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82
2011 unless the Company is able to negotiate earlier terminations. Of the total facilities-related accruals, $1.7 million
is included in the caption “accrued expenses and other current liabilities” and $1.3 million is included in the caption
“long-term liabilities” in the Company’s consolidated balance sheet as of December 31, 2008.
O. SEGMENT INFORMATION
The Company’s organizational structure is based on strategic business units aligned with the principal product
segments in which the Company’s products are sold. In SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, operating segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making
group, in deciding how to allocate resources and in assessing performance. The Company evaluated the discrete
financial information that is regularly reviewed by the chief operating decision makers and determined that these
business units equate to three reportable segments: Professional Video, Audio, and Consumer Video.
During the first quarter of 2008, the Company changed the way it reviews and manages its business by excluding
certain corporate infrastructure costs and expenses, including finance, human resources, legal and some information
technology expenses, when evaluating reportable segment performance and measuring the profitability of each
operating segment. Such expenses, which were previously allocated to the operating segments, are managed outside
the segments and are not controllable at the segment level. The Company believes that excluding these costs provides
a better measure of each segment’s performance. The Company also continues to exclude certain other costs and
expenses when evaluating segment performance and profitability, including the amortization and impairment of
acquired intangible assets, the write-off of acquired in-process research and development, stock-based compensation
expenses, restructuring expenses and legal settlements. The Company now reports a contribution margin for each
business unit that excludes these costs and has revised the prior period segment disclosures to conform to the current
presentation. The change to the current presentation did not affect the Company’s consolidated operating results.
The Professional Video segment provides digital nonlinear hardware and software solutions designed to improve the
productivity of video and film editors and broadcasters by enabling them to edit video, film and sound; manage media
assets and automate workflows in a faster, easier, and more cost-effective manner. This segment’s digital nonlinear
editing software and hardware products include the Media Composer product line widely used to edit television
programs, commercials and films; the NewsCutter and Instinct editors designed for the fast-paced world of news
production; and Avid Symphony Nitris DX and Avid DS, which are used during the “online” or “finishing” stage of
post production. Professional Video editing solutions accounted for approximately 14%, 15% and 19% of the
Company’s consolidated net revenues for 2008, 2007 and 2006, respectively. The Professional Video segment also
includes shared storage and workflow solutions that provide complete network, storage and database solutions based
on the Company’s Avid Unity MediaNetwork technology and enable users to simultaneously share and manage media
assets throughout a project or organization. Professional Video storage and workflow solutions accounted for
approximately 16%, 15% and 14% of the Company’s consolidated net revenues in 2008, 2007 and 2006, respectively.
The Audio segment hardware and software for digital audio production systems and live sound systems provide music
creation; audio recording, editing, and mixing; and live performance solutions for a broad range of customers. This
segment includes the Company’s Pro Tools products, which accounted for approximately 14%, 15% and 15% of the
Company’s consolidated net revenues in 2008, 2007 and 2006, respectively.
The Consumer Video segment was formed in 2005 to include certain product lines acquired in the Pinnacle
acquisition. The segment has historically developed and marketed products aimed primarily at the consumer market
that allow users to create, edit, view and distribute rich media content using a personal computer. This segment’s
product lines include the Pinnacle Studio video-editing product line and formerly included the PCTV product line that
was sold in the fourth quarter of 2008. (see Note G).
In July 2008, the Company announced several changes to its historical business unit structure to be implemented for
2009. The Company completed the actions necessary to transition to this new business structure in the second half of
2008, and the new business unit structure, which includes a single customer-facing organization, will be used to
evaluate segment performance and measure segment profitability beginning January 1, 2009. In 2009, segment