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Avid Technology, Inc.
2006 Annual Report

Table of contents

  • Page 1
    2006 Annual Report Avid Technology, Inc.

  • Page 2
    ... into the important global education market when we acquired Sibelius Software Ltd., a leading developer of music education solutions. $471.9 $418.7 Consolidated Statement of Operations Data (in thousands except per share data) Year ended December 31, Net Revenues Net income (loss) Net income...

  • Page 3
    ... changes across the digital media markets have created both challenges and opportunities for media businesses, from small independent enterprises to global Twenty years of innovation, growth, and experience helping customers to create and distribute the world's most compelling content finds Avid...

  • Page 4
    ...fine the future in efficiencies of digital media production and workï¬,ow management. Now, as we enter the next phase of growth for the company, we are focused on helping our customers respond to new opportunities and challenges brought by the wide-area network (WAN) - including the Internet. Our...

  • Page 5
    ... movies and video games. Just a few years ago, the market for digital mixing consoles in live-sound production - where professionals could leverage the full benefits of the well-established Pro Tools® digital audio workstation - was relatively nonexistent. Digidesign's revolutionary VENUE system...

  • Page 6
    ... Unity ISISâ„¢ broadcast, the Web, and mobile devices without duplicating efforts. Working closely with the Hearst team, Avid service consultants regularly monitor technology implementations across the group, ensuring that the corporation can capitalize on new distribution opportunities as quickly...

  • Page 7
    ... way that Avid is responding to this opportunity is to make it easier for consumers to directly publish content to popular Web sites right from the editing application. For example, the forthcoming version of Pinnacle Studio 11 (which is expected to be available Digital Lifestyle Becomes Mainstream...

  • Page 8
    ... Across the changing landscape of the digital media markets, Avid Technology is uniquely positioned to help our customers achieve their goals. Whether it's helping global broadcasters move from a largely analog workï¬,ow to an all-digital operation, enabling film studios to create content once but...

  • Page 9
    ... or Organization) 04-2977748 (I.R.S. Employer Identification No.) Avid Technology Park, One Park West Tewksbury, Massachusetts 01876 (Address of Principal Executive Offices, Including Zip Code) (978) 640-6789 (Registrant's Telephone Number, Including Area Code) Securities Registered...

  • Page 10
    AVID TECHNOLOGY, INC. FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 TABLE OF CONTENTS PART I. ITEM 1. ITEM 1A. ITEM 1B. ITEM 2. ITEM 3. ITEM 4. Business: Risk Factors Unresolved Staff Comments Properties Legal Proceedings Submission of Matters to a Vote of Security Holders Executive Offi...

  • Page 11
    ... OVERVIEW BUSINESS We develop, market, sell and support a wide range of software and hardware products for the production, management and distribution of digital media content. Our products help every class of user, from the home hobbyist to the feature film professional, create and use video and...

  • Page 12
    ... making media, including our professional and consumer video and audio editing tools, compositing and graphics systems, animation solutions and audio mixing consoles. Content Management and Storage - products used for storing, sharing, managing, searching, archiving, encoding or transcoding digital...

  • Page 13
    ... Avid encourages every employee to focus on providing exceptional customer service. We seek to train our support staff in a broad range of applications, operating systems and storage and networking solutions. In addition, we also train our global resellers to deliver application and hardware support...

  • Page 14
    ... of our production solutions. Avid AirSpeed ingest and playout servers provide a fast and highly scalable method for recording media directly into, and playing media from, an Avid Unity MediaNetwork or Avid ISIS system. NewsCutter editing systems build on our core editing technology and provide...

  • Page 15
    ...means of playing program content to air. Because play-to-air solutions are the most mission-critical of broadcast components, reliability and serviceability are primary design considerations. Our MediaStream video servers are designed to record, store, retrieve, process and play all types of digital...

