(Mark One)
|
||
S
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended June 30, 2011
|
||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from __________ to __________
|
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
04-2977748
(I.R.S. Employer
Identification No.)
|
Large Accelerated Filer £
Non-accelerated Filer £
(Do not check if smaller reporting company)
|
Accelerated Filer S
Smaller Reporting Company £
|
Page
|
|||
·
|
1
|
||
·
|
2
|
||
·
|
3
|
||
·
|
4
|
||
24
|
|||
41
|
|||
43
|
|||
44
|
|||
44
|
|||
44
|
|||
44
|
|||
45
|
|||
46
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||||||||
Net revenues:
|
|||||||||||||||||||
Products
|
$
|
129,190
|
$
|
134,134
|
$
|
266,525
|
$
|
262,813
|
|||||||||||
Services
|
32,154
|
28,026
|
61,142
|
55,303
|
|||||||||||||||
Total net revenues
|
161,344
|
162,160
|
327,667
|
318,116
|
|||||||||||||||
Cost of revenues:
|
|||||||||||||||||||
Products
|
62,964
|
65,837
|
127,615
|
129,106
|
|||||||||||||||
Services
|
15,312
|
13,139
|
29,699
|
27,179
|
|||||||||||||||
Amortization of intangible assets
|
685
|
946
|
1,351
|
1,912
|
|||||||||||||||
Total cost of revenues
|
78,961
|
79,922
|
158,665
|
158,197
|
|||||||||||||||
Gross profit
|
82,383
|
82,238
|
169,002
|
159,919
|
|||||||||||||||
Operating expenses:
|
|||||||||||||||||||
Research and development
|
30,453
|
30,268
|
60,426
|
60,419
|
|||||||||||||||
Marketing and selling
|
46,052
|
44,474
|
90,862
|
86,220
|
|||||||||||||||
General and administrative
|
14,920
|
13,879
|
30,218
|
28,481
|
|||||||||||||||
Amortization of intangible assets
|
2,161
|
2,417
|
4,306
|
5,274
|
|||||||||||||||
Restructuring and other (recoveries) costs, net
|
(163
|
)
|
4,007
|
(2,379
|
)
|
5,347
|
|||||||||||||
Loss on sales of assets
|
597
|
—
|
597
|
—
|
|||||||||||||||
Total operating expenses
|
94,020
|
95,045
|
184,030
|
185,741
|
|||||||||||||||
Operating loss
|
(11,637
|
)
|
(12,807
|
)
|
(15,028
|
)
|
(25,822
|
)
|
|||||||||||
Interest income
|
9
|
6
|
68
|
141
|
|||||||||||||||
Interest expense
|
(717
|
)
|
(252
|
)
|
(1,139
|
)
|
(461
|
)
|
|||||||||||
Other income (expense), net
|
(60
|
)
|
144
|
3
|
218
|
||||||||||||||
Loss before income taxes
|
(12,405
|
)
|
(12,909
|
)
|
(16,096
|
)
|
(25,924
|
)
|
|||||||||||
(Benefit from) provision for income taxes, net
|
(543
|
)
|
(3
|
)
|
883
|
464
|
|||||||||||||
Net loss
|
$
|
(11,862
|
)
|
$
|
(12,906
|
)
|
$
|
(16,979
|
)
|
$
|
(26,388
|
)
|
|||||||
Net loss per common share – basic and diluted
|
$
|
(0.31
|
)
|
$
|
(0.34
|
)
|
$
|
(0.44
|
)
|
$
|
(0.70
|
)
|
|||||||
Weighted-average common shares outstanding – basic and diluted
|
38,413
|
37,909
|
38,323
|
37,714
|
June 30,
2011
|
December 31,
2010
|
||||||||
ASSETS
|
|||||||||
Current assets:
|
|||||||||
Cash and cash equivalents
|
$
|
37,557
|
$
|
42,782
|
|||||
Accounts receivable, net of allowances of $15,400 and $17,149 at June 30, 2011
and December 31, 2010, respectively
|
98,386
|
101,171
|
|||||||
Inventories
|
129,795
|
108,357
|
|||||||
Deferred tax assets, net
|
1,144
|
1,068
|
|||||||
Prepaid expenses
|
7,628
|
7,688
|
|||||||
Other current assets
|
15,622
|
16,130
|
|||||||
Total current assets
|
290,132
|
277,196
|
|||||||
Property and equipment, net
|
59,254
|
62,519
|
|||||||
Intangible assets, net
|
24,625
|
29,750
|
|||||||
Goodwill
|
247,520
|
246,997
|
|||||||
Other assets
|
11,065
|
10,109
|
|||||||
Total assets
|
$
|
632,596
|
$
|
626,571
|
|||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||||
Current liabilities:
|
|||||||||
Borrowings under revolving credit facilities
|
$
|
13,000
|
$
|
—
|
|||||
Accounts payable
|
44,777
|
47,340
|
|||||||
Accrued compensation and benefits
|
31,834
|
41,101
|
|||||||
Accrued expenses and other current liabilities
|
35,560
|
40,986
|
|||||||
Income taxes payable
|
2,801
|
4,640
|
|||||||
Deferred revenues
|
49,341
|
40,585
|
|||||||
Total current liabilities
|
177,313
|
174,652
|
|||||||
Long-term liabilities
|
28,036
|
25,309
|
|||||||
Total liabilities
|
205,349
|
199,961
|
|||||||
Contingencies (Note 11)
|
|||||||||
Stockholders’ equity:
|
|||||||||
Common stock
|
423
|
423
|
|||||||
Additional paid-in capital
|
1,012,348
|
1,005,198
|
|||||||
Accumulated deficit
|
(515,963
|
)
|
(495,254
|
)
|
|||||
Treasury stock at cost, net of reissuances
|
(84,834
|
)
|
(91,025
|
)
|
|||||
Accumulated other comprehensive income
|
15,273
|
7,268
|
|||||||
Total stockholders’ equity
|
427,247
|
426,610
|
|||||||
Total liabilities and stockholders’ equity
|
$
|
632,596
|
$
|
626,571
|
Six Months Ended
June 30,
|
|||||||||
2011
|
2010
|
||||||||
Cash flows from operating activities:
|
|||||||||
Net loss
|
$
|
(16,979
|
)
|
$
|
(26,388
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
|||||||||
Depreciation and amortization
|
15,875
|
16,497
|
|||||||
Provision for (recoveries of) doubtful accounts
|
459
|
(10
|
)
|
||||||
Non-cash provision for restructuring
|
125
|
249
|
|||||||
Loss on sales of assets
|
597
|
—
|
|||||||
Gain on disposal of fixed assets
|
(6
|
)
|
(46
|
)
|
|||||
Compensation expense from stock grants and options
|
8,262
|
6,986
|
|||||||
Unrealized foreign currency transaction losses (gains)
|
6,490
|
(5,248
|
)
|
||||||
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions
|
(4
|
)
|
(250
|
)
|
|||||
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
|
|||||||||
Accounts receivable
|
2,228
|
(17,521
|
)
|
||||||
Inventories
|
(21,438
|
)
|
1,744
|
||||||
Prepaid expenses and other current assets
|
(208
|
)
|
5,269
|
||||||
Accounts payable
|
(2,625
|
)
|
20,920
|
||||||
Accrued expenses, compensation and benefits, and other liabilities
|
(16,246
|
)
|
(18,482
|
)
|
|||||
Income taxes payable
|
(2,031
|
)
|
(967
|
)
|
|||||
Deferred revenues
|
11,815
|
8,346
|
|||||||
Net cash used in operating activities
|
(13,686
|
)
|
(8,901
|
)
|
|||||
Cash flows from investing activities:
|
|||||||||
Purchases of property and equipment
|
(6,078
|
)
|
(22,509
|
)
|
|||||
(Increase) decrease in other long-term assets
|
(574
|
)
|
67
|
||||||
Payments for business acquisitions, net of cash acquired
|
—
|
(27,008
|
)
|
||||||
Purchases of marketable securities
|
—
|
(2,250
|
)
|
||||||
Proceeds from sales of marketable securities
|
—
|
19,605
|
|||||||
Net cash used in investing activities
|
(6,652
|
)
|
(32,095
|
)
|
|||||
Cash flows from financing activities:
|
|||||||||
Proceeds from (payments related to) the issuance of common stock under employee stock plans, net
|
1,349
|
(322
|
)
|
||||||
Proceeds from revolving credit facilities
|
21,000
|
—
|
|||||||
Payments on revolving credit facilities
|
(8,000
|
)
|
—
|
||||||
Net cash provided by (used in) financing activities
|
14,349
|
(322
|
)
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
764
|
(3,406
|
)
|
||||||
Net decrease in cash and cash equivalents
|
(5,225
|
)
|
(44,724
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
42,782
|
91,517
|
|||||||
Cash and cash equivalents at end of period
|
$
|
37,557
|
$
|
46,793
|
|||||
Supplemental information:
|
|||||||||
Cash paid for income taxes, net of refunds
|
$
|
2,541
|
$
|
2,472
|
|||||
Non-cash investing activities:
|
|||||||||
Landlord allowance for leasehold improvements
|
$
|
—
|
$
|
6,036
|
|||||
Issuance of common stock for business acquisition
|
$
|
—
|
$
|
5,776
|
·
|
The Company utilizes a pricing model for its products to capture the right value given the product and market context. The model considers such factors as: (i) competitive reference prices for products that are similar but not functionally equivalent, (ii) differential value based on specific feature sets, (iii) geographic regions where the products are sold, (iv) customer price sensitivity, (v) price-cost-volume tradeoffs, and (vi) volume based pricing. Management approval ensures that all of the Company’s selling prices are consistent and within an acceptable range for use with the relative selling price method.
