Archive for the ‘SEC Filings’ Category

Avid Terminates CEO Louis Hernandez, Jr. for Misconduct, Rosica Appointed CEO

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Feb 26 2018

The Board of Directors at Avid voted on February 25, 2018 “to terminate the employment of Louis Hernandez Jr., Chief Executive Officer, effective immediately, due to violations by Mr. Hernandez of the Company’s policies related to workplace conduct,” according to a filing with securities regulators.

As a result of this termination under his employment agreement, Mr. Hernandez is no longer the Company’s Chief Executive Officer. Hernandez has also resigned from his position on the Avid Board of Directors and Nancy Hawthorne has been elected Chairman of the Board.

Avid said the termination of Hernandez is “due to violations of Company policies related to workplace conduct.”

The company provided more detail, saying: “With the assistance of independent external legal counsel, a Special Committee comprising independent members of the Board of Directors conducted a thorough investigation into allegations of improper non-financially related workplace conduct by Mr. Hernandez. After reviewing the findings of the Special Committee’s investigation, the Board of Directors unanimously concluded that the findings warranted immediate termination of Mr. Hernandez’s employment.”

Jeff Rosica, who has been serving as the Company’s President, as the Company’s Chief Executive Officer, effective immediately

“I am honored and excited for this opportunity to lead Avid through this important moment in the Company’s history,” said Roscia. “The outlook for Avid is strong, and I look forward to working with the leadership team, the Board and our incredibly talented employees as we execute on our strategic priorities and continue our journey to be a best-in-class company and leader in our industry.”

Nancy Hawthorne, Chairman of the Avid Board of Directors, said, “Jeff’s deep experience as an industry expert coupled with his impressive knowledge of Avid’s business and strategy make him the natural choice to lead the Company.”




© Devoncroft Partners 2009- 2018




Grass Valley Paid $94.2M for Snell Advanced Media

Analysis, Annual Results, Broadcast Vendor M&A, Conference Sessions, SEC Filings | Posted by Joe Zaller
Feb 13 2018

Last week, Belden / Grass Valley announced it had closed the acquisition of Snell Advanced Media (SAM).

At that time, the company did not disclose the terms of the deal.

Today, Belden said in a filing with securities regulators that it paid $75.8 million plus the assumption of $18.4 million of debt for a company it acquired on February 8, 2018 (the same day it confirmed the SAM acquisition).

This equates to an enterprise value of $94.2 million.

Based on filings with the UK government, SAM’s parent company had revenue of £90.8 million ($123 million USD at 2016 average exchange rate) through December 31, 201, and increase of 20.3% from £75.4 million ($115.2 million USD at 2015 average exchange rate) for the 12 months ending December 31, 2015.

Based on its previous acquisitions in the broadcast industry, Belden typically pays around 8x EBITDA when it buys a company.  If that was the case in the SAM transaction, it would mean that SAM’s EBITDA over the trailing twelve months prior to the acquisition was $11.775 million. However, in its filing with UK regulators, SAM said it had EBITDA of -£1.6 million for the 12 months ending on December 31, 2016.  Performance for the full year 2017 is unknown.

Given SAM’s growth from 2015 to 2016, the company may have achieved positive EBITDA, but the full details won’t be known until Belden provides additional information about the transaction (which it said it will do closer to the 2018 NAB Show).  It’s also possible that the valuation was based on a multiple of SAM’s sales in 2017.


Attend the 2018 Devoncroft Executive Summit to hear more about Belden’s strategy

For those wondering about Belden’s plans for SAM, and whether it continues to look for M&A targets in the broadcast industry, join us on April 8, 2018 to find out.

That’s the date of the seventh annual “Devoncroft Executive Summit: The Business of Media Technology,” where Belden CEO John Stroup will be take part in a panel of broadcast technology supplier CEOs.

Registration for the 2018 Executive Summit is available here.


The relevant text from Belden’s filing has been pasted in below:

Note 28: Subsequent Events

On February 8, 2018, we acquired a company for a purchase price of $75.8 million, plus we assumed debt of $18.4 million. The acquisition includes a potential earn-out for which we have not yet estimated a fair value. This acquisition was funded with cash on hand.