  • Page 16
    ... software upgrades and generally helping our customers to fully utilize their applications. In addition to Avid Support, we offer professional services for media-industry consultation and installation services, and training programs. AUDIO Professional Audio Pro Tools Digital Audio Workstation Pro...

  • Page 17
    ... and Home Studio Audio Our M-Audio family of digital audio and MIDI hardware and software solutions enable electronic musicians and home enthusiasts to create, perform and record audio. Audio Interfaces M-Audio audio interfaces dovetail with Digidesign's Pro Tools LE product line, allowing users...

  • Page 18
    ...of nonlinear video editing software and hardware tools that run on the Windows operating system. Our Pinnacle Studio editing line offers two configurations, Pinnacle Studio and Pinnacle Studio Plus. Pinnacle Studio is designed for entry-level storytellers looking for a quick and easy way to enhance...

  • Page 19
    ... a number of foreign countries, including Avid, Media Composer, NewsCutter, Digidesign, Pro Tools, M-Audio, Softimage, XSI, Sibelius and Pinnacle Systems. Although we believe ownership of our patents, copyrights, trademarks and service marks, and trade secrets is an important factor in our business...

  • Page 20
    ...Our research and development efforts are focused on the development of digital media content-creation tools and workgroup solutions that operate primarily on the Macintosh and Windows platforms. We are committed to delivering best-in-class video, film, 3D animation and audio editing systems to meet...

  • Page 21
    ... workstation software and hardware products, such as Apple Inc., MOTU, Inc. (Mark of the Unicorn), Line 6, Inc., Merging Technologies Inc. and Steinberg Media Technologies GmbH (a subsidiary of Yamaha Corporation). We also compete with manufacturers of professional analog and digital mixing consoles...

  • Page 22
    ... of sales opportunities often include long-term or phased implementation plans and customer acceptance frameworks that may delay, or make difficult to predict the timing of, revenue recognition. These types of sales also generally involve greater complexity than single product or service sales, and...

  • Page 23
    ...common stock or other equity rights in the acquisition; potential loss of key employees of the acquired company; difficulty in complying with a variety of foreign laws and regulations, if so required; impairment of relationships with customers or suppliers; and possibility of contingent payments or...

  • Page 24
    ...to a significant degree by media and broadcast organizations converting entire systems from analog, or tape-based, processes to digital formats. Our combined product and service solutions may not always be sufficiently compelling or comprehensive for our customers' requirements, and we may need to...

  • Page 25
    ... a more dynamic work environment or greater opportunity to work with, or train on, cutting-edge technology than we are able to offer. In the past, we have relied on stock option grants as one mechanism for recruiting and retaining highly-skilled talent, however, a decline in the market price for our...

  • Page 26
    ... open source software code that if used in combination with our own software may jeopardize our intellectual property rights. If any thirdparty technology license expires, is terminated or ceases to be available on commercially reasonable terms, we may be required to expend considerable resources...

  • Page 27
    ... life cycles and encounter rapid technological obsolescence as a result of dynamic market conditions. We procure product components and build inventory based upon our forecasts of product life cycle and customer demand. If we are unable to provide accurate forecasts or manage our inventory levels...

  • Page 28
    ... of acquisitions, new products, significant contracts, commercial relationships or capital commitments; shifts in markets or demand for our products; our ability to develop and market new or upgraded products on a timely basis; changes in our relationships with suppliers, resellers, distributors or...

  • Page 29
    ... leases on these buildings expire in June 2010. We lease office space in Daly City, California for our Audio headquarters, including its administrative, sales and marketing and research and development activities, and in Mountain View, California, for our Consumer Video headquarters including its...

  • Page 30
    ... * Vice President, General Counsel and Corporate Secretary Vice President of Corporate Development Vice President and Chief Technology Officer Vice President and General Manager, Avid Video Mr. Milbury has notified the Company of his intention to resign from his position effective March 2, 2007...

