Avid Confirms Delay in Filing Restated Financials

14 Aug

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Avid has posted a NT 10-Q Notification Of Late Filing stating that the company is still in the process of restating its financial statements 2009-2011. While this will not result in a recalculation of total revenues it will result in a reclassification and this is just another example of the less than stellar management from this major player, which has resulted in several key executive firings & hirings — the replacement of CEO Garry Greenfield, CFO Ken Sexton, and Chief Accounting Officer Karl Johnson. In addition, the company’s reported annual revenues have been on the decline since 2007 ($926.6 M) down to $677.9M in 2011 (last reported.

The full statement narrative posted two days ago is as follows:

As previously reported in the Form 8-K filed on May 21, 2013 (“Form 8-K”), Avid Technology, Inc. (the “Company”) is 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. The restatement relates to the Company’s accounting treatment of certain upgrades, enhancements and compatibility extensions (collectively “Software Updates”) it previously made available to certain of its customers at no-charge. The Company has determined that such Software Updates should have been accounted for as implied post-contract customer support (PCS) under U.S. Generally Accepted Accounting Principles. The Company 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.

Pending completion of the restatement work, the Company 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 fifth calendar day after the prescribed due date. The Company will continue to work expeditiously to file as soon as practicable thereafter.

Please refer to the disclosures in the Form 8-K for additional information regarding the Company’s ongoing accounting evaluation, and for information regarding the Company’s delayed filing of its 2012 Form 10-K and Form 10-Q for the quarter ended March 31, 2013.

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