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FINANCIAL INFORMATION (Notes)
3 Months Ended
Mar. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
FINANCIAL INFORMATION
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, comprehensive (loss) income, 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, 2014 was derived from the Company’s audited consolidated financial statements and does not include all disclosures required by U.S. GAAP for annual financial statements. The Company filed audited consolidated financial statements as of and for the year ended December 31, 2014 in its Annual Report on Form 10-K for the year ended December 31, 2014, 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The Company’s preparation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from the Company’s estimates.

The Company has generally funded operations in recent years through the use of existing cash balances and cash flows from operations, which have been supplemented from time to time with borrowings under credit facilities. At March 31, 2015, the Company’s principal sources of liquidity included cash and cash equivalents totaling $25.5 million and available borrowings under the Company’s credit facilities, which are discussed in Note 11. Cash provided by operating activities aggregated $4.6 million for the three months ended March 31, 2015, which was attributable to significantly reduced costs associated with restatement-related activities and restructuring activities, as well as the timing of annual bonus payments.

The Company’s cash requirements vary depending on factors such as the growth of the business, changes in working capital, capital expenditures, acquisitions of businesses or technologies and obligations under restructuring programs. Management expects to operate the business and execute its strategic initiatives principally with funds generated from operations and the Company's external sources of credit under the credit facilities. Management anticipates that the Company will have sufficient internal and external sources of liquidity to fund operations and anticipated working capital and other expected cash needs for at least the next 12 months as well as for the foreseeable future.

Subsequent Events

On April 12, 2015, Avid entered into a Transaction Agreement and Plan of Merger (the “Merger Agreement”) with Orad Hi-Tec Systems Ltd., an Israeli company listed on the Frankfurt stock exchange, in which Avid agreed to acquire Orad and its subsidiaries on the terms and subject to the conditions set forth in the Merger Agreement, including Orad stockholder approval of the merger. Orad is a leading provider of state-of-the-art 3D real-time graphics, video servers and related asset management solutions. The acquisition adds key content creation and media management solutions to the Avid MediaCentral Platform.

Pursuant to the terms of the Merger Agreement, at the effective time of the merger, each issued and outstanding share of Orad common stock will be canceled and converted into the right to receive consideration equal to EUR 5.67 in cash. This consideration represents an enterprise value of approximately $60 million.

On April 12, 2015, Avid also entered into a financing commitment letter (the “Commitment Letter”) with certain lenders, in which the lenders have agreed to provide a five-year secured term loan in an aggregate principal amount of $100 million for the purpose of financing the consideration payable under the Merger Agreement and funding the Company’s general working capital requirements. The proposed term loan would bear interest, at Avid’s option, at an annual rate equal to a reference rate plus margin of 5.25% or LIBOR plus 6.50%. The lenders’ obligations to provide funding in accordance with the Commitment Letter are subject to Avid’s compliance with customary terms and conditions precedent for such borrowing as set forth in the Commitment Letter.

For a more detailed description of the Merger Agreement and the Commitment Letter, see the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on April 13, 2015.

Recent Accounting Pronouncements To Be Adopted

On May 28, 2014, the Financial Accounting Standards Board (the “FASB”) and the International Accounting Standards Board (the “IASB”) issued substantially converged final standards on revenue recognition. The FASB's Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), was issued in three parts: (a) Section A, “Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40),” (b) Section B, “Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables” and (c) Section C, “Background Information and Basis for Conclusions.” The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance.

The new revenue recognition guidance becomes effective for the Company on January 1, 2017, and early adoption is not permitted. The FASB has proposed but not yet finalized an amendment to this guidance that would defer the effective date to January 1, 2018. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU.  The Company has not yet selected a transition method and is evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.