  • Page 31
    ... Planning and New Business Development. Prior to joining Avid, Mr. Rastogi was a Vice President and Partner at the management consulting firm Bain & Company, Inc. from September 1996 until December 2003. Prior to that, Mr. Rastogi was senior automation engineer at harddisk manufacturer Komag...

  • Page 32
    ... repurchases during the period indicated of equity securities that are registered by us pursuant to Section 12 of the Exchange Act: Total Number of Shares Repurchased as Part of the Publicly Announced Program Dollar Value of Shares that May Yet be Purchased Under the Program (in thousands) Period...

  • Page 33
    ... with the cumulative return during the period for the NASDAQ Computer, Data Processing Index, and the NASDAQ Index (all companies traded on NASDAQ Capital, Global or Global Select Markets). This comparison assumes the investment of $100 on December 31, 2001 in Avid common stock, the NASDAQ Index...

  • Page 34
    ...ling. CONSOLIDATED STATEMENTS OF OPERATIONS DATA: (in thousands except per share data) For the Year Ended December 31, 2006 2005 2004 2003 2002 Net revenues Cost of revenues Gross profit Operating expenses: Research and development Marketing and selling General and administrative Amortization of...

  • Page 35
    ... CONDITION AND RESULTS OF OPERATIONS EXECUTIVE OVERVIEW Our Markets and Strategy We develop, market, sell and support a wide range of software and hardware products for the production, management and distribution of digital media content. Our products help every class of user, from the home...

  • Page 36
    ...; support open standards for media, metadata and application program interfaces; and deliver excellent customer service. We continue to focus on enhancing our existing products and broadening our product offerings to satisfy customer demand for new technology across the spectrum of educational to...

  • Page 37
    ... of Sibelius in July 2006. The remaining increase represents continued strong demand for our products in both the professional and home-user markets with increased revenues from the M-Audio and live-sound VENUE product line, as well as from sales of the Digidesign Pro Tools|HD and LE systems. The...

  • Page 38
    ...nancial condition and involve our most difficult and subjective estimates and judgments. Revenue Recognition and Allowances for Product Returns and Exchanges We generally recognize revenue from sales of software and software-related products upon receipt of a signed purchase order or contract and...

  • Page 39
    ... terms relating to the upgrade have been satisfied. In 2006, approximately 72% of our revenue was derived from indirect sales channels, including authorized resellers and distributors. Within our Professional Video segment, our resellers and distributors are generally not granted rights to return...

  • Page 40
    ... from the customer, provided that all other revenue recognition criteria are met. If a significant portion of the fee is due after our normal payment terms, which are generally 30 days, but can be up to 90 days, after the invoice date, we evaluate whether we have sufficient history of successfully...

  • Page 41
    ...estimated bad debt losses resulting from the inability of our customers to make required payments for products or services. When evaluating the adequacy of the allowances, we analyze accounts receivable balances, historical bad debt experience, customer concentrations, customer credit worthiness and...

  • Page 42
    ... (generally for the following twelve months) and market conditions. If actual future demand or market conditions are less favorable than we estimate, additional inventory write-downs may be required. Business Combinations When we acquire new businesses, we allocate the purchase price of businesses...

  • Page 43
    ... review deferred tax assets for recoverability taking into consideration such factors as historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. SFAS No. 109, "Accounting for Income Taxes," requires us to record a valuation...

  • Page 44
    ... product families, including decreased revenues from our Media Composer and broadcast news product families, offset by increased revenues from our shared-storage systems and high-end editing systems. For the 2006 year, we had lower than expected revenue from large solution sales, which was due to...

  • Page 45
    ... to new product introductions of Avid Unity ISIS and Symphony Nitris in the third and fourth quarters of 2005, respectively. Services revenues consist primarily of maintenance contracts, installation services and training. Professional Video services revenues resulting from the Pinnacle acquisition...

  • Page 46
    .... All of the revenues for 2005 represent revenue from the Pinnacle consumer business from the acquisition date of August 9, 2005 through December 31, 2005. Service revenues consist primarily of maintenance contracts, installation services and training. Professional Video services revenues for 2005...

