Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 02, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Avid Technology, Inc. | |
Entity Central Index Key | 896,841 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 39,821,072 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net revenues: | ||||
Products | $ 75,592 | $ 76,150 | $ 160,101 | $ 156,179 |
Services | 58,477 | 33,617 | 117,515 | 73,174 |
Total net revenues | 134,069 | 109,767 | 277,616 | 229,353 |
Cost of revenues: | ||||
Products | 28,488 | 28,363 | 55,612 | 60,160 |
Services | 15,831 | 14,943 | 30,241 | 30,638 |
Amortization of intangible assets | 1,950 | 163 | 3,900 | 163 |
Total cost of revenues | 46,269 | 43,469 | 89,753 | 90,961 |
Gross profit | 87,800 | 66,298 | 187,863 | 138,392 |
Operating expenses: | ||||
Research and development | 21,434 | 23,310 | 42,838 | 46,483 |
Marketing and selling | 30,177 | 32,811 | 61,796 | 60,856 |
General and administrative | 16,807 | 17,425 | 34,537 | 36,812 |
Amortization of intangible assets | 782 | 408 | 1,568 | 782 |
Restructuring (recoveries) costs, net | (213) | 539 | 2,564 | 539 |
Total operating expenses | 68,987 | 74,493 | 143,303 | 145,472 |
Operating income (loss) | 18,813 | (8,195) | 44,560 | (7,080) |
Interest expense | (4,769) | (915) | (9,000) | (1,253) |
Other income (expense), net | (390) | (524) | (342) | (909) |
Income (loss) before income taxes | 13,654 | (9,634) | 35,218 | (9,242) |
Provision for (benefit from) income taxes | 703 | (5,550) | 1,338 | (4,989) |
Net income (loss) | $ 12,951 | $ (4,084) | $ 33,880 | $ (4,253) |
Net income (loss) per common share – basic | $ 0.33 | $ (0.10) | $ 0.86 | $ (0.11) |
Net income (loss) per common share – diluted | $ 0.33 | $ (0.10) | $ 0.85 | $ (0.11) |
Weighted-average common shares outstanding – basic | 39,678 | 39,635 | 39,622 | 39,512 |
Weighted-average common shares outstanding – diluted | 39,734 | 39,635 | 39,691 | 39,512 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net income (loss) | $ 12,951 | $ (4,084) | $ 33,880 | $ (4,253) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (787) | 2,213 | 2,458 | (3,668) |
Comprehensive income (loss) | $ 12,164 | $ (1,871) | $ 36,338 | $ (7,921) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 50,365 | $ 17,902 |
Accounts receivable, net of allowances of $7,807 and $9,226 at June 30, 2016 and December 31, 2015, respectively | 44,769 | 58,807 |
Inventories | 53,902 | 48,073 |
Prepaid expenses | 9,220 | 6,548 |
Other current assets | 7,179 | 6,119 |
Total current assets | 165,435 | 137,449 |
Property and equipment, net | 35,676 | 35,481 |
Intangible assets, net | 27,762 | 33,219 |
Goodwill | 32,643 | 32,643 |
Long-term deferred tax assets, net | 2,025 | 2,011 |
Other long-term assets | 10,169 | 7,123 |
Total assets | 273,710 | 247,926 |
Current liabilities: | ||
Accounts payable | 35,121 | 45,511 |
Accrued compensation and benefits | 22,814 | 28,124 |
Accrued expenses and other current liabilities | 24,871 | 35,354 |
Income taxes payable | 495 | 1,023 |
Short-term debt | 5,000 | 5,000 |
Deferred revenues | 165,623 | 189,887 |
Total current liabilities | 253,924 | 304,899 |
Long-term debt | 187,830 | 95,950 |
Long-term deferred tax liabilities, net | 2,088 | 3,443 |
Long-term deferred revenues | 101,529 | 158,495 |
Other long-term liabilities | 17,343 | 14,711 |
Total liabilities | 562,714 | 577,498 |
Contingencies (Note 8) | ||
Stockholders' deficit: | ||
Common stock | 423 | 423 |
Additional paid-in capital | 1,054,641 | 1,055,838 |
Accumulated deficit | (1,285,489) | (1,319,318) |
Treasury stock at cost | (52,858) | (58,336) |
Accumulated other comprehensive loss | (5,721) | (8,179) |
Total stockholders' deficit | (289,004) | (329,572) |
Total liabilities and stockholders' deficit | $ 273,710 | $ 247,926 |
CONSOLIDATED BALANCE SHEETS (PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts | $ 7,807 | $ 9,226 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 33,880 | $ (4,253) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 12,890 | 8,014 |
Provision (recovery) for doubtful accounts | 367 | (205) |
Stock-based compensation expense | 4,388 | 5,344 |
Non-cash interest expense | 5,394 | 207 |
Unrealized foreign currency transaction losses (gains) | 1,578 | (4,043) |
Benefit for deferred taxes | (1,365) | (6,514) |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Accounts receivable | 13,683 | 8,935 |
Inventories | (5,829) | 8,940 |
Prepaid expenses and other current assets | (3,994) | 784 |
Accounts payable | (10,373) | 347 |
Accrued expenses, compensation and benefits and other liabilities | (13,910) | (17,362) |
Income taxes payable | (510) | 770 |
Deferred revenues | (81,215) | (27,178) |
Net cash used in operating activities | (45,016) | (26,214) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (7,321) | (6,742) |
Payments for business and technology acquisitions, net of cash acquired | 0 | (65,967) |
Increase in other long-term assets | (12) | (850) |
Increase in restricted cash | (4,544) | (2,330) |
Net cash used in investing activities | (11,877) | (75,889) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 100,000 | 121,150 |
Repayment of debt | (1,250) | 0 |
Cash paid for capped call transactions | 0 | (10,125) |
Proceeds from the issuance of common stock under employee stock plans | 285 | 2,804 |
Common stock repurchases for tax withholdings for net settlement of equity awards | (441) | (1,299) |
Proceeds from revolving credit facilities | 25,000 | 29,500 |
Payments on revolving credit facilities | (30,000) | (29,500) |
Payments for credit facility issuance costs | (4,971) | (505) |
Net cash provided by financing activities | 88,623 | 112,025 |
Effect of exchange rate changes on cash and cash equivalents | 733 | (331) |
Net increase in cash and cash equivalents | 32,463 | 9,591 |
Cash and cash equivalents at beginning of period | 17,902 | 25,056 |
Cash and cash equivalents at end of period | 50,365 | 34,647 |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for income taxes, net of refunds | 1,003 | 877 |
Cash paid for interest | 3,690 | 981 |
Long-term Debt [Member] | ||
Non-cash Financing Activities: | ||
Issuance costs for debt | 49 | 581 |
Line of Credit [Member] | ||
Non-cash Financing Activities: | ||
Issuance costs for debt | $ 0 | $ 634 |
FINANCIAL INFORMATION (Notes)
FINANCIAL INFORMATION (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2015 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, 2015 in its Annual Report on Form 10-K for the year ended December 31, 2015 , 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, 2015 . 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, supplemented from time to time with the proceeds of long-term debt and borrowings under its credit facilities. The Company’s principal sources of liquidity include cash and cash equivalents totaling $50.4 million as of June 30, 2016 . In February 2016, the Company committed to a cost efficiency program that encompasses a series of measures intended to allow the Company to more efficiently operate in a leaner, and more directed cost structure. These measures include reductions in the Company’s workforce, facilities consolidation, transferring certain business processes to lower cost regions and reducing other third-party service costs. In connection with this cost efficiency program, the Company expects to incur, in the aggregate, cash expenditures of approximately $25 million relating to termination benefits, facility costs, employee overlap expenses and related actions. The Company anticipates that the cost efficiency program will be substantially complete by the end of the second quarter of 2017 and, when fully implemented, will result in annualized costs savings of approximately $76 million . In connection with the cost efficiency program, on February 26, 2016, the Company entered into a Financing Agreement (the “Financing Agreement”) with the lenders party thereto (the “Lenders”). Pursuant to the Financing Agreement, the Company entered into a term loan in the aggregate principal amount of $100 million . The Financing Agreement also provides the Company with the ability to draw up to a maximum of $5 million in revolving credit. All outstanding loans under the Financing Agreement will become due and payable in February 2021, or in May 2020 if the $125 million in outstanding principal of 2.00% convertible senior notes due June 15, 2020 (the “Notes”) has not been repaid or refinanced by such time. Proceeds from the Financing Agreement have been used to replace an existing $35 million revolving credit facility, finance the Company’s efficiency program and other initiatives, and provide operating flexibility throughout the remainder of the transformation in this period of heightened market volatility. After paying for both debt issuance costs and the cost efficiency program, the new financing provided approximately $70 million of available liquidity, about half of which replaced the prior revolving credit facility with the remainder providing incremental liquidity to fund operations. The Financing Agreement requires the Company to comply with a financial statement covenant that stipulates a maximum leverage ratio (defined to mean the ratio of (a) consolidated total funded indebtedness to (b) consolidated EBITDA) commencing on June 30, 2016 of 4.35:1. The maximum leverage ratio declines gradually over the term of the agreement to a requirement of 2.5:1 on March 31, 2019 and thereafter. The Company’s ability to satisfy the leverage ratio covenant in the future is heavily dependent on its ability to increase bookings and billings above levels experienced over the last twelve months. In recent quarters, the Company has experienced volatility in bookings and billings resulting from, among other things, (i) its transition towards subscription and recurring revenue streams and the resulting decline in traditional upfront product sales, (ii) volatility in currency rates and in particular the strengthening of the US dollar against the Euro, (iii) dramatic changes in the media industry and the impact it has on the Company’s customers and (iv) the impact of new and anticipated product launches and features. In addition to the impact of new bookings and billings, GAAP revenues recognized as the result of the existence of Implied Maintenance Release PCS in prior periods will decline significantly for the remainder of 2016 and in 2017, which will have an adverse impact on the Company’s leverage ratio. In the event bookings and billings in future quarters are lower than the Company currently anticipates, it may be forced to take remedial actions which could include, among other things (and where allowed by the Lenders), (i) further cost reductions, (ii) seeking replacement financing, (iii) raising additional equity or (iv) disposing of certain assets or businesses. Such remedial actions, which may not be available on favorable terms or at all, could have a material adverse impact on the Company’s business. If the Company is not in compliance with the leverage ratio and is unable to obtain an amendment or waiver, such noncompliance may result in an event of default under the Financing Agreement, which could permit acceleration of the outstanding indebtedness under the Financing Agreement and require the Company to repay such indebtedness before the scheduled due date. If an event of default were to occur, the Company might not have sufficient funds available to make the payments required. If the Company is unable to repay amounts owed, the lenders may be entitled to foreclose on and sell substantially all of the Company’s assets, which secure its borrowings under the Financing Agreement. The Company’s cash requirements vary depending on factors such as the growth of the business, changes in working capital, capital expenditures, and obligations under the cost efficiency program. Management expects to operate the business and execute its strategic initiatives principally with funds generated from operations, remaining net proceeds from the term loan borrowings under the Financing Agreement, and draw up to a maximum of $5.0 million under the Financing Agreement’s revolving credit facility. 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 twelve months as well as for the foreseeable future. Subsequent Events The Company evaluated subsequent events through the date of issuance of these financial statements and no subsequent events required recognition or disclosure in these financial statements. Significant Accounting Policies - Revenue Recognition General The Company commences revenue recognition when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is reasonably assured. Generally, the products the Company sells do not require significant production, modification or customization. Installation of the Company’s products is generally routine, consists of implementation and configuration and does not have to be performed by the Company. 