Posts Tagged ‘SEC Filings’

Avid Receives Additional Notice of Potential NASDAQ Delisting

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 19 2013

Avid announced that it has received an additional notification from the NASDAQ Listing Qualifications Department that the company remains non-compliant with NASDAQ Listing Rule 5250(c)(1) due to the delay in filing its Form 10-Q for the quarter ended June 30, 2013.

Failure to regain compliance with Listing Rule 5250(c)(1) could serve as a basis for the delisting of the Avid’s stock from the NASDAQ Global Select Market.

Avid said it anticipated the receipt of the letter, and that the notification has no immediate effect on the listing of Avid’s common stock on the NASDAQ Global Select Market.

The NASDAQ notification requires Avid to submit an update to its original plan to regain compliance with NASDAQ’s filing requirements for continued listing by August 21, 2013.

Avid says it intends to submit such an update to its original plan by the required date.

If NASDAQ accepts Avid’s plan, the company could be given until September 16, 2013, to regain compliance.

If NASDAQ does not accept Avid’s plan, Avid will have the opportunity to appeal that decision to a NASDAQ Hearings Panel.

The latest notification stems from Avid’s previously announced internal audit of the way it historically accounted for certain software upgrades delivered to certain customers.  When this process has been completed, Avid will restate its financial results the fiscal years ended December 31, 2011, 2010 and 2009 and for the quarterly periods ended March 31, 2012 and 2011, June 30, 2012 and 2011, and September 30, 2012 and 2011

As a result of the ongoing audit, Avid is currently unable to file its annual report on Form 10-K for the year ended December 31, 2012 and quarterly reports on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013.

Avid says it is working diligently to complete the accounting evaluation, the restatements and the filings as soon as possible.

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Related Content:

Avid 8-K Filing: Receipt of Anticipated NASDAQ Letter

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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ChyronHego Avoids NASDAQ Delisting as Shareholder Equity Rises After Merger

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 13 2013

ChyronHego, said in a regulatory filing that the company believes that it has regained compliance with NASDAQ Listing Rule 5450(b)(1)(A), which requires companies listed on the NASDAQ Global Market to maintain a minimum of $10,000,000 in stockholders’ equity.

On August 9, 2013, Chyron received a letter from NASDAQ stating that the Exchange has determined Chyron now complies with the continued listing requirement for shareholders’ equity, subject to the Chyron providing evidence of its compliance upon filing its quarterly report on Form 10-Q for the quarter ended June 30, 2013.

This notification formally puts to rest an issue that Chyron has been dealing with for the past six months.

In March 2013, Chyron received notice of potential delisting from NASDAQ because its stockholder’s equity has fallen below the minimum $10m threshold set by rules of the Exchange.

At that time, Chyron explained that its stockholder’s equity fell below the $10m threshold at the end of 2012 because it took a $19.5m accounting charge against deferred tax assets. Because this allowance reduced the company’s shareholders’ equity by $19.5m, Chyron company ended the year 2012 with shareholders’ equity of about $1.9m, which put it in violation of NASDAQ’s listing requirement.

In accordance with NASDAQ Listing Rules, Chyron had 45 calendar days from the date of the notice to submit to NASDAQ a plan to regain compliance with its listing requirement.

In April 2013 Chyron submitted to NASDAQ its plan to regain compliance with the minimum stockholders’ equity requirement. NASDAQ granted Chyron an extension to regain compliance with the stockholders’ equity requirement until August 15, 2013, by which date the company will be required to file its quarterly report on Form 10-Q for the quarter ended June 30, 2013.

A key factor in Chyron’s plan to regain compliance was the company’s then-proposed merger with Hego, which has now been successfully completed.

Under the terms of the Chyron – Hego Stock Purchase Agreement Chyron paid $1,000 in cash and issued 12,199,431 shares of its common stock to the former Hego stockholders in exchange for all of the issued and outstanding shares of Hego. The issuance of the 12,199,431 shares, at a value of $1.36 per share at the closing of the transaction, resulted in an increase in the Company’s shareholders’ equity of approximately $16.6m.

