Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-Q



	(Mark One)
	x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2012
	OR
	¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

Commission File Number: 0-21174

__________________

Avid Technology, Inc.

( Exact Name of Registrant as Specified in Its Charter)



	Delaware (State or Other Jurisdiction of Incorporation or Organization)		04-2977748 (I.R.S. Employer Identification No.)

75 Network Drive

Burlington, Massachusetts 01803

(Address of Principal Executive Offices, Including Zip Code)

(978) 640-6789

(Registrant’s Telephone Number, Including Area Code)

__________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large Accelerated Filer x Non-accelerated Filer ¨ (Do not check if smaller reporting company)		Accelerated Filer ¨ Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the registrant’s Common Stock as of May 7, 2012 was 38,723,542 .

AVID TECHNOLOGY, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012

TABLE OF CONTENTS



		Page
PART I.	FINANCIAL INFORMATION

ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2012 and 2011	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2012 and 2011	2
	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2012 and December 31, 2011	3
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2012 and 2011	4
	Notes to Condensed Consolidated Financial Statements	5
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4.	CONTROLS AND PROCEDURES	38

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	40
ITEM 1A.	RISK FACTORS	40
ITEM 6.	EXHIBITS	40

SIGNATURE		41

INDEX TO EXHIBITS		42

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this quarterly report that relate to future results or events are forward-looking statements. Forward-looking statements may be identified by use of forward-looking words, such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “feel,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements. There are a number of factors that could cause actual events or results to differ materially from those expressed or implied by forward-looking statements, many of which are beyond our control, including the risk factors discussed in Part I - Item 1A under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011, and as referenced in Part II - Item 1A of this report. In addition, the forward-looking statements contained in this quarterly report represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise.

PART I - FINANCIAL INFORMATION


ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share data, unaudited)



	Three Months Ended
	March 31,
	2012			2011 (Revised)
Net revenues:
Products	$	119,938		$	136,765
Services	32,201			28,988
Total net revenues	152,139			165,753

Cost of revenues:
Products	61,208			63,867
Services	12,717			14,054
Amortization of intangible assets	650			666
Total cost of revenues	74,575			78,587
Gross profit	77,564			87,166

Operating expenses:
Research and development	27,482			29,973
Marketing and selling	45,927			45,050
General and administrative	14,638			15,000
Amortization of intangible assets	1,611			2,145
Restructuring costs (recoveries), net	168			(1,476		)
Total operating expenses	89,826			90,692

Operating loss	(12,262		)	(3,526		)

Interest income	129			59
Interest expense	(343		)	(422		)
Other income (expense), net	20			63
Loss before income taxes	(12,456		)	(3,826		)
Provision for income taxes, net	521			957
Net loss	$	(12,977	)	$	(4,783	)

Net loss per common share – basic and diluted	$	(0.34	)	$	(0.13	)

Weighted-average common shares outstanding – basic and diluted	38,662			38,228

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, unaudited)



	Three Months Ended
	March 31,
	2012			2011 (Revised)
Net loss	$	(12,977	)	$	(4,783	)

Other comprehensive income:
Foreign currency translation adjustments, net of taxes	2,425			5,376

Comprehensive (loss) income	$	(10,552	)	$	593

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, unaudited)



				(Revised)
	March 31, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	49,681		$	32,855
Accounts receivable, net of allowances of $15,859 and $15,985 at March 31, 2012 and December 31, 2011, respectively	87,506			104,305
Inventories	103,666			111,397
Deferred tax assets, net	1,482			1,480
Prepaid expenses	9,902			7,652
Other current assets	13,279			14,405
Total current assets	265,516			272,094
Property and equipment, net	52,213			53,487
Intangible assets, net	16,387			18,524
Goodwill	246,884			246,592
Other assets	9,526			11,568
Total assets	$	590,526		$	602,265

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	37,188		$	42,533
Accrued compensation and benefits	22,873			31,750
Accrued expenses and other current liabilities	32,503			35,109
Income taxes payable	8,254			8,951
Deferred revenues	57,908			45,768
Total current liabilities	158,726			164,111
Long-term liabilities	29,121			27,885
Total liabilities	187,847			191,996

Contingencies (Note 10)

Stockholders’ equity:
Common stock	423			423
Additional paid-in capital	1,021,880			1,019,200
Accumulated deficit	(547,575		)	(532,478		)
Treasury stock at cost, net of reissuances	(79,899		)	(82,301		)
Accumulated other comprehensive income	7,850			5,425
Total stockholders’ equity	402,679			410,269
Total liabilities and stockholders’ equity	$	590,526		$	602,265

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)



	Three Months Ended
	March 31,
	2012			2011 (Revised)
Cash flows from operating activities:
Net loss	$	(12,977	)	$	(4,783	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	7,574			7,892
(Recovery from) provision for doubtful accounts	(77		)	144
Non-cash provision for restructuring	—			125
Gain on disposal of fixed assets	(2		)	(5		)
Compensation expense from stock grants and options	3,133			4,133
Non-cash interest expense	73			80
Unrealized foreign currency transaction losses	2,298			3,785
Changes in deferred tax assets and liabilities, excluding initial effects of acquisitions	372			—
Changes in operating assets and liabilities, excluding initial effects of acquisitions:
Accounts receivable	16,857			5,280
Inventories	7,731			(16,876		)
Prepaid expenses and other current assets	(975		)	(1,699		)
Accounts payable	(5,376		)	107
Accrued expenses, compensation and benefits and other liabilities	(12,338		)	(15,242		)
Income taxes payable	(766		)	(541		)
Deferred revenues	13,431			11,544
Net cash provided by (used in) operating activities	18,958			(6,056		)

