$2 - $14
 

The adoption of ASC 606 as of January 1, 2018 is estimated to unfavorably impact revenue and Adjusted EBITDA by $11 million and $2 million in 2018 and Q1 2018, respectively .
A reconciliation of guidance under the ASC 606 and ASC 605 standards is provided for comparison purposes in the supplemental tables included in this press release.
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 table 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 Q4 2017 Business Update presentation posted on Avid’s Investor Relations website.

Non-GAAP Financial Measures
Avid includes non-GAAP financial measures in this press release, including Adjusted EBITDA, Adjusted Free Cash Flow, Free Cash Flow, non-GAAP Operating Income (loss), non-GAAP Operating Expenses, non-GAAP Gross Margin, Adjusted EBITDA margin and Adjusted Free Cash Flow conversion of Adjusted EBITDA. The Company also includes the operational metrics 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, and Free Cash Flow. Reconciliations of these forward-looking non-GAAP financial measures are 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
Avid will host a conference call to discuss its financial results for the fourth quarter and full year 2017 on Thursday, March 15, 2018 at 5:00 p.m. ET. The call will be open to the public and can be accessed by dialing 323-994-2083 and referencing confirmation code 7939066. 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 the year ending December 31, 2018 and first quarter ending March 31, 2018, 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; backlog; revenue backlog conversion rate; product mix and free cash flow; 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 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, 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; 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 Media Composer®, Pro Tools®, Avid NEXIS®, MediaCentral®, iNEWS®, AirSpeed®, Sibelius®, Avid VENUE™, Avid FastServe™, Maestro™, and PlayMaker™. 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 .

© 2018 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid Everywhere, Avid Artist | DNxIV, Avid NEXIS, Avid FastServe, AirSpeed, iNews, Maestro, MediaCentral, Media Composer, PlayMaker, Pro Tools, Avid VENUE, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. All other trademarks are the property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.

Investor Contact:
Dean Ridlon
Avid
dean.ridlon@avid.com
(978) 640-3379

PR Contact:
Jim Sheehan
Avid
jim.sheehan@avid.com
(978) 640-3152












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,
 
2017
 
2016
 
2017
 
2016
Net revenues:
 
 
 
 
 
 
 
Products
$
56,481

 
$
59,269

 
$
209,461

 
$
283,110

Services
50,777

 
56,026

 
209,542

 
228,820

Total net revenues
107,258

 
115,295

 
419,003

 
511,930

 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
Products
32,128

 
29,174

 
112,606

 
111,579

Services
14,734

 
14,702

 
56,481

 
59,828

Amortization of intangible assets
1,950

 
1,950

 
7,800

 
7,800

Total cost of revenues
48,812

 
45,826

 
176,887

 
179,207

Gross profit
58,446

 
69,469

 
242,116

 
332,723

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
16,308

 
18,773

 
68,212

 
81,564

Marketing and selling
25,776

 
21,311

 
106,257

 
110,338

General and administrative
10,624

 
13,112

 
53,892

 
61,471

Amortization of intangible assets
362

 
363

 
1,450

 
2,498

Restructuring costs, net
595

 
4,959

 
7,059

 
12,837

Total operating expenses
53,665

 
58,518

 
236,870

 
268,708

 
 
 
 
 
 
 
 
Operating income
4,781

 
10,951

 
5,246

 
64,015

 
 
 
 
 
 
 
 
Interest and other expense, net
(5,203
)
 
(4,622
)
 
(18,668
)
 
(18,671
)
(Loss) income before income taxes
(422
)
 
6,329

 
(13,422
)
 
45,344

Provision for (benefit from) income taxes
459

 
1,108

 
133

 
(2,875
)
Net (loss) income
$
(881
)
 
$
5,221

 
$
(13,555
)
 
$
48,219

 
 
 
 
 
 
 
 
Net (loss) income per common share – basic and diluted
$
(0.02
)
 
$
0.13

 
$
(0.33
)
 
$
1.20

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding – basic
41,216

 
40,637

 
41,020

 
40,021

Weighted-average common shares outstanding – diluted
41,216

 
40,746

 
41,020

 
40,176








AVID TECHNOLOGY, INC.
Reconciliations of GAAP financial measures to Non-GAAP financial measures
(unaudited - in thousands)
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2017
 