The company says that as a result of the Hego merger, and following the release of Chyron’s Q2 2013 results, its shareholders’ equity was approximately $17.9m June 30, 2013, comfortable above the minimum threshold set by NASDAQ.

Following the announcement of its Q2 2013 earnings, Chyron filed an 8-K with regulators that disclosing that it has received a letter NASDAQ  stating that once the company files its Form 10-Q for the period ended June 30, 2013, it will officially be compliant with all NASDAQ listing requirements.

In the same filing, Chyron published its management incentive compensation plan for the second half of 2013.  The company says that it terminated its previous 2013 incentive plan and adopted a new plan that include new executive officers and management and aligns the interests of all members of management, including certain members of management that became executive officers of the Company upon the consummation of the business combination with Hego during the second quarter of 2013.

On Chyron’s Q2 2013 earnings call, company CEO Michael Wellesley-Wesley briefly discussed the delisting, saying “As instructed by NASDAQ, we notified the SEC directly and, thus, the NASDAQ indirectly this morning via a current report on Form 8-K that was filed at the SEC before market opened of our compliance with NASDAQ’s minimum shareholders equity requirement and we now consider the matter closed.”

Wellesley-Wesley has long assured shareholders that the company would do whatever it takes to avoid delisting.

On the company’s Q1 2013 earnings call in May 2013 he said: “The bottom line is this – these shares are not going to be delisted. There are all kinds of ways that we can get back in compliance. We’ll make sure that we don’t get delisted.”

With this latest filing, it looks as though Wellesley-Wesley has made good on his promise to ChyronHego shareholders.

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Related Content:

Chyron 8-K Filing: Notice of Renewed Compliance with NASDAQ Listing Rule 5450(b)(1)(A)

Chyron 8-K Filing: Company believes it has regained compliance with NASDAQ’s shareholders’ equity requirement

ChyronHego Corporation: Second Half of 2013 Management Incentive Compensation Plan

Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Chyron Q2 2013 Earnings Call Transcript

Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 13 2013

Avid said that due to an ongoing internal audit of past treatment of software upgrades, it “is not able to complete and cannot file its quarterly report on Form 10-Q for the quarter ended June 30, 2013 by the prescribed due date or by August 14, 2013.” The disclosure was made in a regulatory filing with the SEC. The company has also delayed the filing of its Q2 2013 earnings.

The focus of Avid’s internal audit is the past accounting treatment of certain software upgrades that the company previously made available to certain of its customers at no-charge. Avid management has now determined that these upgrades should have been accounted for as “implied post-contract customer support” under US GAAP accounting rules.

As a result, Avid is currently in the process of restating its financial statements for the fiscal years ended December 31, 2011, 2010 and 2009 and for its quarterly periods ended September 30, 2012 and 2011, June 30, 2012 and 2011, and March 31, 2012 and 2011.

Because the work required to review and restate historical transactions has not yet been completed, the company says it is not in a position at this time to compare results of operations for the quarters ended June 30, 2012 and 2013 respectively, resulting in the delayed filing of its 10-Q for the second quarter of 2013.

It’s worth noting that the work being done by the company is an internal accounting review that focuses on the timing of revenue recognition, not the validity or overall amount of revenue received.

Avid says that although the restatement adjustments will impact previously reported revenue and operating results for prior periods, they are “not expected to affect the amount of total revenue ultimately to be earned, or the amount or timing of cash received or to be received, from the sales transactions or the company’s liquidity or cash flow for any prior period.”

After reviewing current and previous regulatory filings, it appears that the crux of the matter is that in past periods Avid recognized the revenue received for the software upgrades in question at the time the upgrade was performed, rather than over the “implied post-contract customer support period” specified in GAAP accounting rules.

Given the fact that Avid is presumably be going back over every single transaction for the three-year period from 2009 to 2011, this process is going to take some time.

