Avid 1996 Annual Report Download
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from
to
Commission File Number 0-21174
AVID TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2977748
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Metropolitan Technology Park, One Park West, Tewksbury, MA 01876
(Address of principal executive offices) (Zip Code)
(508) 640-6789
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of The Act:
None
Securities Registered Pursuant to Section 12(g) of The Act:
Common Stock $.01 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES √ NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $138,598,416
based on the closing price of the Common Stock on the NASDAQ National Market on March 17, 1997.
The number of shares outstanding of the registrant's Common Stock as of March 17, 1997, was 21,467,094.
Documents Incorporated by Reference
Document Description
10-K Part
Portions of the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held June 4, 1997................................. III
Table of contents
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Page 1
... THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the Transition period from to Commission File Number 0-21174 AVID TECHNOLOGY, INC... -
Page 2
...and educational institutions; and corporate video departments. In January 1995, Avid effected a merger with Digidesign, Inc. ("Digidesign"). Digidesign is a leading provider of computerbased, digital audio production systems for the professional music, film, broadcast, multimedia, and home recording... -
Page 3
... as an industry standard media file interchange format to facilitate the transfer of various media types, such as video, audio, animation, film, and graphics, among various systems and applications used in the media production processes. The Company has published the OMFI file format and is seeking... -
Page 4
... slide presentation, or post on a web page. These movies can include video, transition effects, narration, titles, and music. Avid Cinema employs Apple's QuickTime technology and allows users to save QuickTime files for various distribution formats. Audio Pro Tools. Pro Tools is a multi-track random... -
Page 5
... computer-based library of video and audio media files. Based on the Silicon Graphics family of servers, Avid MediaServer supports multiple editing and/or playback workstations. The Avid MediaServer system is designed to allow television broadcasters to capture electronic news feeds, edit stories... -
Page 6
... technology in an NRCS is customized around the process of news production and transmission: story assignment and resource scheduling, story research, story creation and collaboration, and the automation of on-air operations. Journalists use the NRCS to access wire stories, schedule, script and edit... -
Page 7
... media content creation tools that operate on Apple computers on which the Company has traditionally relied, as well as on Unix-based and Windows-based computers; 2) the development of hardware and software enhancements and additions to its existing video, film and audio editing systems, and digital... -
Page 8
... Alesis, Tascam, and other disk-based digital audio production system suppliers, including Sonic Solutions. In addition, companies such as Creative Technology currently provide low cost (under $500) digital audio playback cards targeted primarily at the personal computer game market. There can be no... -
Page 9
... other things, Data Translation has willfully infringed Avid's patent number 5,045,940, entitled "Video/Audio Transmission System and Method." Avid is also seeking an award of treble damages together with prejudgment interest and costs, Avid's costs and reasonable attorneys' fees, and an injunction... -
Page 10
... would have a material adverse effect on the financial position or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the Company's security holders during the last quarter of the fiscal year ended December 31... -
Page 11
... Worldwide Operations; Chief Operating Officer of Digidesign Division Senior Vice President of Human Resources and Corporate Services Senior Vice President and Chief Technology Officer Judith M. Oppenheim 55 Eric C. Peters 45 WILLIAM J. MILLER. Mr. Miller joined the Company in April 1996 and... -
Page 12
...Vice President of Worldwide Operations for Avid from June 1996 to January 1997. Mr. Olson was Vice President of Operations at Digidesign, Inc. from August 1991 to June 1996. JUDITH M. OPPENHEIM. Ms. Oppenheim has been Senior Vice President of Human Resources and Corporate Services since January 1997... -
Page 13
... MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is listed on the NASDAQ National Market under the symbol AVID. The table below shows the high and low bid prices of the Common Stock during the fiscal years ended December 31, 1996 and 1995. 1996 First... -
Page 14
... filing. Consolidated Statements of Income Data: In thousands (except per share data) Net revenues Cost of revenues Gross profit Operating expenses: Research and development Marketing and selling. General and administrative Nonrecurring costs Total operating expenses Operating income (loss).. Other... -
Page 15
... mainly from the sales of disk-based digital, nonlinear media editing systems and related peripherals, licensing of related software, and sales of software maintenance contracts. Net revenues increased by $22.3 million (5.5%) to $429.0 million in the year ended December 31, 1996 from $406.7 million... -