We are in the preliminary phase of the purchase accounting process, including obtaining third party valuations of certain tangible and intangible assets acquired. As such, the purchase accounting process is incomplete and we cannot provide the required disclosures of the estimated fair value of the assets and liabilities acquired for this business combination.



Related Content:

2018 Devoncroft Executive Summit: The Business of Media Technology

Belden/Grass Valley Acquires Snell Advanced Media

Grass Valley Q4 2017 Revenue Impacted by Revenue Recognition, Predicts Growth for 2018

Broadcast Vendor M&A: Belden Completes Acquisition of Grass Valley, Will Invest $25 Million in Integration of Combined Business

More Broadcast Vendor M&A: Belden Buys Miranda for $350 Million in All-Cash Deal



© Devoncroft Partners 2009-2018.  All Rights Reserved.


Autodesk M&E Declines 16% in Q2, Driven by Subscription Model Transition

Analysis, Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 26 2016

Autodesk reported revenue for the second quarter of fiscal year 2017, which aligns with the three month period ending July 31, 2016.  Autodesk breaks out the revenue performance of its Media and Entertainment (M&E) business segment, which comprises visual effects and post-production solutions including Maya, Flame, and Shotgun.  Autodesk_Logo

Autodesk M&E revenue for the quarter was $34 million, a decrease of 16% compared to the second quarter of fiscal 2015, and a 2.9% decrease versus the preceding quarter, FQ1 2017.  M&E contributed 6.2% of Autodesk’s total sales in the quarter.  This compares to 6.7% during the year-earlier quarter and 6.8% during the preceding quarter.

There was no commentary provided by Autodesk’s management on the reason for the year-over-year decline, though Autodesk’s overall revenue decline was attributable to the Company’s transition from perpetual licenses to a subscription revenue model.

The close of the second quarter marked another milestone for Autodesk’s transition to a subscription business model, as the Company no longer sells perpetual licenses for its Suite products.  Autodesk discontinued selling perpetual licenses for individual products with the close of the fourth fiscal quarter of 2016.  Beginning with the start of the current quarter (FQ3 2017) Autodesk only sells subscription or flexible license offerings.

Update on Business Model Transition

Autodesk’s M&E division has been a public data point on the impact of pricing compression in the post-production technology segment of the media technology sector.  Revenue for the M&E division has been on a declining revenue trajectory for almost a decade given the impacts of the transition from hardware to software, the collapsing of functionality into Suites, and now the shift from perpetual licenses to subscription.

The below chart illustrates the revenue performance of the M&E division since the second half of fiscal 2008.


At the same time, the gross margin of the M&E division has benefited from these market trends.  Gross margins increased from 74.4% in the first quarter of fiscal 2008 to 80.0% during the first fiscal quarter of 2017.

The short-term implications of the business model transition is captured in the first paragraph of Autodesk’s prepared remarks for the quarter, “Autodesk is undergoing a business model transition in which it has discontinued most new perpetual license sales in favor of subscriptions and flexible license arrangements. During the transition, revenue, margins, EPS, deferred revenue, billings and cash flow from operations will be impacted as more revenue is recognized ratably rather than up front and as new product offerings generally have a lower initial purchase price.”

Related Content:

Press Release: Autodesk FY Q2 2017 Financial Results

Prepared Remarks: Autodesk management FY Q2 2017 Financial Results

Conference Call Transcript:  Autodesk FY Q2 2017



© Devoncroft Partners 2009-2016. All Rights Reserved.




Harmonic Closes Thomson Video Networks Acquisition

Analysis, Broadcast Vendor M&A, SEC Filings | Posted by Joe Zaller
Mar 02 2016

Harmonic+TVN logos

Harmonic said it has completed the acquisition of rival compression vendor Thomson Video Networks (TVN), nearly a month earlier than the April 1, 2016 date predicted in the company’s Q4 and full-year 2015 announcement.

This indicates that conditions of the deal were met ahead of schedule.