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 reasonably assured that collection will occur. When 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 reasonably assured, revenues are recognized on a cash basis, provided that all other revenue recognition criteria are satisfied. At the outset of the arrangement, the Company also assesses whether the fee associated with the order is fixed or determinable and free of contingencies or significant uncertainties. When assessing whether the fee is fixed or determinable, the Company considers the payment terms of the transaction, the Company’s 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, the Company evaluates whether the Company has sufficient history of successfully collecting past transactions with similar terms without offering concessions. If that collection history is sufficient, revenue recognition commences, upon delivery of the products, assuming all other revenue recognition criteria are satisfied. If the Company was to make different judgments or assumptions about any of these matters, it could cause a material increase or decrease in the amount of revenues reported in a particular period. The Company often receives multiple purchase orders or contracts from a single customer or a group of related customers that are evaluated to determine if they are, in effect, part of a single arrangement. In situations when the Company has concluded that two or more orders with the same customer are so closely related that they are, in effect, parts of a single arrangement, the Company accounts for those orders as a single arrangement for revenue recognition purposes. In other circumstances, when the Company has concluded that two or more orders with the same customer are independent buying decisions, such as an earlier purchase of a product and a subsequent purchase of a software upgrade or maintenance contract, the Company accounts for those orders as separate arrangements for revenue recognition purposes. For many of the Company’s products, there has been an ongoing practice of Avid making available at no charge to customers minor feature and compatibility enhancements as well as bug fixes on a when-and-if-available basis (collectively “Software Updates”), for a period of time after initial sales to end users. The implicit obligation to make such Software Updates available to customers over a period of time represents implied post-contract customer support, which is deemed to be a deliverable in each arrangement and is accounted for as a separate element (“Implied Maintenance Release PCS”). Over the course of the last two years, in connection with a strategic initiative to increase support and other recurring revenue streams, the Company has taken a number of steps to eliminate the longstanding practice of providing Implied Maintenance Release PCS for many of its products, including Media Composer, Pro Tools and Sibelius product lines. In the third quarter and fourth quarter of 2015, respectively, the Company concluded that Implied Maintenance Release PCS for its Media Composer and Sibelius product lines had ceased. In the first quarter of 2016, in connection with the release of Cloud Collaboration in Pro Tools version 12.5, which was an undelivered feature that had prevented the Company from recognizing any revenue related to new Pro Tools 12 software sales as it represented a specified upgrade right for which vendor specific objective evidence (“VSOE”) of fair value was not available, the Company concluded that Implied Maintenance Release PCS for Pro Tools 12 product lines had also ended. The determination that Pro Tools 12 Implied Maintenance Release PCS had ended was based on management (i) clearly communicating a policy of no longer providing any Software Updates or other support to customers that are not covered under a paid support plan and (ii) implementing robust digital rights management tools to enforce the policy. With the new policy and technology for Pro Tools 12 in place, combined with management’s intent to continue to adhere to the policy, management concluded in the first quarter of 2016 that Implied Maintenance Release PCS for Pro Tools 12 transactions no longer exists. As a result of the conclusion that Implied Maintenance Release PCS on Pro Tools 12 has ended, revenue and net income in the first quarter of 2016 increased approximately $11.1 million , reflecting the recognition of orders received after the launch of Pro Tools 12 that would have qualified for earlier recognition using the residual method of accounting. In addition, the elimination of Implied Maintenance Release PCS also resulted in the accelerated recognition of maintenance and product revenues that were previously being recognized on a ratable basis over a much longer expected period of Implied Maintenance Release PCS rather than the contractual maintenance period. The reduction in the estimated amortization period of transactions being recognized on a ratable basis resulted in an additional $15.2 million and $21.7 million of revenue during the three and six months ended June 30, 2016 , respectively. The Company enters into certain contractual arrangements that have multiple elements, one or more of which may be delivered subsequent to the delivery of other elements. These multiple-deliverable arrangements may include products, support, training, professional services and Implied Maintenance Release PCS. For these multiple-element arrangements, the Company allocates revenue to each deliverable of the arrangement based on the relative selling prices of the deliverables. In such circumstances, the Company first determines the selling price of each deliverable based on (i) VSOE of fair value if that exists; (ii) third-party evidence of selling price (“TPE”), when VSOE does not exist; or (iii) best estimate of the selling price (“BESP”), when neither VSOE nor TPE exists. Revenue is then 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 selling price hierarchy. The Company’s process for determining BESP for deliverables for which VSOE or TPE does not exist involves significant management judgment. In determining BESP, the Company considers a number of data points, including: • the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis; • contractually stated prices for deliverables that are intended to be sold on a standalone basis; • the pricing of standalone sales that may not qualify as VSOE of fair value due to limited volumes or variation in prices; and • other pricing factors, such as the geographical region in which the products are sold and expected discounts based on the customer size and type. In determining a BESP for Implied Maintenance Release PCS, which the Company does not sell separately, the Company considers (i) the service period for the Implied Maintenance Release PCS, (ii) the differential in value of the Implied Maintenance Release PCS deliverable compared to a full support contract, (iii) the likely list price that would have resulted from the Company’s established pricing practices had the deliverable been offered separately, and (iv) the prices a customer would likely be willing to pay. The Company estimates the service period of Implied Maintenance Release PCS based on the length of time the product version purchased by the customer is planned to be supported with Software Updates. If facts and circumstances indicate that the original service period of Implied Maintenance Release PCS for a product has changed significantly after original revenue recognition has commenced, the Company will modify the remaining estimated service period accordingly and recognize the then-remaining deferred revenue balance over the revised service period. The Company has established VSOE of fair value for some of the Company’s professional services, training and support offerings. The Company’s policy for establishing VSOE of fair value consists of evaluating standalone sales to determine if a substantial portion of the transactions fall within a reasonable range. If a sufficient volume of standalone sales exist and the standalone pricing for a substantial portion of the transactions falls within a reasonable range, management concludes that VSOE of fair value exists. In accordance with ASU No. 2009-14, the Company excludes from the scope of software revenue recognition requirements the Company’s 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 Company adopted ASU No. 2009-13 and ASU No. 2009-14 prospectively on January 1, 2011 for new and materially modified arrangements originating after December 31, 2010. Prior to the Company’s adoption of ASU No. 2009-14, the Company primarily recognized revenues using the revenue recognition criteria of Accounting Standards Codification, or ASC, Subtopic 985-605, Software-Revenue Recognition. As a result of the Company’s adoption of ASU No. 2009-14 on January 1, 2011, a majority of the Company’s products are now considered non-software elements under GAAP, which excludes them from the scope of ASC Subtopic 985-605 and includes them within the scope of ASC Topic 605, Revenue Recognition. Because the Company had not been able to establish VSOE of fair value for Implied Maintenance Release PCS, as described further below, substantially all revenue arrangements prior to January 1, 2011 were recognized on a ratable basis over the service period of Implied Maintenance Release PCS. Subsequent to January 1, 2011 and the adoption of ASU No. 2009-14, the Company determines a relative selling price for all elements of the arrangement through the use of BESP, as VSOE and TPE are typically not available, resulting in revenue recognition upon delivery of arrangement consideration attributable to product revenue, provided all other criteria for revenue recognition are met, and revenue recognition of Implied Maintenance Release PCS and other service and support elements over time as services are rendered. Revenue Recognition of Non-Software Deliverables Revenue from products that are considered non-software deliverables is recognized upon delivery of the product to the customer. Products are considered delivered to the customer once they have been shipped and title and risk of loss has been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. Revenue from support that is considered a non-software deliverable is initially deferred and is recognized ratably over the contractual period of the arrangement, which is generally 12 months. Professional services and training services are typically sold to customers on a time and materials basis. Revenue from professional services and training services that are considered non-software deliverables is recognized for these deliverables as services are provided to the customer. Revenue for Implied Maintenance Release PCS that is considered a non-software deliverable is recognized ratably over the service period of Implied Maintenance Release PCS, which ranges from one to eight years. Revenue Recognition of Software Deliverables The Company recognizes the following types of elements sold using software revenue recognition guidance: (i) software products and software upgrades, when the software sold in a customer arrangement is more than incidental to the arrangement as a whole and the product does not contain hardware that functions with the software to provide essential functionality, (ii) initial support contracts where the underlying product being supported is considered to be a software deliverable, (iii) support contract renewals, and (iv) professional services and training that relate to deliverables considered to be software deliverables. Because the Company does not have VSOE of the fair value of its software products, the Company is permitted to account for its typical customer arrangements that include multiple elements using the residual method. Under the residual method, the VSOE of fair value of the undelivered elements (which could include support, professional services or training, or any combination thereof) is deferred and the remaining portion of the total arrangement fee is recognized as revenue for the delivered elements. If evidence of the VSOE of fair value of one or more undelivered elements does not exist, revenues are deferred and recognized when delivery of those elements occurs or when VSOE of fair value can be established. VSOE of fair value is typically based on the price charged when the element is sold separately to customers. The Company is unable to use the residual method to recognize revenues for many arrangements that include products that are software deliverables under GAAP since VSOE of fair value does not exist for Implied Maintenance Release PCS elements, which are included in many of the Company’s arrangements. For software products that include Implied Maintenance Release PCS, an element for which VSOE of fair value does not exist, revenue for the entire arrangement fee, which could include combinations of product, professional services, training and support, is recognized ratably as a group over the longest service period of any deliverable in the arrangement, with recognition commencing on the date delivery has occurred for all deliverables in the arrangement (or begins to occur in the case of professional services, training and support). Standalone sales of support contracts are recognized ratably over the service period of the product being supported. From time to time, the Company offers certain customers free upgrades or specified future products or enhancements. When a software deliverable arrangement contains an Implied Maintenance Release PCS deliverable, revenue recognition of the entire arrangement will only commence when any free upgrades or specified future products or enhancements have been delivered, assuming all other products in the arrangement have been delivered and all services, if any, have commenced. Recently Adopted Accounting Pronouncement On March 30, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation-Stock Compensation (Topic 718). