Avid 2009 Annual Report Download - page 43

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Accounts receivable decreased by $23.8 million to $79.7 million at December 31, 2009, from $103.5 million at
December 31, 2008, driven by the decrease in net revenues of 15% in the fourth quarter of 2009, when compared to the
same period of 2008, as well as improved collections reflected by a decrease in days sales outstanding. 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 was 41 days at December 31, 2009,
compared to 45 days at December 31, 2008.
At December 31, 2009 and 2008, we held inventory in the amounts of $77.2 million and $95.8 million, respectively.
These balances include stockroom, spare parts and demonstration equipment inventories at various locations and
inventory at customer sites related to shipments for which we have not yet recognized revenues. The decrease in
inventory of $18.6 million from December 31, 2008 to December 31, 2009 was primarily due to improved efficiencies
resulting from the consolidation of operations in connection with our business transformation. 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.
Deferred revenues decreased by $29.5 million to $39.1 million at December 31, 2009, from $68.6 million at December
31, 2008. This decrease was primarily the result of the recognition of deferred revenue related to large broadcast deals
accepted in the fourth quarter of 2009 and, to a lesser extent, a reduction in deferrals related to maintenance contracts
resulting from lower average maintenance contract values and the timing of contract renewals.
Restructuring accruals decreased by $1.1 million to $17.0 million at December 31, 2009, from $18.1 million at
December 31, 2008. This decrease was primarily the result of restructuring-related cash payments of $25.8 million and
non-cash write-offs of $3.1 million, offset by 2009 restructuring charges of $27.7 million. In connection with
restructuring activities during 2009 and prior periods, at December 31, 2009, we had restructuring accruals of $9.2
million and $7.7 million related to severance and lease obligations, respectively. Our future cash obligations for leases
for which we have vacated the underlying facilities total approximately $13.4 million. The lease accruals represent the
present value of the excess of our lease commitments on the vacated space over expected payments to be received on
subleases of the relevant facilities. The lease payments will be made over the remaining terms of the leases, which have
varying expiration dates through 2017, unless we are able to negotiate earlier terminations. The severance payments will
be made during the next twelve months. All payments related to restructuring actions are expected to be funded through
working capital. See Note N to our Consolidated Financial Statements in Item 8 for the activity in the restructuring and
other costs accrual for 2009.
Net cash flow used in investing activities was ($20.0) million and ($1.2) million in 2009 and 2008, respectively,
compared to $35.6 million provided by investing activities in 2007. We hold our excess cash in short-term marketable
securities and convert them to cash as needed. The net cash flow used in investing activities for 2009 primarily reflected
purchases of property and equipment and a $10 million facility-related escrow deposit into a long-term asset account,
partially offset by net proceeds of $8.6 million resulting from the timing of the sale and purchase of marketable
securities and the release of escrow holdings totaling $3.5 million related to the 2008 sale of our Softimage 3D
animation product line. The remaining escrow holdings of $3.5 million, subject to possible adjustment, are scheduled to
be released during the fourth quarter of 2010. The $10 million facility-related escrow deposit was related to our recently
signed leases for facilities in Burlington, Massachusetts. The net cash flow used in investing activities for 2008
primarily reflected purchases of property and equipment and net purchases of $10.1 million resulting from the timing of
the sale and purchase of marketable securities, partially offset by proceeds, net of transaction costs, of $26.3 million
from the sale of our Softimage 3D animation and PCTV product lines. The net cash flow provided by investing
activities for 2007 primarily reflected net proceeds of $63.6 million resulting from the timing of the sale and purchase of
marketable securities, partially offset by purchases of property and equipment. We purchased $18.7 million of property
and equipment during 2009, compared to $15.4 million during 2008 and $26.1 million in 2007. Purchases of property
and equipment in all years consisted primarily of computer hardware and software to support R&D activities and our
information systems. Our cash requirements for capital spending in 2010 are expected to total approximately $32
million. This amount could increase in the event we enter into strategic business acquisitions or for other reasons. On
January 5, 2010, we acquired all the outstanding shares of Blue Order Solutions AG for approximately $16 million.