  • Page 47
    ...maintenance contract revenue and other services; and royalties for third-party software and hardware included in our products. Cost of revenues also includes amortization of technology, which represents the amortization of developed technology assets acquired in the August 2005 Pinnacle acquisition...

  • Page 48
    ... to 2004. The decrease in research and development expenses as a percentage of revenues relates primarily to the acquisitions of M-Audio and Pinnacle, in particular the Consumer Video portion, whose research and development costs are proportionately lower than the other businesses within Avid. 38

  • Page 49
    Marketing and Selling Marketing and selling expenses consist primarily of employee salaries and benefits for sales, marketing and presales customer support personnel, commissions, travel expenses, advertising and promotional expenses, and facilities costs. Comparison of 2006 to 2005 Years Ended ...

  • Page 50
    ... compared to 2004, in part related to the acquisitions over the past year. Amortization of Intangible Assets Intangible assets result from acquisitions accounted for under the purchase method of accounting and include developed technology, customer-related intangibles, trade names and other identi...

  • Page 51
    ... to reinvest the majority of these savings during 2007 to fill the needs of the new management and sales teams. As a result of the Consumer Video restructuring program, 11 employees worldwide, primarily in the sales and engineering teams, were notified that their employment would be terminated and...

  • Page 52
    ... of the acquired company and the applications of the acquired technology. Projections of revenues and expenses, the estimated costs to complete the projects and the determination of the appropriate discount rate reï¬,ect management's best estimates of such factors at the time of the valuation. For...

  • Page 53
    ... income earned due to increased rates of return on cash and marketable securities balances. Years Ended December 31, 2005 and 2004 (dollars in thousands) 2005 2004 Change Interest and other income (expense), net As a percentage of net revenues $5,586 0.7% $1,339 0.2% $4,427 0.5% The increase...

  • Page 54
    ...tax impact of net operating loss carryforwards related to stock option deductions and acquisition related net operating loss carryforwards. The tax rate in each year is affected by net changes in the valuation allowance against our deferred tax assets. We regularly review our deferred tax assets for...

  • Page 55
    ...million, including purchases of hardware and software to support activities in the research and development, information systems and manufacturing areas, as well as for facilities renovations. However, this amount could increase in the event we enter into strategic business acquisitions or for other...

  • Page 56
    ...do so on favorable terms. CONTRACTUAL AND COMMERCIAL OBLIGATIONS INCLUDING OFF-BALANCE SHEET ARRANGEMENTS The following table sets forth future payments that we are obligated to make, as of December 31, 2006, under existing lease agreements and commitments to purchase inventory (in thousands): Total...

  • Page 57
    ... purchase price. See Footnote G to our Consolidated Financial Statements in Item 8. We conduct our business globally and, consequently, our results from operations are exposed to movements in foreign- currency exchange rates. We enter into forward exchange contracts, which generally have one-month...

  • Page 58
    ... service agreements which result in an obligation to service a financial asset, and requires that servicing assets and servicing liabilities be recognized at fair value, if practicable. SFAS No. 156 will be effective for fiscal years beginning after September 15, 2006, or January 1, 2007 for Avid...

  • Page 59
    ...We derive more than half of our revenues from customers outside the United States. This business is, for the most part, transacted through international subsidiaries and generally in the currency of the end-user customers. Therefore, we are exposed to the risks that changes in foreign currency could...

  • Page 60
    ...AVID TECHNOLOGY, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Page CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 8: Management's Report on Internal... - Valuation and ...required information is not present, or not present in amounts sufficient to require...

  • Page 61
    ... under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the...

  • Page 62
    ... only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements...

  • Page 63
    ...-Based Payment" which requires the Company to recognize expense related to the fair-value of share-based compensation awards. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Avid Technology, Inc.'s internal...