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company early adopted ASU 2016-09 during the second quarter of 2016 on a modified retrospective basis for the income statement impact of forfeitures. The adoption of ASU 2016-09 has no impact to the Company’s income taxes and condensed consolidated statements of cash flows. Accordingly, a cumulative-effect adjustment recorded to the beginning retained earnings as of January 1, 2016 for the impact of forfeitures is immaterial. Recent Accounting Pronouncements to be Adopted In May, 2014, the FASB issued a final updated standard on revenue recognition. The standard supersedes the most current revenue recognition guidance, including industry-specific guidance. The new revenue recognition guidance becomes effective for the Company on January 1, 2018, and early adoption as of January 1, 2017 is permitted. 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. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern . ASU 2014-15 provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for the Company beginning January 1, 2017. Early adoption is permitted. The Company is evaluating the potential impact of adopting this standard on its financial statements, as well as timing of its adoption of the standard. On February 25, 2016, the FASB issued new accounting guidance on leases. Lessees will need to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability. The new guidance becomes effective for the Company on January 1, 2019, and early adoption is permitted upon issuance. The Company is evaluating the potential impact of adopting this standard on its financial statements, as well as the timing of its adoption of the standard. |
NET INCOME PER SHARE (Notes)
NET INCOME PER SHARE (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE Net income per common share is presented for both basic income per share (“Basic EPS”) and diluted income per share (“Diluted EPS”). Basic EPS is based on the weighted-average number of common shares outstanding during the period. Diluted EPS is based on the weighted-average number of common shares and common share equivalents outstanding during the period. The potential common shares that were considered anti-dilutive securities were excluded from the diluted earnings per share calculations for the relevant periods either because the sum of the exercise price per share and the unrecognized compensation cost per share was greater than the average market price of the Company’s common stock for the relevant period, or because they were considered contingently issuable. The contingently issuable potential common shares result from certain stock options and restricted stock units granted to the Company’s employees that vest based on performance conditions, market conditions, or a combination of performance and market conditions. The following table sets forth (in thousands) potential common shares that were considered anti-dilutive securities for the six months ended June 30, 2016 and at June 30, 2015. June 30, 2016 June 30, 2015 Options 4,218 5,227 Non-vested restricted stock units 1,177 951 Anti-dilutive potential common shares 5,395 6,178 On June 15, 2015, the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2020 (the “Notes”). The Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate, subject to adjustment (see Note 11). In connection with the offering of the Notes, the Company entered into a capped call transaction with a third party (the “Capped Call”) (see Note 11, Long-Term Debt and Credit Agreement). The Company uses the treasury stock method in computing the dilutive impact of the Notes. The Notes are convertible into shares of the Company’s common stock but the Company’s stock price was less than the conversion price as of June 30, 2016 , and, therefore, the Notes are excluded from Diluted EPS. The Capped Call is not reflected in diluted net income per share as it will always be anti-dilutive. |
ACQUISITION (Notes)
ACQUISITION (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
ACQUISITION | ACQUISITION On June 23, 2015, the Company completed the acquisition of Orad Hi-Tech Systems Ltd. (“Orad”). Orad provides 3D real-time graphics, video servers and related asset management solutions. The acquisition adds applications to Avid’s Studio Suite which the Company intends to connect to the Avid MediaCentral Platform. In allocating the total purchase consideration of $73.4 million for Orad based on the fair value as of June 23, 2015, the Company recorded $32.6 million of goodwill, $37.2 million of identifiable intangibles assets, and $3.6 million to other net assets. Intangible assets acquired included core and completed technology, customer relationships and trade name. |
FAIR VALUE MEASUREMENTS (Notes)
FAIR VALUE MEASUREMENTS (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets Measured at Fair Value on a Recurring Basis The Company measures deferred compensation investments on a recurring basis. As of June 30, 2016 and December 31, 2015 , the Company’s deferred compensation investments were classified as either Level 1 or Level 2 in the fair value hierarchy. Assets valued using quoted market prices in active markets and classified as Level 1 are money market and mutual funds. Assets valued based on other observable inputs and classified as Level 2 are insurance contracts. The following tables summarize the Company’s deferred compensation investments measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using June 30, 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 $ 2,641 $ 474 $ 2,167 $ — Fair Value Measurements at Reporting Date Using December 31, 2015 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 $ 3,617 $ 572 $ 3,045 $ — Financial Instruments Not Recorded at Fair Value The carrying amounts of the Company’s other financial assets and liabilities including cash, accounts receivable, 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 or settlement. As of June 30, 2016 , the net carrying amount of the Notes was $98.7 million , and the fair value of the Notes was approximately $87.5 million based on open market trading activity, which constitutes a Level 1 input in the fair value hierarchy. |
INVENTORIES (Notes)
INVENTORIES (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following (in thousands): June 30, 2016 December 31, 2015 Raw materials $ 10,179 $ 9,594 Work in process 241 256 Finished goods 43,482 38,223 Total $ 53,902 $ 48,073 As of June 30, 2016 and December 31, 2015 , finished goods inventory included $8.2 million and $5.3 million , respectively, associated with products shipped to customers and deferred labor costs for arrangements where revenue recognition had not yet commenced. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL INTANGIBLE ASSETS (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Amortizing identifiable intangible assets related to the Company’s acquisitions or capitalized costs of internally developed or externally purchased software that form the basis for the Company’s products consisted of the following (in thousands): June 30, 2016 December 31, 2015 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Completed technologies and patents $ 58,249 $ (35,011 ) $ 23,238 $ 58,032 $ (30,902 ) $ 27,130 Customer relationships 54,736 (50,411 ) 4,325 54,656 (48,767 ) 5,889 Trade names 1,346 (1,147 ) 199 1,346 (1,146 ) 200 Capitalized software costs 4,911 (4,911 ) — 4,911 (4,911 ) — Total $ 119,242 $ (91,480 ) $ 27,762 $ 118,945 $ (85,726 ) $ 33,219 Amortization expense related to all intangible assets in the aggregate was $2.7 million and $0.6 million , respectively, for the three months ended June 30, 2016 and 2015 and $5.5 million and $1.0 million , respectively, for the six months ended June 30, 2016 and 2015 . The Company expects amortization of acquired intangible assets to be $4.8 million for the remainder of 2016 , $9.3 million in 2017 , $9.3 million in 2018 , and $4.4 million in 2019 . Goodwill at June 30, 2016 and December 31, 2015 was $32.6 million , which resulted from the acquisition of Orad in 2015. |
OTHER LONG-TERM LIABILITIES (No
OTHER LONG-TERM LIABILITIES (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
OTHER LONG-TERM LIABILITIES | OTHER LONG-TERM LIABILITIES Other long-term liabilities consisted of the following (in thousands): June 30, 2016 December 31, 2015 Deferred rent $ 7,216 $ 6,755 Accrued restructuring 537 647 Income tax payable 2,711 — Deferred compensation 6,879 7,309 Total $ 17,343 $ 14,711 |
CONTINGENCIES (Notes)
CONTINGENCIES (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES The Company’s industry is characterized by the existence of a large number of patents and frequent claims and litigation regarding patent and other intellectual property rights. The Company is involved in legal proceedings from time to time arising from the normal course of business activities, including claims of alleged infringement of intellectual property rights and contractual, commercial, employee relations, product or service performance, or other matters. The Company does not believe these matters will have a material adverse effect on the Company’s financial position or results of operations. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, the Company’s financial position or results of operations may be negatively affected by the unfavorable resolution of one or more of these proceedings for the period in which a matter is resolved. The Company’s results could be materially adversely affected if the Company is accused of, or found to be, infringing third parties’ intellectual property rights. The Company considers all claims on a quarterly basis and based on known facts assesses whether potential losses are considered reasonably possible, probable and estimable. Based upon this assessment, the Company then evaluates disclosure requirements and whether to accrue for such claims in its consolidated financial statements. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. As of June 30, 2016 and as of the date of filing of these consolidated financial statements, the Company believes that, other than as set forth in this note, no provision for liability nor disclosure is required related to any claims because: (a) there is no reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. Additionally, the Company provides indemnification to certain customers for losses incurred in connection with intellectual property infringement claims brought by third parties with respect to the Company’s products. These indemnification provisions generally offer perpetual coverage for infringement claims based upon the products covered by the agreement, and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions is theoretically unlimited. To date, the Company has not incurred material costs related to these indemnification provisions; accordingly, the Company believes the estimated fair value of these indemnification provisions is immaterial. Further, certain of the Company’s arrangements with customers include clauses whereby the Company may be subject to penalties for failure to meet certain performance obligations; however, the Company has not recorded any related material penalties to date. The Company has letters of credit that are used as security deposits in connection with the Company’s Burlington, Massachusetts office space and other facilities. In the event of default on the underlying leases, the landlords would, as of June 30, 2016 , be eligible to draw against the letters of credit to a maximum of $2.2 million in the aggregate. The letters of credit are subject to aggregate reductions provided the Company is not in default under the underlying leases and meets certain financial performance conditions. In no case will the letters of credit amounts be reduced to below $1.2 million in the aggregate throughout the lease periods, all of which extend to May 2020. Also, the Company has letters of credit totaling $0.4 million that support its ongoing operations. These letters of credit have various terms and expiry dates during 2016 and beyond, and some of the letters of credit may automatically renew based on the terms of the underlying agreements. The Company provides warranties on externally sourced and internally developed hardware. For internally developed hardware, and in cases where the warranty granted to customers for externally sourced hardware is greater than that provided by the manufacturer, the Company records an accrual for the related liability based on historical trends and actual material and labor costs. The following table sets forth the activity in the product warranty accrual account for the six months ended June 30, 2016 and 2015 (in thousands): Six Months Ended June 30, 2016 2015 Accrual balance at beginning of year $ 2,234 $ 2,792 Accruals for product warranties 1,362 1,409 Costs of warranty claims (1,205 ) (1,727 ) Accrual balance at end of period $ 2,391 $ 2,474 The warranty accrual is included in the caption “accrued expenses and other current liabilities” in the Company’s condensed consolidated balance sheet. |
