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1
PART I
ITEM 1. BUSINESS
OVERVIEW
We provide an open, integrated, and comprehensive technology platform, along with applications and services that enable the
creation, distribution, and monetization of audio and video content. Specifically, we develop, market, sell, and support software
and hardware for digital media content production, management and distribution. Digital media are video, audio or graphic
elements in which the image, sound or picture is recorded and stored as digital values, as opposed to analog or tape-based signals.
Our products are used in production and post-production facilities; film studios; network, affiliate, independent and cable
television stations; recording studios; live-sound performance venues; advertising agencies; government and educational
institutions; corporate communication departments; and by independent video and audio creative professionals, as well as aspiring
professionals. Projects produced using our products include feature films, television programming, live events, news broadcasts,
commercials, music, video and other digital media content.
Our mission is to create the most powerful and collaborative media network that enables the creation, distribution and
monetization of the most inspiring content in the world. Guided by our Avid Everywhere strategic vision, we strive to deliver the
industry’s most open, innovative and comprehensive media platform connecting content creation with collaboration, asset
protection, distribution and consumption for the media in the world – from the most prestigious and award-winning feature films,
music recordings, and television shows, to live concerts and news broadcasts. We have been honored over time for our
technological innovation with 14 Emmy Awards, one Grammy Award, two Oscars and the first ever America Cinema Editors
Technical Excellence Award. Our solutions were used in all 2016 Oscar nominated films for Best Picture, Best Film Editing, Best
Sound Editing, Best Sound Mixing and Best Original Score. Our audio solutions were also used in all 2016 Grammy nominated
recordings for Best Album of The Year, Best Record of the Year and Best Song of the Year.
RECENT EVENTS
Restructuring Plan
In the first quarter of 2016, we commenced restructuring actions that are part of a broad restructuring plan encompassing a series
of measures intended to allow us to more efficiently operate in a leaner, and more directed cost structure. These include reductions
in our workforce, facilities consolidation, transferring certain business processes to lower cost regions, and reducing other third-
party services costs. In connection with this restructuring plan, we expect to incur incremental cash expenditures of approximately
$25 million relating to termination benefits, facility costs, employee overlap expenses and related actions. We anticipate that the
restructuring plan will be substantially complete by the end of the second quarter of 2017 and will result in annualized costs
savings of appropriately $68 million.
Financing Agreement with Cerberus Business Finance, LLC
In connection with the cost efficiency program, on February 26, 2016 (the “Closing Date”), we entered into a Financing
Agreement (the “Financing Agreement”) with Cerberus Business Finance, LLC, as collateral and administrative agent, and the
lenders party thereto (the “Lenders”). Pursuant to the Financing Agreement, the Lenders agreed to provide us with (a) a term loan
in the aggregate principal amount of $100 million (the “Term Loan”) and (b) a revolving credit facility (the “Credit Facility”) of
up to a maximum of $5 million in borrowings outstanding at any time. All outstanding loans under the Financing Agreement will
become due and payable, on the earlier of February 26, 2021 and the date that is 30 days prior to June 15, 2020, the scheduled
maturity date of our outstanding 2.00% convertible senior notes due 2020. We borrowed the full amount of the Term Loan, or
$100 million, as of the Closing Date, but did not borrow any amount under the Credit Facility as of the Closing Date. Proceeds
from the term loan will be used to replace our existing $35 million revolving credit facility, finance the Company’s efficiency
program and other initiatives, and provide operating flexibility throughout the remainder of the transformation in this period of
heightened market volatility. We estimate that after paying for both debt issuance costs and the efficiency program, the new
financing will provide approximately $70 million of available liquidity, about half of which replaces the existing revolving credit
facility with the remainder providing incremental liquidity to strengthen the Company’s balance sheet.