|
·
|
While the pricing model currently in use captures all critical variables, unforeseen changes due to external market forces may result in the revision of some of the Company’s inputs. These modifications may result in consideration allocation in future periods that differs from the one presently in use. Absent a significant change in the pricing inputs, future changes in the pricing model are not expected to materially impact the Company’s allocation of arrangement consideration.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010 | |||||||||||||
Options
|
3,903 | 5,236 | 3,357 | 4,831 | ||||||||||||
Non-vested restricted stock and restricted stock units
|
810 | 453 | 600 | 466 | ||||||||||||
Anti-dilutive potential common shares
|
4,713 | 5,689 | 3,957 | 5,297 |
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010 | |||||||||||||
Options
|
166 | 20 | 247 | 14 | ||||||||||||
Non-vested restricted stock and restricted stock units
|
36 | 29 | 103 | 37 | ||||||||||||
Anti-dilutive common stock equivalents
|
202 | 49 | 350 | 51 |
Derivatives Not Designated as Hedging
Instruments under ASC Topic 815
|
Balance Sheet Location
|
Fair Value at
June 30, 2011
|
Fair Value at
December 31, 2010
|
|||
Financial assets:
|
||||||
Foreign currency forward contracts
|
Other current assets
|
$242
|
$389
|
|||
Financial liabilities:
|
||||||
Foreign currency forward contracts
|
Accrued expenses and other current liabilities
|
$454
|
$1
|
Derivatives Not Designated as Hedging
Instruments under ASC Topic 815
|
Net Gain Recorded in Marketing and Selling Expenses
|
|||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||
2011
|
2010
|
2011
|
2010
|
|||||
Foreign currency forward contracts
|
$639
|
$5
|
$540
|
$281
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||
June 30,
2011
|
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
|
$
|
1,113
|
$
|
1,113
|
$
|
—
|
$
|
—
|
|||||||
Foreign currency forward contracts
|
242
|
—
|
242
|
—
|
|||||||||||
Financial Liabilities:
|
|||||||||||||||
Deferred compensation obligations
|
$
|
4,033
|
$
|
1,113
|
$
|
2,920
|
$
|
—
|
|||||||
Foreign currency forward contracts
|
454
|
—
|
454
|
—
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||
December 31,
2010
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Financial Assets:
|
|||||||||||||||
Benefit plan and deferred compensation assets
|
$
|
1,366
|
$
|
998
|
$
|
368
|
$
|
—
|
|||||||
Foreign currency forward contracts
|
389
|
—
|
389
|
—
|
|||||||||||
Financial Liabilities:
|
|||||||||||||||
Benefit plan and deferred compensation obligations
|
$
|
4,226
|
$
|
998
|
$
|
3,228
|
$
|
—
|
|||||||
Foreign currency forward contracts
|
1
|
—
|
1
|
—
|
Fair Value Measurements Using
|
|||||||||||||||
Six Months
Ended
June 30,
2011
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
Related
Expenses
|
|||||||||||
Liabilities:
|
|||||||||||||||
Facilities-related restructuring accruals
|
$
|
1,542
|
$
|
—
|
$
|
1,542
|
$
|
—
|
$
|
1,542
|
Fair Value Measurements Using
|
|||||||||||||||
Twelve Months
Ended
December 31,
2010
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
Related
Expenses
|
|||||||||||
Liabilities:
|
|||||||||||||||
Facilities-related restructuring accruals
|
$
|
4,718
|
$
|
—
|
$
|
4,718
|
$
|
—
|
$
|
4,718
|
June 30,
2011
|
December 31,
2010
|
||||||||
Accounts receivable
|
$
|
113,786
|
$
|
118,320
|
|||||
Less:
|
|||||||||
Allowance for doubtful accounts
|
(1,968
|
)
|
(3,051
|
)
|
|||||
Allowance for sales returns and rebates
|
(13,432
|
)
|
(14,098
|
)
|
|||||
$
|
98,386
|
$
|
101,171
|
June 30,
2011
|
December 31,
2010
|
||||||||
Raw materials
|
$
|
12,318
|
$
|
12,147
|
|||||
Work in process
|
614
|
411
|
|||||||
Finished goods
|
116,863
|
95,799
|
|||||||
$
|
129,795
|
$
|
108,357
|
June 30,
2011
|
December 31,
2010
|
||||||||
Computer and video equipment and software
|
$
|
131,742
|
$
|
125,690
|
|||||
Manufacturing tooling and testbeds
|
6,252
|
6,234
|
|||||||
Office equipment
|
4,855
|
4,785
|
|||||||
Furniture and fixtures
|
12,909
|
12,745
|
|||||||
Leasehold improvements
|
35,965
|
37,002
|
|||||||
191,723
|
186,456
|
||||||||
Accumulated depreciation and amortization
|
(132,469
|
)
|
(123,937
|
)
|
|||||
$
|
59,254
|
$
|
62,519
|
Tangible assets acquired, net
|
$
|
2,008
|
||
Identifiable intangible assets:
|
||||
Developed technology
|
2,200
|
|||
Customer relationships
|
1,700
|
|||
Trademarks and trade name
|
700
|
|||
Non-compete agreement
|
200
|
|||
Goodwill
|
10,349
|
|||
Deferred tax liabilities, net
|
(460
|
)
|
||
Total assets acquired
|
$
|
16,697
|
Tangible liabilities assumed, net
|
$
|
(2,375
|
)
|
|
Identifiable intangible assets:
|
||||
Core technology
|
4,597
|
|||
Customer relationships
|
3,160
|
|||
Non-compete agreements
|
1,293
|
|||
Trademarks and trade name
|
287
|
|||
Goodwill
|
9,711
|
|||
Deferred tax liabilities, net
|
(586
|
)
|
||
Total assets acquired
|
$
|
16,087
|
June 30,
2011
|
December 31,
2010
|
||||||||
Goodwill
|
$
|
419,420
|
$
|
418,897
|
|||||
Accumulated impairment losses
|
(171,900
|
)
|
(171,900
|
)
|
|||||
$
|
247,520
|
$
|
246,997
|
Total
|
||||
Goodwill balance at December 31, 2010
|
$
|
246,997
|
||
Blue Order acquisition purchase accounting allocation adjustments
|
(105
|
)
|
||
Euphonix acquisition purchase accounting allocation adjustments
|
(176
|
)
|
||
Foreign exchange and other adjustments
|
804
|
|||
Goodwill balance at June 30, 2011
|
$
|
247,520
|
June 30, 2011
|
December 31, 2010
|
|||||||||||||||||||||||||||
Gross
|
Accumulated
Amortization
|
Net(a)
|
Gross
|
Accumulated
Amortization
|
Net
|
|||||||||||||||||||||||
Completed technologies
and patents
|
$
|
75,263
|
$
|
(69,525)
|
$
|
5,738
|
$
|
74,820
|
$
|
(68,026)
|
$
|
6,794
|
||||||||||||||||
Customer relationships
|
68,587
|
(51,009)
|
17,578
|
68,330
|
(47,344)
|
20,986
|
||||||||||||||||||||||
Trade names
|
14,797
|
(14,220)
|
577
|
14,772
|
(13,737)
|
1,035
|
||||||||||||||||||||||
License agreements
|
560
|
(560)
|
—
|
560
|
(560)
|
—
|
||||||||||||||||||||||
Non-compete agreements (b)
|
1,502
|
(770)
|
732
|
1,576
|
(641)
|
935
|
||||||||||||||||||||||
$
|
160,709
|
$
|
(136,084)
|
$
|
24,625
|
$
|
160,058
|
$
|
(130,308)
|
$
|
29,750
|
(a)
|
The June 30, 2011 net amounts include foreign currency translation changes of approximately $0.5 million from the December 31, 2010 amounts.
|
(b)
|
During the six months ended June 30, 2011, the Company wrote-off a fully amortized non-compete agreement with a gross value of approximately $0.2 million.
|
June 30,
2011
|
December 31,
2010
|
||||||||
Long-term deferred tax liabilities, net
|
$
|
2,256
|
$
|
2,154
|
|||||
Long-term deferred revenue
|
12,023
|
8,923
|
|||||||
Long-term deferred rent
|
10,847
|
11,094
|
|||||||
Long-term accrued restructuring
|
2,910
|
3,138
|
|||||||
$
|
28,036
|
$
|
25,309
|
Six Months Ended
June 30,
|
|||||||||
2011
|
2010
|
||||||||
Accrual balance at beginning of period
|
$
|
4,492
|
$
|
4,454
|
|||||
Accruals for product warranties
|
3,193
|
2,590
|
|||||||
Cost of warranty claims
|
(2,977
|
)
|
(2,599
|
)
|
|||||
Accrual balance at end of period
|
$
|
4,708
|
$
|
4,445
|
Six Months Ended
June 30,
|
|||
2011
|
2010
|
||
Expected dividend yield
|
0.00%
|
0.00%
|
|
Risk-free interest rate
|
2.21%
|
1.92%
|
|
Expected volatility
|
40.5%
|
46.1%
|
|
Expected life (in years)
|
4.49
|
4.50
|
|
Weighted-average fair value of options granted
|
$7.89
|
$5.56
|
Stock Options
|
|||||||||
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
(in thousands)
|
||||||
Options outstanding at December 31, 2010
|
5,241,898
|
$19.76
|
|||||||
Granted
|
990,900
|
$21.24
|
|||||||
Exercised
|
(148,191
|
)
|
$13.10
|
||||||
Forfeited or expired
|
(318,709
|
)
|
$21.19
|
||||||
Options outstanding at June 30, 2011 (a)
|
5,765,898
|
$20.11
|
5.07 years
|
$13,839
|
|||||
Options vested at June 30, 2011 or expected to vest
|
5,061,427
|
$20.25
|
5.05 years
|
$12,223
|
|||||
Options exercisable at June 30, 2011
|
1,786,251
|
$22.91
|
4.52 years
|
$4,325
|
(a)
|
Options outstanding at June 30, 2011 included 1,760,155 options that had vesting based on either market conditions or a combination of performance and market conditions.
|
Six Months Ended
June 30,
|
|||
2011
|
2010
|
||
Expected dividend yield
|
0.00%
|
0.00%
|
|
Risk-free interest rate
|
4.11%
|
4.16%
|
|
Expected volatility
|
41.4%
|
46.8%
|
|
Expected life (in years)
|
3.00
|
4.49
|
Non-Vested Restricted Stock Units
|
|||||||||
Shares
|
Weighted-
Average
Grant-Date
Fair Value
|
Weighted-
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
(in thousands)
|
||||||
Non-vested at December 31, 2010
|
573,264
|
$18.15
|
|||||||
Granted (a)
|
532,000
|
$21.71
|
|||||||
Vested
|
(174,630
|
)
|
$26.53
|
||||||
Forfeited
|
(12,282
|
)
|
$21.13
|
||||||
Non-vested at June 30, 2011 (b)
|
918,352
|
$19.41
|
2.35 years
|
$17,293
|
|||||
Expected to vest
|
723,493
|
$19.61
|
2.19 years
|
$13,623
|
(a)
|
Restricted stock units granted during the six months ended June 30, 2011 included 245,000 units that had vesting based on either market conditions or a combination of performance and market conditions.