  • Page 64
    ...index present fairly, in all material respects, the financial position of Avid Technology, Inc. and its subsidiaries at December 31, 2005 and the results ... Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance ...

  • Page 65
    ...per share data) For the Year Ended December 31, 2006 2005 2004 Net revenues: Products Services Total net revenues Cost of revenues: Products Services Amortization of intangible assets Total cost of revenues Gross profit Operating expenses: Research and development Marketing and selling General and...

  • Page 66
    ...and other current liabilities Income taxes payable Deferred revenues Total current liabilities Long-term liabilities Total liabilities Commitments and contingencies (Notes G and J) Stockholders' equity: Preferred stock, $0.01 par value, 1,000 shares authorized; no shares issued or outstanding Common...

  • Page 67
    ... to employee stock plans Stock-based compensation Tax benefits on stock options Issuance (recovery) of common stock in connection with acquisitions Stock recovery for payment of withholding tax Comprehensive loss: Net loss Net change in unrealized gain (loss) on marketable securities Translation...

  • Page 68
    ... activities: Payments on capital lease obligations Payments on debt Purchases of common stock for treasury Proceeds from issuance of common stock under employee stock plans Tax benefits of stock option exercises Net cash (used in) provided by financing activities Effect of exchange rate changes...

  • Page 69
    ... FINANCIAL STATEMENTS A. ORGANIZATION AND OPERATIONS Avid Technology, Inc. ("Avid" or the "Company") develops, markets, sells and supports a wide range of software and hardware for digital media production, management and distribution. Digital media are video, audio or graphic elements in which...

  • Page 70
    ...marketability based upon assumptions about future inventory demand (generally for the following twelve months) and market conditions. Inventory in the digital-media market, including the Company's inventory, is subject to rapid technological change or obsolescence; therefore, utilization of existing...

  • Page 71
    ... of customer relationships, trade names and developed technology, result from the Company's acquisitions of the following companies or their assets: Sibelius, Sundance, Medea, Pinnacle, Wizoo, M-Audio, Avid Nordic AB and NXN (see Note G), which were accounted for under the purchase method. Finite...

  • Page 72
    ..., customers may purchase a maintenance and support agreement. The Company recognizes revenue from maintenance contracts on a ratable basis over their term. The Company recognizes revenue from training, installation or other services as the services are performed. The Company uses the residual method...

  • Page 73
    ... differed materially from management's estimates. If the financial condition of certain customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances could be required. The Company records as revenue all amounts billed to customers for shipping...

  • Page 74
    ... as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization. Development costs for software to be sold that are incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are...

  • Page 75
    ... The following table illustrates the effect on net income and net income per share as if the Company had applied the fair value recognition provisions of SFAS No. 123 to all stock-based employee awards for the years ended December 31, 2005 and 2004 (in thousands, except per share data): For the Year...

  • Page 76
    ... service agreements which result in an obligation to service a financial asset, and requires that servicing assets and servicing liabilities be recognized at fair value, if practicable. SFAS No. 156 will be effective for fiscal years beginning after September 15, 2006, or January 1, 2007 for Avid...

  • Page 77
    ...which represent amounts for large solution and certain distributor sales that have been invoiced but for which revenue has not been earned and payment is not due. E. INVENTORIES Inventories consist of the following (in thousands): December 31, 2006 2005 Raw materials Work in process Finished goods...

  • Page 78
    ...future revenues and expenses. Projections of revenues and expenses and the determination of the appropriate discount rate reï¬,ect management's best estimates of these factors at the time of the valuation. The weighted-average discount rate (or rate of return) used to determine the value of Sibelius...

  • Page 79
    ...broadcast video servers, tape transports, graphics systems and other broadcast station equipment, for cash, net of cash acquired, of $11.2 million plus transaction costs of $0.2 million. The acquisition of Sundance allows the Company to offer more open and streamlined broadcast production workï¬,ows...