RESTRUCTURING COSTS AND ACCRUAL
RESTRUCTURING COSTS AND ACCRUALS (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING COSTS AND ACCRUALS | RESTRUCTURING COSTS AND ACCRUALS 2016 Restructuring Plan In February 2016, the Company committed to a restructuring plan that encompasses a series of measures intended to allow the Company to more efficiently operate in a leaner, and more directed cost structure. These include reductions in the Company’s workforce, facilities consolidation, transferring certain business processes to lower cost regions, and reducing other third-party services costs. During the quarter ended December 31, 2015 , the Company recorded restructuring costs of $5.8 million , which represented an initial elimination of 111 positions worldwide during January and February of 2016. During the quarter ended March 31, 2016, the Company recorded restructuring costs of $2.8 million , representing the elimination of an additional 63 positions worldwide. During the quarter ended June 30, 2016 , the Company recorded additional restructuring costs of $0.4 million , and recoveries totaling $0.6 million as a result of severance pay estimate changes primarily for the eliminated positions in Europe. Prior Years’ Restructuring Plans The remaining accrual balance of $1.2 million as of June 30, 2016 was related to the closure of part of the Company’s Mountain View, California, and Dublin, Ireland facilities under restructuring plans that were made in 2012 and 2008, respectively. No further actions are anticipated under those plans. Restructuring Summary The following table sets forth the activity in the restructuring accruals for the six months ended June 30, 2016 (in thousands): Employee- Related Facilities/ Other- Related Total Accrual balance as of December 31, 2015 $ 5,509 $ 1,671 $ 7,180 New restructuring charges – operating expenses 3,176 — 3,176 Revisions of estimated liabilities (612 ) — (612 ) Accretion — 137 137 Cash payments (5,962 ) (659 ) (6,621 ) Foreign exchange impact on ending balance (73 ) 7 (66 ) Accrual balance as of June 30, 2016 $ 2,038 $ 1,156 $ 3,194 The employee-related accruals as of June 30, 2016 represent severance costs to former employees that will be paid out within twelve months, and are, therefore, included in the caption “accrued expenses and other current liabilities” in the Company’s consolidated balance sheets. The facilities/other-related accruals as of June 30, 2016 represent contractual lease payments, net of estimated sublease income, on space vacated as part of the Company’s restructuring actions. The leases, and payments against the amounts accrued, extend through December 2021 unless the Company is able to negotiate earlier terminations. Of the total facilities/other-related accruals, $0.7 million is included in the caption “accrued expenses and other current liabilities” and $0.5 million is included in the caption “other long-term liabilities” in the Company’s condensed consolidated balance sheet as of June 30, 2016 . |
PRODUCT AND GEOGRAPHIC INFORMAT
PRODUCT AND GEOGRAPHIC INFORMATION (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
PRODUCT AND GEOGRAPHIC INFORMATION | PRODUCT AND GEOGRAPHIC INFORMATION The Company, through the evaluation of the discrete financial information that is regularly reviewed by the chief operating decision makers (the Company’s chief executive officer and chief financial officer), has determined that the Company has one reportable segment. The following table is a summary of the Company’s revenues by type for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Video products and solutions net revenues $ 44,501 $ 42,830 $ 79,070 $ 89,947 Audio products and solutions net revenues 31,091 33,320 81,031 66,232 Products and solutions net revenues 75,592 76,150 160,101 156,179 Services net revenues 58,477 33,617 117,515 73,174 Total net revenues $ 134,069 $ 109,767 $ 277,616 $ 229,353 The following table sets forth the Company’s revenues by geographic region for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenues: United States $ 44,360 $ 41,917 $ 99,402 $ 87,079 Other Americas 10,234 6,623 20,972 14,172 Europe, Middle East and Africa 58,980 47,000 114,719 96,253 Asia-Pacific 20,495 14,227 42,523 31,849 Total net revenues $ 134,069 $ 109,767 $ 277,616 $ 229,353 |
LONG TERM DEBT AND CREDIT AGREE
LONG TERM DEBT AND CREDIT AGREEMENT LONG TERM DEBT AND CREDIT AGREEMENT (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
LONG TERM DEBT AND CREDIT AGREEMENT | LONG TERM DEBT AND CREDIT AGREEMENT Long term debt consisted of the following (in thousands): June 30, 2016 December 31, 2015 Term Loan, net of unamortized debt issuance costs of $4,616 at June 30, 2016 $ 94,134 $ — Notes, net of unamortized original issue discount and debt issuance costs of $26,304 at June 30, 2016 and $29,050 at December 31, 2015, respectively 98,696 95,950 Credit Agreement — 5,000 Total debt 192,830 100,950 Less: current portion 5,000 5,000 Total long-term debt $ 187,830 $ 95,950 2.00% Convertible Senior Notes due 2020 On June 15, 2015, the Company issued $125.0 million aggregate principal amount of its Notes in an offering conducted in accordance with Rule 144A under the Securities Act of 1933. The net proceeds from the offering were $120.3 million after deducting the offering expenses. The Notes pay interest semi-annually on June 15 and December 15 of each year, beginning on December 15, 2015, at an annual rate of 2.00% and mature on June 15, 2020 unless earlier converted or repurchased in accordance with their terms prior to such date. Additional interest may be payable upon the occurrence of certain events of default relating to the Company’s failure to deliver certain documents or reports to the trustee under the indenture, the Company’s failure to timely file any document or report required pursuant to Section 13 or 15(d) of the Exchange Act or if the Notes are not freely tradable as of one year after the last date of original issuance of the Notes. The Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate, subject to adjustment, of 45.5840 shares per $1,000 principal amount of Notes, which is equal to an initial conversion price of $21.94 per share. Prior to December 15, 2019, the Notes are convertible only in the following circumstances: (1) during any calendar quarter commencing after September 30, 2015, if the last reported sale price of the Company’s common stock is greater than or equal to 130% of the applicable conversion price for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter; (2) during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day in the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. On or after December 15, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. The Company may not redeem the Notes prior to their maturity, which means that the Company is not required to redeem or retire the Notes periodically. The Notes are senior unsecured obligations. Upon the occurrence of certain specified fundamental changes, the holders may require the Company to repurchase all or a portion of the Notes for cash at 100% of the principal amount of the Notes being purchased, plus any accrued and unpaid interest. In accounting for the Notes at issuance, the Company allocated proceeds from the Notes into debt and equity components according to the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion. The initial carrying amount of the debt component, which approximates its fair value, was estimated by using an interest rate for nonconvertible debt, with terms similar to the Notes. The excess of the principal amount of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to the carrying value of the Notes over their term as interest expense using the interest method. Upon issuance of the Notes, the Company recorded $96.7 million as debt and $28.3 million as additional paid-in capital in stockholders’ equity. The effective interest rate used to estimate the fair value of the debt was is 7.66% . Total interest expense for the six months ended June 30, 2016 was $4.0 million , reflecting the coupon and accretion of the discount. The Company incurred transaction costs of $4.7 million relating to the issuance of the Notes. The Company adopted ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs be classified as a reduction in the carrying value of the debt. In accounting for these costs, the Company allocated the costs of the offering between debt and equity in proportion to the fair value of the debt and equity recognized. The transaction costs allocated to the debt component of approximately $3.6 million were recorded as a direct deduction from the face amount of the Notes and are being amortized as interest expense over the term of the Notes using the interest method. The transaction costs allocated to the equity component of approximately $1.1 million were recorded as a decrease in additional paid-in capital. Capped Call Transaction In connection with the offering of the Notes, on June 9, 2015, the Company entered into a Capped Call derivative transaction with a third party. The Capped Call is expected generally to reduce the potential dilution to the common stock and/or offset any cash payments the Company may be required to make in excess of the principal amount upon conversion of the Notes in the event that the market price per share of the common stock is greater than the strike price of the Capped Call. The Capped Call has a strike price of $21.94 and a cap price of $26.00 and is exercisable by the Company when and if the Notes are converted. If, upon conversion of the Notes, the price of the Company’s common stock is above the strike price of the Capped Call, the counter-party will deliver shares of common stock and/or cash with an aggregate value approximately equal to the difference between the price of the common stock at the conversion date (as defined, with a maximum price for purposes of this calculation equal to the cap price) and the strike price, multiplied by the number of shares of common stock related to the portion of the Capped Call being exercised. The Capped Call expires on June 15, 2020. The Company paid $10.1 million for the Capped Call and recorded the payment as a decrease to additional paid-in capital in 2015. Credit Facility On February 26, 2016, the Company entered into the Financing Agreement with the Lenders. Pursuant to the Financing Agreement, the Lenders agreed to provide the Company with (a) a term loan in the aggregate principal amount of $100.0 million (the “Term Loan”) and (b) a revolving credit facility (the “Credit Facility”) of up to a maximum of $5.0 million in borrowings outstanding at any time. All outstanding loans under the Financing Agreement will become due and payable on the earlier of February 26, 2021 and the date that is 30 days prior to June 15, 2020 if the $125.0 million in outstanding principal of the Notes has not been repaid or refinanced by such time. The Company borrowed the full amount of the Term Loan, or $100.0 million , as of the closing date of the Financing Agreement, and there were no amounts outstanding under the Credit Facility as of June 30, 2016 . Concurrently with the entry into the Financing Agreement, on February 26, 2016 the Company terminated its prior Credit Agreement, dated June 22, 2015, among the Company and certain of its subsidiaries, as borrowers, KeyBank National Association, as Administrative Agent and the other lender parties thereto, and repaid all outstanding borrowings under such agreement. There were no penalties paid by the Company in connection with this termination. Interest accrues on outstanding borrowings under the Credit Facility and the Term Loan at a rate of either the LIBOR Rate (as defined in the Financing Agreement) plus 6.75% or a Reference Rate (as defined in the Financing Agreement) plus 5.75%, at the option of the Company. The Company must also pay to the Lenders, on a monthly basis, an unused line fee at a rate of 0.5% per annum. The Company may prepay all or any portion of the Term Loan prior to its stated maturity, subject to the payment of certain fees based on the amount repaid. The Term Loan requires quarterly principal payments of $1.25 million, which commenced in June 2016. The Term Loan also requires the Company to use 50% of excess cash, as defined in the Financing Agreement, to repay outstanding principal of the loans under the Financing Agreement. The Company recorded $2.7 million of interest expense on the Term Loan for the six months ended June 30, 2016 , of which $2.0 million related to the quarter ended June 30, 2016. The Company granted a security interest on substantially all of its assets to secure the obligations under the Credit Facility and the Term Loan. The Financing Agreement contains customary representations and warranties, covenants, mandatory prepayments, and events of default under which the Company’s payment obligations may be accelerated. The Financing Agreement includes covenants requiring the Company to maintain a Leverage Ratio (defined as the ratio of (a) consolidated total funded indebtedness to (b) consolidated Adjusted EBITDA) of no greater than 4.35:1.00 for the four quarters ending June 30, 2016, 5.40:1.00 for the four quarters ending September 30, 2016, 4.20:1.00 for the four quarters ending December 31, 2016 and thereafter declining over time from 3.50:1.00 to 2.50:1.00. The Financing Agreement also restricts the Company from making capital expenditures in excess of $20,000,000 in any fiscal year. As of June 30, 2016 the Company was in compliance with these covenants. The Financing Agreement contains restrictive covenants that are customary for an agreement of this kind, including, for example, covenants that restrict the Company from incurring additional indebtedness, granting liens, making investments and restricted payments, making acquisitions, paying dividends and engaging in transactions with affiliates. |