|
(b)
|
Non-vested restricted stock units at June 30, 2011 included 488,300 units that had vesting based on either market conditions or a combination of performance and market conditions.
|
Non-Vested Restricted Stock
|
|||||||||
Shares
|
Weighted-
Average
Grant-Date
Fair Value
|
Weighted-
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
(in thousands)
|
||||||
Non-vested at December 31, 2010
|
25,000
|
$25.41
|
|||||||
Granted
|
—
|
—
|
|||||||
Vested
|
(12,500
|
)
|
$25.41
|
||||||
Forfeited
|
—
|
—
|
|||||||
Non-vested at June 30, 2011
|
12,500
|
$25.41
|
0.47 years
|
$235
|
Six Months Ended
June 30,
|
|||
2011
|
2010
|
||
Expected dividend yield
|
0.00%
|
0.00%
|
|
Risk-free interest rate
|
0.23%
|
1.15%
|
|
Expected volatility
|
40.9%
|
44.9%
|
|
Expected life (in years)
|
0.24
|
0.24
|
|
Weighted-average fair value per right granted
|
$2.83
|
$2.24
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Cost of product revenues
|
$
|
110
|
$
|
197
|
$
|
249
|
$
|
386
|
||||||||
Cost of services revenues
|
277
|
282
|
545
|
535
|
||||||||||||
Research and development expenses
|
427
|
547
|
899
|
1,198
|
||||||||||||
Marketing and selling expenses
|
1,356
|
1,107
|
2,574
|
2,075
|
||||||||||||
General and administrative expenses
|
2,355
|
1,531
|
3,995
|
2,792
|
||||||||||||
Total stock-based compensation
|
$
|
4,525
|
$
|
3,664
|
$
|
8,262
|
$
|
6,986
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
Net loss
|
$
|
(11,862
|
)
|
$
|
(12,906
|
)
|
$
|
(16,979
|
)
|
$
|
(26,388
|
)
|
||||||||||
Net changes in:
|
||||||||||||||||||||||
Foreign currency translation adjustment
|
2,168
|
(6,018
|
)
|
7,560
|
(10,253
|
)
|
||||||||||||||||
Unrealized gains from defined benefit plan
|
445
|
—
|
445
|
—
|
||||||||||||||||||
Unrealized losses on marketable securities
|
—
|
—
|
—
|
(4
|
)
|
|||||||||||||||||
Total comprehensive loss
|
$
|
(9,249
|
)
|
$
|
(18,924
|
)
|
$
|
(8,974
|
)
|
$
|
(36,645
|
)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||
Non-acquisition-related restructuring charges
|
$
|
(163
|
)
|
$
|
213
|
$
|
(2,532
|
)
|
$
|
828
|
||||||||
Acquisition-related restructuring charges
|
—
|
—
|
153
|
725
|
||||||||||||||
Tewksbury facility exit costs
|
—
|
3,794
|
—
|
3,794
|
||||||||||||||
Restructuring and other (recoveries) costs, net
|
$
|
(163
|
)
|
$
|
4,007
|
$
|
(2,379
|
)
|
$
|
5,347
|
Non-Acquisition-Related
Restructuring
Liabilities
|
Acquisition-Related
Restructuring
Liabilities
|
|||||||||||||||||||||||
Employee-
Related
|
Facilities-
Related
|
Employee-
Related
|
Facilities-
Related
|
Total
|
||||||||||||||||||||
Accrual balance at December 31, 2010
|
$
|
11,835
|
$
|
6,042
|
$
|
202
|
$
|
883
|
$
|
18,962
|
||||||||||||||
New restructuring charges
|
—
|
20
|
—
|
—
|
20
|
|||||||||||||||||||
Revisions of estimated liabilities
|
(3,933
|
)
|
1,381
|
12
|
141
|
(2,399
|
)
|
|||||||||||||||||
Accretion
|
—
|
94
|
—
|
—
|
94
|
|||||||||||||||||||
Cash payments for employee-related charges
|
(5,157
|
)
|
—
|
(178
|
)
|
—
|
(5,335
|
)
|
||||||||||||||||
Cash payments for facilities, net of sublease income
|
—
|
(1,671
|
)
|
—
|
(237
|
)
|
(1,908
|
)
|
||||||||||||||||
Non-cash write-offs
|
—
|
—
|
—
|
(125
|
)
|
(125
|
)
|
|||||||||||||||||
Foreign exchange impact on ending balance
|
486
|
25
|
6
|
1
|
518
|
|||||||||||||||||||
Accrual balance at June 30, 2011
|
$
|
3,231
|
$
|
5,891
|
$
|
42
|
$
|
663
|
$
|
9,827
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||
Video products revenues
|
$
|
65,244
|
$
|
66,913
|
$
|
132,328
|
$
|
125,048
|
||||||||||
Audio products revenues
|
63,946
|
67,221
|
134,197
|
137,765
|
||||||||||||||
Total products revenues
|
129,190
|
134,134
|
266,525
|
262,813
|
||||||||||||||
Services revenues:
|
32,154
|
28,026
|
61,142
|
55,303
|
||||||||||||||
Total net revenues
|
$
|
161,344
|
$
|
162,160
|
$
|
327,667
|
$
|
318,116
|
·
|
Drive customer success. We are committed to making each and every customer successful. Period. It’s that simple.
|
·
|
From enthusiasts to the enterprise. Whether performing live or telling a story to sharing a vision or broadcasting the news – we create products to support our customers at all stages.
|
·
|
Fluid, dependable workflows. Reliability. Flexibility. Ease of Use. High Performance. We provide best-in-class workflows to make our customers more productive and competitive.
|
·
|
Collaborative support. For the individual user, the workgroup, a community or the enterprise, we enable a collaborative environment for success.
|
·
|
Avid optimized in an open ecosystem. Our products are innovative, reliable, integrated and best-of-breed. We work in partnership with a third-party community resulting in superior interoperability.
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||
Net revenues:
|
||||||||||||||
Product revenues
|
80.1
|
%
|
82.7
|
%
|
81.3
|
%
|
82.6
|
%
|
||||||
Services revenues
|
19.9
|
%
|
17.3
|
%
|
18.7
|
%
|
17.4
|
%
|
||||||
Total net revenues
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of revenues
|
48.9
|
%
|
49.3
|
%
|
48.4
|
%
|
49.7
|
%
|
||||||
Gross margin
|
51.1
|
%
|
50.7
|
%
|
51.6
|
%
|
50.3
|
%
|
||||||
Operating expenses:
|
||||||||||||||
Research and development
|
18.9
|
%
|
18.7
|
%
|
18.4
|
%
|
19.0
|
%
|
||||||
Marketing and selling
|
28.5
|
%
|
27.4
|
%
|
27.7
|
%
|
27.1
|
%
|
||||||
General and administrative
|
9.2
|
%
|
8.5
|
%
|
9.2
|
%
|
8.9
|
%
|
||||||
Amortization of intangible assets
|
1.4
|
%
|
1.5
|
%
|
1.4
|
%
|
1.7
|
%
|
||||||
Restructuring and other (recoveries) costs, net
|
(0.0
|
%)
|
2.5
|
%
|
(0.7
|
%)
|
1.7
|
%
|
||||||
Loss on sales of assets
|
0.3
|
%
|
—
|
0.2
|
%
|
—
|
||||||||
Total operating expenses
|
58.3
|
%
|
58.6
|
%
|
56.2
|
%
|
58.4
|
%
|
||||||
Operating loss
|
(7.2
|
%)
|
(7.9
|
%)
|
(4.6
|
%)
|
(8.1
|
%)
|
||||||
Interest and other income (expense), net
|
(0.5
|
%)
|
(0.1
|
%)
|
(0.3
|
%)
|
(0.0
|
%)
|
||||||
Loss before income taxes
|
(7.7
|
%)
|
(8.0
|
%)
|
(4.9
|
%)
|
(8.1
|
%)
|
||||||
Provision for (benefit from) income taxes
|
(0.3
|
%)
|
(0.0
|
%)
|
0.3
|
%
|
0.2
|
%
|
||||||
Net loss
|
(7.4
|
%)
|
(8.0
|
%)
|
(5.2
|
%)
|
(8.3
|
%)
|
·
|
We utilize a pricing model for our products to capture the right value given the product and market context. The model considers such factors as: (i) competitive reference prices for products that are similar but not functionally equivalent, (ii) differential value based on specific feature sets, (iii) geographic regions where the products are sold, (iv) customer price sensitivity, (v) price-cost-volume tradeoffs, and (vi) volume based pricing. Management approval ensures that all of our selling prices are consistent and within an acceptable range for use with the relative selling price method.
|
·
|
While the pricing model currently in use captures all critical variables, unforeseen changes due to external market forces may result in the revision of some of our inputs. These modifications may result in consideration allocation in future periods that differs from the one presently in use. Absent a significant change in the pricing inputs, future changes in the pricing model are not expected to materially impact our allocation of arrangement consideration.