In a filing with securities regulators, Harmonic said the completion of the “transaction will be subject to TVN’s reacquisition of its patent portfolio from France Brevets (a third-party patent licensing firm), the receipt of certain historical audited financial statements of TVN prepared in accordance with U.S. generally accepted accounting principles, the receipt of certain regulatory approvals required under French law, and certain other customary closing conditions.”

The Harmonic-TVN deal was structured as a “put option” for TVN’s shareholders.  A put option gives the holder the right but not the obligation to sell shares to the option writer (in this instance Harmonic).  The “put” option is subject to the selling TVN shareholders’ 60-day consultation process with TVN’s employee works council in France.  When/if TVN’s shareholders execute the “put” option subsequent to the consultation process, then the parties would immediately execute a formal purchase and sale agreement.

According to filings with securities regulators, “On February 11, 2016, pursuant to the terms of the Put Option Agreement,” a Harmonic company “entered into a securities purchase agreement (SPA) relating to the purchase of 100% of the share capital and voting rights of Thomson Video Networks.”

The terms of the deal include an initial purchase price of $75,000,000, “subject to customary working capital and other closing adjustments as set forth in the SPA, payable at closing of the transaction. In addition, there may be additional post-closing payments in amounts respectively capped to (i) the difference between €76,000,000 (as converted from euros into U.S. dollars) and $75,000,000, with respect to an adjustment based on TVN’s 2015 revenue, and (ii) $5,000,000, with respect to an adjustment based on TVN’s 2015 backlog that ships during the first half of 2016, all of which at such times and under the circumstances set forth in the SPA.

TVN has changed ownership several times in the past five years.  TVN was divested by Technicolor in 2011 in a management-led buyout sponsored by Fonds de Consolidation & Développement des Entreprises (FDCE) for a reported price of around $8 million.  When Technicolor announced that it had sold TVN to FDCE in 2009, it said that the company had 525 employees and operated in 15 countries, and that its 2009 revenues was €61m.

Institutional investor Edmon de Rothschild Investment Partners then acquired a 49% stake in TVN in December 2014.

“We are pleased to announce the closing of the TVN acquisition,” said Patrick Harshman, President and CEO of Harmonic. “By bringing together two powerhouses in the video industry, we further extend our position as the market leader. With expanded global R&D, sales and support teams, we are accelerating innovation and driving delivery of best-in-class solutions, products, capabilities and support services for our customers.”



Related Content:

Press Release: Harmonic Completes Acquisition of Thomson Video Networks

Harmonic-TVN — Put Option Agreement and Securities Purchase Agreement

Delayed Purchasing Decisions Drive Harmonic Revenue Down 13 Percent in 2015

Harmonic Announces Binding Offer to Acquire Thomson Video Networks for up to $90 Million

Press Release: Harmonic Announces Binding Offer to Acquire Thomson Video Networks

Press Release: Thomson Video Networks Receives Harmonic Group’s Acquisition Offer



© Devoncroft Partners 2009-2016. All Rights Reserved.








Avid Restructures and Refinances as it Enters Final Phase of Corporate Transformation

Analysis, Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Feb 29 2016

Avid_Logo (Black Background)

Avid Technologies said in regulatory filings that it has committed to a restructuring plan, which includes “reductions in workforce, facility consolidation, transferring resources to lower cost regions and reducing other third-party services costs.”

According to the company, these actions will enable Avid to “more efficiently operate in a leaner, and more directed cost structure.”

Avid says these actions represent “the final phase of talent alignment and facilities rationalization program – Avid is putting the right people in the right roles in the right locations with the right cost structure which will position Avid for the end of its transformation in 2017. In connection with this effort, redundant offices will also be closed or downsized.”

“Since we began Avid’s transformation, the Avid Everywhere vision – to build our portfolio of products as applications on a single platform, the Avid Media Central platform – has been central to our strategy to solve the industry’s most important issues with greater innovation, flexibility and efficiency. Avid is in the final stretches of its dramatic transformation and we’re pleased that the growing adoption, stability and maturation of the Media Central Platform will now allow us to fully realize its potential to drive a more efficient operating model by eliminating components and processes that are no longer required with a single global platform.” said Louis Hernandez, Jr, Chairman, President, and CEO of Avid.

