Avid 2008 Annual Report Download - page 48

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inventory of $21.5 million from December 31, 2007 to December 31, 2008 was primarily the result of the sale of our
PCTV product line, as well as our ongoing initiatives to reduce our inventories and increase our inventory turns. PCTV
inventory valued at $7.5 million was classified as held-for-sale and included in “other current assets” in our
consolidated balance sheet as of December 31, 2008. We will be reimbursed for the cost of any PCTV inventory sold by
the buyer and expect the inventory to be sold during the next twelve months. We review all inventory balances regularly
for excess quantities or potential obsolescence and make appropriate adjustments as needed to write-down the
inventories to reflect their estimated realizable value. We source inventory products and components pursuant to
purchase orders placed from time to time.
Net cash flow used in investing activities was $1.2 million in 2008. Cash of $35.6 million was provided by investing
activities in 2007, and $25.5 million was used in investing activities in 2006. We hold our excess cash in short-term
marketable securities and convert them to cash as needed. The net cash flow used in investing activities for 2008
primarily reflected purchases of property and equipment and net purchases of $10.1 million resulting from the timing of
the sale and purchase of marketable securities, partially offset by proceeds, net of transaction costs, of $26.3 million
from the sale of our Softimage and PCTV product lines. The net cash flow provided by investing activities for 2007
primarily reflected net proceeds of $63.6 million resulting from the timing of the sale and purchase of marketable
securities, partially offset by purchases of property and equipment. The net cash flow used in investing activities in
2006 primarily reflected cash paid, net of cash acquired, of $20.7 million, $11.4 million and $9.3 million for our
acquisitions of Sibelius, Sundance Digital and Medea, respectively, and purchases of property and equipment, partially
offset by net proceeds resulting from the sale and purchase of marketable securities. We purchased $15.4 million of
property and equipment during 2008, compared to $26.1 million during 2007 and $20.8 million in 2006. Purchases of
property and equipment in all years consisted primarily of computer hardware and software to support R&D activities
and our information systems. Our capital spending in 2009 is currently expected to be approximately $25 million. This
amount could increase in the event we enter into strategic business acquisitions or for other reasons.
Net cash flow used in financing activities was $92.4 million, $15.3 million and $37.8 million, respectively, in 2008,
2007 and 2006. A stock repurchase program was approved by our board of directors in April 2007, which authorized the
repurchase of up to $100 million of our common stock through transactions on the open market, in block trades or
otherwise. In February 2008, our board of directors approved a $100 million increase in authorized funds for the
repurchase of our common stock under this program. During 2007, we repurchased 809,236 shares of our common
stock under the program for a total purchase price, including commissions, of $26.6 million. During 2008, we
repurchased an additional 4,254,397 shares of our common stock for a total purchase price, including commissions, of
$93.2 million, leaving $80.3 million authorized for future repurchases. The stock repurchase program is being funded
through working capital and has no expiration date.
The cash used in financing activities in 2008 was the result of $93.2 million used for our stock repurchase program,
slightly offset by proceeds of $1.1 million from the exercise of stock options and purchases under our employee stock
purchase plan. The cash used in financing activities in 2007 reflected a $26.6 million repurchase of our common stock,
partially offset by proceeds of $11.1 million from the issuance of stock related to the exercise of stock options and our
employee stock purchase plan. The cash used in financing activities in 2006 was primarily the result of $50.0 million
used to repurchase 1,432,327 shares of our common stock under a stock repurchase program approved and completed in
2006, partially offset by proceeds of $8.2 million from the issuance of stock related to the exercise of stock options and
our employee stock purchase plan.
In connection with non-acquisition-related restructuring activities during 2008 and prior periods, as of December 31,
2008, we had restructuring accruals of $15.1 million and $2.2 million related to severance and lease obligations,
respectively. Our future cash obligations for leases for which we have vacated the underlying facilities total
approximately $3.9 million. The lease accrual represents the present value of the excess of our lease commitments on
the vacated space over expected payments to be received on subleases of the relevant facilities. The lease payments will
be made over the remaining terms of the leases, which have varying expiration dates through 2011, unless we are able
to negotiate earlier terminations. The severance payments will be made during the next twelve months.
In connection with our Pinnacle acquisition in 2005, we recorded restructuring accruals totaling $14.4 million related to
severance ($10.0 million) and lease or other contract terminations ($4.4 million). As of December 31, 2008, we had
future cash obligations of approximately $0.5 million under a lease for which we had vacated the underlying facility and