Delaware | 1-36254 | 04-2977748 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
EBITDA (M) | Total Vested | |||
$ | 77.9 | 100 | % | |
$ | 70.1 | 90 | % | |
$ | 62.3 | 75 | % | |
$ | 46.8 | 60 | % | |
$ | 31.2 | 50 | % |
NEO | Title | Options/RSUs | Number Modified | Original Grant Date | Exercise Price of Options |
Hernandez, Louis | President and Chief Executive Officer | Options | 437,500 | 02/11/13 | $7.87 |
Frederick, John W. | Executive Vice President, CFO & CAO | Options | 280,000 | 02/11/13 | $7.87 |
Gahagan, Christopher | Sr. Vice President of Products | Options | 50,000 | 07/21/09 | $12.84 |
RSUs | 21,250 | 02/16/11 | N/A | ||
Options | 50,000 | 07/21/09 | $12.84 | ||
Options | 50,000 | 07/21/09 | $12.84 |
Employee Name | Title | No. of RSUs | Service Periods Covered | Vesting Start Date |
Louis Hernandez, Jr. | President and Chief Executive Officer | 93,000 | 2014 | 2/12/2014 |
John W. Frederick | Executive Vice President, CFO and CAO | 56,000 | 2014 | 2/12/2014 |
Christopher C. Gahagan | Sr. Vice President of Products and Services | 48,000 | 2013 | 2/12/2013 |
48,000 | 2014 | 2/12/2014 | ||
Jason A. Duva | VP, General Counsel & Corporate Secretary | 28,000 | 2013 | 2/12/2013 |
28,000 | 2014 | 2/12/2014 |
Exhibit Number | Description |
99.1* | Press Release dated November 13, 2014 |
AVID TECHNOLOGY, INC. | |
(Registrant) | |
Date: November 13, 2014 | By: /s/ John W. Frederick Name: John W. Frederick Title: Executive Vice President, Chief Financial Officer and Chief Administrative Officer |
• | Revenue of $142.4 million and non-GAAP net income of $22.5 million, an increase of 2.5% and over 59%, respectively versus Q3 2013 |
• | Adjusted EBITDA of $27.3 million, up 37% from Q3 2013 |
• | Free cash flow generation of $8.1 million, up year-on-year and sequentially |
• | Bookings of $112.2 million, compared with $127.0 million for Q3 2013 |
• | Non-GAAP gross margin improved 320 basis points, while operating expense declined 1.5% year-on-year |
• | Over 3,200 new Media Composer cloud based subscription users as of September 30, 2014 with average monthly growth rate of 45% over first four months. |
• | Adjusted EBITDA of $64 million to $72 million |
• | Annual bookings growth of 0%-3% |
• | Free cash flow of approximately $15 million to $20 million |
AVID TECHNOLOGY, INC. | ||||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||||
(unaudited - in thousands, except per share data) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Net revenues: | ||||||||||||||||||
Products | $ | 105,330 | $ | 92,969 | $ | 287,215 | $ | 291,545 | ||||||||||
Services | 37,099 | 45,924 | 114,840 | 124,764 | ||||||||||||||
Total net revenues | 142,429 | 138,893 | 402,055 | 416,309 | ||||||||||||||
Cost of revenues: | ||||||||||||||||||
Products | 37,807 | 39,683 | 107,898 | 115,600 | ||||||||||||||
Services | 14,981 | 16,372 | 45,975 | 47,040 | ||||||||||||||
Amortization of intangible assets | — | 158 | 50 | 1,310 | ||||||||||||||
Total cost of revenues | 52,788 | 56,213 | 153,923 | 163,950 | ||||||||||||||
Gross profit | 89,641 | 82,680 | 248,132 | 252,359 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Research and development | 22,154 | 23,239 | 67,178 | 70,693 | ||||||||||||||
Marketing and selling | 31,410 | 31,512 | 98,522 | 99,324 | ||||||||||||||
General and administrative | 20,644 | 22,715 | 58,959 | 54,443 | ||||||||||||||
Amortization of intangible assets | 373 | 660 | 1,251 | 1,981 | ||||||||||||||
Restructuring costs (recoveries), net | — | 688 | (165 | ) | 2,879 | |||||||||||||
Total operating expenses | 74,581 | 78,814 | 225,745 | 229,320 | ||||||||||||||
Operating income | 15,060 | 3,866 | 22,387 | 23,039 | ||||||||||||||
Interest and other expense, net | (455 | ) | (363 | ) | (1,163 | ) | (868 | ) | ||||||||||
Income before income taxes | 14,605 | 3,503 | 21,224 | 22,171 | ||||||||||||||
Provision for income taxes, net | 365 | 921 | 1,427 | 2,147 | ||||||||||||||
Net income | 14,240 | 2,582 | 19,797 | 20,024 | ||||||||||||||