Scheduled to be completed by the end of the second quarter of 2017, the restructuring plan is expected to deliver appropriately $68m of annualized costs savings.

Avid quantified these expectations, saying  “personnel related savings account for two-thirds of overall efficiency gains. Many of the personnel related actions have already been completed with savings expected to be realized on an accelerated basis with each successive quarter. The remainder of the efficiencies will be achieved through consolidating and darkening underutilized facilities and further rationalizing spend on external vendors.”

The company “expects to incur incremental cash expenditures of approximately $25 million relating to termination benefits, facility costs, employee overlap expenses and related actions.” Approximately $14 million of the expenditures will be recorded as restructuring expenses in the quarters ending December 31, 2015 through June 30, 2017.

In connection with the announced cost efficiency program, Avid entered into a new five-year, $105 million senior secured credit facility, which consists of a $100 million term loan and an undrawn $5 million revolver. The company borrowed the full amount of the Term Loan, or $100,000,000, as of the Closing Date (February 26, 2016), but did not borrow any amount under the Credit Facility as of the Closing Date.

Avid said the company “granted a security interest on substantially all of their assets to secure the obligations of all obligors under the Credit Facility and the Term Loan. Avid Worldwide provided a guarantee of all the Company’s obligations under the Financing Agreement. Future subsidiaries of the Company (other than certain foreign and immaterial subsidiaries) are also required to become a party to the applicable security agreements and guarantee the obligations under the Financing Agreement. The Financing Agreement includes 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.”

Proceeds from the term loan will be used to replace the company’s existing $35 million revolving credit facility, finance the company’s efficiency program and other transformation initiatives, and provide operating flexibility throughout the remainder of the transformation in this period of heightened market volatility.

The company estimates 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.

“The new debt facility further strengthens our liquidity position and supports the execution of the last leg of our transformation, including the efficiency program,” said John Frederick, Chief Financial and Administrative Office of Avid. “We continue to expect positive adjusted free cash flow generation in 2016, although we do anticipate using cash in the first half of the year as we execute on the cost initiatives. We look forward to updating the investor community on our 2015 results and 2016 guidance, as well as sharing more details behind the 2016 growth and efficiency initiatives, in our fourth quarter and full-year 2015 earnings and business update call. We now have a capital structure that we believe allows us to make the investments necessary and finish executing on our plan.”

“Our clients and community are fully supportive of our vision, said Hernandez.  “Hundreds of large and sophisticated global media companies who have purchased over 32,000 Media Central licenses, punctuated by the record contract with Sinclair Broadcast Group signed in December 2015. Clients everywhere are enjoying the benefits of the platform as they look to capitalize on major industry shifts in the media landscape. For Avid, 2016 will be marked by a focus on additional platform-enabled growth and efficiency initiatives, which will demonstrate our ability to generate a meaningful financial return for our shareholders.”



Related Content:

Press Release: Avid Technology Announces Next Milestone in Company Transformation

Avid SEC Filing: February 26, 2016



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



Broadcast Vendor M&A: ARRIS Buys Pace for $2.1 Billion

Analysis, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Apr 22 2015

In the latest round of media technology consolidation ARRIS announced  it will acquire Pace for $2.1 billion in stock and cash.

ARRIS is financing the deal with just $55 million in cash.  The remaining $2.05 billion comes from a new incremental $800m credit facility underwritten by Bank of America Merrill Lynch, and $1.455 billion worth of newly issued ARRIS shares.

The transaction will result in the formation of “New ARRIS,” which is expected to be listed on the NASDAQ stock exchange under the ticker ARRIS.

Full details of the transaction are available in the Agreement and Plan of Merger file with the SEC.

In a presentation to investors, ARRIS provided the following graphical description of the post-closing structure of New ARRIS:

ARRIS Acquires Pace -- New Arris Post-Closing Structure


The deal comes just over two years since ARRIS paid $2.2 billion to acquire the Motorola Home business from Google and catapulted itself to global leader status in the process.