Indeed, the audit has been ongoing for many months and has already resulted in the delayed filing of Avid’s Q4 2012 results, 2012 10-K filing, and Q1 2013 results.  In May 2013, the company received notice of potential delisting from the NASDAQ stock market for failure to submit its 10-K filing for 2012.

Avid has not disclosed the value of the software upgrades in question. It also says that at this time it “cannot estimate the full impact of the adjustments of revenue and costs, and the related impact on income taxes, on any previously issued financial statements for any individual reporting period, although it may be significant.”  Avid also said that “the timing of recognition of certain costs related to these customer arrangements may also be impacted, along with the timing of related income taxes.”

Avid has not disclosed how much it has spent on the ongoing audit. However, in July 2013, the company said in a filing that “expects that additional cash expenditures related to the ongoing accounting evaluation through the fiscal year ending December 31, 2013 will amount to approximately $11 million to $14 million.”  This includes up to $1.7 million for a potential Remediation Bonus that will be paid once the company has filed its 2012 Form 10-K with securities regulators.

During this process, Avid has made significant changes to its finance team during the past six months.  In July 2012 the company said that Karl Johnsen, the company’s chief accounting officer & controller has left the company. In April 2013 Avid announced that John Frederick, who joined the company in February 2013 as Chief of Staff became CFO, replacing Ken Sexton, who has been Avid’s CFO since 2008 under previous CEO Gary Greenfield. Prior to joining Avid, Frederick was the Corporate EVP and CFO at Open Solutions, where he served under current Avid CEO Louis Hernandez.

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Related Content:

Avid for NT 10-Q: Notice of Delayed Filing of Form 10-Q for the Period Ended June 30, 2013

New Avid Bonus Plan Contemplates “Reorganization Event”

Avid 8-K July 25 2013 — VP Finance Transition and Remediation Bonus

Avid 2013 Remediation Bonus Plan

Amended and Restated 2005 Stock Incentive Plan

Avid Replaces Chief Accounting Officer

Avid Replaces Chief Financial Officer

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

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

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

Greenfield Resigns from Avid Board of Directors

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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Bankruptcy Court Approves Kit Digital Restructuring, Company to Rebrand as “Piksel” Before IBC 2013

broadcast industry technology trends, Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Aug 06 2013

After more than a year of rumor, speculation, management changes, and shareholder lawsuits, it appears that the Kit Digital roller coaster ride is finally coming to an end – with a successful outcome for company management.

The one-time high-flying online video delivery provider announced that its Plan of Reorganization under Chapter 11 will be confirmed by the U.S. Bankruptcy Court for the Southern District of New York.

KIT digital filed for voluntary bankruptcy protection in April 2013 “to cleanse itself of legacy issues, including financial, legal and regulatory matters.”

At that time, the company filed a Reorganization Plan with the Court under which it would go into bankruptcy, be recapitalized by a “plan sponsor group” of investors, and emerge as profitable, debt-free business.

According to the Reorganization Plan, the company entered Chapter 11 with the intention of closing at least eight loss-making subsidiaries, while retaining four of its profitable subsidiaries: Ioko 365, Polymedia, KIT digital France and KIT digital Americas.  In its filings with the Court, Kit disclosed that the aggregate revenue generated in 2012 by these four remaining business was approximately $134.5 million.

With the new announcement, it appears the company’s Reorganization Plan has now been approved by the Bankruptcy Court.

Kit says that once it emerges from Chapter 11, it will change its name to “Piksel,” and re-brand in time for the IBC trade show in September 2013.

If the company can overcome the “legacy baggage” of Kit Digital, Piksel may turn out to be a formidable player in the broadcast industry once it is fully up and running later this year.

According to Court documents, Piksel will have more 800 employees and revenues in excess of $100m, making it one of the largest players in the industry broadcast industry, where the majority of its business comes from.  After emerging from Chapter 11, it’s also likely that the company will have little debt.