Net income per common share - basic and diluted | $ | 0.36 | $ | 0.07 | $ | 0.51 | $ | 0.51 | ||||||||||
Weighted-average common shares outstanding - basic | 39,133 | 39,075 | 39,117 | 39,031 | ||||||||||||||
Weighted-average common shares outstanding - diluted | 39,201 | 39,076 | 39,164 | 39,066 |
AVID TECHNOLOGY, INC. | |||||||||||||||||
Reconciliations of GAAP financial measures to Non-GAAP financial measures | |||||||||||||||||
(unaudited - in thousands, except per share data) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
GAAP | |||||||||||||||||
Net Revenues | $ | 142,429 | $ | 138,893 | $ | 402,055 | $ | 416,309 | |||||||||
Cost of revenues | 52,788 | 56,213 | 153,923 | 163,950 | |||||||||||||
Gross profit | 89,641 | 82,680 | 248,132 | 252,359 | |||||||||||||
Operating expenses | 74,581 | 78,814 | 225,745 | 229,320 | |||||||||||||
Operating income | 15,060 | 3,866 | 22,387 | 23,039 | |||||||||||||
Interest and other expense, net | (455 | ) | (363 | ) | (1,163 | ) | (868 | ) | |||||||||
Provision for income taxes, net | 365 | 921 | 1,427 | 2,147 | |||||||||||||
Net income | $ | 14,240 | $ | 2,582 | $ | 19,797 | $ | 20,024 | |||||||||
Weighted-average common shares outstanding - diluted | 39,201 | 39,076 | 39,164 | 39,066 | |||||||||||||
Net income per share - diluted | $ | 0.36 | $ | 0.07 | $ | 0.51 | $ | 0.51 | |||||||||
Adjustments to GAAP Results | |||||||||||||||||
Cost of Revenues | |||||||||||||||||
Amortization of intangible assets | — | 158 | 50 | 1,310 | |||||||||||||
Stock-based compensation | 78 | 185 | 394 | 623 | |||||||||||||
Operating Expenses | |||||||||||||||||
Amortization of intangible assets | 373 | 660 | 1,251 | 1,981 | |||||||||||||
Restructuring costs (recoveries), net | — | 688 | (165 | ) | 2,879 | ||||||||||||
Restatement costs | 8,564 | 8,730 | 19,408 | 12,428 | |||||||||||||
Gain on sale of assets | — | — | — | (125 | ) | ||||||||||||
Stock-based compensation | |||||||||||||||||
R&D | 96 | 137 | 336 | 455 | |||||||||||||
Sales & Marketing | 252 | 402 | 1,186 | 1,455 | |||||||||||||
G&A | (1,107 | ) | 808 | 802 | 3,183 | ||||||||||||
Other | |||||||||||||||||
Tax adjustment | 4 | (215 | ) | (7 | ) | (645 | ) | ||||||||||
Non-GAAP | |||||||||||||||||
Net revenues | 142,429 | 138,893 | 402,055 | 416,309 | |||||||||||||
Cost of revenues | 52,710 | 55,870 | 153,479 | 162,017 | |||||||||||||
Gross Profit | 89,719 | 83,023 | 248,576 | 254,292 | |||||||||||||
Operating Expenses | 66,403 | 67,389 | 202,927 | 207,064 | |||||||||||||
Operating Income | 23,316 | 15,634 | 45,649 | 47,228 | |||||||||||||
Interest and other expense, net | (455 | ) | (363 | ) | (1,163 | ) | (868 | ) | |||||||||
Provision for income taxes, net | 361 | 1,136 | 1,434 | 2,792 | |||||||||||||
Net income | 22,500 | 14,135 | 43,052 | 43,568 |
Net income per share - diluted | $ | 0.57 | $ | 0.36 | $ | 1.10 | $ | 1.12 | |||||||||
Adjusted EBITDA | |||||||||||||||||
Non-GAAP Operating Income (from above) | 23,316 | 15,634 | 45,649 | 47,228 | |||||||||||||
Depreciation | 3,968 | 4,302 | 12,294 | 13,451 | |||||||||||||
Amortization of capitalized software development costs | 28 | 49 | 127 | 228 | |||||||||||||
Adjusted EBITDA | 27,312 | 19,985 | 58,070 | 60,907 | |||||||||||||
Free Cash Flow | |||||||||||||||||
GAAP net cash provided by (used in) operating activities | 5,252 | (4,472 | ) | (20,830 | ) | (10,028 | ) | ||||||||||
Capital Expenditures | (5,269 | ) | (3,708 | ) | (11,660 | ) | (8,998 | ) | |||||||||
Restructuring Payments | 1,274 | 3,256 | 6,085 | 10,671 | |||||||||||||
Restatement Payments | 6,814 | 3,919 | 22,902 | 5,433 | |||||||||||||
Free Cash Flow | $ | 8,071 | $ | (1,005 | ) | $ | (3,503 | ) | $ | (2,922 | ) | ||||||
AVID TECHNOLOGY, INC. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(unaudited - in thousands) | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
ASSETS: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,476 | $ | 48,203 | ||||
Accounts receivable, net of allowances of $11,255 and $13,963 | ||||||||
at September 30, 2014 and December 31, 2013, respectively | 56,011 | 56,770 | ||||||