2016
 
2017
 
2016
Non-GAAP revenue
 
 
 
 
 
 
 
GAAP revenue
$
107,258

 
$
115,295

 
$
419,003

 
$
511,930

Amortization of acquired deferred revenue

 

 

 
594

Non-GAAP revenue
107,258

 
115,295

 
419,003

 
512,524

Pre-2011 Revenue
78

 
2,268

 
985

 
24,772

Elim PCS

 
8,100

 
1,700

 
52,900

Non-GAAP Revenue w/o Pre-2011 and Elim
107,180

 
104,927

 
416,318

 
434,852

 
 
 
 
 
 
 
 
Non-GAAP gross profit
 
 
 
 
 
 
 
GAAP gross profit
58,446

 
69,469

 
242,116

 
332,723

Amortization of acquired deferred revenue

 

 

 
594

Amortization of intangible assets
1,950

 
1,950

 
7,800

 
7,800

Stock-based compensation
(305
)
 
(48
)
 
242

 
440

Non-GAAP gross profit
60,091

 
71,371

 
250,158

 
341,557

Pre-2011 Revenue
78

 
2,268

 
985

 
24,772

Elim PCS

 
8,100

 
1,700

 
52,900

Non-GAAP gross profit w/o Pre-2011 and Elim
60,013

 
61,003

 
247,473

 
263,885

 
 
 
 
 
 
 
 
Non-GAAP operating expenses
 
 
 
 
 
 
 
GAAP operating expenses
53,665

 
58,518

 
236,870

 
268,708

Less Amortization of intangible assets
(362
)
 
(363
)
 
(1,450
)
 
(2,498
)
Less Stock-based compensation
(2,741
)
 
(1,847
)
 
(8,069
)
 
(7,475
)
Less Restructuring costs, net
(595
)
 
(4,959
)
 
(7,059
)
 
(12,837
)
Less Restatement costs
(558
)
 
(109
)
 
(1,284
)
 
(295
)
Less Acquisition, integration and other costs
(266
)
 
(129
)
 
(163
)
 
(587
)
Less Efficiency program costs
(931
)
 
(967
)
 
(3,985
)
 
(4,305
)
Non-GAAP operating expenses
48,212

 
50,144

 
214,860

 
240,711

 
 
 
 
 
 
 
 
Non-GAAP operating income
 
 
 
 
 
 
 
GAAP operating income
4,781

 
10,951

 
5,246

 
64,015

Amortization of acquired deferred revenue

 

 

 
594

Amortization of intangible assets
2,312

 
2,313

 
9,250

 
10,298

Stock-based compensation
2,436

 
1,799

 
8,311

 
7,915

Restructuring costs, net
595

 
4,959

 
7,059

 
12,837

Restatement costs
558

 
109

 
1,284

 
295

Acquisition, integration and other costs
266

 
129

 
163

 
587

Efficiency program costs
931

 
967

 
3,985

 
4,305

Non-GAAP operating income
11,879

 
21,227

 
35,298

 
100,846

 
 
 
 
 
 
 
 





Adjusted EBITDA
 
 
 
 
 
 
 
Non-GAAP operating income (from above)
11,879

 
21,227

 
35,298

 
100,846

Depreciation
3,093

 
3,997

 
13,087

 
15,181

Adjusted EBITDA
14,972

 
25,224

 
48,385

 
116,027

Adjusted EBITDA margin
14
%
 
22
%
 
12
%
 
23
 %
Pre-2011 Revenue
78

 
2,268

 
985

 
24,772

Elim PCS

 
8,100

 
1,700

 
52,900

Adjusted EBITDA w/o Pre-2011 and Elim
14,894

 
14,856

 
45,700

 
38,355

Adjusted EBITDA w/o Pre-2011 and Elim margin
14
%
 
14
%
 
11
%
 
9
 %
 
 
 
 
 
 
 
 
Adjusted free cash flow
 
 
 
 
 
 
 
