Avid 2015 Annual Report Download - page 58

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Financial and other covenants. The Cerberus Financing Agreement contains customary representations and warranties and
covenants. These include covenants requiring the Company to maintain a Leverage Ratio (defined to mean the ratio of (a)
consolidated total funded indebtedness to (b) consolidated EBITDA) of no greater than 4.35:1.00 for the four quarters ending
June 30, 2016, 5.40:1.00 for the four quarters ending September 30, 2016, 4.20:1.00 for the four quarters ending December 31,
2016 and thereafter declining over time from 3.50:1.00 to 2.50:1.00. The Financing Agreement also restricts the Company from
making capital expenditures in excess of $20,000,000 in any fiscal year.
The Financing Agreement contains restrictive covenants that are customary for an agreement of this kind, including, for example,
covenants that restrict the Company from incurring additional indebtedness, granting liens, making investments and restricted
payments, making acquisitions, paying dividends, and engaging in transactions with affiliates. Certain exceptions to these
restrictive covenants are not available in the event the Company’s liquidity (defined as cash held in U.S. accounts and availability
under the Credit Facility) is less than $30.0 million.
Events of default. The Cerberus Financing Agreement contains customary events of default under which the Company’s payment
obligations may be accelerated. These events of default include, among others, failure to pay amounts payable under the Cerberus
Financing Agreement when due, breach of representations and warranties, failure to perform covenants, a change of control,
default or acceleration of material indebtedness, certain judgments and certain impairments to the collateral.
2.00% Convertible Senior Notes
On June 15, 2015, we issued $125.0 million aggregate principal amount of our 2.00% Convertible Senior Notes due 2020 (the
“Notes”). The net proceeds from the offering were $120.3 million after deducting the offering expenses. The Notes pay interest
semi-annually on June 15 and December 15 of each year, beginning on December 15, 2015, at an annual rate of 2.00% and
mature on June 15, 2020 unless earlier converted or repurchased in accordance with their terms prior to such date. In connection
with the offering of the Notes, on June 9, 2015, we entered into a capped call derivative transaction with a third party (the
“Capped Call”). The Capped Call is expected generally to reduce the potential dilution to the common stock and/or offset any
cash payments we may be required to make in excess of the principal amount upon conversion of the Notes in the event that the
market price per share of the common stock is greater than the strike price of the Capped Call. The Capped Call has a strike price
of $21.94 and a cap price of $26.00 and is exercisable by us when and if the Notes are converted. The Capped Call expires on
June 15, 2020.
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2015, 2014 and 2013 (in thousands):
Year Ended December 31,
2015 2014 2013
Net cash used in operating activities $(34,026) $ (9,897) $ (9,145)
Net cash used in investing activities (81,796)(11,800) (11,536)
Net cash provided by (used in) financing activities 109,558 (436) (96)
Effect of foreign currency exchange rates on cash and cash equivalents (890)(1,014) (1,410)
Net decrease in cash and cash equivalents $ (7,154) $ (23,147) $ (22,187)
Cash Flows from Operating Activities
Cash used in operating activities aggregated $34.0 million for the year ended December 31, 2015. The cash usage during 2015
was primarily attributable to the annual bonus payments, product development costs, and the professional and consulting services
related to the acquisition of Orad.
Cash Flows from Investing Activities
For the year ended December 31, 2015, the net cash flow used in investing activities reflected $66.0 million used for our
acquisition of Orad, and $15.3 million used for the purchase of property and equipment. Our purchases of property and