Cash flows from investing activities:
Purchases of property and equipment, net	(3,588		)	(3,545		)
Decrease (increase) in other long-term assets	1,318			(617		)
Net cash used in investing activities	(2,270		)	(4,162		)

Cash flows from financing activities:
(Payments related to) proceeds from the issuance of common stock under employee stock plans, net	(172		)	127
Proceeds from revolving credit facilities	1,000			8,000
Payments on revolving credit facilities	(1,000		)	(8,000		)
Net cash (used in) provided by financing activities	(172		)	127

Effect of exchange rate changes on cash and cash equivalents	310			529
Net increase (decrease) in cash and cash equivalents	16,826			(9,562		)
Cash and cash equivalents at beginning of period	32,855			42,782
Cash and cash equivalents at end of period	$	49,681		$	33,220

Supplemental information:
Cash paid for income taxes, net of refunds	$	785		$	2,021

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.	FINANCIAL INFORMATION

The accompanying condensed consolidated financial statements include the accounts of Avid Technology, Inc. and its wholly owned subsidiaries (collectively, “Avid” or the “Company”). These financial statements are unaudited. However, in the opinion of management, the condensed consolidated financial statements reflect all normal and recurring adjustments necessary for their fair statement. Interim results are not necessarily indicative of results expected for any other interim period or a full year. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of operations, financial position and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying condensed consolidated balance sheet as of December 31, 2011 was derived from the Company's audited consolidated financial statements and revised for errors as described below, but does not include all disclosures required by U.S. GAAP. The Company filed audited consolidated financial statements for, and as of, the year ended December 31, 2011 in its 2011 Annual Report on Form 10-K, which included all information and footnotes necessary for such presentation. The financial statements contained in this Form 10-Q should be read in conjunction with the audited consolidated financial statements in the Form 10-K.

The Company's preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. The most significant estimates reflected in these financial statements include revenue recognition, stock-based compensation, accounts receivable and sales allowances, inventory valuation, goodwill and intangible asset valuations, fair value measurements and income tax asset valuation allowances. Actual results could differ from the Company's estimates.

The Company evaluated subsequent events through the date of issuance of these financial statements and, except as disclosed in the “Revised Prior Period Amounts” section below and Note 15, no other recognized or unrecognized subsequent events required recognition or disclosure in these financial statements.

Revised Prior Period Amounts

While preparing its financial statements for the three months ended March 31, 2012, the Company identified and corrected certain errors related to the accounting for an intercompany note made between two of its international subsidiaries that occurred in the fourth quarter of 2007. The Company determined that it should have accrued withholding taxes of approximately $3.8 million at the time of the loan, and as a result, the Company had understated the provision for income taxes in 2007 and income taxes payable reported on its balance sheets for each period subsequent to the transaction. Additionally, as the tax was not withheld and paid to the taxing authority, the Company is subject to interest and penalties on the unpaid balance, commencing in the three months ended March 31, 2009 and for subsequent periods. Interest and penalties totaled approximately $1.1 million ( $0.7 million interest and $0.4 million penalties) and $1.0 million ( $0.6 million interest and $0.4 million penalties) at March 31, 2012 and December 31, 2011 , respectively. The Company expects to recover the $3.8 million of withholding taxes in a subsequent period as the amount is refundable, if and when, the intercompany note is repaid. In addition, upon repayment of the intercompany note, the Company would request a refund from the taxing authority for any penalties paid under a voluntary compliance approach, although there can be no assurance that a refund of the penalties will be obtained.

In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 (“SAB 99” and “SAB 108”), the Company evaluated these errors and, based on an analysis of quantitative and qualitative factors, determined that they were immaterial to each of the prior reporting periods affected and, therefore, amendment of previously filed reports with the Securities and Exchange Commission was not required. However, if the adjustments to correct the cumulative effect of the aforementioned errors and other previously unrecorded immaterial errors had been recorded in the three months ended March 31, 2012, the Company believes the impact would have been significant and would impact comparisons to prior periods. Therefore, as required by SAB 108, the Company has revised in this filing previously reported financial information for each quarter of 2011 and for the years ended December 31, 2011 and 2010. In addition to correcting these withholding tax errors, the Company recorded other adjustments to prior period amounts to correct other previously unrecorded immaterial errors. Also, in accordance with SAB 108, the Company will include this revised financial information when it files subsequent reports on Form 10-Q and Form 10-K or files a registration statement under the Securities Act of 1933.

The Condensed Consolidated Statements of Operations for the years ended December 31, 2011 and 2010 and the three months ended March 31, 2011, June 30, 2011, September 30, 2011 and December 31, 2011 have been revised herein to reflect the effect of the withholding tax errors described above and the other immaterial errors. Revised Condensed Consolidated Statements of Operations for those periods have been presented herein.

The Condensed Consolidated Balance Sheets at December 31, 2011 and 2010 have been revised to reflect the cumulative effect of the errors described above and other immaterial errors. These revisions to the Condensed Consolidated Balance Sheet resulted in increases in accumulated deficit of $7.9 million , $8.2 million , and $6.3 million , respectively, at December 31, 2011, 2010 and 2009. Revised Condensed Consolidated Balance Sheets for December 31, 2011 and 2010 have been presented herein.

The adjustments to the Condensed Consolidated Statement of Cash Flows for each period resulted in immaterial changes to the amounts previously reported for net cash provided by (used in) operating activities, investing activities and financing activities in these periods.