According to the company, the deal “significantly enhances ARRIS international presence, provides large scale entry into satellite segment, [and a] broader product portfolio in equipment, software and services.”

In a letter to employees, ARRIS chairman & CEO said the acquisition of Pace “opens the door for ARRIS’s next phase of growth – through a broader geographic and customer footprint, newly combined complementary product offerings, and enhanced scale. It will provide us with a large-scale entry into the satellite segment. By adding Pace’s innovation and talent, we can further broaden our product portfolio in equipment, software, and services. We will also benefit from Pace’s strong presence in Latin America – one of our industry’s highest growth regions – opening up new global opportunities.”

ARRIS described the Pace product portfolio in the chart below:

ARRIS Acquires Pace -- Pace Product Portfolio


The acquisition of Pace gives ARRIS a stronger position in the set-top box business, at the same time as Cisco is being urged by investors to exit from its set-top box unit.  For the first six months if its 2015 fiscal year, revenue in Cisco’s “Service Provider Video” business, which includes STBs decreased by more than 15% versus the same period last year.

“This transaction is another example of ARRIS’s ongoing strategy of investing in the right opportunities to position our company for growth. Adding Pace’s talent, products and diverse customer base will provide ARRIS with a large scale entry into the satellite segment, broaden our portfolio and expand our global presence. We expect this merger will enable ARRIS to increase its speed of innovation. We believe this is a tremendous opportunity for ARRIS and our customers, employees, shareholders and partners around the world as we collaborate to invent the future,” said  Stanzione.

“Pace plc is a great company with a strong track record of pioneering innovation and excellent customer service. Through a combination of organic development and acquisitions, Pace has grown to be a leading technology solutions provider to the PayTV and Broadband industries serving cable, satellite and telco customers across the globe. Over the last three years, Mike Pulli and the wider Pace team have successfully executed against our strategic plan to develop Pace into a more distinctive, profitable and cash generative company, creating significant value for shareholders.

“The Pace Directors believe that ARRIS’s offer recognises this value and also gives our shareholders the opportunity to share in the future success of the combined group. While we believe that Pace is strongly positioned to continue to execute its strategy in the medium and long term, we believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential. We believe this is a great fit for both companies, our employees, customers and trading partners,” said Allan Leighton, Chairman of Pace.



Related Content:

Press Release: ARRIS to Acquire Pace plc for $2.1 Billion in Stock and Cash


Investor Presentation — ARRIS TO ACQUIRE PACE PLC

ARRIS Employee Letter

Arris-Pace Merger Credit Agreement

Reuters: Arris to buy British set-top box maker Pace in $2.1 billion deal

Reuters — Analysis: Some Cisco investors urge an exit from set-top box unit

Press Release: ARRIS Acquires Motorola Home: Creates Premier Video Delivery and Broadband Technology Company



© Devoncroft Partners 2009 – 2015. All Rights Reserved.




ChyronHego Taken Private by PE Firm, Delisted from NASDAQ

Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Mar 09 2015

ChyronHego LogoVector Capital has completed the previously announced $120m deal to acquire ChyronHego and take it private.

Under the terms of the deal, ChyronHego stockholders will receive $2.82 per share in cash, and ChyronHego common stock has ceased trading on the NASDAQ Stock Exchange.

According the definitive proxy statement, the purchase of ChyronHego will be funded by a combination of equity and debt financing.

Equity financing will be provided by Vector Capital and its affiliates, who have committed to pay approximately $49.3m towards the acquisition, and related expenses.

Debt financing is being provided by Silicon Valley Bank (SVB) and Apollo Investment Corporation (Apollo) in the form of a $50m senior secured five-year term loan, which is expected have interest of “either (i) the Eurodollar Base Rate plus 5.625% (subject to a 1.0% floor with respect to the Eurodollar Base Rate), or (ii) at the Adjusted Base Rate (defined as the highest of (w) 2.75% of (x) the Wall Street Journal Prime Rate and (y) the Federal Funds Rate plus 0.50%) plus 3.875%.”