|
Net Revenues for the Three Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Net Revenues
|
Change
|
2010
Net Revenues
|
||||||||
$
|
%
|
|||||||||
Video products revenues
|
$
|
65,244
|
$
|
(1,669)
|
(2.5%)
|
$
|
66,913
|
|||
Audio products revenues
|
63,946
|
(3,275)
|
(4.9%)
|
67,221
|
||||||
Total products revenues
|
129,190
|
(4,944)
|
(3.7%)
|
134,134
|
||||||
Services revenues
|
32,154
|
4,128
|
14.7%
|
28,026
|
||||||
Total net revenues
|
$
|
161,344
|
$
|
(816)
|
(0.5%)
|
$
|
162,160
|
Net Revenues for the Six Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Net Revenues
|
Change
|
2010
Net Revenues
|
||||||||
$
|
%
|
|||||||||
Video products revenues
|
$
|
132,328
|
$
|
7,280
|
5.8%
|
$
|
125,048
|
|||
Audio products revenues
|
134,197
|
(3,568)
|
(2.6%)
|
137,765
|
||||||
Total products revenues
|
266,525
|
3,712
|
1.4%
|
262,813
|
||||||
Services revenues
|
61,142
|
5,839
|
10.6%
|
55,303
|
||||||
Total net revenues
|
$
|
327,667
|
$
|
9,551
|
3.0%
|
$
|
318,116
|
·
|
the procurement of components;
|
·
|
the assembly, testing and distribution of finished products;
|
·
|
warehousing;
|
·
|
customer support costs related to maintenance contract revenues and other services;
|
·
|
providing professional services and training;
|
·
|
royalties for third-party software and hardware included in our products; and
|
Costs of Revenues for the Three Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Costs
|
Change
|
2010
Costs
|
||||||||
$
|
%
|
|||||||||
Cost of products revenues
|
$
|
62,964
|
$
|
(2,873)
|
(4.4%)
|
$
|
65,837
|
|||
Cost of services revenues
|
15,312
|
2,173
|
16.5%
|
13,139
|
||||||
Amortization of intangible assets
|
685
|
(261)
|
(27.6%)
|
946
|
||||||
Total cost of revenues
|
$
|
78,961
|
$
|
(961)
|
(1.2%)
|
$
|
79,922
|
|||
Gross profit
|
$
|
82,383
|
$
|
145
|
0.2%
|
$
|
82,238
|
Costs of Revenues for the Six Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Costs
|
Change
|
2010
Costs
|
||||||||
$
|
%
|
|||||||||
Cost of products revenues
|
$
|
127,615
|
$
|
(1,491)
|
(1.2%)
|
$
|
129,106
|
|||
Cost of services revenues
|
29,699
|
2,520
|
9.3%
|
27,179
|
||||||
Amortization of intangible assets
|
1,351
|
(561)
|
(29.3%)
|
1,912
|
||||||
Total cost of revenues
|
$
|
158,665
|
$
|
468
|
0.3%
|
$
|
158,197
|
|||
Gross profit
|
$
|
169,002
|
$
|
9,083
|
5.7%
|
$
|
159,919
|
Gross Margin %
|
||||||||||||||||||||||||
Three Months Ended June 30, 2011 and 2010
|
Six Months Ended June 30, 2011 and 2010
|
|||||||||||||||||||||||
2011 Gross
Margin %
|
Increase
(Decrease)
In Gross
Margin %
|
2010 Gross
Margin %
|
2011 Gross
Margin %
|
Increase
In Gross
Margin %
|
2010 Gross
Margin %
|
|||||||||||||||||||
Products
|
51.3 | % | 0.4 | % | 50.9 | % | 52.1 | % | 1.2 | % | 50.9 | % | ||||||||||||
Services
|
52.4 | % | (0.7 | %) | 53.1 | % | 51.4 | % | 0.6 | % | 50.9 | % | ||||||||||||
Total
|
51.1 | % | 0.3 | % | 50.7 | % | 51.6 | % | 1.3 | % | 50.3 | % |
Operating Expenses and Operating Loss for the Three Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Expenses
|
Change
|
2010
Expenses
|
||||||||
$
|
%
|
|||||||||
Research and development expenses
|
$
|
30,453
|
$
|
185
|
0.6%
|
$
|
30,268
|
|||
Marketing and selling expenses
|
46,052
|
1,578
|
3.5%
|
44,474
|
||||||
General and administrative expenses
|
14,920
|
1,041
|
7.5%
|
13,879
|
||||||
Amortization of intangible assets
|
2,161
|
(256)
|
(10.6%)
|
2,417
|
||||||
Restructuring and other (recoveries) costs, net
|
(163)
|
(4,170)
|
(104.1%)
|
4,007
|
||||||
Loss on sales of assets
|
597
|
597
|
n/m
|
—
|
||||||
Total operating expenses
|
$
|
94,020
|
$
|
(1,025)
|
(1.1%)
|
$
|
95,045
|
|||
Operating loss
|
$
|
(11,637)
|
$
|
(1,170)
|
(9.1%)
|
$
|
(12,807)
|
Operating Expenses and Operating Loss for the Six Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Expenses
|
Change
|
2010
Expenses
|
||||||||
$
|
%
|
|||||||||
Research and development expenses
|
$
|
60,426
|
$
|
7
|
0.0%
|
$
|
60,419
|
|||
Marketing and selling expenses
|
90,862
|
4,642
|
5.4%
|
86,220
|
||||||
General and administrative expenses
|
30,218
|
1,737
|
6.1%
|
28,481
|
||||||
Amortization of intangible assets
|
4,306
|
(968)
|
(18.4%)
|
5,274
|
||||||
Restructuring and other (recoveries) costs, net
|
(2,379)
|
(7,726)
|
(144.5%)
|
5,347
|
||||||
Loss on sales of assets
|
597
|
597
|
n/m
|
—
|
||||||
Total operating expenses
|
$
|
184,030
|
$
|
(1,711)
|
(0.9%)
|
$
|
185,741
|
|||
Operating loss
|
$
|
(15,028)
|
$
|
(10,794)
|
(41.8%)
|
$
|
(25,822)
|
Year-Over-Year Change in Research and Development Expenses for the Three and Six Months Ended June 30, 2011
|
|||||||
(dollars in thousands)
|
|||||||
Three Months Ended
June 30, 2011 (Decrease)
Increase From 2010 Period
|
Six Months Ended
June 30, 2011 (Decrease)
Increase From 2010 Period
|
||||||
$
|
%
|
$
|
%
|
||||
Personnel-related expenses
|
$
|
(1,050)
|
(5.3%)
|
$
|
(3,258)
|
(8.1%)
|
|
Consulting and outside services expenses
|
549
|
14.5%
|
1,505
|
21.6%
|
|||
Computer hardware and supplies expenses
|
516
|
59.6%
|
1,082
|
75.9%
|
|||
Facilities and information technology infrastructure costs
|
(66)
|
(1.4%)
|
789
|
8.7%
|
|||
Other expenses
|
236
|
25.7%
|
(111)
|
(4.3%)
|
|||
Total research and development expenses increase
|
$
|
185
|
0.6%
|
$
|
7
|
0.0%
|
Year-Over-Year Change in Marketing and Selling Expenses for the Three and Six Months Ended June 30, 2011
|
|||||||
(dollars in thousands)
|
|||||||
Three Months Ended
June 30, 2011 Increase
(Decrease) From 2010 Period
|
Six Months Ended
June 30, 2011 Increase
(Decrease) From 2010 Period
|
||||||
$
|
%
|
$
|
%
|
||||
Consulting and outside services
|
$
|
2,051
|
73.0%
|
$
|
2,428
|
38.4%
|
|
Tradeshow and other promotional expenses
|
586
|
16.9%
|
2,288
|
42.5%
|
|||
Personnel related expenses
|
993
|
2.5%
|
841
|
1.0%
|
|||
Bad debt expenses
|
155
|
96.7%
|
468
|
n/m
|
|||
Facilities and information technology infrastructure costs
|
(845)
|
(9.6%)
|
(881)
|
(5.2%)
|
|||
Foreign exchange losses (gains)
|
(634)
|
n/m
|
(256)
|
(89.8%)
|
|||
Other expenses
|
(728)
|
(6.7%)
|
(246)
|
(1.1%)
|
|||
Total marketing and selling expenses increase
|
$
|
1,578
|
3.5%
|
$
|
4,642
|
5.4%
|
Year-Over-Year Change in General and Administrative Expenses for the Three and Six Months Ended June 30, 2011
|
|||||||
(dollars in thousands)
|
|||||||
Three Months Ended
June 30, 2011 Increase
(Decrease) From 2010 Period
|
Six Months Ended
June 30, 2011 Increase
(Decrease) From 2010 Period
|
||||||
$
|
%
|
$
|
%
|
||||
Personnel-related expenses
|
$
|
960
|
12.4%
|
$
|
1,676
|
10.9%
|
|
Consulting and outside services expenses
|
365
|
85.4%
|
802
|
91.4%
|
|||
Legal settlement expenses
|
192
|
n/m
|
192
|
n/m
|
|||
Mergers and acquisitions costs
|
118
|
143.2%
|
(568)
|
(74.0%)
|
|||
Facilities and information technology infrastructure costs
|
(305)
|
(9.9%)
|
(146)
|
(2.6%)
|
|||
Other expenses
|
(289)
|
(11.4%)
|
(219)
|
(3.8%)
|
|||
Total general and administrative expenses increase
|
$
|
1,041
|
7.5%
|
$
|
1,737
|
6.1%
|
Year-Over-Year Change in Amortization of Intangible Assets for the Three and Six Months Ended June 30, 2011
|
|||||||
(dollars in thousands)
|
|||||||
Three Months Ended
June 30, 2011 Decrease
From 2010 Period
|
Six Months Ended
June 30, 2011 Decrease
From 2010 Period
|
||||||
$
|
%
|
$
|
%
|
||||
Amortization of intangible assets recorded in cost of revenues
|
$
|
(261)
|
(27.6%)
|
$
|
(561)
|
(29.3%)
|
|
Amortization of intangible assets recorded in operating expenses
|
(256)
|
(10.6%)
|
(968)
|
(18.4%)
|
|||
Total amortization of intangible assets decrease
|
$
|
(517)
|
(15.4%)
|
$
|
(1,529)
|
(21.3%)
|
|
2010 Restructuring Plans
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||
Non-acquisition-related restructuring charges
|
$
|
(163
|
)
|
$
|
213
|
$
|
(2,532
|
)
|
$
|
828
|
||||||||
Acquisition-related restructuring charges
|
—
|
—
|
153
|
725
|
||||||||||||||
Tewksbury facility exit costs
|
—
|
3,794
|
—
|
3,794
|
||||||||||||||
Restructuring and other (recoveries) costs, net
|
$
|
(163
|
)
|
$
|
4,007
|
$
|
(2,379
|
)
|
$
|
5,347
|
Interest and Other Income (Expense) for the Three Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Income
(Expense)
|
Change
|
2010
Income
(Expense)
|
||||||||
$
|
%
|
|||||||||
Interest income
|
$
|
9
|
$
|
3
|
50.0%
|
$
|
6
|
|||
Interest expense
|
(717)
|
(465)
|
184.5%
|
(252)
|
||||||
Other income (expense), net
|
(60)
|
(204)
|
(141.7%)
|
144
|
||||||
Total interest and other income (expense), net
|
$
|
(768)
|
$
|
(666)
|
(652.9%)
|
$
|
(102)
|
Interest and Other Income (Expense) for the Six Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Income
(Expense)
|
Change
|
2010
Income
(Expense)
|
||||||||
$
|
%
|
|||||||||
Interest income
|
$
|
68
|
$
|
(73)
|
(51.8%)
|
$
|
141
|
|||
Interest expense
|
(1,139)
|
(678)
|
147.1%
|
(461)
|
||||||
Other income (expense), net
|
3
|
(215)
|
(98.6%)
|
218
|
||||||
Total interest and other income (expense), net
|
$
|
(1,068)
|
$
|
(966)
|
(947.1%)
|
$
|
(102)
|
Benefit from Income Taxes, Net for the Three Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Benefit
|
Change
|
2010
Benefit
|
||||||||
$
|
%
|
|||||||||
Benefit from income taxes, net
|
$
|
(543)
|
$
|
(540)
|
(18000.0%)
|
$
|
(3)
|
Provision for Income Taxes, Net for the Six Months Ended June 30, 2011 and 2010
|
||||||||||
(dollars in thousands)
|
||||||||||
2011
Provision
|
Change
|
2010
Provision
|
||||||||
$
|
%
|
|||||||||
Provision for income taxes, net
|
$
|
883
|
$
|
419
|
90.3%
|
$
|
464
|
Six Months Ended June 30,
|
|||||||||
2011
|
2010
|
||||||||
Net cash used in operating activities
|
$
|
(13,686
|
)
|
$
|
(8,901
|
)
|
|||
Net cash used in investing activities
|
(6,652
|
)
|
(32,095
|
)
|
|||||
Net cash provided by (used in) financing activities
|
14,349
|
(322
|
)
|
||||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
764
|
(3,406
|
)
|
||||||
Net decrease in cash and cash equivalents
|
$
|
(5,225
|
)
|
$
|
(44,724
|
)
|
Period
|
Total Number
of Shares
Repurchased(a)
|
Average Price
Paid Per Share
|
Total Number of
Shares Repurchased
as Part of the
Publicly Announced
Program
|
Dollar Value of
Shares That May
Yet be Purchased
Under the Program(b)
|
||||||
April 1 – April 30, 2011
|
–
|
$
|
–
|
–
|
$
|
80,325,905
|
||||
May 1 – May 31, 2011
|
–
|
–
|
–
|
80,325,905
|
||||||
June 1 – June 30, 2011
|
2,607
|
17.42
|
–
|
80,325,905
|
||||||
2,607
|
$
|
17.42
|
–
|
$
|
80,325,905
|
(a)
|
In June 2011, we acquired upon surrender 2,607 shares of restricted stock from an employee to pay required withholding taxes upon the vesting of restricted stock.