Condensed Consolidated Balance Sheets

At December 31, 2011 and 2010

(in thousands except per share date, unaudited)



	December 31, 2011						December 31, 2010
	As Reported			As Revised			As Reported			As Revised
ASSETS
Current assets:
Cash and cash equivalents	$	32,855		$	32,855		$	42,782		$	42,782
Accounts receivable	104,305			104,305			101,171			102,631
Inventories	111,833			111,397			108,357			106,785
Deferred tax assets, net	1,480			1,480			1,068			757
Prepaid expenses	7,652			7,652			7,688			7,688
Other current assets	14,509			14,405			15,701			15,701
Total current assets	272,634			272,094			276,767			276,344
Property and equipment, net	53,487			53,487			62,519			62,519
Intangible assets, net	18,524			18,524			29,750			29,750
Goodwill	246,398			246,592			246,997			246,997
Other assets	11,568			11,568			10,538			10,538
Total assets	$	602,611		$	602,265		$	626,571		$	626,148

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	42,533		$	42,533		$	47,340		$	47,104
Accrued compensation and benefits	31,350			31,750			38,686			38,118
Accrued expenses and other current liabilities	34,174			35,109			40,986			42,059
Income taxes payable	3,898			8,951			4,640			9,823
Deferred revenues	45,768			45,768			43,634			44,173
Total current liabilities	157,723			164,111			175,286			181,277
Long-term liabilities	27,885			27,885			24,675			24,675
Total liabilities	185,608			191,996			199,961			205,952
Stockholders’ equity:
Common stock	423			423			423			423
Additional paid-in capital	1,018,604			1,019,200			1,005,198			1,006,029
Accumulated deficit	(524,530		)	(532,478		)	(495,254		)	(503,485		)
Treasury stock at cost, net of reissuances	(82,301		)	(82,301		)	(91,025		)	(91,025		)
Accumulated other comprehensive income	4,807			5,425			7,268			8,254
Total stockholders’ equity	417,003			410,269			426,610			420,196
Total liabilities and stockholders’ equity	$	602,611		$	602,265		$	626,571		$	626,148

Condensed Consolidated Statements of Operations

For the Year Ended December 31, 2011 and 2010

(in thousands except per share date, unaudited)



	Twelve Months Ended						Twelve Months Ended
	December 31, 2011						December 31, 2010
	As Reported			As Revised			As Reported			As Revised
Net revenues:
Products	$	546,371		$	545,470		$	559,907		$	561,123
Services	131,565			131,565			118,615			118,615
Total net revenues	677,936			677,035			678,522			679,738

Cost of revenues: (a)
Products	255,735			254,522			267,985			269,978
Services	62,482			62,482			56,490			56,490
Amortization of intangible assets	2,693			2,693			3,299			3,299
Total cost of revenues	320,910			319,697			327,774			329,767
Gross profit	357,026			357,338			350,748			349,971

Operating expenses:
Research and development	118,108			118,108			120,229			120,445
Marketing and selling	183,865			184,288			177,178			177,111
General and administrative	57,851			56,496			64,345			65,424
Amortization of intangible assets	8,528			8,528			9,743			9,743
Restructuring costs (recoveries), net	8,858			10,163			20,450			18,877
Loss on sale of assets	597			597			(5,029		)	(5,029		)
Total operating expenses	377,807			378,180			386,916			386,571

Operating loss	(20,781		)	(20,842		)	(36,168		)	(36,600		)

Interest income	144			144			173			173
Interest expense	(2,053		)	(1,930		)	(864		)	(987		)
Other income (expense), net	(159		)	(159		)	301			301
Loss before income taxes	(22,849		)	(22,787		)	(36,558		)	(37,113		)
Provision for income taxes, net	942			721			396			1,796
Net loss	$	(23,791	)	$	(23,508	)	$	(36,954	)	$	(38,909	)

Net loss per common share – basic and diluted	$	(0.62	)	$	(0.61	)	$	(0.98	)	$	(1.03	)

Weighted-average common shares outstanding – basic and diluted	38,435			38,435			37,895			37,895

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2011, June 30, 2011, September 30, 2011 and December 31, 2011

(in thousands except per share date, unaudited)



	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
	March 31, 2011						June 30, 2011						September 30, 2011						December 31, 2011
	As Reported			As Revised			As Reported			As Revised			As Reported			As Revised			As Reported			As Revised
Net revenues:
Products	$	137,335		$	136,765		$	129,190		$	129,629		$	131,875		$	131,608		$	147,971		$	147,468
Services	28,988			28,988			32,154			32,154			33,090			33,090			37,333			37,333
Total net revenues	166,323			165,753			161,344			161,783			164,965			164,698			185,304			184,801

Cost of revenues:
Products (a)	64,651			63,867			62,964			64,024			60,048			60,063			66,221			66,568
Services (a)	14,387			14,054			15,312			14,706			16,497			15,585			18,137			18,137
Amortization of intangible assets	666			666			685			685			685			685			657			657
Total cost of revenues	79,704			78,587			78,961			79,415			77,230			76,333			85,015			85,362
Gross profit	86,619			87,166			82,383			82,368			87,735			88,365			100,289			99,439

Operating expenses:
Research and development	29,973			29,973			30,453			30,453			28,960			28,960			28,722			28,722
Marketing and selling	44,810			45,050			46,052			45,867			45,411			45,395			47,592			47,976
General and administrative	15,298			15,000			14,920			14,219			13,240			13,518			14,393			13,759
Amortization of intangible assets	2,145			2,145			2,161			2,161			2,159			2,159			2,063			2,063
Restructuring costs (recoveries), net	(2,216		)	(1,476		)	(163		)	162			2,707			2,707			8,530			8,770
Loss on sale of assets	—			—			597			597			—			—			—			—
Total operating expenses	90,010			90,692			94,020			93,459			92,477			92,739			101,300			101,290