STOCKHOLDERS' EQUITY (Notes)
STOCKHOLDERS' EQUITY (Notes) | 6 Months Ended |
Jun. 30, 2016 | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Stock-Based Compensation Information with respect to option shares granted under all the Company’s stock incentive plans for the six months ended June 30, 2016 was as follows: Time-Based Shares Performance-Based Shares Total Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Options outstanding as of January 1, 2016 4,345,334 — 4,345,334 $10.68 Forfeited or canceled (455,570 ) — (455,570 ) $16.42 Options outstanding as of June 30, 2016 3,889,764 — 3,889,764 $10.01 3.41 $0 Options vested as of June 30, 2016 or expected to vest 3,889,764 $10.01 3.41 $0 Options exercisable as of June 30, 2016 3,492,116 $10.29 3.26 $0 Information with respect to the Company’s non-vested restricted stock units for the six months ended June 30, 2016 was as follows: Non-Vested Restricted Stock Units Time-Based Shares Performance-Based Shares Total Shares Weighted- Average Grant-Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Non-vested as of January 1, 2016 905,934 360,074 1,266,008 $9.97 Granted 668,472 489,482 1,157,954 $6.91 Vested (264,688 ) — (264,688 ) $13.36 Forfeited (121,882 ) (41,010 ) (162,892 ) $6.94 Non-vested as of June 30, 2016 1,187,836 808,546 1,996,382 $7.99 0.88 $11,579 Expected to vest 1,727,159 $7.97 0.88 $10,018 Stock-based compensation was included in the following captions in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of products revenues $ 1 $ 40 $ 31 $ 135 Cost of services revenues 151 175 300 334 Research and development expenses 65 46 149 152 Marketing and selling expenses 520 683 961 1,373 General and administrative expenses 1,553 1,938 2,947 3,350 $ 2,290 $ 2,882 $ 4,388 $ 5,344 |
FINANCIAL INFORMATION Significa
FINANCIAL INFORMATION Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Financial Information [Abstract] | |
Revenue Recognition, Deferred Revenue [Policy Text Block] | Significant Accounting Policies - Revenue Recognition General The Company commences revenue recognition when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is reasonably assured. Generally, the products the Company sells do not require significant production, modification or customization. Installation of the Company’s products is generally routine, consists of implementation and configuration and does not have to be performed by the Company. 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 reasonably assured that collection will occur. When 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 reasonably assured, revenues are recognized on a cash basis, provided that all other revenue recognition criteria are satisfied. At the outset of the arrangement, the Company also assesses whether the fee associated with the order is fixed or determinable and free of contingencies or significant uncertainties. When assessing whether the fee is fixed or determinable, the Company considers the payment terms of the transaction, the Company’s 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, the Company evaluates whether the Company has sufficient history of successfully collecting past transactions with similar terms without offering concessions. If that collection history is sufficient, revenue recognition commences, upon delivery of the products, assuming all other revenue recognition criteria are satisfied. If the Company was to make different judgments or assumptions about any of these matters, it could cause a material increase or decrease in the amount of revenues reported in a particular period. The Company often receives multiple purchase orders or contracts from a single customer or a group of related customers that are evaluated to determine if they are, in effect, part of a single arrangement. In situations when the Company has concluded that two or more orders with the same customer are so closely related that they are, in effect, parts of a single arrangement, the Company accounts for those orders as a single arrangement for revenue recognition purposes. In other circumstances, when the Company has concluded that two or more orders with the same customer are independent buying decisions, such as an earlier purchase of a product and a subsequent purchase of a software upgrade or maintenance contract, the Company accounts for those orders as separate arrangements for revenue recognition purposes. For many of the Company’s products, there has been an ongoing practice of Avid making available at no charge to customers minor feature and compatibility enhancements as well as bug fixes on a when-and-if-available basis (collectively “Software Updates”), for a period of time after initial sales to end users. The implicit obligation to make such Software Updates available to customers over a period of time represents implied post-contract customer support, which is deemed to be a deliverable in each arrangement and is accounted for as a separate element (“Implied Maintenance Release PCS”). Over the course of the last two years, in connection with a strategic initiative to increase support and other recurring revenue streams, the Company has taken a number of steps to eliminate the longstanding practice of providing Implied Maintenance Release PCS for many of its products, including Media Composer, Pro Tools and Sibelius product lines. In the third quarter and fourth quarter of 2015, respectively, the Company concluded that Implied Maintenance Release PCS for its Media Composer and Sibelius product lines had ceased. In the first quarter of 2016, in connection with the release of Cloud Collaboration in Pro Tools version 12.5, which was an undelivered feature that had prevented the Company from recognizing any revenue related to new Pro Tools 12 software sales as it represented a specified upgrade right for which vendor specific objective evidence (“VSOE”) of fair value was not available, the Company concluded that Implied Maintenance Release PCS for Pro Tools 12 product lines had also ended. The determination that Pro Tools 12 Implied Maintenance Release PCS had ended was based on management (i) clearly communicating a policy of no longer providing any Software Updates or other support to customers that are not covered under a paid support plan and (ii) implementing robust digital rights management tools to enforce the policy. With the new policy and technology for Pro Tools 12 in place, combined with management’s intent to continue to adhere to the policy, management concluded in the first quarter of 2016 that Implied Maintenance Release PCS for Pro Tools 12 transactions no longer exists. As a result of the conclusion that Implied Maintenance Release PCS on Pro Tools 12 has ended, revenue and net income in the first quarter of 2016 increased approximately $11.1 million , reflecting the recognition of orders received after the launch of Pro Tools 12 that would have qualified for earlier recognition using the residual method of accounting. In addition, the elimination of Implied Maintenance Release PCS also resulted in the accelerated recognition of maintenance and product revenues that were previously being recognized on a ratable basis over a much longer expected period of Implied Maintenance Release PCS rather than the contractual maintenance period. The reduction in the estimated amortization period of transactions being recognized on a ratable basis resulted in an additional $15.2 million and $21.7 million of revenue during the three and six months ended June 30, 2016 , respectively. The Company enters into certain contractual arrangements that have multiple elements, one or more of which may be delivered subsequent to the delivery of other elements. These multiple-deliverable arrangements may include products, support, training, professional services and Implied Maintenance Release PCS. For these multiple-element arrangements, the Company allocates revenue to each deliverable of the arrangement based on the relative selling prices of the deliverables. In such circumstances, the Company first determines the selling price of each deliverable based on (i) VSOE of fair value if that exists; (ii) third-party evidence of selling price (“TPE”), when VSOE does not exist; or (iii) best estimate of the selling price (“BESP”), when neither VSOE nor TPE exists. Revenue is then 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 selling price hierarchy. The Company’s process for determining BESP for deliverables for which VSOE or TPE does not exist involves significant management judgment. In determining BESP, the Company considers a number of data points, including: • the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis; • contractually stated prices for deliverables that are intended to be sold on a standalone basis; • the pricing of standalone sales that may not qualify as VSOE of fair value due to limited volumes or variation in prices; and • other pricing factors, such as the geographical region in which the products are sold and expected discounts based on the customer size and type. In determining a BESP for Implied Maintenance Release PCS, which the Company does not sell separately, the Company considers (i) the service period for the Implied Maintenance Release PCS, (ii) the differential in value of the Implied Maintenance Release PCS deliverable compared to a full support contract, (iii) the likely list price that would have resulted from the Company’s established pricing practices had the deliverable been offered separately, and (iv) the prices a customer would likely be willing to pay. The Company estimates the service period of Implied Maintenance Release PCS based on the length of time the product version purchased by the customer is planned to be supported with Software Updates. If facts and circumstances indicate that the original service period of Implied Maintenance Release PCS for a product has changed significantly after original revenue recognition has commenced, the Company will modify the remaining estimated service period accordingly and recognize the then-remaining deferred revenue balance over the revised service period. The Company has established VSOE of fair value for some of the Company’s professional services, training and support offerings. The Company’s policy for establishing VSOE of fair value consists of evaluating standalone sales to determine if a substantial portion of the transactions fall within a reasonable range. If a sufficient volume of standalone sales exist and the standalone pricing for a substantial portion of the transactions falls within a reasonable range, management concludes that VSOE of fair value exists. In accordance with ASU No. 2009-14, the Company excludes from the scope of software revenue recognition requirements the Company’s 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 Company adopted ASU No. 2009-13 and ASU No. 2009-14 prospectively on January 1, 2011 for new and materially modified arrangements originating after December 31, 2010. Prior to the Company’s adoption of ASU No. 2009-14, the Company primarily recognized revenues using the revenue recognition criteria of Accounting Standards Codification, or ASC, Subtopic 985-605, Software-Revenue Recognition. As a result of the Company’s adoption of ASU No. 2009-14 on January 1, 2011, a majority of the Company’s products are now considered non-software elements under GAAP, which excludes them from the scope of ASC Subtopic 985-605 and includes them within the scope of ASC Topic 605, Revenue Recognition. Because the Company had not been able to establish VSOE of fair value for Implied Maintenance Release PCS, as described further below, substantially all revenue arrangements prior to January 1, 2011 were recognized on a ratable basis over the service period of Implied Maintenance Release PCS. Subsequent to January 1, 2011 and the adoption of ASU No. 2009-14, the Company determines a relative selling price for all elements of the arrangement through the use of BESP, as VSOE and TPE are typically not available, resulting in revenue recognition upon delivery of arrangement consideration attributable to product revenue, provided all other criteria for revenue recognition are met, and revenue recognition of Implied Maintenance Release PCS and other service and support elements over time as services are rendered. Revenue Recognition of Non-Software Deliverables Revenue from products that are considered non-software deliverables is recognized upon delivery of the product to the customer. Products are considered delivered to the customer once they have been