Separately, SVB and Apollo have also providing a $7m senior secured revolving credit facility that has the same terms as the senior five-year term loan. ChyronHego will use the revolving credit facility for working capital and capital expenditures and other general corporate purposes.

In its last quarter as a public company (Q3 2014), ChyronHego posted a net loss of $2.6m on revenue of $14m.

During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.

For the trailing twelve months (TTM) ended September 30, 2014, ChyronHego had revenue of $58m, comprised of $27.2m of product revenue and $30.8m of service revenue.

In a securities filing, ChyronHego said it ended 2014 with approximately $5.4m in cash and equivalents; and projected that its revenue for the full year 2014 would be $59m.

“We are delighted to be working with Vector Capital,” said Johan Apel, President and Chief Executive at ChyronHego. “As a private company, ChyronHego will be ideally positioned to reinforce the company’s leadership in news, sports and live production solutions. The Vector team has a strong track record of success in acquiring and operating innovative technology companies, and our partnership with them will enable us to reach new levels of scale, technological capabilities and customer service.”

David Fishman, Managing Director at Vector Capital, who will join ChyronHego’s Board of Directors, said: “We believe that as a private company with Vector’s financial support ChyronHego will be well positioned to capitalize on the significant opportunities in broadcast graphics creation, play-out and real time data visualization. Over time, we are confident the company will be well positioned to capitalize on the exciting trends in the sports, news and live television markets.”

“We welcome ChyronHego to the Vector family,” said Nick Lukens, Vice President at Vector. “We are very excited to roll up our sleeves and get to work with the talented team at ChyronHego. Through our partnership with management, we are committed to strengthening and expanding ChyronHego’s market leading product and service capabilities.”



Related Content:

Press Release: Vector Capital Completes Acquisition of ChyronHego

Certificate of Merger

ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



Autodesk FY 2015 Media & Entertainment Revenue Declines 13.9 Percent

Analysis, Annual Results, Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Feb 27 2015


Autodesk reported that its Q4 FY 2015 revenue from its Media and Entertainment (M&E) business segment was $43m, an increase of 5% compared to the same period last year, and flat with the previous quarter.

M&E gross margins for the fourth quarter were 79.1% ($34m), down from 81% during the same period a year ago, and up from 74.4% last quarter


Full Year M&E Revenue Declines 13.9 Percent

Media & Entertainment revenue for the full FY 2015 was $167m, down 13.9% versus the full FY 2013.

M&E gross margins for the full year 2015 were 76%, down from 81% in both 2013 and 2012.


Decline in M&E Revenue Continues

As shown below, the latest year-on-year decline in M&E revenue continues the trend that began more than five years ago.

Autodesk M&E Revenue 2008-15


Between fiscal 2008 and fiscal 2015, the company’s M&E business has a CAGR of -6%.  During this same time, M&E sales as a percentage of total Autodesk revenue has declined from 12% to 6%.

This is perhaps not surprising, given that company has been talking for some time about the anticipated decline in M&E revenue.  Last year, Autodesk CEO Carl Bass said the company expects its M&E revenue to decline over time as Autodesk incorporates greater functionality into its design suites.


Autodesk M&E: A Tale of Two Product Lines

Another reason for the ongoing decline is likely the changing mix of products sold by Autodesk into the M&E sector, including the sale of hardware versus software.

Autodesk breaks out products sold media and entertainment customers into two separate categories:

  • Animation (including design visualization): includes products, such as Autodesk Maya, Autodesk 3ds Max, and the Autodesk Entertainment Creation Suites. These products provide tools for digital sculpting, modeling, animation, effects, rendering and compositing, for design visualization, visual effects and games production.


  • Creative Finishing: include Autodesk Flame, Autodesk Smoke, Autodesk Lustre, and Autodesk Flare. These products provide editing, finishing and visual effects design and color grading.


In a filing with securities regulators last year, the company said that for the year ended January 31, 2014, revenue from Creative Finishing products declined by 17% due to “a general decrease in M&E industry end-market demand.”  In the same filing, the company said that Animation products had declined 7% during the fiscal year ended January 31, 2014.