Operating loss	(3,391		)	(3,526		)	(11,637		)	(11,091		)	(4,742		)	(4,374		)	(1,011		)	(1,851		)

Interest income	59			59			9			9			10			10			66			66
Interest expense	(422		)	(422		)	(717		)	(594		)	(556		)	(556		)	(358		)	(358		)
Other income (expense), net	63			63			(60		)	(60		)	43			43			(205		)	(205		)
Loss before income taxes	(3,691		)	(3,826		)	(12,405		)	(11,736		)	(5,245		)	(4,877		)	(1,508		)	(2,348		)
Provision for (benefit from) income taxes, net	1,426			957			(543		)	(590		)	2,774			2,672			(2,715		)	(2,318		)
Net (loss) income	$	(5,117	)	$	(4,783	)	$	(11,862	)	$	(11,146	)	$	(8,019	)	$	(7,549	)	$	1,207		$	(30	)

Net (loss) income per common share – basic	$	(0.13	)	$	(0.13	)	$	(0.31	)	$	(0.29	)	$	(0.21	)	$	(0.20	)	$	0.03		$	(0.00	)
Net (loss) income per common share – diluted	$	(0.13	)	$	(0.13	)	$	(0.31	)	$	(0.29	)	$	(0.21	)	$	(0.20	)	$	0.03		$	(0.00	)

Weighted-average common shares outstanding – basic	38,228			38,228			38,413			38,413			38,511			38,511			38,580			38,580
Weighted-average common shares outstanding – diluted	38,228			38,228			38,413			38,413			38,511			38,511			38,584			38,580


(a)	The “As Reported” products and services cost of revenues amounts do not sum to the annual “As Reported” products and services cost of revenues amounts due to a reclassification made to the financial statements for the year ended December 31, 2011.

Recently Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-08, Testing Goodwill for Impairment . This ASU allows an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of such events or circumstances, an entity determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the entity will be required to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test will not be required. ASU No. 2011-08 was effective for fiscal years and interim periods beginning after December 15, 2011, and prospective application was required. The Company adopted this ASU on January 1, 2012. Adoption did not have an impact on the Company's consolidated financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income . This ASU eliminates the current option to report other comprehensive income and its components in the statement of changes in equity and requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate consecutive statements. ASU No. 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011, which is January 1, 2012 for Avid, and retrospective application was required. The Company adopted this ASU on January 1, 2012. While this ASU changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance; therefore, adoption did not have an impact on the Company's consolidated financial position, results of operations or cash flows.

In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS . This ASU amends current U.S. GAAP fair value measurement and disclosure guidance to be consistent with International Financial Reporting Standards, including increased transparency around valuation inputs and the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position, but for which the fair value of such items is required to be disclosed. ASU No. 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011 and prospective application was required. The Company adopted this ASU on January 1, 2012. Adoption did not have an impact on the Company's consolidated financial position, results of operations or cash flows.


2.	NET LOSS PER SHARE

Net loss per common share is presented for both basic loss per share (“Basic EPS”) and diluted loss per share (“Diluted EPS”). Basic EPS is based on the weighted-average number of common shares outstanding during the period, excluding non-vested restricted stock held by employees. Diluted EPS is based on the weighted-average number of common shares and potential common shares outstanding during the period.

The following table sets forth (in thousands) potential common shares, on a weighted-average basis, that were considered anti-dilutive securities and excluded from the Diluted EPS calculations for the relevant periods either because the sum of the exercise price per share and the unrecognized compensation cost per share was greater than the average market price of the Company's common stock for the relevant period, or because they were considered contingently issuable. The contingently issuable potential common shares result from certain stock options and restricted stock units granted to the Company's executive officers that vest based on performance or market conditions.



	Three Months Ended
	March 31,
	2012	2011
Options	5,644	2,928
Non-vested restricted stock and restricted stock units	617	504
Anti-dilutive potential common shares	6,261	3,432

During periods of net loss, certain potential common shares that would otherwise be included in the Diluted EPS calculation are excluded because the effect would be anti-dilutive. The following table sets forth (in thousands) common stock equivalents that were excluded from the calculation of Diluted EPS due to the net loss for the relevant period.



	Three Months Ended
	March 31,
	2012	2011
Options	2	329
Non-vested restricted stock and restricted stock units	57	125
Total anti-dilutive common stock equivalents	59	454


3.	FOREIGN CURRENCY FORWARD CONTRACTS

As a hedge against the foreign exchange exposure of certain forecasted receivables, payables and cash balances of foreign subsidiaries, the Company enters into short-term foreign currency forward contracts. The changes in fair value of the foreign currency forward contracts intended to offset foreign currency exchange risk on cash flows associated with net monetary assets are recorded as gains or losses in the Company's statement of operations in the period of change, because they do not meet the criteria of Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging , to be treated as hedges for accounting purposes. There are two objectives of the Company's foreign currency forward contract program: (1) to offset any foreign currency exchange risk associated with cash receipts expected to be received from the Company's customers and cash payments expected to be made to the Company's vendors over the next 30-day period and (2) to offset the impact of foreign currency exchange on the Company's net monetary assets denominated in currencies other than the functional currency of the legal entity. These forward contracts typically mature within 30 days of execution.