shipped and title and risk of loss has been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. Revenue from support that is considered a non-software deliverable is initially deferred and is recognized ratably over the contractual period of the arrangement, which is generally 12 months. Professional services and training services are typically sold to customers on a time and materials basis. Revenue from professional services and training services that are considered non-software deliverables is recognized for these deliverables as services are provided to the customer. Revenue for Implied Maintenance Release PCS that is considered a non-software deliverable is recognized ratably over the service period of Implied Maintenance Release PCS, which ranges from one to eight years. Revenue Recognition of Software Deliverables The Company recognizes the following types of elements sold using software revenue recognition guidance: (i) software products and software upgrades, when the software sold in a customer arrangement is more than incidental to the arrangement as a whole and the product does not contain hardware that functions with the software to provide essential functionality, (ii) initial support contracts where the underlying product being supported is considered to be a software deliverable, (iii) support contract renewals, and (iv) professional services and training that relate to deliverables considered to be software deliverables. Because the Company does not have VSOE of the fair value of its software products, the Company is permitted to account for its typical customer arrangements that include multiple elements using the residual method. Under the residual method, the VSOE of fair value of the undelivered elements (which could include support, professional services or training, or any combination thereof) is deferred and the remaining portion of the total arrangement fee is recognized as revenue for the delivered elements. If evidence of the VSOE of fair value of one or more undelivered elements does not exist, revenues are deferred and recognized when delivery of those elements occurs or when VSOE of fair value can be established. VSOE of fair value is typically based on the price charged when the element is sold separately to customers. The Company is unable to use the residual method to recognize revenues for many arrangements that include products that are software deliverables under GAAP since VSOE of fair value does not exist for Implied Maintenance Release PCS elements, which are included in many of the Company’s arrangements. For software products that include Implied Maintenance Release PCS, an element for which VSOE of fair value does not exist, revenue for the entire arrangement fee, which could include combinations of product, professional services, training and support, is recognized ratably as a group over the longest service period of any deliverable in the arrangement, with recognition commencing on the date delivery has occurred for all deliverables in the arrangement (or begins to occur in the case of professional services, training and support). Standalone sales of support contracts are recognized ratably over the service period of the product being supported. From time to time, the Company offers certain customers free upgrades or specified future products or enhancements. When a software deliverable arrangement contains an Implied Maintenance Release PCS deliverable, revenue recognition of the entire arrangement will only commence when any free upgrades or specified future products or enhancements have been delivered, assuming all other products in the arrangement have been delivered and all services, if any, have commenced. |
FINANCIAL INFORMATION Recent Ac
FINANCIAL INFORMATION Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Adopted Accounting Pronouncement On March 30, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation-Stock Compensation (Topic 718). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company early adopted ASU 2016-09 during the second quarter of 2016 on a modified retrospective basis for the income statement impact of forfeitures. The adoption of ASU 2016-09 has no impact to the Company’s income taxes and condensed consolidated statements of cash flows. Accordingly, a cumulative-effect adjustment recorded to the beginning retained earnings as of January 1, 2016 for the impact of forfeitures is immaterial. Recent Accounting Pronouncements to be Adopted In May, 2014, the FASB issued a final updated standard on revenue recognition. The standard supersedes the most current revenue recognition guidance, including industry-specific guidance. The new revenue recognition guidance becomes effective for the Company on January 1, 2018, and early adoption as of January 1, 2017 is permitted. 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. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern . ASU 2014-15 provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for the Company beginning January 1, 2017. Early adoption is permitted. The Company is evaluating the potential impact of adopting this standard on its financial statements, as well as timing of its adoption of the standard. On February 25, 2016, the FASB issued new accounting guidance on leases. Lessees will need to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability. The new guidance becomes effective for the Company on January 1, 2019, and early adoption is permitted upon issuance. The Company is evaluating the potential impact of adopting this standard on its financial statements, as well as the timing of its adoption of the standard. |
FINANCIAL INFORMATION Recent 21
FINANCIAL INFORMATION Recent Accounting Pronouncements To Be Adopted (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements to be Adopted In May, 2014, the FASB issued a final updated standard on revenue recognition. The standard supersedes the most current revenue recognition guidance, including industry-specific guidance. The new revenue recognition guidance becomes effective for the Company on January 1, 2018, and early adoption as of January 1, 2017 is permitted. 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. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern . ASU 2014-15 provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effective for the Company beginning January 1, 2017. Early adoption is permitted. The Company is evaluating the potential impact of adopting this standard on its financial statements, as well as timing of its adoption of the standard. On February 25, 2016, the FASB issued new accounting guidance on leases. Lessees will need to recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability. The new guidance becomes effective for the Company on January 1, 2019, and early adoption is permitted upon issuance. The Company is evaluating the potential impact of adopting this standard on its financial statements, as well as the timing of its adoption of the standard. |
FINANCIAL INFORMATION Debt Inst
FINANCIAL INFORMATION Debt Instrument (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Debt Covenants [Text Block] | The Financing Agreement requires the Company to comply with a financial statement covenant that stipulates a maximum leverage ratio (defined to mean the ratio of (a) consolidated total funded indebtedness to (b) consolidated EBITDA) commencing on June 30, 2016 of 4.35:1. The maximum leverage ratio declines gradually over the term of the agreement to a requirement of 2.5:1 on March 31, 2019 and thereafter. The Company’s ability to satisfy the leverage ratio covenant in the future is heavily dependent on its ability to increase bookings and billings above levels experienced over the last twelve months. In recent quarters, the Company has experienced volatility in bookings and billings resulting from, among other things, (i) its transition towards subscription and recurring revenue streams and the resulting decline in traditional upfront product sales, (ii) volatility in currency rates and in particular the strengthening of the US dollar against the Euro, (iii) dramatic changes in the media industry and the impact it has on the Company’s customers and (iv) the impact of new and anticipated product launches and features. In addition to the impact of new bookings and billings, GAAP revenues recognized as the result of the existence of Implied Maintenance Release PCS in prior periods will decline significantly for the remainder of 2016 and in 2017, which will have an adverse impact on the Company’s leverage ratio. In the event bookings and billings in future quarters are lower than the Company currently anticipates, it may be forced to take remedial actions which could include, among other things (and where allowed by the Lenders), (i) further cost reductions, (ii) seeking replacement financing, (iii) raising additional equity or (iv) disposing of certain assets or businesses. Such remedial actions, which may not be available on favorable terms or at all, could have a material adverse impact on the Company’s business. If the Company is not in compliance with the leverage ratio and is unable to obtain an amendment or waiver, such noncompliance may result in an event of default under the Financing Agreement, which could permit acceleration of the outstanding indebtedness under the Financing Agreement and require the Company to repay such indebtedness before the scheduled due date. If an event of default were to occur, the Company might not have sufficient funds available to make the payments required. If the Company is unable to repay amounts owed, the lenders may be entitled to foreclose on and sell substantially all of the Company’s assets, which secure its borrowings under the Financing Agreement. |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded From Computation of Net (Income) Loss Per Share | The following table sets forth (in thousands) potential common shares that were considered anti-dilutive securities for the six months ended June 30, 2016 and at June 30, 2015. June 30, 2016 June 30, 2015 Options 4,218 5,227 Non-vested restricted stock units 1,177 951 Anti-dilutive potential common shares 5,395 6,178 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial assets and liabilities measured at fair value on a recurring basis | The following tables summarize the Company’s deferred compensation investments measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using June 30, 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 $ 2,641 $ 474 $ 2,167 $ — Fair Value Measurements at Reporting Date Using December 31, 2015 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 $ 3,617 $ 572 $ 3,045 $ — |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following (in thousands): June 30, 2016 December 31, 2015 Raw materials $ 10,179 $ 9,594 Work in process 241 256 Finished goods 43,482 38,223 Total $ 53,902 $ 48,073 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization of identifiable intangible assets | Amortizing identifiable intangible assets related to the Company’s acquisitions or capitalized costs of internally developed or externally purchased software that form the basis for the Company’s products consisted of the following (in thousands): June 30, 2016 December 31, 2015 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Completed technologies and patents $ 58,249 $ (35,011 ) $ 23,238 $ 58,032 $ (30,902 ) $ 27,130 Customer relationships 54,736 (50,411 ) 4,325 54,656 (48,767 ) 5,889 Trade names 1,346 (1,147 ) 199 1,346 (1,146 ) 200 Capitalized software costs 4,911 (4,911 ) — 4,911 (4,911 ) — Total $ 119,242 $ (91,480 ) $ 27,762 $ 118,945 $ (85,726 ) $ 33,219 |
OTHER LONG-TERM LIABILITIES (Ta
OTHER LONG-TERM LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Long-term liabilities | Other long-term liabilities consisted of the following (in thousands): June 30, 2016 December 31, 2015 Deferred rent $ 7,216 $ 6,755 Accrued restructuring 537 647 Income tax payable 2,711 — Deferred compensation 6,879 7,309 Total $ 17,343 $ 14,711 |
CONTINGENCIES (Tables)
CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Product warranty accrual activity | The following table sets forth the activity in the product warranty accrual account for the six months ended June 30, 2016 and 2015 (in thousands): Six Months Ended June 30, 2016 2015 Accrual balance at beginning of year $ 2,234 $ 2,792 Accruals for product warranties 1,362 1,409 Costs of warranty claims (1,205 ) (1,727 ) Accrual balance at end of period $ 2,391 $ 2,474 |
RESTRUCTURING COSTS AND ACCRU29
RESTRUCTURING COSTS AND ACCRUALS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | The following table sets forth the activity in the restructuring accruals for the six months ended June 30, 2016 (in thousands): Employee- Related Facilities/ Other- Related Total Accrual balance as of December 31, 2015 $ 5,509 $ 1,671 $ 7,180 New restructuring charges – operating expenses 3,176 — 3,176 Revisions of estimated liabilities (612 ) — (612 ) Accretion — 137 137 Cash payments (5,962 ) (659 ) (6,621 ) Foreign exchange impact on ending balance (73 ) 7 (66 ) Accrual balance as of June 30, 2016 $ 2,038 $ 1,156 $ 3,194 |
PRODUCT AND GEOGRAPHIC INFORM30