On last night’s Q4 and full year fiscal 2015 earnings call, the company did not discuss its M&E product in either the prepared remarks or the Q&A session with equity analysts.

Indeed, the company has not discussed M&E on an earnings call since August 2014, when an analyst from JP Morgan asked Autodesk CEO Carl Bass: “How should we think about where the media and entertainment revenue line goes from here, is it something that actually could start to fade away?”

Bass replied: “No. I think, as we always try to distinguish, media and entertainment they are two different parts of the business. There is the creative finishing. Creative finishing has been diminishing, some of it is just nature of the market and some of it has to do with the hardware component in there which we no longer sell. And then there’s the other part which is the software part of the business. The software part of the business is good and healthy and we like all the dynamics in that part of the business. What we see in the other part less happy with it. That’s been going on for the last half dozen years in the creative finishing part.”



Related Content:

Press Release: Autodesk Reports Strong Fourth Quarter Results

Previous Year: Autodesk Media & Entertainment Revenue Down 16% in Q4 FY 2013, Down 10% for Full Fiscal Year

2012: Autodesk Media & Entertainment Revenue Rises Nine Percent in Fiscal 2012



© Devoncroft Partners 2009 – 2015. All Rights Reserved.




Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

Analysis, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Nov 17 2014

Broadcast graphics specialist ChyronHego announced that it has entered into a definitive agreement with Vector Capital, under which an affiliate of Vector will acquire all of the outstanding shares of ChyronHego common stock for $2.82 per share in cash.

San Francisco-based Vector Capital is a private equity firm with experience in the digital media sector. Recent portfolio investments include Corel and Technicolor. To fund the ChyronHego deal, Vector has secured committed financing consisting of a combination of equity and debt.

This is the second recent take-private transaction of a broadcast graphics provider. Earlier this month. Vizrt announced that it will be taken private by Nordic Capital in a $374m all-cash deal.

The $2.82 per share purchase price represents a premium of approximately 18% over the company’s average closing share price for the six months ending on November 14, 2014, and a 4% premium over the company’s closing share price on November 14, 2014, the last day of trading before the announcement.

Based on the total number of shares outstanding in ChyronHego, the deal equates to an equity value of approximately $114m. After backing out the cash on the company’s most recently published financial statements, this represents an enterprise value of approximately $108m.  On a valuation multiple basis, this is approximately 1.8x trailing 12 month’s revenue.

According to a shareholder FAQ, ChyronHego’s management team will stay the same after the transaction closes. Johan Apel will continue as CEO, and Soren Kjellin will continue as CTO.

The contractual details of the ChyronHego – Vector Capital agreement are complex and worth a longer discussion. We are preparing an analysis of the deal, and we will post this later this week.

A very brief synopsis of certain deal points follow:

  • Technically, the deal is a merger rather than an acquisition. ChyronHego is being merged into an entity controlled by Vector Capital, in order to create a new corporate entity, which will also be owned and controlled by Vector Capital.


  • All major shareholders on the ChyronHego management team have agreed to re-invest approximately 50% of their holdings in ChyronHego into the new corporate entity, for which they will receive approximately 31% of the equity in the new entity


  • Interestingly the merger agreement includes a “go shop” provision whereby ChyronHego has seven weeks to find a buyer who will offer a higher price than Vector Capital’s offer of $2.82 per share. Given Vizrt’s valuation in the Nordic Capital deal, and the fact that shares of ChyronHego have traded above $3.00 several times during the past year, it is possible that ChyronHego will be able to find a better offer. However, the “go shop” provision includes termination fees that will triggered under specified circumstances such as the acceptance of a superior offer. The company says it does not intend to disclose developments with respect to the solicitation process unless and until a decision has been made in respect to any potential superior proposal. 


The transaction is subject to customary closing conditions and most notably the approval by holders of two-thirds of ChyronHego’s outstanding shares and the approval by holders of a majority of shares held by current ChyronHego’s stockholders who will not become stockholders in the going-forward entity.  The Company expects the transaction to close in the first quarter of fiscal 2015.