|
(b)
|
In April 2007, we initiated a stock repurchase program that ultimately authorized the repurchase of up to $200 million of our common stock through transactions on the open market, in block trades or otherwise. At June 30, 2011, $80.3 million remained available for future stock repurchases under the program. The stock repurchase program is funded through working capital and has no expiration date. The last repurchase of shares of our common stock under this program was in March 2008.
|
Date: August 9, 2011
|
By:
|
/s/ Ken Sexton
|
Ken Sexton
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
(Principal Financial Officer)
|
Incorporated by Reference
|
||||||||||
Exhibit
No.
|
Description
|
Filed with
this Form
10-Q
|
Form or
Schedule
|
SEC Filing
Date
|
SEC File
Number
|
|||||
10.1#
|
2011 Executive Bonus Plan
|
X
|
||||||||
31.1
|
Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||
31.2
|
Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||
32.1
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||
101.INS##
|
XBRL Instance Document
|
|||||||||
101.SCH##
|
XBRL Taxonomy Extension Schema Document
|
|||||||||
101.CAL##
|
XBRL Taxonomy Calculation Linkbase Document
|
|||||||||
101.LAB##
|
XBRL Taxonomy Label Linkbase Document
|
|||||||||
101.PRE##
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
#
|
Management contract or compensatory plan identified pursuant to Item 15(a)(3)
|
|
##
|
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.
|
1.
|
PURPOSE OF THE PLAN
|
2.
|
FINAL AUTHORITY; ADMINISTRATION
|
3.
|
ELIGIBILITY
|
4.
|
TARGET BONUS
|
5.
|
PLAN MODEL OVERVIEW
|
Performance Component
|
Weight
|
Company Performance
|
80%
|
Personal Performance
|
20%
|
6.
|
PERFORMANCE COMPONENTS
|
6.1
|
Company Performance. Company Performance will be measured using two metrics (each a “Company Metric”), with each Company Metric assigned a weight, as set forth in the following table:
|
Company Metric1
|
Weight
|
Company Revenues
|
50%
|
Company Operating Earnings2
|
50%
|
|
1
|
Actual performance for all Company Metrics will be determined on a non-GAAP basis consistent with historical Company practice.
|
|
2
|
Operating earnings will include any bonus payouts for officers and employees.
|
Performance Level
|
Score
|
Maximum (and above)
|
1.5
|
Between target and maximum
|
1.00 to 1.51
|
Target
|
1.00
|
Between minimum and target
|
0.30 to 1.002
|
Minimum
|
0.30
|
Below minimum
|
0.00
|
|
1
|
Score will be adjusted on a linear basis between 1.00 and 1.5 based on actual results.
|
|
2
|
Score will be adjusted on a linear basis between 0.30 and 1.00 based on actual results.
|
(Company Revenues score) x (50%)
|
+ (Company Operating Earnings score) x (50%)
|
Company Performance Score
|
6.2
|
Personal Performance. The Committee will assign personal performance goals to Participants for 2011. The Committee will consider goals recommended by the Chief Executive Officer for each Participant when making such assignments. The Committee may amend or modify any goal or substitute a new goal in place of any existing goal, to the extent equitable under the circumstances (e.g., in the event a Participant’s role or responsibilities change).
|
7.
|
OVERALL PARTICIPANT SCORE
|
(Company Performance Score)
|
x
|
(80%)
|
+ (Personal Performance Score)
|
x
|
(20%)
|
Overall Score
|
8.
|
BONUS PAYOUTS
|
8.1
|
Bonus Payout. Each Participant’s actual bonus payout under this Plan, if any, will be determined in accordance with the following formula:
|
8.2
|
Timing. Bonuses, if any, are expected to be determined and paid in the first quarter of 2011, although the Company will not have any liability to any Participant if bonus payouts are delayed beyond that time period for any reason, provided that in no event will the bonuses, if any, be paid later than December 31, 2011.
|
9.
|
CHANGES TO EMPLOYMENT CIRCUMSTANCES
|
9.1
|
Changes to Base Salary. Because each Participant’s Target Bonus Amount is based upon base salary paid in 2011, any adjustments to the rate or payment of a Participant’s base salary will automatically be incorporated on a pro rata basis into that Participant’s bonus payout calculation, including, without limitation, in the event of (i) any increase or diminution in base salary, (ii) any suspension, in whole or in part, of the payment of base salary in connection with an authorized leave of absence, and (iii) any payment of less than a full year’s base salary in connection with a date of hire after January 1, 2011. If a Participant becomes disabled and qualifies for benefits under the Company’s long-term disability plan, the Participant’s bonus payout will be calculated based upon the Participant’s base salary paid while on the Company payroll as an employee.
|
9.2
|
Changes to Bonus Percentage. If a Participant’s Bonus Percentage changes during 2011, then separate bonus calculations will be performed for each time period for which different Bonus Percentages existed, using the Participant’s base salary during each such time period.
|
9.3
|
Personal Performance Goals. Should a Participant’s employment be terminated during 2011, the Committee shall have full discretion to determine the extent, if any, that a Participant will receive payment in consideration of his or her Personal Performance.
|
10.
|
MISCELLANEOUS
|
10.1
|
Other Bonuses and Incentives. Nothing in this Plan shall limit the discretionary authority of the Board or the Committee to approve and pay out additional or alternative bonuses to Participants (based on performance) or provide Participants additional or alternative incentives outside of the terms of this Plan.
|
10.2
|
No Right to Employment or Other Status. This Plan shall not be construed as giving any Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with any Participant free from any liability or claim under the Plan, except as may otherwise be provided in the Participant’s employment agreement or change-in-control agreement with the Company.
|
10.3
|
Provisions for non-U.S. Participants. The Company may modify bonus payouts or establish separate procedures for Participants who are non-U.S. nationals or who are employed outside the United States in order to comply with laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, currency, employee benefits or other matters.
|
10.4
|
Governing Law. This Plan will be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts without giving effect to any choice or conflict of law provision.