At March 31, 2012 and December 31, 2011 , the Company had foreign currency forward contracts outstanding with notional values of $64.3 million and $69.1 million , respectively, as hedges against forecasted foreign-currency-denominated receivables, payables and cash balances. The following table sets forth the balance sheet locations and fair values of the Company's foreign currency forward contracts at March 31, 2012 and December 31, 2011 (in thousands):



Derivatives Not Designated as Hedging Instruments under ASC Topic 815	Balance Sheet Location	Fair Value at March 31, 2012	Fair Value at December 31, 2011
Financial assets:
Foreign currency forward contracts	Other current assets	$49	$—

Financial liabilities:
Foreign currency forward contracts	Accrued expenses and other current liabilities	$452	$1,430

The following table sets forth the net foreign exchange losses recorded as marketing and selling expenses in the Company's statements of operations during the three months ended March 31, 2012 and 2011 that resulted from the Company's foreign exchange contracts and the revaluation of the related hedged items (in thousands):



Derivatives Not Designated as Hedging Instruments under ASC Topic 815	Net Loss Recorded in Marketing and Selling Expenses
	Three Months Ended March 31,
	2012	2011
Foreign currency forward contracts and revaluation of hedged items, net	$(123)	$(99)

See Note 4 for additional information on the fair value measurements for all financial assets and liabilities, including derivative assets and derivative liabilities, that are measured at fair value on a recurring basis.


4.	FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

On a recurring basis, the Company measures certain financial assets and liabilities at fair value, including certain cash equivalents, marketable securities and foreign-currency forward contracts. At March 31, 2012 and December 31, 2011 , all of the Company's financial assets and liabilities were classified as either Level 1 or Level 2 in the fair value hierarchy as defined by ASC Topic 820, Fair Value Measurements and Disclosure . Assets and liabilities valued using quoted market prices in active markets and classified as Level 1 are certain deferred compensation investments and related obligations. Assets and liabilities valued based on other observable inputs and classified as Level 2 are foreign currency forward contracts and certain deferred compensation obligations.

The following tables summarize the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis at March 31, 2012 and December 31, 2011 (in thousands):



			Fair Value Measurements at Reporting Date Using
	March 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Deferred compensation assets	$	1,627	$	1,062	$	565	$	—
Foreign currency forward contracts	49		—		49		—

Financial Liabilities:
Deferred compensation obligations	$	4,079	$	1,062	$	3,017	$	—
Foreign currency forward contracts	452		—		452		—



			Fair Value Measurements at Reporting Date Using
	December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Deferred compensation assets	$	1,549	$	1,018	$	531	$	—

Financial Liabilities:
Deferred compensation obligations	$	3,920	$	1,018	$	2,902	$	—
Foreign currency forward contracts	1,430		—		1,430		—

The fair values of level 1 benefit plan and deferred compensation assets and the corresponding obligations are determined using a market approach and are based on quoted market prices of the underlying securities. The fair values of level 2 benefit plan and deferred compensation assets are determined using an income approach based on observable inputs including the prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. The fair values of level 2 benefit plan and deferred compensation liabilities are derived using valuation models, such as the projected unit credit method, with significant inputs derived from or corroborated by observable market data, such as mortality and disability rates from published sources, for example the RT 2005 G mortality tables, and discount rates that are observable at commonly quoted intervals.

The fair values of foreign currency forward contracts are classified as level 2 in the fair value hierarchy and are measured at fair value on a recurring basis using an income approach based on observable inputs. The primary inputs used to fair value foreign currency forward contracts are published foreign currency exchange rates as of the date of valuation. See Note 3 for information on the Company's foreign currency forward contracts.

The carrying amounts of the Company's other financial assets and liabilities including cash, cash equivalents, accounts receivable, borrowings under revolving credit facilities, accounts payable and accrued liabilities approximate their respective fair values because of the relatively short period of time between their origination and their expected realization.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following tables summarize the Company's fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis during the year ended March 31, 2012 and December 31, 2011 (in thousands):



			Fair Value Measurements Using
	Three Months Ended March 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Related Expenses
Liabilities:
Facilities-related restructuring accruals	$	530	$	—	$	530	$	—	$	530



			Fair Value Measurements Using
	Year Ended December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Related Expenses
Liabilities:
Facilities-related restructuring accruals (revised)	$	2,593	$	—	$	2,593	$	—	$	2,593

During the three months ended March 31, 2012 and the year ended December 31, 2011 , the Company recorded restructuring accruals associated with exiting all or portions of certain leased facilities and for revised estimates related to previously exited facilities. The Company estimates the fair value of such liabilities using an income approach based on observable inputs, including the remaining payments required under the existing lease agreements, utilities costs based on recent invoice amounts, and potential sublease receipts based on quoted market prices for similar sublease arrangements. The liabilities are discounted to net present value based on the Company's current borrowing rate. See Note 12 for further information on the Company's restructuring activities.


5.	ACCOUNTS RECEIVABLE

Accounts receivable, net of allowances, consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



	March 31, 2012			December 31, 2011
Accounts receivable	$	103,365		$	120,290
Less:
Allowance for doubtful accounts	(2,231		)	(2,342		)
Allowance for sales returns and rebates	(13,628		)	(13,643		)
	$	87,506		$	104,305

The accounts receivable balances at March 31, 2012 and December 31, 2011 exclude approximately $15.3 million and $10.3 million , respectively, for large solution sales and certain distributor sales that were invoiced, but for which revenues had not been recognized and payments were not then due.


6.	INVENTORIES

Inventories consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



			(Revised)
	March 31, 2012		December 31, 2011
Raw materials	$	11,458	$	11,306
Work in process	478		415
Finished goods	91,730		99,676
	$	103,666	$	111,397

At March 31, 2012 and December 31, 2011 , finished goods inventory included $10.8 million and $7.2 million , respectively, associated with products shipped to customers and deferred labor costs for revenue arrangements that have not yet been recognized.