PRODUCT AND GEOGRAPHIC INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated | The following table is a summary of the Company’s revenues by type for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Video products and solutions net revenues $ 44,501 $ 42,830 $ 79,070 $ 89,947 Audio products and solutions net revenues 31,091 33,320 81,031 66,232 Products and solutions net revenues 75,592 76,150 160,101 156,179 Services net revenues 58,477 33,617 117,515 73,174 Total net revenues $ 134,069 $ 109,767 $ 277,616 $ 229,353 |
Schedule of Revenues and Long-lived Assets By Geographic Areas | The following table sets forth the Company’s revenues by geographic region for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenues: United States $ 44,360 $ 41,917 $ 99,402 $ 87,079 Other Americas 10,234 6,623 20,972 14,172 Europe, Middle East and Africa 58,980 47,000 114,719 96,253 Asia-Pacific 20,495 14,227 42,523 31,849 Total net revenues $ 134,069 $ 109,767 $ 277,616 $ 229,353 |
LONG TERM DEBT AND CREDIT AGR31
LONG TERM DEBT AND CREDIT AGREEMENT Schedule of Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Instrument [Line Items] | |
Schedule of Long-term Debt Instruments [Table Text Block] | Long term debt consisted of the following (in thousands): June 30, 2016 December 31, 2015 Term Loan, net of unamortized debt issuance costs of $4,616 at June 30, 2016 $ 94,134 $ — Notes, net of unamortized original issue discount and debt issuance costs of $26,304 at June 30, 2016 and $29,050 at December 31, 2015, respectively 98,696 95,950 Credit Agreement — 5,000 Total debt 192,830 100,950 Less: current portion 5,000 5,000 Total long-term debt $ 187,830 $ 95,950 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Information with respect to option shares granted under all the Company’s stock incentive plans for the six months ended June 30, 2016 was as follows: Time-Based Shares Performance-Based Shares Total Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Options outstanding as of January 1, 2016 4,345,334 — 4,345,334 $10.68 Forfeited or canceled (455,570 ) — (455,570 ) $16.42 Options outstanding as of June 30, 2016 3,889,764 — 3,889,764 $10.01 3.41 $0 Options vested as of June 30, 2016 or expected to vest 3,889,764 $10.01 3.41 $0 Options exercisable as of June 30, 2016 3,492,116 $10.29 3.26 $0 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Information with respect to the Company’s non-vested restricted stock units for the six months ended June 30, 2016 was as follows: Non-Vested Restricted Stock Units Time-Based Shares Performance-Based Shares Total Shares Weighted- Average Grant-Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Non-vested as of January 1, 2016 905,934 360,074 1,266,008 $9.97 Granted 668,472 489,482 1,157,954 $6.91 Vested (264,688 ) — (264,688 ) $13.36 Forfeited (121,882 ) (41,010 ) (162,892 ) $6.94 Non-vested as of June 30, 2016 1,187,836 808,546 1,996,382 $7.99 0.88 $11,579 Expected to vest 1,727,159 $7.97 0.88 $10,018 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Stock-based compensation was included in the following captions in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of products revenues $ 1 $ 40 $ 31 $ 135 Cost of services revenues 151 175 300 334 Research and development expenses 65 46 149 152 Marketing and selling expenses 520 683 961 1,373 General and administrative expenses 1,553 1,938 2,947 3,350 $ 2,290 $ 2,882 $ 4,388 $ 5,344 |
FINANCIAL INFORMATION (Details)
FINANCIAL INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 17 Months Ended | ||||||
Jun. 30, 2016 | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | Feb. 26, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Jun. 15, 2015 | Dec. 31, 2014 | |
Debt Covenants [Table Text Block] | The Financing Agreement requires the Company to comply with a financial statement covenant that stipulates a maximum leverage ratio (defined to mean the ratio of (a) consolidated total funded indebtedness to (b) consolidated EBITDA) commencing on June 30, 2016 of 4.35:1. The maximum leverage ratio declines gradually over the term of the agreement to a requirement of 2.5:1 on March 31, 2019 and thereafter. The Company’s ability to satisfy the leverage ratio covenant in the future is heavily dependent on its ability to increase bookings and billings above levels experienced over the last twelve months. In recent quarters, the Company has experienced volatility in bookings and billings resulting from, among other things, (i) its transition towards subscription and recurring revenue streams and the resulting decline in traditional upfront product sales, (ii) volatility in currency rates and in particular the strengthening of the US dollar against the Euro, (iii) dramatic changes in the media industry and the impact it has on the Company’s customers and (iv) the impact of new and anticipated product launches and features. In addition to the impact of new bookings and billings, GAAP revenues recognized as the result of the existence of Implied Maintenance Release PCS in prior periods will decline significantly for the remainder of 2016 and in 2017, which will have an adverse impact on the Company’s leverage ratio. In the event bookings and billings in future quarters are lower than the Company currently anticipates, it may be forced to take remedial actions which could include, among other things (and where allowed by the Lenders), (i) further cost reductions, (ii) seeking replacement financing, (iii) raising additional equity or (iv) disposing of certain assets or businesses. Such remedial actions, which may not be available on favorable terms or at all, could have a material adverse impact on the Company’s business. If the Company is not in compliance with the leverage ratio and is unable to obtain an amendment or waiver, such noncompliance may result in an event of default under the Financing Agreement, which could permit acceleration of the outstanding indebtedness under the Financing Agreement and require the Company to repay such indebtedness before the scheduled due date. If an event of default were to occur, the Company might not have sufficient funds available to make the payments required. If the Company is unable to repay amounts owed, the lenders may be entitled to foreclose on and sell substantially all of the Company’s assets, which secure its borrowings under the Financing Agreement. | ||||||||
Long-term Debt | $ 187,830 | $ 187,830 | $ 95,950 | ||||||
Cash and Cash Equivalents, at Carrying Value | 50,365 | 50,365 | $ 17,902 | $ 34,647 | $ 25,056 | ||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Revenue | 11,100 | ||||||||
Recognition of Deferred Revenue | 15,200 | 21,700 | |||||||
Cerberus Business Finance LLC [Member] | |||||||||
Available Liquidity Increase | $ 70,000 | ||||||||
Cerberus Business Finance LLC [Member] | Line of Credit [Member] | |||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 5,000 | ||||||||
Cerberus Business Finance LLC [Member] | Long-term Debt [Member] | |||||||||
Long-term Debt | 100,000 | 100,000 | 100,000 | ||||||
KeyBank [Member] | |||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 35,000 | ||||||||
Scenario, Forecast [Member] | Cerberus Business Finance LLC [Member] | |||||||||
Forecasted Credit Facility Borrowings, Maximum | $ 5,000 | ||||||||
2016 Plan [Member] | |||||||||
Forecasted Restructuring-Related Cost Savings | $ 76,000 | $ 76,000 | |||||||
2016 Plan [Member] | Scenario, Forecast [Member] | |||||||||
Estimated Restructuring Plan Cash Expenditures | $ 25,000 | ||||||||
Convertible Debt [Member] | |||||||||
Convertible Notes Payable, Noncurrent | $ 125,000 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - USD ($) shares in Thousands, $ in Millions | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 15, 2015 | |
Antidilutive Securities Excluded from Computation of Net Loss Per Share [Line Items] | |||
Anti-dilutive potential common shares (in thousands of shares) | 5,395 | 6,178 | |
Options | |||
Antidilutive Securities Excluded from Computation of Net Loss Per Share [Line Items] | |||
Anti-dilutive potential common shares (in thousands of shares) | 4,218 | 5,227 | |
Non-vested restricted stock units | |||
Antidilutive Securities Excluded from Computation of Net Loss Per Share [Line Items] | |||
Anti-dilutive potential common shares (in thousands of shares) | 1,177 | 951 | |
Convertible Debt [Member] | |||
Antidilutive Securities Excluded from Computation of Net Loss Per Share [Line Items] | |||
Convertible Notes Payable, Noncurrent | $ 125 |
ACQUISITION Purchase Price Allo
ACQUISITION Purchase Price Allocation (Details) $ in Millions | Jun. 23, 2015USD ($) |
Business Combination, Consideration Transferred | $ 73.4 |
Business Combination, Goodwill Recognized | 32.6 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 37.2 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | $ 3.6 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 15, 2015 |
Liabilities: | |||
Convertible Notes, Carrying Value | $ 98,696 | $ 95,950 | |
Fair Value, Measurements, Recurring [Member] | |||
Financial Assets: | |||
Deferred compensation assets | 2,641 | 3,617 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | |||
Financial Assets: | |||
Deferred compensation assets | 474 | 572 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | |||
Financial Assets: | |||
Deferred compensation assets | 2,167 | 3,045 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | |||
Financial Assets: | |||
Deferred compensation assets | 0 | $ 0 | |
Convertible Debt [Member] | |||
Liabilities: | |||
Convertible Notes, Carrying Value | $ 96,700 | ||
Convertible Notes, Fair Value Disclosure | $ 87,500 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Raw materials | $ 10,179 | $ 9,594 |
Work in process | 241 | 256 |
Finished Goods | 43,482 | 38,223 |
Total inventory | 53,902 | 48,073 |
Finished goods, consigned | $ 8,200 | $ 5,300 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of Finite-Lived Intangible Assets | $ 2,700 | $ 600 | $ 5,500 | $ 1,000 | |
Amortizing Identifiable Intangible Assets [Abstract] | |||||
Gross | 119,242 | 119,242 | $ 118,945 | ||
Accumulated Amortization | (91,480) | (91,480) | (85,726) | ||
Net | 27,762 | 27,762 | 33,219 | ||
Future expected amortization expense, identifiable intangible assets | |||||
2,016 | 4,800 | 4,800 | |||
2,017 | 9,300 | 9,300 | |||
2,018 | 9,300 | 9,300 | |||
2,019 | 4,400 | 4,400 | |||
Carrying value of Goodwill [Abstract] | |||||
Goodwill | 32,643 | 32,643 | 32,643 | ||
Completed Technologies and Patents [Member] | |||||
Amortizing Identifiable Intangible Assets [Abstract] | |||||
Gross | 58,249 | 58,249 | 58,032 | ||
Accumulated Amortization | (35,011) | (35,011) | (30,902) | ||
Net | 23,238 | 23,238 | 27,130 | ||
Customer Relationships [Member] | |||||
Amortizing Identifiable Intangible Assets [Abstract] | |||||
Gross | 54,736 | 54,736 | 54,656 | ||
Accumulated Amortization | (50,411) | (50,411) | (48,767) | ||
Net | 4,325 | 4,325 | 5,889 | ||
Trade Names [Member] | |||||
Amortizing Identifiable Intangible Assets [Abstract] | |||||
Gross | 1,346 | 1,346 | 1,346 | ||
Accumulated Amortization | (1,147) | (1,147) | (1,146) | ||
Net | 199 | 199 | 200 | ||
Capitalized Software Costs [Member] | |||||
Amortizing Identifiable Intangible Assets [Abstract] | |||||
Gross | 4,911 | 4,911 | 4,911 | ||
Accumulated Amortization | (4,911) | (4,911) | (4,911) | ||
Net | $ 0 | $ 0 | $ 0 |
OTHER LONG-TERM LIABILITIES (De
OTHER LONG-TERM LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Other Liabilities Disclosure [Abstract] | ||
Long-term deferred rent | $ 7,216 | $ 6,755 |
Long-term accrued restructuring | 537 | 647 |
Income tax payable | 2,711 | 0 |
Long-term deferred compensation | 6,879 | 7,309 |
Total long-term liabilities | $ 17,343 | $ 14,711 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Product warranty accrual [Roll Forward] | ||
Accrual balance at beginning of year | $ 2,234 | $ 2,792 |
Accruals for product warranties | 1,362 | 1,409 |
Cost of warranty claims | (1,205) | (1,727) |
Accrual balance at end of period | 2,391 | $ 2,474 |
Standby Letters of Credit [Member] | Office Space - Burlington, Massachusetts [Member] | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, Range of Possible Loss, Portion Not Accrued | 2,200 | |
Loss Contingency, Range Of Possible Loss, Portion Not Accrued, Minimum | 1,200 | |
Avid Technology Domestic [Member] | Standby Letters of Credit [Member] | ||
Operating Lease Commitments [Abstract] | ||
Letters of Credit Outstanding, Amount | $ 400 |
RESTRUCTURING COSTS AND ACCRU41
RESTRUCTURING COSTS AND ACCRUALS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 17 Months Ended | ||||
Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2017USD ($) | |
Restructuring accrual [Roll Forward] | |||||||
Accrual balance at beginning of year | $ 7,180 | $ 7,180 | |||||
New restructuring charges - operating expenses | 3,176 | ||||||
Revisions of estimated liabilities | (612) | ||||||
Accretion | 137 | ||||||
Cash payments | (6,621) | ||||||
Foreign exchange impact on ending balance | (66) | ||||||
Accrual balance at end of period | $ 3,194 | $ 7,180 | 3,194 | ||||
Facilities-related accruals - non-current | 537 | 647 | 537 | ||||
Restructuring Charges | (213) | $ 539 | 2,564 | $ 539 | |||
Employee-Related [Member] | |||||||
Restructuring accrual [Roll Forward] | |||||||