|
|
I, Gary G. Greenfield, certify that:
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Avid Technology, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 9, 2011
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/s/ Gary G. Greenfield
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Gary G. Greenfield
Chairman of the Board of Directors,
Chief Executive Officer and President
(Principal Executive Officer)
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I, Ken Sexton, certify that:
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Avid Technology, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 9, 2011
|
/s/ Ken Sexton
|
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Ken Sexton
Executive Vice President, Chief Financial Officer
and Chief Administrative Officer
(Principal Financial Officer)
|
|
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
|
|
AS ADOPTED PURSUANT TO
|
Date: August 9, 2011
|
/s/ Gary G. Greenfield
|
Gary G. Greenfield
Chairman of the Board of Directors, Chief Executive
Officer and President
(Principal Executive Officer)
|
Date: August 9, 2011
|
/s/ Ken Sexton
|
Ken Sexton
Executive Vice President, Chief Financial
Officer and Chief Administrative Officer
(Principal Financial Officer)
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (unaudited) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Balance Sheet - Parenthetical [Abstract] | Â | Â |
Accounts receivable, allowances | $ 15,400 | $ 17,149 |
Document And Entity Information (USD $)
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6 Months Ended | |
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Jun. 30, 2011
|
Dec. 31, 2010
|
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Entity Registrant Name | AVID TECHNOLOGY, INC. | Â |
Entity Central Index Key | 0000896841 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Well-known Seasoned Issuer | No | Â |
Entity Voluntary Filers | No | Â |
Entity Current Reporting Status | Yes | Â |
Entity Filer Category | Accelerated Filer | Â |
Entity Public Float | Â | $ 371,746,000 |
Entity Common Stock, Shares Outstanding | 38,536,531 | Â |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 |
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PROPERTY AND EQUIPMENT, NET
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Jun. 30, 2011
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PROPERTY AND EQUIPMENT, NET [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET [Text Block] | 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):
During the three months ended June 30, 2011, the Company determined it was appropriate to revise the way it classifies certain fixed assets. As a result, approximately $2.6 million of fixed assets previously reported as leasehold improvements at December 31, 2010 have been included in office equipment for the current presentation. |
CREDIT FACILITIES
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6 Months Ended |
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Jun. 30, 2011
|
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CREDIT FACILITIES | Â |
CREDIT FACILITIES [Text Block] | 12. CREDIT FACILTIES On October 1, 2010, Avid Technology, Inc. and certain of its subsidiaries (the "Borrowers") entered into a Credit Agreement with Wells Fargo Capital Finance LLC ("Wells Fargo"), which established two revolving credit facilities with combined maximum borrowings of up to $60 million. The actual amount of credit available to the Borrowers will vary depending upon changes in the level of the respective accounts receivable and inventory, and is subject to other terms and conditions which are more specifically described in the Credit Agreement. The credit facilities have a maturity date of October 1, 2014, at which time Wells Fargo's commitments to provide additional credit shall be terminated and all outstanding borrowings by the Borrowers must be repaid. Prior to the maturity of the credit facilities, any amounts borrowed may be repaid and, subject to the terms and conditions of the Credit Agreement, reborrowed in whole or in part without penalty. The Credit Agreement contains customary representations and warranties, covenants, mandatory prepayments, and events of default under which the Borrowers' payment obligations may be accelerated, including guarantees and liens on substantially all of the Borrowers' assets to secure their obligations under the Credit Agreement. The Credit Agreement requires that Avid Technology, Inc. ("Avid Technology") maintain liquidity (comprised of unused availability under its portion of the credit facilities plus certain unrestricted cash and cash equivalents) of $10 million, at least $5 million of which must be from unused availability under its portion of the credit facilities, and its subsidiary, Avid Technology International B.V. ("Avid Europe"), is required to maintain liquidity (comprised of unused availability under Avid Europe's portion of the credit facilities plus certain unrestricted cash and cash equivalents) of $5 million, at least $2.5 million of which must be from unused availability under Avid Europe's portion of the credit facilities. Interest accrues on outstanding borrowings under the credit facilities at a rate of either LIBOR plus 2.75% or a base rate (as defined in the Credit Agreement) plus 1.75%, at the option of Avid Technology or Avid Europe, as applicable. The Borrowers must also pay Wells Fargo a monthly unused line fee at a rate of 0.625% per annum. During the second quarter of 2011, Avid Technology borrowed $13.0 million against the credit facilities to meet certain short-term cash requirements, none of which had been repaid as of the date of issuance of these financial statements. The weighted-average interest rate on the outstanding balance at June 30, 2011 was 5.00%. At June 30, 2011, the Borrowers were in compliance with all debt agreement covenants and had additional available borrowings under the credit facilities of approximately $35.5 million after taking into consideration the liquidity covenant. Avid Technology or the other eligible borrowers under the credit facilities expect to borrow against the line of credit above the current outstanding borrowings to cover cash requirements during the remainder of the year as may be required to meet the short-term funding needs of the business. |
FOREIGN CURRENCY FORWARD CONTRACTS
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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FOREIGN CURRENCY FORWARD CONTRACTS [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FOREIGN CURRENCY FORWARD CONTRACTS [Text Block] | 3. FOREIGN CURRENCY FORWARD CONTRACTS The Company has significant international operations and, therefore, the Company's revenues, earnings, cash flows and financial position are exposed to foreign currency risk from foreign-currency-denominated receivables, payables and sales transactions, as well as net investments in foreign operations. The Company derives more than half of its revenues from customers outside the United States. This business is, for the most part, transacted through international subsidiaries and generally in the currency of the end-user customers. Therefore, the Company is exposed to the risks that changes in foreign currency could adversely affect its revenues, net income and cash flow. The Company may use derivatives in the form of foreign currency forward contracts to manage certain short-term exposures to fluctuations in the foreign currency exchange rates that exist as part of its ongoing international business operations. The Company does not enter into any derivative instruments for trading or speculative purposes. As required by FASB ASC Topic 815, Derivatives and Hedging, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as hedges of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as hedges of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. Under hedge accounting, the determination of hedge effectiveness is dependent upon whether the gain or loss on the hedging derivative is highly effective in offsetting the gain or loss in the value of the item being hedged. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though the Company elects not to apply hedge accounting under ASC Topic 815. The Company from time to time may execute foreign currency forward contracts to hedge the foreign exchange currency risk associated with certain forecasted euro-denominated sales transactions. These contracts are designated and intended to qualify as cash flow hedges under the criteria of ASC Topic 815. The effective portion of the changes in the fair value of derivatives designated and qualifying as cash flow hedges are initially reported as a component of accumulated other comprehensive income (loss) in stockholders' equity and subsequently reclassified into revenues at the time the hedged transactions affect earnings. Any ineffective portion of the change in fair value is recognized directly into earnings. The Company did not use forward contracts to hedge the foreign exchange currency risk associated with its forecasted euro-denominated sales transactions during the three- and six-month periods ended June 30, 2011 and 2010, and no such foreign currency forward contracts existed at either June 30, 2011 or December 31, 2010. In an effort to hedge against the foreign exchange exposure of certain forecasted receivables, payables and cash balances of foreign subsidiaries, the Company enters into short-term foreign currency forward contracts. The changes in fair value of the foreign currency forward contracts intended to offset foreign currency exchange risk on forecasted cash flows and net monetary assets are recorded as gains or losses in the Company's statement of operations in the period of change, because they do not meet the criteria of ASC Topic 815 to be treated as hedges for accounting purposes. There are two objectives of the Company's foreign currency forward contract program: (1) to offset any foreign exchange currency risk associated with cash receipts expected to be received from the Company's customers and cash payments expected to be made to the Company's vendors over the next 30-day period and (2) to offset the impact of foreign currency exchange on the Company's net monetary assets denominated in currencies other than the functional currency of the legal entity. These forward contracts typically mature within 30 days of execution. At June 30, 2011 and December 31, 2010, the Company had foreign currency forward contracts outstanding with notional values of $65.3 million and $47.4 million, respectively, as hedges against forecasted foreign-currency-denominated receivables, payables and cash balances. The following table sets forth the balance sheet locations and fair values of the Company's foreign currency forward contracts at June 30, 2011 and December 31, 2010 (in thousands):
The following table sets forth the net foreign exchange gains recorded within marketing and selling expenses in the Company's statements of operations during the three- and six-month periods ended June 30, 2011 and 2010 that resulted from the Company's foreign exchange contracts not designated as hedging instruments and the revaluation of the related hedged items (in thousands):
See Note 4 for additional information on the fair value measurements for all financial assets and liabilities, including derivative assets and derivative liabilities, that are measured at fair value on a recurring basis. |
GOODWILL AND INTANGIBLE ASSETS
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Jun. 30, 2011
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GOODWILL AND INTANGIBLE ASSETS [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS [Text Block] | 9. GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill resulting from the Company's acquisitions consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):
Changes in the carrying amount of the Company's goodwill during the six months ended June 30, 2011 consisted of the following (in thousands):
There were no interim indicators of goodwill impairment during the three or six months ended June 30, 2011. Identifiable Intangible Assets Identifiable intangible assets resulting from the Company's acquisitions consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):
Amortization expense related to all intangible assets in the aggregate was $2.8 million and $3.4 million for the three-month periods ended June 30, 2011 and 2010, respectively, and $5.7 million and $7.2 million for the six-month periods ended June 30, 2011 and 2010, respectively. The Company expects amortization of these intangible assets to be approximately $6 million for the remainder of 2011, $8 million in 2012, $5 million in 2013, $3 million in 2014, $2 million in 2015 and $1 million in 2016. |
STOCK REPURCHASES
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
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STOCK REPURCHASES [Abstract] | Â |
STOCK REPURCHASES [Text Block] | 14. STOCK REPURCHASES In April 2007, the Company initiated a stock repurchase program that ultimately authorized the repurchase of up to $200 million of the Company's common stock through transactions on the open market, in block trades or otherwise. At June 30, 2011, $80.3 million remained available for future stock repurchases under the program. The stock repurchase program is funded through working capital and has no expiration date. No shares of common stock have been repurchased under this program since March 2008. During the six months ended June 30, 2011, the Company acquired upon surrender 4,590 shares of restricted stock from an employee to pay the minimum required withholding taxes upon the vesting of restricted stock. At June 30, 2011 and December 31, 2010, treasury shares held by the Company totaled 3,857,669 shares and 4,163,765 shares, respectively. |
LONG-TERM LIABILITIES
