Avid 2009 Annual Report Download - page 82

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The employee-related accruals at December 31, 2009 represent severance and outplacement costs to former employees that
will be paid out within the next twelve months and are, therefore, included in the caption ―accrued expenses and other
current liabilities‖ in the Company’s consolidated balance sheet at December 31, 2009.
The facilities-related accruals at December 31, 2009 represent estimated losses, net of subleases, on space vacated as part of
the Company’s restructuring actions. The leases, and payments against the amounts accrued, extend through 2017 unless
the Company is able to negotiate earlier terminations. Of the total facilities-related accruals, $5.0 million is included in the
caption ―accrued expenses and other current liabilities‖ and $2.7 million is included in the caption ―long-term liabilities‖ in
the Company’s consolidated balance sheet at December 31, 2009.
O. SEGMENT INFORMATION
The Company’s organizational structure is based on strategic business units aligned with the principal product segments in
which the Company’s products are sold. ASC section 280-10-50, Segment Reporting – Overall – Disclosure, (formerly
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information), defines operating segments as
components of an enterprise about which separate financial information is available that is evaluated regularly by the chief
operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. In
July 2008, the Company announced several changes to its historical business unit structure to be implemented for 2009.
The new business structure, which includes a single customer-facing organization, was used to evaluate segment
performance and measure segment profitability beginning January 1, 2009. Also beginning January 1, 2009, the Company’s
former Consumer Video segment was combined with the former Professional Video segment to form a single Video
segment. The Company’s evaluation of the discrete financial information that is regularly reviewed by the chief operating
decision makers determined that for 2009 the Company’s two business units, Video and Audio, also equated to its
reportable segments.
The Company excludes certain corporate infrastructure costs and expenses, including marketing and selling, finance,
human resources, legal and some information technology expenses, when evaluating reportable segment performance and
measuring the profitability of each operating segment. Such expenses are managed outside the segments and are not
controllable at the segment level, and the Company believes that excluding these costs provides a better measure of each
segment’s performance. The Company also excludes certain other costs and expenses when evaluating segment
performance and profitability, including the amortization and impairment of acquired intangible assets, stock-based
compensation expenses, restructuring expenses, gains or losses on sales of assets, and legal settlements. The Company
reports a contribution margin for each business unit that excludes these costs. The Company has revised the prior period
segment disclosures to conform to the current presentation.
The Video segment provides digital nonlinear hardware and software solutions designed to improve the productivity of
video and film editors and broadcasters by enabling them to edit video, film and sound; manage media assets and automate
workflows in a faster, easier, and more cost-effective manner. This segment’s professional digital nonlinear editing
software and hardware products include the Media Composer product line widely used to edit television programs,
commercials and films; the NewsCutter and Instinct editors designed for the fast-paced world of news production; and Avid
Symphony Nitris DX and Avid DS, which are used during the ―online‖ or ―finishing‖ stage of post production. Professional
video-editing solutions accounted for approximately 13%, 14% and 15% of the Company’s consolidated net revenues for
2009, 2008 and 2007, respectively. The Video segment also includes shared storage and workflow solutions that provide
complete network, storage and database solutions based on the Company’s Avid Unity MediaNetwork technology and
enable users to simultaneously share and manage media assets throughout a project or organization. Video storage and
workflow solutions accounted for approximately 16%, 16% and 15% of the Company’s consolidated net revenues in 2009,
2008 and 2007, respectively. This segment’s products also include the Pinnacle Studio video-editing product line,
previously reported in the Company’s former Consumer Video segment, that allows users to create, edit, view and
distribute video media using a personal computer. The 2008 and 2007 reporting for the Video segment also includes the
Company’s former Softimage 3D animation and PCTV product lines that were sold in the fourth quarter of 2008 (see Note
G).
The Audio segment hardware and software for digital audio production systems and live sound systems provide music
creation; audio recording, editing, and mixing; and live performance solutions for a broad range of customers. This segment
includes the Company’s Pro Tools products, which accounted for approximately 17%, 14% and 15% of the Company’s
consolidated net revenues in 2009, 2008 and 2007, respectively.