Avid 2008 Annual Report Download - page 69

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64
estimated forfeiture rates were 0% for non-employee director awards, 9% for executive management staff and 10% for
all other employee awards. Then-current forfeiture rates are also applied quarterly to all outstanding stock options and
non-vested restricted stock awards, which may result in a revised estimate of compensation costs related to these
stock-based grants. As a result of the application of the changes in forfeiture rates in 2008, the Company recorded in
its results of operations cumulative adjustments that reduced previously recorded stock-based compensation expense
of approximately $1.9 million.
Stock-based compensation expense of $14.2 million, $15.9 million and $16.8 million, was included in the following
captions in the Company’s consolidated statements of operations for the years ended December 31, 2008, 2007 and
2006, respectively (in thousands):
2008 2007 2006
Cost of products revenues $ 616 $ 679 $ 516
Cost of services revenues 539 829 801
Research and development expenses 2,820 4,521 4,925
Marketing and selling expenses 4,005 4,470 4,833
General and administrative expenses 6,221 5,450 5,766
$ 14,201 $ 15,949 $ 16,841
In addition, stock-based compensation totaling $180,000 was included in the caption “restructuring costs, net” during
2006 related to stock-based compensation expense for the acceleration of vesting of equity awards for certain
employees whose employment was terminated in a restructuring program.
As of December 31, 2008, there was $48.6 million of total unrecognized compensation cost, before forfeitures, related
to non-vested stock-based compensation awards granted under the Company’s stock-based compensation plans. The
Company expects this amount to be amortized as follows: $19.7 million in 2009, $16.7 million in 2010, $10.2 million
in 2011 and $2.0 million thereafter. The weighted-average recognition period of the total unrecognized compensation
cost is 1.49 years.
Recent Accounting Pronouncements
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities.
SFAS No. 161 requires companies with derivative instruments to disclose information that should enable financial-
statement users to understand how and why a company uses derivative instruments, how derivative instruments and
related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, and how derivative instruments and related hedged items affect a company’s financial position, financial
performance and cash flows. SFAS No 161 is effective for the Company’s fiscal year beginning January 1, 2009.
Adoption of SFAS No. 161 is not expected to have a material impact on the Company’s financial position or results of
operations.
In December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141(R)”), Business Combinations. SFAS
141(R) makes significant changes to the accounting and reporting standards for business acquisitions. SFAS 141(R)
establishes principles and requirements for an acquirer’s financial statement recognition and measurement of the
assets acquired; the liabilities assumed, including those arising from contractual contingencies; any contingent
consideration; and any noncontrolling interest in the acquiree at the acquisition date. SFAS 141(R) amends SFAS No.
109, Accounting for Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax
benefits that are recognizable as a result of a business combination either in income from continuing operations in the
period of the combination or directly in contributed capital, depending on the circumstances. The statement also
amends SFAS No. 142, Goodwill and Other Intangible Assets, to, among other things, provide guidance for the
impairment testing of acquired research and development intangible assets and assets that the acquirer intends not to
use. SFAS 141(R) is effective for the Company’s fiscal year beginning January 1, 2009 and may not be adopted early
or applied retrospectively. The adoption of SFAS 141(R) will have an impact on the accounting for, and the effect will
depend upon the nature of, business combinations occurring on or after the adoption date. Adoption will also have an
impact on changes in deferred tax valuation allowances and income tax uncertainties related to acquisitions made
before the effective date.