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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LONG-TERM LIABILITIES [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM LIABILITIES [Text Block] | 10. LONG-TERM LIABILITIES Long-term liabilities consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):
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ACQUISITIONS
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ACQUISITIONS [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS [Text Block] | 8. ACQUISITIONS Euphonix, Inc. On April 21, 2010, the Company acquired Euphonix, Inc. ("Euphonix"), a California-based provider of large-format digital audio consoles, media controllers and peripherals, for cash, net of cash acquired, of $10.9 million and 327,439 shares of the Company's common stock valued at $5.8 million. During the three months ended March 31, 2011, the Company completed its evaluation of the information necessary to determine the fair value of the acquired assets and liabilities of Euphonix and finalized the purchase price allocation as follows (in thousands):
The Company used the income approach to determine the values of the identifiable intangible assets. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset discounted to present value. The weighted-average discount rate (or rate of return) used to determine the value of Euphonix's intangible assets was 23% and the effective tax rate used was 35%. The goodwill, which is not deductible for tax purposes, reflects the value of the assembled workforce and the company-specific synergies the Company expects to realize by selling Euphonix's digital audio consoles, media controllers and peripherals to its existing customers. The results of operations of Euphonix have been included prospectively in the results of operations of the Company since the date of acquisition. The Company's results of operations giving effect to the Euphonix acquisition as if it had occurred at the beginning of 2010 would not differ materially from reported results. Blue Order Solutions AG On January 5, 2010, the Company acquired all the outstanding shares of Blue Order Solutions AG ("Blue Order"), a Germany-based developer and provider of workflow and media asset management solutions, for cash, net of cash acquired, of $16.1 million. During the three months ended March 31, 2011, the Company completed its evaluation of the information necessary to determine the fair value of the acquired assets and liabilities of Blue Order and finalized the purchase price allocation as follows (in thousands):
The Company used the cost approach to value the core technology intangible asset and the income approach to determine the values of the customer relationships, non-compete agreements and trademarks and trade names intangible assets. The cost approach measures the value of an asset by quantifying the aggregate expenditures that would be required to replace the asset. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset discounted to present value. The weighted-average discount rate (or rate of return) used to determine the value of Blue Order's intangible assets was 20% and the effective tax rate used was 30%. The goodwill, which is not deductible for tax purposes, reflects the value of the assembled workforce and the customer-specific synergies the Company expects to realize by incorporating Blue Order's workflow and media asset management technology into future solutions offered to customers. The results of operations of Blue Order have been included prospectively in the results of operations of the Company since the date of acquisition. The Company's results of operations giving effect to the Blue Order acquisition as if it had occurred at the beginning of 2010 would not differ materially from reported results. |
FINANCIAL INFORMATION
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6 Months Ended | ||||
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Jun. 30, 2011
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FINANCIAL INFORMATION [Abstract] | Â | ||||
FINANCIAL INFORMATION [Text Block] | 1. FINANCIAL INFORMATION The accompanying condensed consolidated financial statements include the accounts of Avid Technology, Inc. and its wholly owned subsidiaries (collectively, "Avid" or the "Company"). These financial statements are unaudited. However, in the opinion of management, the condensed consolidated financial statements reflect all normal and recurring adjustments necessary for their fair statement. Interim results are not necessarily indicative of results expected for any other interim period or a full year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of operations, financial position and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The accompanying condensed consolidated balance sheet as of December 31, 2010 was derived from the Company's audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. The Company filed audited consolidated financial statements for, and as of, the year ended December 31, 2010 in its 2010 Annual Report on Form 10-K, which included all information and footnotes necessary for such presentation. The financial statements contained in this Form 10-Q should be read in conjunction with the audited consolidated financial statements in the Form 10-K. Certain prior period amounts have been reclassified to conform to the current year presentation. The Company's preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. The most significant estimates reflected in these financial statements include revenue recognition, stock-based compensation, accounts receivable and sales allowances, inventory valuation, goodwill and intangible asset valuations, fair value measurements and income tax asset valuation allowances. Actual results could differ from the Company's estimates. The Company evaluated subsequent events through the date of issuance of these financial statements and determined that no recognized or unrecognized subsequent events required recognition or disclosure. Revenue Recognition In October 2009, the Financial Accounting Standards Board ("FASB"), issued Accounting Standards Update ("ASU") No. 2009-13, Multiple-Deliverable Revenue Arrangements, an amendment to Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition, and ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elements, an amendment to ASC Subtopic 985-605, Software - Revenue Recognition (the "Updates"). ASU No. 2009-13 requires the allocation of revenue to each unit of accounting using the relative selling price of each deliverable for multiple-element arrangements. ASU No. 2009-13 also amends the accounting for multiple-element arrangements to provide guidance on how the deliverables in an arrangement should be separated and eliminates the use of the residual method by establishing a hierarchy of evidence to determine the stand-alone selling price of a deliverable based on vendor-specific objective evidence ("VSOE"), third-party evidence ("TPE") and the best estimate of selling price ("ESP"). If VSOE is available, it is used to determine the selling price of a deliverable. If VSOE is not available, the entity must determine whether TPE is available. If so, TPE would be used to determine the selling price. If TPE is not available, then the entity would be required to determine its ESP. ASU No. 2009-14 amends ASC Subtopic 985-605 to exclude from the scope of software revenue recognition requirements sales of tangible products that contain both software and non-software components that function together to deliver the essential functionality of the tangible products. The Updates also include new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The Updates must be adopted in the same period using the same transition method and are effective prospectively, with retrospective adoption permitted. The Company adopted the Updates prospectively on January 1, 2011 for new and materially modified arrangements originating after December 31, 2010. Prior to adoption of the Updates, the Company generally recognized revenues using the revenue recognition criteria of FASB ASC Subtopic 985-605, Software - Revenue Recognition. As a result of adoption of ASU No. 2009-14 on January 1, 2011, the Company now typically recognizes revenue using the criteria of FASB ASC Topic 605, Revenue Recognition. Historically, the Company was generally able to establish VSOE for undelivered elements in multiple-element arrangements as allowed by ASC Subtopic 985-605 and, therefore, could typically recognize revenues for each element of multiple-element arrangements as the element was delivered. Under the new guidance, revenue may be recognized in an earlier period for a limited number of multiple-element arrangements for which VSOE could not be established for all undelivered elements under the previous guidance. For those arrangements, the Company will now determine a relative selling price for the undelivered elements through the use of TPE or ESP, and the recognition of certain revenues that would have been deferred under the previous guidance will likely be recognized at the time of delivery under the new guidance, provided all other criteria for revenue recognition are met. For the three and six months ended June 30, 2011, adoption of the Updates resulted in increases in total revenues of approximately $1.8 million and $6.3 million, respectively. These increases were primarily the result of sales arrangements now accounted for under the guidance of ASU No. 2009-13 that contained undelivered elements for which VSOE of fair value could not be established as of June 30, 2011. The Company cannot reasonably estimate the effect of the adoption of the Updates on future financial periods as the impact will vary depending on the nature and volume of new or materially modified arrangements in any given period. Effective January 1, 2011, the Company adopted the following policy for Revenue Recognition. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. However, determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenues the Company reports. For example, the Company often receives multiple purchase orders or contracts from a single customer or a group of related parties that are evaluated to determine if they are, in effect, parts of a single arrangement. If they are determined to be parts of a single arrangement, revenues are recorded as if a single multiple-element arrangement exists. Generally, the products the Company sells do not require significant production, modification or customization of software. Installation of the products is generally routine, consists of implementation and configuration and does not have to be performed by Avid. However, certain transactions for the Company's video products, typically complex solution sales that include a significant number of products and may involve multiple customer sites, require the Company to perform an installation effort that it deems to be complex, non-routine and essential to the functionality of the products delivered. In these situations, the Company does not recognize revenues for either the products shipped or services performed until the essential services have been completed. In addition, if these orders include a customer acceptance provision, no revenues are recognized until the customer's formal acceptance of the products and services has been received. In the first quarter of fiscal 2011, the Company adopted ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements, an amendment to ASC Topic 605, Revenue Recognition, and ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elements, an amendment to ASC Subtopic 985-605, Software - Revenue Recognition. ASU No. 2009-13 requires the allocation of revenue, based on the relative selling price of each deliverable, to each unit of accounting for multiple-element arrangements. It also changes the level of evidence of standalone selling price required to separate deliverables by allowing a best estimate of the standalone selling price of deliverables when more objective evidence of fair value, such as vendor-specific objective evidence or third-party evidence, is not available. ASU No. 2009-14 amends ASC Subtopic 985-605 to exclude sales of tangible products containing both software and non-software components that function together to deliver the tangible products essential functionality from the scope of revenue recognition requirements for software arrangements. The Company adopted this accounting guidance prospectively and applied its provisions to arrangements entered into or materially modified after December 31, 2010. The Company recognizes revenue from the sale of non-software products, including software bundled with hardware that is essential to the functionality of the hardware, under the general revenue recognition accounting guidance of ASC Topic 605, Revenue Recognition and ASC Subtopic 605-25 Revenue Recognition - Multiple-Element Arrangements. The Company recognizes revenue in accordance with ASC Subtopic 985-605, Software - Revenue Recognition for the following types of sales transactions: (i) standalone sales of software products and related upgrades and (ii) sales of software elements that are bundled with non-software elements, when the software elements are not essential to the functionality of the non-software elements. For 2011 and future periods, pursuant to the guidance of ASU No. 2009-13, when a sales arrangement contains multiple elements, such as non-software products, software products, customer support services, and/or professional services, the Company allocates revenue to each element based on the aforementioned selling price hierarchy. Revenue is allocated to the non-software deliverables as a group and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then recognized using the guidance for recognizing software revenue, as amended. The Company's process for determining its ESP for deliverables without VSOE or TPE involves management's judgment. The Company generally determines ESP based on the following.