7.	PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



	March 31, 2012		December 31, 2011
Computer and video equipment and software	$	135,414	$	132,022
Manufacturing tooling and testbeds	6,458		6,407
Office equipment	4,717		4,709
Furniture, fixtures and other	11,829		11,819
Leasehold improvements	35,132		34,786
	193,550		189,743
Less accumulated depreciation and amortization	141,337		136,256
	$	52,213	$	53,487


8.	GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

Goodwill

Goodwill resulting from the Company's acquisitions consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



				(Revised)
	March 31, 2012			December 31, 2011
Goodwill acquired (a)	$	418,784		$	418,492
Accumulated impairment losses	(171,900		)	(171,900		)
Goodwill (a)	$	246,884		$	246,592


(a)	The March 31, 2012 gross and net goodwill amounts include total foreign currency translation increases of approximately $0.3 million from the December 31, 2011 amounts.

The Company performs a goodwill impairment analysis annually in the fourth quarter of each year, or whenever events and circumstances occur that indicate that the recorded goodwill may be impaired, in accordance with ASC Subtopic 350-20, Intangibles - Goodwill and Others - Goodwill, a two-step process is used to test for goodwill impairment. The first step determines if there is an indication of impairment by comparing the estimated fair value of each reporting unit to its carrying value including existing goodwill. Upon an indication of impairment from the first step, a second step is performed to determine if goodwill impairment exists.

At September 30, 2011 , as a result of a decline in the Company's stock price since its fourth quarter 2010 goodwill impairment testing, lower than expected year-to-date 2011 revenues and operating results, and a reduction in forecasted 2011 results, the Company performed an interim step one goodwill impairment test. The interim step one test at September 30, 2011 indicated that the estimated fair value of the Company's single reporting unit (approximately $530 million ) exceeded its carrying value of $414.9 million by approximately 28% . Therefore, no goodwill impairment existed at September 30, 2011 , and the Company was not required to perform step two. In connection with its interim goodwill step one impairment test at September 30, 2011 , the Company weighted the direct market capitalization approach at 67% , the income approaches at 11% , the guideline public company market approaches at 11% , and the guideline transaction market approaches at 11% . The estimated fair value under the direct market capitalization approach was calculated by applying control premiums of approximately 45% to the Company's market capitalization. The Company's market capitalization was calculated using the average stock price of the Company's common stock for the 20 trading days prior to September 30, 2011 ( $8.73 per share). If the Company had used the closing stock price of its common stock on September 30, 2011 ( $7.74 per share) in the direct market capitalization described above and applied similar weightings described above, the estimated fair value of the Company's single reporting would have exceeded its carrying value by approximately 20% at September 30, 2011 . The Company's market capitalization based on the closing stock price at September 30, 2011 was approximately $298.3 million , compared to the carrying value of the Company's single reporting unit of $414.9 million . This implied a control premium of approximately 39% .

The Company's annual goodwill analyses performed in the fourth quarter of 2011 indicated there was no goodwill impairment at December 31, 2011 . The step one test at December 31, 2011 indicated that the estimated fair value of the Company's single reporting unit (approximately $506 million ) exceeded its carrying value of $417.0 million by approximately 21% . Therefore, no goodwill impairment existed at December 31, 2011 , and the Company was not required to perform step two. In connection with its annual goodwill step one impairment test at December 31, 2011 , the Company weighted the direct market capitalization approach at 67% , the income approaches at 11% , the guideline public company market approaches at 11% , and the guideline transaction market approaches at 11% . The estimated fair value under the direct market capitalization approach was calculated by applying control premiums of approximately 45% to the Company's market capitalization. The Company's market capitalization was calculated using the average stock price of the Company's common stock for the 20 trading days prior to December 31, 2011 ( $8.04 per share). If the Company used the closing stock price of its common stock on December 31, 2011 ( $8.53 per share), the last trading day in 2011, in the direct market capitalization described above and applied similar weightings described above, the estimated fair value of the Company's single reporting would have exceeded its carrying value by approximately 26% . The Company's market capitalization based on the closing stock price at December 31, 2011 was approximately $329.3 million , compared to the carrying value of the Company's single reporting unit of $417.0 million . This implied a control premium of approximately 27% .

There were no indicators of goodwill impairment at March 31, 2012 .

Acquisition-Related Identifiable Intangible Assets

Amortizing identifiable intangible assets related to the Company's acquisitions consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



	March 31, 2012							December 31, 2011
	Gross		Accumulated Amortization			Net (a)		Gross		Accumulated Amortization			Net
Completed technologies and patents	$	74,805	$	(71,290	)	$	3,515	$	74,624	$	(70,536	)	$	4,088
Customer relationships	68,320		(55,819		)	12,501		68,226		(54,396		)	13,830
Trade names	14,772		(14,707		)	65		14,763		(14,577		)	186
License agreements	560		(560		)	—		560		(560		)	—
Non-compete covenants	1,401		(1,095		)	306		1,368		(948		)	420
	$	159,858	$	(143,471	)	$	16,387	$	159,541	$	(141,017	)	$	18,524


(a)	The March 31, 2012 net amounts include total foreign currency translation increases of approximately $0.1 million from the December 31, 2011 amounts.

Amortization expense related to all intangible assets in the aggregate was $2.3 million and $2.8 million , respectively, for the three months ended March 31, 2012 and 2011 . The Company expects amortization of these intangible assets to be approximately $5 million for the remainder of 2012 , $5 million in 2013 , $2 million in 2014 , $2 million in 2015 and $2 million in 2016 .