More importantly, Piksel will operate in an area where broadcasters and media companies are increasingly focusing their attention, the management and delivery of multi-screen video services.  Not only does the new company have core technical expertise in this area, it also boasts a large professional services organization capable of specifying and implementing complex multi-screen deployments, and a 24×7 network monitoring operation, which is offered as a service to clients who do not want to build their own multi-platform NOC.

It remains to be seen how well the company will fare once it comes out of Chapter 11, but Peter Heiland, who became interim CEO of Kit Digital in August 2012, provide a few clues in his upbeat statement about the company’s future. “Piksel is set to emerge as a healthy, dynamic company with a great mix of talented employees, market-leading customers, profitable assets, and sufficient liquidity for operations and investments,” he said.

Heiland went on to say that the new company will “leverage its solutions expertise; the flexibility of which will be driven by a suite of software applications, industry partnerships, and world-class professional and managed services.”  He also acknowledged the people who helped the company through what was presumably a traumatic period, saying “I would like to thank all of those who dedicated so much time and effort, including our employees and advisors, to helping us complete our restructuring.”

KIT digital will officially rebrand as Piksel on August 29, 2013.

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Related Content:

Press Release: KIT digital Restructuring Approved; Prepares to Exit Bankruptcy and Change Name to Piksel

Kit Digital Announces $6 Million Settlement of Securities Lawsuits

KIT Digital Files For Chapter 11 Bankruptcy, Plans to Re-Emerge as “Healthier, Focused Company” by IBC 2013

KIT Digital: Chapter 11 Plan of Reorganization

KIT Digital: Voluntary Petition for Chapter 11 & List of 30 Largest Unsecured Creditors

KIT Digital: Declaration of Fabrice Hamaide in Support of Debtor’s Chapter 11 Petition

KIT Digital Delisted by NASDAQ, Will Not Appeal

Activist Investor Heiland Becomes CEO at KIT Digital

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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New Avid Bonus Plan Contemplates “Reorganization Event”

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 01 2013

Avid recently established a new employee bonus plan, whereby payments will be triggered upon the earlier of:

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(i)            filing by the Company of its Annual Report on Form 10-K with respect to the year ended December 31, 2012 (the “10-K Filing Date”);

 

(ii)           immediately prior to consummation of a Reorganization Event (as defined in the Company’s Amended and Restated 2005 Stock Incentive Plan);

              

(iii)          with respect to Participants who are not officers of the Company (as defined in Rule 16a-1 promulgated pursuant to the Securities Exchange Act of 1934, as amended) as of such date, March 31, 2014; and

              

(iv)          with respect to Participants who are officers of the Company (as defined in Rule 16a-1 promulgated pursuant to the Securities Exchange Act of 1934, as amended) as of March 31, 2014, such date on or subsequent to March 31, 2014 as may be determined in the sole discretion of the Committee.

 

According to the terms of the program,  ”In no event shall a Bonus Payment Date be subsequent to December 31, 2014, and the Plan shall terminate upon the earlier of (x) all Bonus Payments being made pursuant to the Plan and (y) December 31, 2014.”

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Companies establish bonus schemes all the time, and at a total of $1.7m, this one is nothing unusual for a company of Avid’s size and available cash ($56.1m as of June 30, 2013).

So what’s the big deal?

It’s entirely possible that there is no big deal here.  The company will file its delayed Form 10-K with the SEC and carry on as usual.

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However, it is interesting to note that Avid has specifically said a potential time for bonus payments is:

 “immediately prior to consummation of a Reorganization Event (as defined in the Company’s Amended and Restated 2005 Stock Incentive Plan)”

 

According to Avid’s Amended and Restated 2005 Stock Incentive Plan (found in Appendix C of this document):

“(1)    Definition.    A “Reorganization Event” shall mean:

(i) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled,

(ii) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction or

(iii) any liquidation or dissolution of the Company.”

 

It’s widely known that Avid is in the middle of a major accounting review.