  • Page 80
    ... Deko on-air graphics system and the MediaStream playout server, into its Professional Video segment and has formed a new Consumer Video segment that offers Pinnacle's consumer products, including Pinnacle Studio and other products. During 2005, the Company allocated the total purchase price of $441...

  • Page 81
    ...acquisition.. As part of the purchase agreement, Avid was contingently obligated to make additional payments to the former shareholders of Wizoo of up to â,¬1.0 million, dependent upon Wizoo achieving certain engineering milestones through January 2008. These payments, if required, would be recorded...

  • Page 82
    ... due to a reduction in the estimated fair value of inventory and other current assets acquired from Avid Nordic AB. As part of the purchase agreement, Avid was required to make additional payments to the former shareholders of Avid Nordic AB of up to â,¬1.3 million contingent upon the operating...

  • Page 83
    ... for the year ended December 31, 2005 as if the acquisitions of Sibelius, Sundance, Medea and Pinnacle had occurred as of January 1, 2005. Pro forma results of operations for the year ended December 31, 2006 giving effect to the Medea acquisition and for the year ended December 31, 2005 giving...

  • Page 84
    ... include $9.7 million in Pinnacle tax credit carryforwards and $82.8 million in Pinnacle net operating loss carryforwards, both of which are subject to limitation under Section 382 change of ownership rules of the U.S. Internal Revenue Code of 1986, as amended. Based on the level of the deferred tax...

  • Page 85
    ... rate Tax credits Foreign operations State taxes, net of federal benefit Other In process research and development Goodwill impairment Increase (decrease) in valuation allowance Effective tax rate (35)% (5) 20 1 2 67 6 56% 35% (2) (5) 3 1 27 (39) 20% 35% (3) (6) 2 (30) (2%) I. LONG-TERM...

  • Page 86
    ... shipment of their hardware components, or adversely modify purchasing terms or pricing structures, the Company's ability to sell and service its products may be impaired. The Company procures product components and builds inventory based upon forecasts of product life cycle and customer demand. If...

  • Page 87
    ... these financing options to its customers for many years, the Company has a substantial history of collecting under these arrangements without providing significant refunds or concessions to the end user, reseller or financing party. To date, the payment default rate has consistently been between...

  • Page 88
    ...this insurance policy coverage, the Company believes the estimated fair value of these indemnification obligations is minimal. Avid provides warranties on externally sourced and internally developed hardware. For internally developed hardware and in cases where the warranty granted to customers for...

  • Page 89
    ...a restructuring program. If the Company had applied the fair value recognition provisions of SFAS No. 123 to all stock-based employee awards for the years ended December 31, 2005 and 2004, the Company's net income (loss) and earnings (loss) per share would have been adjusted to the pro forma amounts...

  • Page 90
    ... are performed on exchange-traded options of the Company's stock, based on the implied volatility of long-term (nine to thirty-nine month term) exchange traded options, which is consistent with the requirements of SFAS 123(R) and Securities and Exchange Commission Staff Accounting Bulletin No...

  • Page 91
    ... Company's average market price on the date of acquisition. The weighted-average fair value of the Sibelius assumed options was $27.65 which was determined using the Black-Scholes option pricing model assuming an expected volatility of 34.3%, a risk-free interest rate of 5.01% and an expected life...

  • Page 92
    ...to shares issued from this plan. M. EMPLOYEE BENEFIT PLANS Employee Benefit Plans The Company has a defined contribution employee benefit plan under section 401(k) of the Internal Revenue Code covering substantially all U.S. employees. The 401(k) plan allows employees to make contributions up to...

  • Page 93
    ...an agreement with the landlord of its Daly City, California facility and executed an amendment to the existing lease for that office space which extended the lease through September 2014. Based on the new terms of the amended lease and the Company's changing facilities requirements, the Company has...

  • Page 94
    ... editing and finishing feature films, television shows, broadcast news programs, commercials, music videos, and corporate and government videos. This segment includes the Media Composer family of products, which accounted for approximately 9%, 12% and 17% of the Company's consolidated net revenues...