GAAP net cash provided by (used in) operating activities
2,833

 
(270
)
 
8,936

 
(49,195
)
Capital expenditures
(1,752
)
 
(1,322
)
 
(7,877
)
 
(11,003
)
Free Cash Flow
1,081

 
(1,592
)
 
1,059

 
(60,198
)
 
 
 
 
 
 
 
 
Non-Operational / One-time Items
 
 
 
 
 
 
 
Restructuring payments
2,599

 
1,959

 
12,139

 
10,940

Restatement payments
455

 
153

 
834

 
153

Acquisition, integration and other payments
120

 
24

 
313

 
1,841

Efficiency program payments
500

 
1,412

 
3,863

 
6,942

Sub-Total Non-Operational / One-Time Items
3,674

 
3,548

 
17,149

 
19,876

 
 
 
 
 
 
 
 
Adjusted free cash flow
$
4,755

 
$
1,956

 
$
18,208

 
$
(40,322
)
Adjusted free cash flow conversion of adjusted EBITDA
32
%
 
8
%
 
38
%
 
(35
)%

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,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
57,223

 
$
44,948

Accounts receivable, net of allowances of $11,142 and $8,618 at December 31, 2017 and 2016, respectively
40,134

 
43,520

Inventories
38,421

 
50,701

Prepaid expenses
8,208

 
6,031

Other current assets
10,341

 
5,805

Total current assets
154,327

 
151,005

Property and equipment, net
21,903

 
30,146

Intangible assets, net
13,682

 
22,932

Goodwill
32,643

 
32,643

Long-term deferred tax assets, net
1,318

 
1,245

Other long-term assets
10,811

 
11,610

Total assets
$
234,684

 
$
249,581

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
30,160

 
$
26,435

Accrued compensation and benefits
25,466

 
25,387

Accrued expenses and other current liabilities
31,549

 
34,088

Income taxes payable
1,815

 
1,012

Short-term debt
5,906

 
5,000

Deferred revenues
121,184

 
146,014

Total current liabilities
216,080

 
237,936

Long-term debt
204,498

 
188,795

Long-term deferred tax liabilities, net

 
913

Long-term deferred revenues
73,429

 
79,670

Other long-term liabilities
9,247

 
12,178

Total liabilities
503,254

 
519,492

 
 
 
 
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 41,356 shares and 40,727 shares outstanding at December 31, 2017 and 2016, respectively
423

 
423

Additional paid-in capital
1,035,808

 
1,043,063

Accumulated deficit
(1,284,703
)
 
(1,271,148
)
Treasury stock at cost, net of reissuances, 983 shares and 1,612 shares at December 31, 2017 and 2016, respectively
(17,672
)
 
(32,353
)
Accumulated other comprehensive loss
(2,426
)
 
(9,896
)
Total stockholders’ deficit
$
(268,570
)
 
$
(269,911
)
 
$
234,684

 
$
249,581













AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
Twelve Months Ended
 
December 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net (loss) income
$
(13,555
)
 
$
48,219

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
22,337

 
25,479

(Recovery) provision for doubtful accounts
(340
)
 
886

Stock-based compensation expense
8,311

 
7,916

Non-cash provision for restructuring
3,191

 
1,137

Non-cash interest expense
8,951

 
9,620

Unrealized foreign currency transaction losses (gains)
7,336

 
(2,599
)
Benefit from deferred taxes
(873
)
 
(1,842
)
Changes in operating assets and liabilities:
 

 
 

Accounts receivable
3,800

 
14,321

Inventories
12,280

 
(2,628
)
Prepaid expenses and other assets
(7,567
)
 
(1,839
)
Accounts payable
3,606

 
(18,959
)
Accrued expenses, compensation and benefits and other liabilities
(8,189
)
 
(6,280
)
Income taxes payable
800

 
(9
)
Deferred revenues
(31,152
)
 
(122,617
)
Net cash provided by (used in) operating activities
8,936

 
(49,195
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(7,877
)
 
(11,003
)
Increase in other long-term assets
(36
)
 
(30
)
Decrease (increase) in restricted cash
1,790

 
(4,544
)
Net cash used in investing activities
(6,123
)
 