Avid replaced its CFO in April 2013, and announced in July 2013 that it has also replaced its  Chief Accounting Officer.

 

In February 2013, Avid delayed the release of its Q4 and full year 2012 results, saying it needed “additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

 

In March 2013 the company received notice of potential delisting from NASDAQ for failure to submit its 2012 10-K filing to the SEC.

 

In May 2013, Avid said that following an internal investigation into its current and historical accounting treatment related to software updates, the company concluded that its “unaudited interim consolidated financial statements for the quarterly periods ended (i) September 30, 2012 and 2011, (ii) June 30, 2012 and 2011, and (iii) March 31, 2012 and 2011, as well as its audited consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 should no longer be relied upon because of errors in the application of US GAAP.”

At that time Avid said it is “working diligently to complete the review and continues to focus its efforts on completing the Form 10-K filing as soon as possible,” and that it intends to submit a plan to NASDAQ staff as to how it intends to regain compliance with continued listing requirements.

 

There’s no doubt that these public disclosures, along with a raft of shareholder lawsuits related to the company’s accounting review are probably making it a bit stressful at Avid these days.

But as they say: “the show must go on,” and Avid’s employees must continue to serve the needs of their customers with a “business as usual” mentality, despite what must be a very distracting time for the company.  Thus it’s only logical that the Avid would seek to reward and retain its key employees through the new bonus pool.

It also seems logical that Avid would be considering all its options during a time like this, and judging by the language of the bonus agreement the company is planning for a variety of outcomes – three of which include business as usual and no change in corporate structure or company ownership.

In the event that something does happen to trigger a “Reorganization Event,” as defined by the company’s Amended and Restated 2005 Stock Incentive Plan, it’s probably safe to assume this is far more likely to be a merger or sale than  a liquidation of the company, which at the end of the day is another “business as usual” outcome.

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Related Content:

Avid 2013 Remediation Bonus Plan

Amended and Restated 2005 Stock Incentive Plan

Avid Replaces Chief Accounting Officer

Avid Replaces Chief Financial Officer

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

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

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

Greenfield Resigns from Avid Board of Directors

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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Avid Replaces Chief Accounting Officer

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Aug 01 2013

Avid said that Karl Johnsen, the company’s chief accounting officer & controller has left the company and has been replaced on an interim basis by John Frederick, Avid’s EVP, CFO & Chief Administrative Officer.

Frederick, who joined Avid in February 2013 as Chief of Staff became CFO in April 2013, replacing Ken Sexton, who has been Avid’s CFO since 2008 under previous CEO Gary Greenfield. Prior to joining Avid, Frederick was the Corporate EVP and CFO at Open Solutions, where he served under current Avid CEO Louis Hernandez.

The company said “no additional arrangement or understanding with Mr. Frederick was entered into in connection with Mr. Frederick becoming the Company’s Principal Accounting Officer.”

This latest change in the company’s high level finance personnel comes during a time where Avid is in the middle of a major review of its previous accounting practices.

In February 2013, Avid announced that it would delay the release of its Q4 and full-year 2012 results in order “to provide additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

Because of this review, Avid also delayed the filing its annual 10-K with securities regulators. As a result, Avid was notified by NASDAQ in March 2013 that the company no longer complies with NASDAQ Marketplace Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.  Failure to comply with this rule could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

At that time, Avid said it was “working diligently to complete the review and continues to focus its efforts on completing the Form 10-K filing as soon as possible,” and that it intends to submit a plan to NASDAQ staff as to how it intends to regain compliance with continued listing requirements.

Under NASDAQ’s rules, the company has until May 20, 2013 to submit this plan.

 

According to the filing, Johnsen will transition to a consulting role for three months and receive six months’ salary continuation, and other customary provisions.

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Related Content:

Avid Replaces Chief Financial Officer

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

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

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

Greenfield Resigns from Avid Board of Directors

Johnsen consulting and severance agreement

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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Kit Digital Announces $6 Million Settlement of Securities Lawsuits

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Jul 02 2013

One-time high flying online video delivery leader Kit Digital has signed a memorandum of understanding to settle a series of federal securities lawsuits filed against the company and some of its KIT’s current and former officers and directors.