From time to time, the Company offers certain customers free upgrades or specified future products or enhancements. For software products, if elements are undelivered at the time of product shipment and provided that the Company has vendor-specific objective evidence of fair value for the undelivered elements, the Company defers the fair value of the specified upgrade, product or enhancement and recognizes those revenues only upon later delivery or at the time at which the remaining contractual terms relating to the elements have been satisfied. If the Company cannot establish VSOE for each undelivered element, all revenue is deferred until all elements are delivered, the Company establishes VSOE or the remaining contractual terms relating to the undelivered elements have been satisfied. For non-software products, if elements are undelivered at the time of product shipment, the Company defers the relative selling price of the specified upgrade, product or enhancement and recognizes those revenues only upon later delivery or at the time at which the remaining contractual terms relating to the elements have been satisfied. Approximately 61% of the Company's revenues for the first six months of 2011 were derived from indirect sales channels, including authorized resellers and distributors. Certain channel partners are offered limited rights of return, stock rotation and price protection. For these partners, the Company generally records a provision for estimated returns and other allowances as a reduction of revenues in the same period that related revenues are recorded in accordance with ASC Subtopic 605-15, Revenue Recognition - Products. Management estimates must be made and used in connection with establishing and maintaining a sales allowance for expected returns and other credits. In making these estimates, the Company analyzes historical returns and credits and the amounts of products held by major resellers and considers the impact of new product introductions, changes in customer demand, current economic conditions and other known factors. While the Company believes it can make reliable estimates regarding these matters, these estimates are inherently subjective. The amount and timing of the Company's revenues for any period may be affected if actual product returns or other reseller credits prove to be materially different from the Company's estimates. A portion of the Company's revenues from sales of consumer video-editing and audio products is derived from transactions with channel partners who have unlimited return rights and from whom payment is contingent upon the product being sold through to their customers. Accordingly, revenues for these channel partners are recognized when the products are sold through to the customer instead of being recognized at the time products are shipped to the channel partners. At the time of a sales transaction, the Company makes an assessment of the collectability of the amount due from the customer. Revenues are recognized only if it is probable that collection will occur in a timely manner. In making this assessment, the Company considers customer credit-worthiness and historical payment experience. If it is determined from the outset of the arrangement that collection is not probable based on the Company's credit review process, revenues are recognized on a cash-collected basis to the extent that the other criteria of ASC Topic 605, ASC Subtopic 985-605 and Securities and Exchange Commission Staff Accounting Bulletin No. 104 are satisfied. At the outset of the arrangement, the Company assesses whether the fee associated with the order is fixed or determinable and free of contingencies or significant uncertainties. In assessing whether the fee is fixed or determinable, the Company considers the payment terms of the transaction, its collection experience in similar transactions without making concessions, and the Company's involvement, if any, in third-party financing transactions, among other factors. If the fee is not fixed or determinable, revenues are recognized only as payments become due from the customer, provided that all other revenue recognition criteria are met. If a significant portion of the fee is due after the Company's normal payment terms, which are generally 30 days, but can be up to 90 days, after the invoice date, the Company evaluates whether it has sufficient history of successfully collecting past transactions with similar terms. If that collection history is successful, revenues are recognized upon delivery of the products, assuming all other revenue recognition criteria are satisfied. If the Company were to change any of these assumptions and judgments, it could cause a material increase or decrease in the amount of revenue reported in a particular period. Recent Accounting Pronouncements In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. This ASU eliminates the current option to report other comprehensive income and its components in the statement of changes in equity and requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate consecutive statements. ASU No. 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011, which is January 1, 2012 for Avid. While this ASU changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance; therefore, adoption will not have an impact on the Company's consolidated financial position, results of operations or cash flows. In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. This ASU amends current U.S. GAAP fair value measurement and disclosure guidance to be consistent with International Financial Reporting Standards, including increased transparency around valuation inputs and the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position, but for which the fair value of such items is required to be disclosed. ASU No. 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011, which is January 1, 2012 for Avid. Adoption is not expected to have an impact on the Company's consolidated financial position, results of operations or cash flows. |
FAIR VALUE MEASUREMENTS
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FAIR VALUE MEASUREMENTS [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Text Block] | 4. FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis On a recurring basis, the Company measures certain financial assets and liabilities at fair value, including cash equivalents and foreign currency forward contracts. At June 30, 2011, all of the Company's financial assets and liabilities were classified as either Level 1 or Level 2 in the fair value hierarchy as defined by FASB ASC Topic 820, Fair Value Measurements and Disclosure. Assets and liabilities valued using quoted market prices in active markets and classified as Level 1 are certain deferred compensation investments and related obligations. Assets and liabilities valued based on other observable inputs and classified as Level 2 are foreign currency forward contracts and certain deferred compensation obligations. The following tables summarize the Company's fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis at June 30, 2011 and December 31, 2010 (in thousands):
The fair values of level 1 benefit plan and deferred compensation assets and the corresponding obligations are based on quoted market prices. The fair values of level 2 benefit plan and deferred compensation assets are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. The fair values of level 2 benefit plan and deferred compensation liabilities are derived using valuation models, such as the projected unit credit method, with significant inputs derived from or corroborated by observable market data, such as mortality and disability rates from published sources, for example the RT 2005 G mortality tables, and discount rates that are observable at commonly quoted intervals. The fair values of foreign currency forward contracts are measured at fair value on a recurring basis based on the changes in fair value of the foreign currency forward contracts and are classified as level 2 in the fair value hierarchy. The primary input used to fair value foreign currency forward contracts are published foreign currency exchange rates as of the date of valuation. See Note 3 for further information on the Company's foreign currency forward contracts. The carrying amounts of our other financial assets and liabilities including accounts receivable, borrowings under revolving credit facilities, accounts payable and accrued liabilities approximate their respective fair values because of the relatively short period of time between their origination and their expected realization. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The following tables summarize the Company's fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis during the six-month period ended June 30, 2011 and the twelve-month period ended December 31, 2010 (in thousands):
During the six-month period ended June 30, 2011 and the twelve-month period ended December 31, 2010, the Company recorded restructuring accruals associated with exiting all or portions of certain leased facilities and for revised estimates related to previously exited facilities. The Company estimates the fair value of such liabilities, which are discounted to net present value at an assumed risk-free interest rate, based on observable inputs, including the remaining payments required under the existing lease agreements, utilities costs based on recent invoice amounts, and potential sublease receipts based on quoted market prices for similar sublease arrangements. See Note 16 for further information on the Company's restructuring activities. |
ACCOUNTS RECEIVABLE
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ACCOUNTS RECEIVABLE [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE [Text Block] | 5. ACCOUNTS RECEIVABLE Accounts receivable, net of allowances, consisted of the following at June 30, 2011 and December 31, 2010 (in thousands):
The accounts receivable balances at June 30, 2011 and December 31, 2010 excluded approximately $9.0 million and $16.1 million, respectively, for large solution sales and certain distributor sales that were invoiced, but for which revenues had not yet been recognized and payments were not then due. |
ACCOUNTING FOR STOCK-BASED COMPENSATION
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ACCOUNTING FOR STOCK-BASED COMPENSATION [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTING FOR STOCK-BASED COMPENSATION [Text Block] | 13. ACCOUNTING FOR STOCK-BASED COMPENSATION Stock Incentive Plans Under its stock incentive plans, the Company may grant stock awards or options to purchase the Company's common stock to employees, officers, directors (subject to certain restrictions) and consultants. Options generally allow the purchase of common stock at the market price on the date of grant. The options become exercisable over various periods, typically four years for employees and one year for non-employee directors, and have a maximum term of seven years. Restricted stock and restricted stock unit awards typically vest over four years. Shares available for issuance under the Company's Amended and Restated 2005 Stock Incentive Plan totaled 3,030,273 at June 30, 2011, including 373,627 shares that may alternatively be issued as awards of restricted stock or restricted stock units. The Company records stock-based compensation cost for stock-based awards over the requisite service periods for the individual awards, which generally equal the vesting periods. Stock-compensation expense is recognized using the straight-line attribution method. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option grants with time-based vesting. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. The fair values of restricted stock awards with time-based vesting, including restricted stock and restricted stock units, are based on the intrinsic values of the awards at the date of grant. The Company also issues stock option grants or restricted stock unit awards with vesting based on market conditions, specifically the Company's stock price, or a combination of performance and market conditions, generally the Company's return on equity. The compensation costs and derived service periods for such grants are estimated using the Monte Carlo valuation method. For stock option grants with vesting based on a combination of performance and market conditions, the compensation costs are also estimated using the Black-Scholes valuation method factored for the estimated probability of achieving the performance goals, and compensation costs for these grants are recorded based on the higher estimate for each vesting tranche. For restricted stock unit grants with vesting based on a combination of performance and market conditions, the compensation costs are also estimated based on the intrinsic values of the awards at the date of grant factored for the estimated probability of achieving the performance goals, and compensation costs for these grants are also recorded based on the higher estimate for each vesting tranche. For each stock option grant and restricted stock award with vesting based on a combination of performance and market conditions where vesting will occur if either condition is met, the related compensation costs are recognized over the shorter of the derived service period or implicit service period. During the first quarter of 2010, the Company modified the vesting terms of certain outstanding stock options that had vesting based on market conditions. The modifications, which affected 16 employees, provide that the vesting of the underlying shares can also occur based on the achievement of certain additional performance-based criteria and resulted in a total incremental compensation charge of $0.9 million, which is being recognized over the remaining derived service period of the stock options. The incremental compensation costs for the option modifications were based on the excess fair values of the modified options immediately after the modification, which were estimated using the Black-Scholes valuation method factored for the estimated probability of achieving the performance goals, compared to the fair values immediately before the modification estimated using the Monte Carlo valuation method. The following table sets forth the weighted-average key assumptions and fair value results for stock options granted during the six-month periods ended June 30, 2011 and 2010:
The following table summarizes changes in the Company's stock options outstanding during the six months ended June 30, 2011:
The aggregate intrinsic values of stock options exercised during the six-month periods ended June 30, 2011 and 2010 were approximately $1.1 million and $0.1 million, respectively. Cash amounts received from the exercise of stock options were $1.9 million and $0.3 million for the six-month periods ended June 30, 2011 and 2010, respectively. The Company did not realize any actual tax benefit from the tax deductions for stock option exercises during the six-month periods ended June 30, 2011 and 2010 due to the full valuation allowance on the Company's U.S. deferred tax assets. The following table sets forth the weighted-average key assumptions used for Monte Carlo valuations of restricted stock units with vesting based on market conditions or a combination of performance and market conditions granted during the six-month periods ended June 30, 2011 and 2010:
The following table summarizes changes in the Company's non-vested restricted stock units during the six months ended June 30, 2011:
The weighted-average fair value of restricted stock units granted during the six-month period ended June 30, 2010 was $13.92. The following table summarizes changes in the Company's non-vested restricted stock during the six months ended June 30, 2011:
Employee Stock Purchase Plan The Company's Second Amended and Restated 1996 Employee Stock Purchase Plan (the "ESPP") offers the Company's shares for purchase at a price equal to 85% of the closing price on the applicable offering period termination date. Shares issued under the ESPP are considered compensatory under FASB ASC Subtopic 718-50, Compensation-Stock Compensation: Employee Stock Purchase Plans. Accordingly, the Company is required to assign fair value to, and record compensation expense for, share purchase rights granted under the ESPP. The following table sets forth the weighted-average key assumptions and fair value results for share purchase rights granted under the ESPP during the six-month periods ended June 30, 2011 and 2010:
Under the ESPP, the Company issued 40,915 shares at an average price per share of $14.96 and 52,367 shares at an average price per share of $11.50 during the six months ended June 30, 2011 and 2010, respectively. A total of 695,811 shares remained available for issuance under the ESPP at June 30, 2011. Stock-Based Compensation The Company estimates forfeiture rates at the time awards are made based on historical turnover rates and applies these rates in the calculation of estimated compensation cost. At June 30, 2011, the Company's annualized estimated forfeiture rates were 0% for non-employee director awards, and 10% for both executive management staff and other employee awards. Stock-based compensation was included in the following captions in the Company's condensed consolidated statements of operations for the three- and six-month periods ended June 30, 2011 and 2010 (in thousands):
Stock-based compensation expense increased for both the three- and six-month periods ended June 30, 2011, compared to the same periods in 2010, as a result of the timing of the Company's 2011 grant cycle and incremental expense related to the reversal of the forfeiture rate applied to certain grant tranches. At June 30, 2011, the Company had $31.1 million of unrecognized compensation costs before forfeitures related to non-vested stock-based compensation awards granted under its stock-based compensation plans. |