Page 16
... of net revenues to 16.2% in 1996 from 13.2% in 1995 and 12.1% in 1994 due to significant resources required to develop and maintain various existing products, including the PCI versions of the Media Composer and Pro Tools products, MCXpress product lines, newsroom computer systems, video processing... -
Page 17
... for hardware and software for the Company's information systems and equipment to support research and development activities. The Company had an equipment-financing arrangement with a bank which expired on March 31, 1996. In 1995, the Company entered into an unsecured line of credit agreement with... -
Page 18
... and customer support costs to cost of goods, sales of third-party computer hardware to its distributors, and competitive pressure on selling prices of products. The Company's systems and software products typically have higher gross margins than storage devices and product upgrades. Gross... -
Page 19
...for digital media editing and production systems are intensely competitive and subject to rapid change. The Company encounters competition in the film, video and audio production and post-production, television broadcast news, and multimedia tools markets, including the corporate and industrial user... -
Page 20
AVID TECHNOLOGY, INC. ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 1996 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION 19 -
Page 21
AVID TECHNOLOGY, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Consolidated Financial Statements included in Item 8: Report of Independent Accountants...Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994...Consolidated ... -
Page 22
..., and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. We also audited the financial statement schedule of Avid Technology, Inc. listed in Item 14(d) of this Form 10-K. These financial statements... -
Page 23
AVID TECHNOLOGY, INC. Consolidated Statements of Operations (in thousands, except per share data) For the Year Ended December 31, 1996 1995 1994 $429,009 $406,650 $233,633 238,808 198,841 108,057 190,201 207,809 125,576 Net revenues Cost of revenues Gross profit Operating expenses: Research and ... -
Page 24
AVID TECHNOLOGY, INC. Consolidated Balance Sheets (In thousands, except share data) December 31, 1996 ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net of allowances of $7,519 and $6,472 in 1996 and 1995, respectively Inventories Deferred tax assets ... -
Page 25
AVID TECHNOLOGY, INC. Consolidated Statements of Stockholders' Equity (in thousands, except per share data) Balances at December 31, 1993 Exercise of stock options and related tax benefits Sale of common stock under Employee Stock Purchase Plan Stock issued in connection with acquisition Adjustment... -
Page 26
...common stock Net cash provided by financing activities Effects of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year For the Year Ended December 31, 1996 1995... -
Page 27
... and Operations Avid Technology, Inc. ("Avid" or "the Company") develops, markets, sells, and supports a wide range of disk-based systems for creating and manipulating digital media content. Avid's digital, nonlinear video and film editing systems are designed to improve the productivity of video... -
Page 28
... reserve at the time of sale for the estimated costs to repair or replace defective hardware products. Research and Development Costs. Research and development costs are expensed as incurred except for costs of internally developed or externally purchased software that qualify for capitalization... -
Page 29
... years D. Inventories Inventories consist of the following (in thousands): December 31, 1996 $19,182 870 8,307 $28,359 1995 $55,690 1,355 6,342 $63,387 Raw materials...Work in process...Finished goods... E. Capitalized Software Development Costs Capitalized purchased and internally developed... -
Page 30
... (in thousands): Depreciable Life 3 to 5 years 3 to 5 years 3 to 5 years 3 to 10 years December 31, 1996 1995 $68,171 $61,085 4,233 4,601 6,915 4,800 12,962 10,404 92,281 80,890 43,035 31,898 $49,246 $48,992 Computer and video equipment...Office equipment...Furniture and fixtures...Leasehold... -
Page 31
... thousands): December 31, 1996 Net foreign operating loss carry-forwards Allowances for accounts receivable Difference in accounting for: Revenue Costs and expenses Inventories Purchased technology Deferred intercompany profit Tax credit and net operating loss carryforwards Other Valuation allowance... -
Page 32
... Foreign sales corporation Other 2 (32%) Consolidated results of operations include results of manufacturing operations in Ireland. Income from the sale of products manufactured or developed in Ireland is subject to a 10% Irish tax rate through the year 2010. The favorable Irish tax rate resulted... -
Page 33
... upon the acquisition by Avid, the stock option agreements were assigned to Avid and Avid registered the 670,884 shares, equivalent to the number of options outstanding, taking into effect the exchange ratio of .79 shares of Avid Common Stock for each share of Digidesign Common Stock. Under the plan... -
Page 34
...on the date of grant using the Black-Scholes optionpricing model utilizing the following weighted-average assumptions: (1) zero-coupon U.S. government issues with interest rates of 6.05% and 6.26%, for 1996 and 1995 respectively, (2) expected option life from vesting of 17 months, (3) expected stock... -
Page 35