KIT, which was delisted from the Nasdaq stock exchange in December 2012, and filed for Chapter 11 bankruptcy protection in April 2013, said the execution of this agreement is “an important milestone as KIT continues to build momentum for a successful future.”

A total of four lawsuits are subject to this agreement.  They were filed separately in the US District Court for the Southern District of New York on behalf of all persons who purchased or otherwise acquired KIT stock during the period between May 19, 2009 and November 21, 2012.

The court combined these separate actions into a single Class Action lawsuit.

At issue was conduct that was alleged to have occurred between 2008 and 2011, and alleged violations of federal securities law arising from, among other things, alleged accounting issues, material weaknesses in the internal controls and financial reporting at KIT, certain acquisition transactions that KIT consummated during 2008-2011, and other events from that time period.

Under the terms of the deal, KIT’s insurers will pay approximately $6m to settle all claims of the Class, and all parties will execute mutual releases. KIT and the other defendants will have no obligation to fund any part of the settlement, and any fee award to plaintiffs’ counsel will be paid from the settlement.

KIT digital Interim CEO, Peter Heiland said: “The federal securities lawsuits, which concerned conduct under KIT’s prior management, have been a significant distraction to the business, hindering its ability to attract capital and grow according to its real capability. Resolving these lawsuits signifies our continued progress towards putting the company back on its feet and freeing the company to focus solely on delivering the best in cutting-edge video software and services.

Along with the chapter 11 Plan of Reorganization that’s progressing in a way that we’re confident will satisfy creditors — as well as shareholders keen to invest in the reorganized KIT business, Piksel — the signing of this MOU is yet a further indication that I think we’re finally seeing blue sky ahead.”

KIT added that its entry into the MOU is not an admission of any fault, wrongdoing, or liability for the claims and damages asserted in the Consolidated Action.

The settlement embodied in the MOU is subject to execution of all necessary documents, including a formal stipulation of settlement, as well as all necessary court approvals.

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Related Content:

Press Release: Kit Digital Announces Settlement of Securities Lawsuits

KIT Digital Files For Chapter 11 Bankruptcy, Plans to Re-Emerge as “Healthier, Focused Company” by IBC 2013

KIT Digital: Chapter 11 Plan of Reorganization

KIT Digital: Voluntary Petition for Chapter 11 & List of 30 Largest Unsecured Creditors

KIT Digital: Declaration of Fabrice Hamaide in Support of Debtor’s Chapter 11 Petition

KIT Digital Delisted by NASDAQ, Will Not Appeal

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© Devoncroft Partners 2009 – 2013. All Rights Reserved.

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Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
May 23 2013

Avid Technology, which has been conducting an internal investigation into its current and historical accounting treatment related to software updates, has concluded that its “unaudited interim consolidated financial statements for the quarterly periods ended (i) September 30, 2012 and 2011, (ii) June 30, 2012 and 2011, and (iii) March 31, 2012 and 2011, as well as its audited consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 should no longer be relied upon because of errors in the application of US GAAP.”

The company had previously disclosed that it has been unable to submit Form 10-K and Form 10-Q filings to the SEC because of its investigation the accounting treatment related to bug fixes, upgrades, enhancements and compatibility extensions.

As a result of these delayed filings with regulators, Avid has been notified by the NASDAQ stock exchange that the company does not comply with NASDAQ Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.

Failure to regain compliance could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

The company said it has undertaken and initial review of “whether software updates previously made available by the company to certain of its customers at no-charge included upgrades, enhancements or compatibility extensions and if so, whether such upgrades, enhancements or compatibility extensions met the definition of post-contract customer support (PCS) under U.S. Generally Accepted Accounting Principles (“GAAP”).”