(15,577
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from long-term debt
16,694

 
100,000

Repayment of debt
(6,735
)
 
(3,750
)
Proceeds from the issuance of common stock under employee stock plans
445

 
6,184

Common stock repurchases for tax withholdings for net settlement of equity awards
(1,329
)
 
(941
)
Proceeds from revolving credit facilities

 
25,000

Payments on revolving credit facilities

 
(30,000
)
Payments for credit facility issuance costs
(700
)
 
(5,041
)
Net cash provided by financing activities
8,375

 
91,452

 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
1,087

 
366

Net increase in cash and cash equivalents
12,275

 
27,046

Cash and cash equivalents at beginning of year
44,948

 
17,902

Cash and cash equivalents at end of year
$
57,223

 
$
44,948






AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited - in thousands)
 
 
December 31,
September 30,
December 31,
 
 
 
Revenue Backlog*
2017
2017
2016
 
 
 
 
 
 
 
 
 
 
Pre-2011
$
112

$
190

$
1,095

 
 
 
Post-2010
$
194,501

$
194,376

$
224,589

 
 
 
Deferred Revenue
$
194,613

$
194,566

$
225,684

 
 
 
Other Backlog
$
341,475

$
293,387

$
203,625

 
 
 
  Total Revenue Backlog
$
536,088

$
487,953

$
429,309

 
 
 
 
 
 
 
 
 
 
The expected timing of recognition of revenue backlog as of December 31, 2017 is as follows:
 
 
 
 
 
 
 
 
 
 
2018
2019
2020
Thereafter
Total
 
Orders executed prior to January 1, 2011
$
112

$

$

$

$
112

 
Orders executed or materially modified on or
$
95,028

$
36,713

$
25,310

$
37,450

$
194,501

 
after January 1, 2011










 
Other Backlog
$
147,550

$
67,301

$
40,427

$
86,197

$
341,475

 
  Total Revenue Backlog
$
242,690

$
104,014

$
65,737

$
123,647

$
536,088

 
 
 
 
 
 
 
 
*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.
 
 
 
In connection with the adoption of ASU No. 2014-09, Revenue from Contracts with Customers , on January 1, 2018, which will require more of our product sales to be recognized as revenue upon delivery rather than over an extended period of time, we expect approximately $105 million of the deferred revenue component of revenue backlog recorded as of December 31, 2017 will be eliminated.










AVID TECHNOLOGY, INC.
Supplemental Information Related to Guidance
(unaudited - in millions)

2018 Guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASC 605
 
 
 
2018 Guidance
ASC 606
2018 Comparison
Actual
 
($M)
Low
High
Add Back
Low
High
2017
 
 
 
 
 
 
 
 
 
Revenue
$404
$434
$11
$415
$445
$419
 
Revenue excl. Pre-2011 & Elim PCS
404
434
11
415
445
416
 
Pre-2011 & Elim PCS
0
0
 
0
0
3
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
39
51
11
50
62
48
 
Adj EBITDA excl. Pre-2011 & Elim PCS
39
51
11
50
62
46
 
 
 
 
 
 
 
 
 
Free Cash Flow
$2
$14
$0
$2
$14
$1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2018 Guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2018
 
ASC 605
 
 
 
Guidance
ASC 606
Q1'18 Comparison
Actual
($M)
Low
High
Add Back
Low
High
Q1 2017
Q4 2017
 
 
 
 
 
 
 
 
Revenue
$95
$105
$2
$97
$107
$104
$107
Revenue excl. Pre-2011 & Elim PCS
95
105
2
97
107
102
107
Pre-2011 & Elim PCS
0
0
0
0
0
2
0
 
 
 
 
 
 
 
 
Adjusted EBITDA
3
9
2
5
11
13
15
Adj EBITDA excl. Pre-2011 & Elim PCS
$3
$9
$2
$5
$11
$11
$15
 
 
 
 
 
 
 
 

PR Contact                 
Jim Sheehan                 
Avid                                 
jim.sheehan@avid.com
978.640.3152             

Investor Contact
Dean Ridlon
Avid
dean.ridlon@avid.com
978.640.3379