... rent expense under non-cancelable operating leases was approximately $11,425,000, $6,818,000, and $3,612,000 for the years ended December 31, 1996, 1995, and 1994, respectively. Purchase Commitments. During 1994, the Company entered into a development and manufacturing licensing agreement with an... -
Page 36
... other things, Data Translation has willfully infringed Avid's patent number 5,045,940, entitled "Video/Audio Transmission System and Method." Avid is also seeking an award of treble damages together with prejudgment interest and costs, Avid's costs and reasonable attorneys' fees, and an injunction... -
Page 37
... receivables are limited due to the large number of customers comprising the Company's customer bases, and their dispersion across different regions. The Company also maintains reserves for potential credit losses and such losses have been within management's expectations. Forward Exchange Contracts... -
Page 38
... A summary of the Company's operations by geographical area for the years ended December 31, 1996, 1995, and 1994 follows (in thousands): 1996 Net revenues: North America Asia Pacific and Latin America Europe Eliminations of transfers from North America to other areas. Total net revenues Operating... -
Page 39
...of Parallax Software Limited, 3 Space Software Limited and Elastic Reality, Inc. are not material to the Company's consolidated operations. In January 1995, the Company completed a merger with Digidesign. The merger was accounted for as a pooling of interests and was effected through the exchange of... -
Page 40
... in developing and introducing new products, its products and customer mix and the level of competition which it experiences. The Company operates with a relatively small backlog. Quarterly sales and operating results therefore generally depend on the volume and timing of orders received during... -
Page 41
... STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following consolidated financial statements are included in Item 8: Report of Independent Accountants Consolidated Statements of Operation for the years ended December 31, 1996, 1995 and 1994. Consolidated Balance... -
Page 42
... as declared effective by the Commission on March 11, 1993, File No. 33-57796). Rights Agreement, dated as of February 29, 1996, between the Registrant and The First National Bank of Boston, as Rights Agent (incorporated by reference to the Registrant's Current Report on Form 8-K as filed with the... -
Page 43
... Agreement among Avid Technology, Inc., The First National Bank of Boston, as agent, NationsBank of Texas, N.A., BayBank and ABN AMRO Bank N.V. dated as of June 30, 1996 (incorporated by reference to the Registrant's Quarterly Report on Form 10-Q as filed with the Commission on August 14, 1996, File... -
Page 44
...the Commission on November 14, 1996, File No. 0-21174). Agreement and Plan of Merger, dated as of October 25, 1994, among Avid Technology, Inc., Avid Technology Merger Co., Inc. and Digidesign, Inc. (incorporated by reference to Registrant's Current Report on Form 8-K as filed with the Commission on... -
Page 45
...L. Flaherty William L. Flaherty Senior Vice President of Finance and Chief Financial Officer Date: March 20, 1997 Date: March 20, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in... -
Page 46
AVID TECHNOLOGY, INC. ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 1996 ITEM 14(d) FINANCIAL STATEMENT SCHEDULES 45 -
Page 47
AVID TECHNOLOGY, INC. SCHEDULE II - Supplemental Valuation and Qualifying Accounts Years ended December 31, 1996, 1995 and 1994 Additions Charged to Charged to costs and other expenses accounts Description Allowance for doubtful accounts December 31, 1996 December 31, 1995 December 31, 1994 Sales ... -
Page 48
... as declared effective by the Commission on March 11, 1993, File No. 33-57796). Rights Agreement, dated as of February 29, 1996, between the Registrant and The First National Bank of Boston, as Rights Agent (incorporated by reference to the Registrant's Current Report on Form 8-K as filed with the... -
Page 49
... Agreement among Avid Technology, Inc., The First National Bank of Boston, as agent, NationsBank of Texas, N.A., BayBank and ABN AMRO Bank N.V. dated as of June 30, 1996 (incorporated by reference to the Registrant's Quarterly Report on Form 10-Q as filed with the Commission on August 14, 1996, File... -
Page 50
...the Commission on November 14, 1996, File No. 0-21174). Agreement and Plan of Merger, dated as of October 25, 1994, among Avid Technology, Inc., Avid Technology Merger Co., Inc. and Digidesign, Inc. (incorporated by reference to Registrant's Current Report on Form 8-K as filed with the Commission on... -
Page 51
... Computation of Earnings Per Share Historical Primary For the year ended December 31, 1996: Weighted average number of common shares outstanding Net income (loss) Net income (loss) per common share 21,163,485 $(38,044,000) $(1.80) Fully Diluted 21,163,485 $(38,044,000) $(1.80) For the year ended... -
Page 52
...TECHNOLOGY SECURITIES CORPORATION (Massachusetts) ELASTIC REALITY, INC. (Wisconsin) AVID TECHNOLOGY FSC LIMITED (Barbados) AVID TECHNOLOGY EUROPE LIMITED (England) AVID TECHNOLOGY LIMITED (England) AVID TECHNOLOGY SYSTEMS LIMITED (England) PARALLAX SOFTWARE LIMITED (England) 3 SPACE SOFTWARE LIMITED... -
Page 53
... statements and financial statement schedule of Avid Technology, Inc. as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, which report is included in this Annual Report on Form 10-K. /s/ COOPERS & LYBRAND L.L.P. Boston, Massachusetts March 17...