In connection with the Company's goodwill impairment test at September 30, 2011, the Company performed an impairment analysis of its long-lived assets, including its intangible assets, in accordance with ASC Section 360-10-35, Property, Plant and Equipment - Overall - Subsequent Measurement . This analysis included grouping the intangible assets with other operating assets and liabilities that would not otherwise be subject to impairment testing because the grouped assets and liabilities represent the lowest level for which cash flows are largely independent of the cash flows of other groups of assets and liabilities within the Company. The analysis determined that the undiscounted cash flows of the long-lived assets were significantly greater than their carrying value, indicating no impairment existed.

Capitalized Software Development Costs

In accordance with ASC Subtopic 985-20, Software - Costs of Software to be Sold, Leased or Marketed, the Company is required to capitalize certain costs of internally developed or externally purchased software. Capitalized software costs included in “other assets” consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



	March 31, 2012							December 31, 2011
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Capitalized software costs	$	6,906	$	(5,047	)	$	1,859	$	6,876	$	(4,730	)	$	2,146

Capitalized software development costs amortized to cost of product revenues were $0.3 million and $0.3 million , respectively, for the three months ended March 31, 2012 and 2011 . The Company expects amortization of capitalized software costs to be approximately $1 million for the remainder of 2012 and $1 million thereafter.


9.	LONG-TERM LIABILITIES

Long-term liabilities consisted of the following at March 31, 2012 and December 31, 2011 (in thousands):



	March 31, 2012		December 31, 2011
Long-term deferred tax liabilities, net	$	1,779	$	1,754
Long-term deferred revenue	10,670		9,378
Long-term deferred rent	10,741		10,666
Long-term accrued restructuring	2,914		3,185
Long-term deferred compensation	3,017		2,902
	$	29,121	$	27,885


10.	CONTINGENCIES

At March 31, 2012 , the Company was subject to various litigation claiming patent infringement by the Company. If any infringement is determined to exist, the Company may seek licenses or settlements. At this time, the Company believes that a loss is neither probable nor remote, and based on the information currently available regarding these legal proceedings, the Company is unable to determine an estimate, or range of estimates, of potential losses.

In addition, as a normal incidence of the nature of the Company's business, various claims, charges and litigation have been asserted or commenced from time to time against the Company arising from or related to contractual, employee relations, intellectual property rights, product performance, or other matters. Management is not aware of any such current claims that will have a material adverse effect on the financial position or results of operations of the Company.

Additionally, the Company provides indemnification to certain customers for losses incurred in connection with intellectual property infringement claims brought by third parties with respect to the Company's products. These indemnification provisions generally offer perpetual coverage for infringement claims based upon the products covered by the agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions is theoretically unlimited. To date, the Company has not incurred material costs related to these indemnification provisions; accordingly, the Company believes the estimated fair value of these indemnification provisions is immaterial.

Further, certain of the Company's arrangements with customers include clauses whereby the Company may be subject to penalties for failure to meet certain performance obligations; however, the Company has not recorded any related material penalties to date.

The Company's Canadian subsidiary, Avid Technology Canada Corporation, was assessed and paid to the Ministry of Revenue Quebec (“MRQ”) approximately CAN $1.7 million for social tax assessments on Canadian employee stock-based compensation related to the Company's stock plans. The Company is currently attempting to recover the payments against these assessments through litigation with the MRQ. The payment amounts were recorded in “other current assets” in the Company's consolidated balance sheets at March 31, 2012 and December 31, 2011 . Because the Company cannot predict the outcome of the litigation at this time or the amount of potential losses, if any, no costs have been accrued for any loss contingency; however, this matter is not expected to have a material effect on the Company's financial position or results of operations.

As permitted under Delaware law and pursuant to the Company's Third Amended and Restated Certificate of Incorporation, as amended, the Company is obligated to indemnify its current and former officers and directors for certain events that occur or occurred while the officer or director is or was serving in such capacity. The term of the indemnification period is for each respective officer's or director's lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited; however, the Company has mitigated the exposure through the purchase of directors and officers insurance, which is intended to limit the risk and, in most cases, enable the Company to recover all or a portion of any future amounts paid. As a result of this insurance coverage, the Company believes the estimated fair value of these indemnification obligations is minimal.

The Company has letters of credit at a bank that are used as security deposits in connection with the Company's Burlington, Massachusetts office space. In the event of default on the underlying leases, the landlords would, at March 31, 2012 , be eligible to draw against the letters of credit to a maximum of $2.6 million in the aggregate. The letters of credit are subject to aggregate reductions of approximately $0.4 million at the end of each of the second, third and fifth years, provided the Company is not in default of the underlying leases and meets certain financial performance conditions. In no case will the letters of credit amounts be reduced to below $1.3 million in the aggregate throughout the lease periods, all of which extend to May 2020. At March 31, 2012 , the Company was not in default of any of the underlying leases.

The Company also has a standby letter of credit at a bank that is used as a security deposit in connection with the Company's Daly City, California office space lease. In the event of default on this lease, the landlord would, at March 31, 2012 , be eligible to draw against this letter of credit to a maximum of $0.8 million . The letter of credit will remain in effect at this amount throughout the remaining lease period, which extends to September 2014. At March 31, 2012 , the Company was not in default of this lease.

The Company also has additional letters of credit totaling approximately $3.7 million that support its ongoing operations. These letters of credit have various terms and expire during 2012 and 2013. Some of the letters of credit may automatically renew based on the terms of the underlying agreements.