Accrual balance at beginning of year | 5,509 | 5,509 | |||||
New restructuring charges - operating expenses | 3,176 | ||||||
Revisions of estimated liabilities | (612) | ||||||
Accretion | 0 | ||||||
Cash payments | (5,962) | ||||||
Foreign exchange impact on ending balance | (73) | ||||||
Accrual balance at end of period | 2,038 | 5,509 | 2,038 | ||||
Facilities-Related [Member] | |||||||
Restructuring accrual [Roll Forward] | |||||||
Accrual balance at beginning of year | $ 1,671 | 1,671 | |||||
New restructuring charges - operating expenses | 0 | ||||||
Revisions of estimated liabilities | 0 | ||||||
Accretion | 137 | ||||||
Cash payments | (659) | ||||||
Foreign exchange impact on ending balance | 7 | ||||||
Accrual balance at end of period | 1,156 | $ 1,671 | 1,156 | ||||
Facilities-related accruals - current | 700 | 700 | |||||
Facilities-related accruals - non-current | 500 | 500 | |||||
2016 Plan [Member] | |||||||
Restructuring accrual [Roll Forward] | |||||||
Forecasted Restructuring-Related Cost Savings | 76,000 | $ 76,000 | |||||
2016 Plan [Member] | Employee-Related [Member] | |||||||
Restructuring accrual [Roll Forward] | |||||||
Revisions of estimated liabilities | (600) | ||||||
Restructuring and Related Cost, Number of Positions Eliminated | 63 | 111 | |||||
Restructuring Charges | $ 400 | $ 2,800 | $ 5,800 | ||||
Scenario, Forecast [Member] | 2016 Plan [Member] | |||||||
Restructuring accrual [Roll Forward] | |||||||
Estimated Restructuring Plan Cash Expenditures | $ 25,000 |
PRODUCT AND GEOGRAPHIC INFORM42
PRODUCT AND GEOGRAPHIC INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Products and solutions net revenues | $ 75,592 | $ 76,150 | $ 160,101 | $ 156,179 |
Services net revenues | 58,477 | 33,617 | 117,515 | 73,174 |
Total net revenues | 134,069 | 109,767 | 277,616 | 229,353 |
Video products and solutions net revenues [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Products and solutions net revenues | 44,501 | 42,830 | 79,070 | 89,947 |
Audio products and solutions net revenues [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Products and solutions net revenues | 31,091 | 33,320 | 81,031 | 66,232 |
United States [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total net revenues | 44,360 | 41,917 | 99,402 | 87,079 |
Other Americas [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total net revenues | 10,234 | 6,623 | 20,972 | 14,172 |
Europe, Middle East and Africa [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total net revenues | 58,980 | 47,000 | 114,719 | 96,253 |
Asia-Pacific [Member] | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total net revenues | $ 20,495 | $ 14,227 | $ 42,523 | $ 31,849 |
LONG TERM DEBT AND CREDIT AGR43
LONG TERM DEBT AND CREDIT AGREEMENT (Details) - USD ($) $ in Thousands | Feb. 26, 2016 | Jun. 15, 2015 | Jun. 09, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Term Loan, net of unamortized debt issuance costs of $4,616 at June 30, 2016 | $ 94,134 | $ 94,134 | $ 0 | |||||
Notes, net of unamortized original issue discount and debt issuance costs of $26,304 at June 30, 2016 and $29,050 at December 31, 2015, respectively | 98,696 | 98,696 | 95,950 | |||||
Credit Agreement | 0 | 0 | 5,000 | |||||
Total debt | 192,830 | 192,830 | 100,950 | |||||
Less: current portion | 5,000 | 5,000 | 5,000 | |||||
Total long-term debt | 187,830 | 187,830 | 95,950 | |||||
Interest Expense | 4,769 | $ 915 | 9,000 | $ 1,253 | ||||
Capped Call Transaction Costs | $ 0 | $ (10,125) | ||||||
Convertible Debt [Member] | ||||||||
Notes, net of unamortized original issue discount and debt issuance costs of $26,304 at June 30, 2016 and $29,050 at December 31, 2015, respectively | $ 96,700 | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 7.66% | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.00% | |||||||
Debt Instrument, Convertible, Terms of Conversion Feature | The Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate, subject to adjustment, of 45.5840 shares per $1,000 principal amount of Notes, which is equal to an initial conversion price of $21.94 per share. Prior to December 15, 2019, the Notes are convertible only in the following circumstances: (1) during any calendar quarter commencing after September 30, 2015, if the last reported sale price of the Company’s common stock is greater than or equal to 130% of the applicable conversion price for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter; (2) during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day in the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. On or after December 15, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. The Company may not redeem the Notes prior to their maturity, which means that the Company is not required to redeem or retire the Notes periodically. | |||||||
Principal amount of Notes | $ 125,000 | |||||||
Debt Issuance Costs, Gross | 4,700 | |||||||
Net Proceeds from Issuance of Convertible Notes Payable | 120,300 | |||||||
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt | 28,300 | |||||||
Interest Expense | $ 4,000 | |||||||
Convertible Notes unamortized issue discount and debt issuance costs | 26,304 | 26,304 | 29,050 | |||||
Convertible Debt [Member] | Debt [Member] | ||||||||
Allocation of issuance costs | 3,600 | |||||||
Convertible Debt [Member] | Equity [Member] | ||||||||
Allocation of issuance costs | $ 1,100 | |||||||
Call Option [Member] | ||||||||
Debt Instrument, Call Feature | The Capped Call has a strike price of $21.94 and a cap price of $26.00 and is exercisable by the Company when and if the Notes are converted. | |||||||
Capped Call Transaction Costs | $ 10,100 | |||||||
Cerberus Business Finance LLC [Member] | ||||||||
Debt Instrument, Interest Rate Terms | Interest accrues on outstanding borrowings under the Credit Facility and the Term Loan at a rate of either the LIBOR Rate (as defined in the Financing Agreement) plus 6.75% or a Reference Rate (as defined in the Financing Agreement) plus 5.75%, at the option of the Company. The Company must also pay to the Lenders, on a monthly basis, an unused line fee at a rate of 0.5% per annum. | |||||||
Debt Instrument, Collateral | The Company granted a security interest on substantially all of its assets to secure the obligations under the Credit Facility and the Term Loan. | |||||||
Debt Instrument, Covenant Description | The Financing Agreement contains customary representations and warranties, covenants, mandatory prepayments, and events of default under which the Company’s payment obligations may be accelerated. The Financing Agreement includes covenants requiring the Company to maintain a Leverage Ratio (defined as the ratio of (a) consolidated total funded indebtedness to (b) consolidated Adjusted EBITDA) of no greater than 4.35:1.00 for the four quarters ending June 30, 2016, 5.40:1.00 for the four quarters ending September 30, 2016, 4.20:1.00 for the four quarters ending December 31, 2016 and thereafter declining over time from 3.50:1.00 to 2.50:1.00. The Financing Agreement also restricts the Company from making capital expenditures in excess of $20,000,000 in any fiscal year. As of June 30, 2016 the Company was in compliance with these covenants. | |||||||
Debt Instrument, Restrictive Covenants | The Financing Agreement contains restrictive covenants that are customary for an agreement of this kind, including, for example, covenants that restrict the Company from incurring additional indebtedness, granting liens, making investments and restricted payments, making acquisitions, paying dividends and engaging in transactions with affiliates. | |||||||
Cerberus Business Finance LLC [Member] | Long-term Debt [Member] | ||||||||
Unamortized Debt Issuance Expense | 4,616 | 4,616 | $ 0 | |||||
Total long-term debt | $ 100,000 | 100,000 | 100,000 | |||||
Debt Instrument, Payment Terms | The Company may prepay all or any portion of the Term Loan prior to its stated maturity, subject to the payment of certain fees based on the amount repaid. The Term Loan requires quarterly principal payments of $1.25 million, which commenced in June 2016. The Term Loan also requires the Company to use 50% of excess cash, as defined in the Financing Agreement, to repay outstanding principal of the loans under the Financing Agreement. | |||||||
Interest Expense, Long-term Debt | $ 2,000 | $ 2,700 | ||||||
Cerberus Business Finance LLC [Member] | Line of Credit [Member] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000 | |||||||
KeyBank [Member] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 35,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Allocated Share-based Compensation Expense | $ 2,290 | $ 2,882 | $ 4,388 | $ 5,344 | |
Cost of Products Revenues [Member] | |||||
Allocated Share-based Compensation Expense | 1 | 40 | 31 | 135 | |
Cost of Services Revenues [Member] | |||||
Allocated Share-based Compensation Expense | 151 | 175 | 300 | 334 | |
Research and Development Expense [Member] | |||||
Allocated Share-based Compensation Expense | 65 | 46 | 149 | 152 | |
Selling and Marketing Expense [Member] | |||||
Allocated Share-based Compensation Expense | 520 | 683 | 961 | 1,373 | |
General and Administrative Expense [Member] | |||||
Allocated Share-based Compensation Expense | $ 1,553 | $ 1,938 | $ 2,947 | $ 3,350 | |
Employee Stock Option [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award Time Based Options Outstanding Number | 3,889,764 | 3,889,764 | 4,345,334 | ||
Share Based Compensation Arrangement By Share Based Payment Award Performance Based Options Outstanding Number | 0 | 0 | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 4,345,334 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 10.01 | $ 10.01 | $ 10.68 | ||
Share Based Compensation Arrangement By Share Based Payment Award, Time Based Options, Forfeitures and Expirations in Period | (455,570) | ||||
Share Based Compensation Arrangement By Share Based Payment Award, Performance Based Options, Forfeitures and Expirations in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | (455,570) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ 16.42 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 3 years 150 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 0 | $ 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 3,889,764 | 3,889,764 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ 10.01 | $ 10.01 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 3 years 150 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | $ 0 | $ 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number | 3,492,116 | 3,492,116 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 10.29 | $ 10.29 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 3 years 96 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value | $ 0 | $ 0 | |||
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Time Based Equity Instruments Other than Options, Nonvested, Number | 1,187,836 | 1,187,836 | 905,934 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Performance Based Equity Instruments Other than Options, Nonvested, Number | 808,546 | 808,546 | 360,074 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 1,266,008 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 7.99 | $ 7.99 | $ 9.97 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 322 days | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-vested Restricted Stock Aggregate Intrinsic Value | $ 11,579 | $ 11,579 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Time Based Equity Instruments Other than Options, Grants in Period | 668,472 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Performance Based Equity Instruments Other than Options, Grants in Period | 489,482 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,157,954 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 6.91 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Time Based Equity Instruments Other than Options, Vested in Period | (264,688) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Performance Based Equity Instruments Other than Options, Vested in Period | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | (264,688) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 13.36 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Time Based Equity Instruments Other than Options, Forfeited in Period | (121,882) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Performance Based Equity Instruments Other than Options, Forfeited in Period | (41,010) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (162,892) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 6.94 | ||||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Expected to Vest Number | 1,727,159 | 1,727,159 | |||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Expected To Vest Weighted Average Grant Date Fair Value | $ 7.97 | $ 7.97 | |||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Expected to Vest Weighted Average Remaining Contractual Term | 322 days | ||||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Expected To Vest Intrinsic Value | $ 10,018 | $ 10,018 | |||
Employee Stock Option [Member] | Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 3,889,764 | 3,889,764 | |||
Non-Vested Restricted Stock and Restricted Stock Units [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 1,996,382 | 1,996,382 |