Inventories | 53,977 | 60,122 | ||||||
Deferred tax assets, net | 497 | 522 | ||||||
Prepaid expenses | 6,573 | 7,778 | ||||||
Other current assets | 15,995 | 17,493 | ||||||
Total current assets | 155,529 | 190,888 | ||||||
Property and equipment, net | 34,414 | 35,186 | ||||||
Intangible assets, net | 2,830 | 4,260 | ||||||
Long-term deferred tax assets, net | 2,272 | 2,415 | ||||||
Other long-term assets | 2,161 | 2,393 | ||||||
Total assets | $ | 197,206 | $ | 235,142 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 34,509 | $ | 33,990 | ||||
Accrued compensation and benefits | 26,701 | 30,342 | ||||||
Accrued expenses and other current liabilities | 31,649 | 41,273 | ||||||
Income taxes payable | 6,032 | 6,875 | ||||||
Short-term debt | 8,000 | — | ||||||
Deferred tax liabilities, net | — | 14 | ||||||
Deferred revenues | 221,830 | 211,403 | ||||||
Total current liabilities | 328,721 | 323,897 | ||||||
Long-term deferred tax liabilities, net | 536 | 565 | ||||||
Long-term deferred revenues | 195,507 | 255,429 | ||||||
Other long-term liabilities | 13,676 | 14,586 | ||||||
Total liabilities | 538,440 | 594,477 | ||||||
Stockholders' deficit: | ||||||||
Common stock | 423 | 423 | ||||||
Additional paid-in capital | 1,044,096 | 1,043,384 | ||||||
Accumulated deficit | (1,316,729 | ) | (1,336,526 | ) | ||||
Treasury stock at cost | (70,855 | ) | (72,543 | ) | ||||
Accumulated other comprehensive income | 1,831 | 5,927 | ||||||
Total stockholders' deficit | (341,234 | ) | (359,335 | ) |
Total liabilities and stockholders' deficit | $ | 197,206 | $ | 235,142 |
AVID TECHNOLOGY, INC. | |||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||
(unaudited - in thousands) | |||||||||||||
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Cash flows from operating activities: | |||||||||||||
Net income | $ | 19,797 | $ | 20,024 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 13,721 | 16,970 | |||||||||||
(Recovery) expense from doubtful accounts | (177 | ) | 140 | ||||||||||
Gain on sale of assets | — | (125 | ) | ||||||||||
Stock-based compensation expense | 2,718 | 5,716 | |||||||||||
Non-cash interest expense | 220 | 220 | |||||||||||
Foreign currency transaction losses (gains) | (494 | ) | (856 | ) | |||||||||
(Benefit from) provision for deferred taxes | (6 | ) | 6 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable | 931 | 12,255 | |||||||||||
Inventories | 6,145 | 7,473 | |||||||||||
Prepaid expenses and other current assets | 646 | 965 | |||||||||||
Accounts payable | 585 | (4,823 | ) | ||||||||||
Accrued expenses, compensation and benefits and other liabilities | (14,842 | ) | (1,348 | ) | |||||||||
Income taxes payable | (603 | ) | (475 | ) | |||||||||
Deferred revenues | (49,471 | ) | (66,170 | ) | |||||||||
Net cash used in operating activities | (20,830 | ) | (10,028 | ) | |||||||||
Cash flows from investing activities: | |||||||||||||
Purchases of property and equipment | (11,660 | ) | (8,998 | ) | |||||||||
Proceeds from divestiture of consumer business | 1,500 | — | |||||||||||
Proceeds from sale of assets | — | 125 | |||||||||||
Decrease (increase) in other long-term assets | 51 | (25 | ) | ||||||||||
Net cash used in investing activities | (10,109 | ) | (8,898 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||
Proceeds from the issuance of common stock under employee stock plans | 1 | 177 | |||||||||||
Common stock repurchases for tax withholdings for net settlement of equity awards | (318 | ) | (263 | ) | |||||||||
Proceeds from revolving credit facilities | 20,500 | — | |||||||||||
Payments on revolving credit facilities | (12,500 | ) | — | ||||||||||
Net cash provided by (used in) financing activities | 7,683 | (86 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,471 | ) | (1,145 | ) | |||||||||
Net decrease in cash and cash equivalents | (25,727 | ) | (20,157 | ) | |||||||||
Cash and cash equivalents at beginning of period | 48,203 | 70,390 | |||||||||||
Cash and cash equivalents at end of period | $ | 22,476 | $ | 50,233 |