Avid 2011 Annual Report Download - page 45

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the financial statements. Although we expect our net cash balance to increase during 2012, we may borrow against the line of
credit above the current outstanding borrowings to cover cash requirements as may be required to meet the short-term funding
needs of the business.
Our cash requirements vary depending on factors such as the growth of our business, changes in working capital, capital
expenditures, our acquisition of businesses or technologies and obligations under restructuring programs. We believe that we have
sufficient cash, cash equivalents, funds generated from operations and funds available under the credit facilities to meet our
operational and strategic objectives for at least the next twelve months.
The following table summarizes our cash flows for the years ended December 31, 2011, 2010 and 2009 (in thousands):
Net cash provided by (used in) operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Effect of foreign currency exchange rates on cash and cash equivalents
Net decrease in cash and cash equivalents
Year Ended December 31,
2011
$ 864
(11,870)
2,026
(947)
$(9,927)
2010
$(12,671)
(34,566)
(396)
(1,102)
$(48,735)
2009
$ (13,471)
(19,955)
120
3,031
$ (30,275)
Cash Flows from Operating Activities
For the year ended December 31, 2011, net cash provided by operating activities primarily reflected the positive impact of our net
loss after adjustment for non-cash items, in particular depreciation and amortization and stock-based compensation expense.
This was partially offset by changes in working capital items, in particular a decrease in accrued liabilities. For the year ended
December 31, 2010, net cash used in operating activities primarily reflected changes in working capital items, in particular
increases in inventories and accounts receivable, partially offset by an increase in accounts payable. These changes were also
partially offset by the positive impact of our net loss after adjustment for non-cash items, in particular depreciation and
amortization and stock-based compensation expense. For the year ended December 31, 2009, net cash used in operating activities
primarily reflected our net loss adjusted for depreciation and amortization and stock-based compensation expense, as well as
changes in working capital items, in particular decreases in deferred revenues and accrued liabilities, partially offset by decreases
in accounts receivable and inventory.
Accounts receivable increased by $3.1 million to $104.3 million at December 31, 2011 from $101.2 million at December 31,
2010. These balances are net of allowances for sales returns, bad debts and customer rebates, all of which we estimate and record
based primarily on historical experience. Days sales outstanding in accounts receivable, or DSO, was 51 days at December 31,
2011, compared to 47 days at December 31, 2010. Our accounts receivable aging at December 31, 2011 is within historical
ranges, and we believe the increase in our DSO is the result of the timing of revenue recognition and customer receipts, as well as
the impact of foreign currency translation on our accounts receivables balances.
Inventories increased by $3.4 million to $111.8 million at December 31, 2011 from $108.4 million at December 31, 2010. These
balances included stockroom, spares and demonstration equipment inventories at various locations, as well as inventory at
customer sites related to shipments for which we had not yet recognized revenue. The increase in inventories at December 31,
2011 was the result of increased stocking levels during the first half of 2011 related to lower than expected revenues, as well as a
buildup of inventory related to new product introductions. During parts of 2010, we experienced certain supply chain shortages
that impacted our ability to meet the demand for certain of our products. Based on our current product forecasts, we believe we
will be able to meet product demand for 2012 based on our current inventory levels and anticipated component purchases. Our
inventories decreased during the fourth quarter of 2011, and we expect the levels to decrease modestly during 2012 as we
continue to work to better optimize our supply chain. 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.
Accounts payable decreased by $4.8 million to $42.5 million at December 31, 2011 from $47.3 million at December 31, 2010.
This decrease is primarily the result of decreased purchases and the associated timing of cash payments to our vendors.
Accrued liabilities, including accrued payroll and benefits, decreased by $14.2 million to $65.5 million at December 31, 2011
from $79.7 million at December 31, 2010. This decrease was largely the result of decreased accruals for payroll and other