Avid says that “during the course of this initial review, the company concluded that certain of these no-charge software updates should have been accounted for as implied PCS when recognizing revenue for the original sale of the related product.”

On May 20, 2013, after evaluating management’s initial assessment of the potential magnitude of the incorrect application of GAAP with respect to certain Software Updates, the Audit Committee of the Company’s Board of Directors concluded, after discussions with the Company’s management that the Company’s unaudited interim consolidated financial statements for the quarterly periods ended (i) September 30, 2012 and 2011, (ii) June 30, 2012 and 2011, and (iii) March 31, 2012 and 2011, as well as its audited consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 should no longer be relied upon because of these errors in the application of GAAP. The Company’s Audit Committee discussed this matter with the Company’s independent registered public accounting firm, Ernst & Young LLP. In addition, any previously issued press release or other publicly issued statement by the Company containing financial information for such periods should not be relied upon.

The company said in a regulatory filing that it intends to correct the errors it has discovered through the filing of its Form 10-K for the year ended December 31, 2012. However, it cautioned that the company “is not currently able to predict when it will file its Form 10-K for the year ended December 31, 2012.”

Avid says it expects that the timing of revenue recognition for the impacted customer arrangements will change from the historical presentation in the company’s financial statements pursuant to which revenue was recognized up front, generally to being recognized ratably over the estimated implied PCS service period. In addition, the timing of recognition of certain costs related to these customer arrangements may also be impacted, along with the timing of related income taxes. The company cannot at this time estimate the full impact of the adjustments of revenue and costs, and the related impact on income taxes, on any previously issued financial statements for any individual reporting period, although it may be significant. However, while the restatement adjustments will impact previously reported revenue and operating results for prior periods, the restatement adjustments are not expected to affect the amount of total revenue ultimately to be earned, or the amount or timing of cash received or to be received, from the sales transactions or the company’s liquidity or cash flow for any prior period.

Avid said it is also reassessing its accounting for certain restructuring expenses related to lease obligations and other exit activities in the quarters ended June 30, 2012 and September 30, 2012. While Avid continues to analyze the accounting treatment of these restructuring expenses, it has concluded that it has improperly accounted for such restructuring expenses and currently estimates that the restructuring expenses may have been cumulatively overstated by approximately $3.5 million on a pre-tax basis at September 30, 2012.

Avid’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that the company’s disclosure controls and procedures and internal controls over financial reporting were not effective as of December 31, 2012 or March 31, 2013 because of the material weaknesses in the company’s internal controls over financial reporting relating to the matters disclosed in the Company’s Form 10-Q for the quarterly periods ended September 30, 2012, June 30, 2012 and March 31, 2012, and for the treatment of software updates described previously.

Avid said its evaluation of current and historical accounting treatment related to software updates is ongoing, and that it may identify additional issues that could require further adjustments to the company’s prior financial statements for one or more prior fiscal years or periods.

Avid says it is working diligently to complete the review and continues to focus its efforts on completing and filing the delayed periodic reports, including restatements, as soon as possible. During this evaluation, the company plans to continue to invest in its product innovation and execute on its growth strategy.

 

The company also said it “believes it is well positioned to support its customers’ ongoing success.”

Ordinarily, this kind of statement sounds like typical PR spin, but in the case of Avid, our research shows that this is indeed the case.  Despite its widely-reported problems of late, the company continues to enjoy strong loyalty from its broadcast industry customer base.  However, if the market begins to perceive that there is a cloud of uncertainty over Avid’s future, things could deteriorate in the future. Thus far, Avid has done a good job of communicating with the market during its accounting review process. Now the company must resolve its issues, and get back to focusing 100 percent on meeting the needs of its customer base.

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Related Content:

Avid Receives Another Notice of Potential NASDAQ Delisting, Submits Plan to Regain Compliance

Press Release: Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial Determinations of its Accounting Evaluation

Avid 8-K Filing:

Greenfield Resigns from Avid Board of Directors

Avid Replaces Chief Financial Officer

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

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© Devoncroft Partners. All Rights Reserved.