The company said that its  board of directors and a special committee of the board composed entirely of independent directors have unanimously approved the deal, and have recommend that ChyronHego’s stockholders approve the transaction

“We are very happy to announce this partnership with Vector Capital, an established global technology oriented private equity firm that is focused on building long-term value. Our management is convinced that this is the right opportunity at the right time for ChyronHego’s customers, employees and stockholders,” said Apel.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14m. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.



Related Content:

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal



© Devoncroft Partners 2009 – 2014. All Rights Reserved.



Avid Releases First Financial Results in Nearly Two Years, Revenue Down 11.4 Percent in 2013

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Sep 12 2014

Avid released financial results for the first time in nearly two years, following a protracted audit of it historic accounting treatment of software upgrades, dating back to 2009, which were made available to certain of its customers at no-charge.

The company has now completed the audit, and released financial results for both 2012 and 2013.  Avid has also released re-stated results for 2009-2011, which reflect the results of the audit.

For the full year 2013, Avid’s revenue was $563.4m, down 11.4% versus the previous year.

GAAP net income for the full year 2013 was $21.2m, down sharply from $92.9m in 2012. Non-GAAP income from continuing operations was $57.2 million or $1.46 per share. The company attributed the decline in revenue and net income to the larger portion of revenue from periods prior to 2011 being amortized in 2012 as compared to 2013 due changes in accounting rules.

The results for 2012 and 2013 are shown below, along with re-stated results from 2009-2011.


Avid restated earnings


“As a result of our restatement and in accordance with GAAP, revenue that had originally been recognized in earlier periods is now being recognized ratably over an extended timeframe,” said Avid EVP and CFO John Frederick. “The amount of revenue earned or to be earned over the entire period of recognition essentially remains unchanged from the amount we historically recognized. There was no change to the cash characteristics of the transactions being restated nor to the Company’s liquidity directly relating to these transactions. As a result of the restatement, the balance sheet reflects a significant increase in deferred revenue, which will be recognized in revenue over a number of years and will provide significant visibility into our future revenues. The revenue recognized from deferred revenue originating in periods prior to 2011 will continue in declining amounts through 2016, creating downward pressure on revenue growth until 2017.”

“We have worked diligently for well over a year on the restatement and are delighted to have completed the process,” said Louis Hernandez, Jr., president and CEO of Avid. “Throughout this period, we have put a premium on maintaining our focus on continued innovation for our customers and reasserting our commitment to being a strategic leader for the media industry with our Avid Everywhere vision. I’m encouraged by the progress we’ve made in executing against our three phase transformational strategy, and specifically with the growth in bookings over the past few quarters. Now that we have completed the restatement process, we are excited to continue our work on the transformation and feel the momentum building.”

Following the filing of Avid’s first quarter 2014 financial report, Avid plans to apply for relisting on the NASDAQ stock exchange, and hopes to be relisted on the NASDAQ stock exchange sometime after becoming current with its SEC reporting obligations. In the interim, Avid stock will continue to trade on OTC Markets — OTC Pink Tier under the trading symbol AVID.



Related Content:

Avid 2013 10-K Filing

Avid Nears Completion of Accounting Audit, Says Normal Financial Reporting Cycle to Resume in Q3 2014

Avid to be Delisted from NASDAQ on February 25, 2014

Avid Receives Anticipated NASDAQ Delist Letter

New Avid Rights Agreement Will Cause “Substantial Dilution” to Potential Acquirers

Avid Unlikely to Regain Compliance with NASDAQ Listing Requirements by March 2014 Deadline

Avid Technology and Computershare Trust Company as Rights Agent, Rights Agreement Dated as of January 6, 2014

Avid Receives Additional Notice of Potential NASDAQ Delisting

Avid Delays Filing of Q2 2013 Financial Results and Form 10-Q

New Avid Bonus Plan Contemplates “Reorganization Event”

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

Avid Delays Release of Q4 and Full Year 2012 Results, Shares Fall



© Devoncroft Partners 2009 – 2014. All Rights Reserved.





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