  • Page 95
    ... technology, and enable users to simultaneously share and manage media assets throughout a project or organization. This product family accounted for 10%, 10% and 12% of the Company's consolidated net revenues in 2006, 2005 and 2004, respectively. The Audio segment produces digital audio systems...

  • Page 96
    ... Unallocated amounts: Restructuring costs, net In-process research and development Stock-based compensation Amortization of acquisition-related intangible assets Impairment of goodwill and intangible assets Consolidated operating income (loss) $ 73,901 (2,613 ) (879 ) (16,604 ) (35,653 ) (53...

  • Page 97
    ...We derive more than half of our revenues from customers outside the United States. This business is, for the most part, transacted through international subsidiaries and generally in the currency of the end-user customers. Therefore, we are exposed to the risks that changes in foreign currency could...

  • Page 98
    ... payments, if required, would be recorded as additional purchase consideration, allocated to goodwill. During 2006, three engineering milestones were met and â,¬0.6 million was recorded as additional purchase price. As part of the purchase agreement for Avid Nordic AB, Avid was obligated to make...

  • Page 99
    ... Company's success in developing and introducing new products, its products and customer mix and the level of competition which it experiences. Quarterly sales and operating results generally depend on the volume and timing of orders received and recognized as revenue during the quarter. The Company...

  • Page 100
    ... designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely...

  • Page 101
    ... our Code of Business Conduct and Ethics upon written request to Avid Technology, Inc., Avid Technology Park, One Park West, Tewksbury, MA 01876, Attention: Corporate Secretary. The remainder of the response to this item is contained under the caption "EXECUTIVE OFFICERS OF THE COMPANY" in Part I of...

  • Page 102
    ... schedule, or because the information required is included in the consolidated financial statements or the notes thereto. (a) 3. LISTING OF EXHIBITS Exhibit No. 2.1 Description Stock and Asset Purchase Agreement among Microsoft Corporation, Softimage Inc. and Avid Technology, Inc. dated as of June...

  • Page 103
    ...with the Commission on November 9, 2004). #10.15 Avid Technology, Inc. 2005 Stock Incentive Plan (incorporated by reference to our Registration Statement on Form...the Sibelius Software Limited Enterprise Management Incentive Scheme. #10.19 Executive Employment Agreement between the Company and David ...

  • Page 104
    ...Executive Employment Agreement between the Company and Sharad Rastogi, dated as of February 16, 2006. #10.24 Change-in-Control Agreement between the Company and David...#10.35 Form of Incentive Stock Option Grant Terms and Conditions (under the 1997 Stock Incentive Plan) (incorporated by reference to ...

  • Page 105
    ... of PricewaterhouseCoopers LLP. Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to ....1 _____ *documents filed herewith #Management contract or compensatory plan identified pursuant to Item 15(a)3. 95

  • Page 106
    ... be signed on its behalf by the undersigned, thereunto duly authorized. AVID TECHNOLOGY, INC. (Registrant) By: /s/ David A. Krall David A. Krall President and Chief Executive Officer (Principal Executive Officer) February 28, 2007 Date: Pursuant to the requirements of the Securities Exchange Act...

  • Page 107
    ...exchange gains (losses). (c) Includes approximately $12.0 million recorded in purchase accounting for accounts receivable acquired in business combinations. The remaining portion is for provisions for sales returns and volume rebates charged directly against revenue. (d) Provisions for sales returns...

  • Page 108
    ..., ISIS, Interplay, M-Audio, Mbox, Media Composer, Media Stream, NewsCutter, Nitris, PCTV, Pinnacle Studio, Pinnacle Systems, Pro Tools, Pro Tools LE, Show Center, SOFTIMAGE, Solaris Symphony, Thunder, VideoRAID, and XSI are either registered trademarks or trademarks of Avid Technology, Inc. and...

  • Page 109
    002CS-13170