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Avid Receives Another Notice of Potential NASDAQ Delisting, Submits Plan to Regain Compliance

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
May 22 2013

Avid been notified by NASDAQ that, due to the company’s delay in submitting various regulatory filings, it remains non-compliant with NASDAQ’s Listing Rules.

Failure to regain compliance could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

The company said the latest notification was expected, as it was issued in accordance standard NASDAQ procedures, and that it has no immediate effect on the listing of Avid’s common stock on the NASDAQ Global Market.

Avid’s issues with NASDAQ, which have been going on for several months, stem from an internal investigation into how it historically recognized certain types of service revenues.

In February 2013, Avid announced that it would delay the release of its Q4 and full-year 2012 results in order “to provide additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

In March 2013, Avid delayed the filing of its annual Form 10-K with regulators.  The company also subsequently delayed its annual shareholder meeting.

On May 172013, the company received  notification from NASDAQ that it remains non-compliant with NASDAQ Listing Rule 5250(c)(1) due to Avid’s delay in filing its Form 10-Q for the first quarter ended March 31, 2013.  This requires timely filing of periodic reports with the SEC as a condition of being listed on the NASDAQ Market.

Avid has now submitted to NASDAQ explaining how it expects to regain compliance with NASDAQ’s continued listing requirements.

If the plan is accepted, Avid expects to have up to 180 calendar days from the initial due date for the Form 10-K, or until September 16, 2013, to regain compliance.

If the plan is not accepted, Avid will have the opportunity to appeal that decision to a NASDAQ Hearings Panel.

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Related Content:

Press Release: Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial Determinations of its Accounting Evaluation

Greenfield Resigns from Avid Board of Directors

Avid Replaces Chief Financial Officer

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

.

© Devoncroft Partners. All Rights Reserved.

.

Greenfield Resigns from Avid Board of Directors

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
May 20 2013

Former Avid CEO Gary Greenfield has resigned from the company’s board of directors.

Greenfield, who was replaced as CEO and president of Avid by Louis Hernandez in February 2013 remained a board member of the company after stepping down from his executive role.

According to a regulatory filing, Greenfield’s term as director was scheduled to expire at the company’s 2013 annual meeting of stockholders.

However, in February 2013, Avid announced that it would delay the release of its Q4 and full-year 2012 results in order “to provide additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

Avid subsequently postponed its 2013 annual meeting of shareholders.

Avid said that because its annual meeting has been delayed, Greenfield decided to resign from his position as director of the Company so that he could attend to other commitments.  Greenfield submitted his resignation as a director on May 15, 2013, effective immediately.

Avid said that Greenfield’s decision to resign was mutually agreeable and amicable and not a result of any disagreement or dispute with the company or its management.

Greenfield’s departure as CEO was followed in April 2013 by the departure of Ken Sexton, who had served as CFO under Greenfield. At that time, Avid said Sexton would continue on in a consulting capacity, for an initial period ending September 30, 2013, and work closely with Frederick in order to ensure a smooth transition.

Sexton was replaced as CFO by John Frederick, who joined the company in February 2013 as Chief of Staff.  Prior to joining Avid, Frederick was the Corporate EVP and CFO at Open Solutions, where Hernandez was previously CEO.

In addition to postponing its annual shareholder meeting due to its accounting review, Avid also delayed the filing its annual 10-K with securities regulators. As a result, Avid was notified by NASDAQ in March 2013 that the company no longer complies with NASDAQ Marketplace Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.  Failure to comply with this rule could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

At that time, Avid said it was “working diligently to complete the review and continues to focus its efforts on completing the Form 10-K filing as soon as possible,” and that it intends to submit a plan to NASDAQ staff as to how it intends to regain compliance with continued listing requirements.

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Related Content:

Avid 8-K Filing: Greenfield Resigns From Avid Board

Avid Replaces Chief Financial Officer

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

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© Devoncroft Partners. All Rights Reserved.

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