The Company provides warranties on externally sourced and internally developed hardware and software. For internally developed hardware and in cases where the warranty granted to customers for externally sourced hardware is greater than that provided by the manufacturer, the Company records an accrual for the related liability based on historical trends and actual material and labor costs. For software, the Company records an accrual for the costs of providing bug fixes. The warranty period for all of the Company's products is generally 90 days to one year , but can extend up to five years depending on the manufacturer's warranty or local law.

The following table sets forth the activity in the warranty accrual account for the three months ended ended March 31, 2012 and 2011 (in thousands):



	Three Months Ended March 31,
	2012			2011 (Revised)
Accrual balance at beginning of year (revised)	$	5,960		$	5,894
Accruals for product warranties	3,108			2,388
Costs of warranty claims	(2,943		)	(2,637		)
Accrual balance at end of period	$	6,125		$	5,645


11.	STOCKHOLDERS' EQUITY

Stock Incentive Plans

Under its stock incentive plans, the Company may grant stock awards or options to purchase the Company's common stock to employees, officers, directors (subject to certain restrictions) and consultants, generally at the market price on the date of grant. Current option grants become exercisable over various periods, typically four years for employees and one year for non-employee directors, and have a maximum term of seven years. Time-based restricted stock and restricted stock unit awards typically vest over four years. Shares available for issuance under the Company's Amended and Restated 2005 Stock Incentive Plan, which is the only plan the Company currently makes grants from, totaled 2,356,459 at March 31, 2012 , including 144,864 shares that may alternatively be issued as awards of restricted stock or restricted stock units.

Information with respect to options granted under all stock option plans for the three months ended March 31, 2012 is as follows:



	Shares		Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2011	5,367,145		$20.01
Granted (a)	1,081,700		$11.57
Exercised	(1,121	)	$9.55
Forfeited or canceled	(264,033	)	$20.39
Options outstanding at March 31, 2012 (b)	6,183,691		$18.52	4.80	$323
Options vested at March 31, 2012 or expected to vest	5,320,651		$18.57	4.77	$270
Options exercisable at March 31, 2012	1,936,210		$20.93	3.78	$55


(a)	Options granted during the three months ended March 31, 2012 included 47,500 options that had vesting based on performance conditions and 15,000 options that had vesting based on either market conditions or a combination of performance or market conditions.


(b)	Options outstanding at March 31, 2012 included 1,716,155 options that had vesting based on either performance conditions, or market conditions or a combination of performance or market conditions.

The following table sets forth the valuation weighted-average key assumptions and fair value results for stock options granted during the three months ended March 31, 2012 and 2011 :



	Three Months Ended March 31,
	2012	2011
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	0.89%	2.29%
Expected volatility	53.8%	41.6%
Expected life (in years)	4.55	4.77
Weighted-average fair value of options granted (per share)	$5.15	$7.58

During the three months ended March 31, 2012 , there were no material proceeds from option exercises. During the three months ended March 31, 2011 , the aggregate intrinsic value of stock options exercised was approximately $0.6 million and the cash received from the exercise of stock options totaled $1.0 million . The Company did not realize any actual tax benefit from tax deductions for stock option exercises during the three months ended March 31, 2012 or 2011 due to the full valuation allowance on the Company's U.S. deferred tax assets.

Information with respect to non-vested restricted stock units for the three months ended March 31, 2012 is as follows:



	Non-Vested Restricted Stock Units
	Shares		Weighted- Average Grant-Date Fair Value	Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Non-vested at December 31, 2011	822,033		$19.45
Granted (a)	287,500		$11.70
Vested	(119,773	)	$22.99
Forfeited	(3,856	)	$19.26
Non-vested at March 31, 2012 (b)	985,904		$16.76	2.21	$10,835
Expected to vest	786,946		$16.90	2.09	$8,649


(a)	Restricted stock units granted during the three months ended March 31, 2012 included 143,750 units that had vesting based on performance conditions.


(b)	Non-vested restricted stock units at March 31, 2012 included 582,250 units that had vesting based on either performance conditions, or market conditions or a combination of performance or market conditions.

The following table sets forth the valuation weighted-average key assumptions for restricted stock units with vesting based on market conditions or a combination of performance or market conditions granted during the three months ended March 31, 2011 . No restricted stock units with vesting based on market conditions or a combination of performance or market conditions were granted during the three months ended March 31, 2012 .



	Three Months Ended March 31, 2011
Expected dividend yield	0.00%
Risk-free interest rate	4.11%
Expected volatility	41.4%
Expected life (in years)	3.00

The weighted-average grant date fair value of restricted stock units granted during the three months ended March 31, 2011 was $22.16 . The total fair value of restricted stock units vested during the three months ended March 31, 2012 and 2011 was $1.3 million and $3.3 million , respectively.

Employee Stock Purchase Plan

The Company's Second Amended and Restated 1996 Employee Stock Purchase Plan (the “ESPP”) offers the Company's shares for purchase at a price equal to 85% of the closing price on the applicable offering period termination date. Shares issued under the ESPP are considered compensatory under FASB ASC Subtopic 718-50, Compensation-Stock Compensation: Employee Stock Purchase Plans . Accordingly, the Company is required to assign fair value to, and record compensation expense for, share purchase rights granted under the ESPP.

The following table sets forth the valuation weighted-average key assumptions and fair value results for shares issued under the ESPP for the three months ended March 31, 2012 and 2011 :



	Three Months Ended March 31,
	2012	2011
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	0.06%	0.15%
Expected volatility	54.5%	40.0%
Expected life (in years)	0.24	0.24
Weighted-average fair value of shares issued (per share)	$1.64	$2.73

The following table sets forth the quantities and average prices of shares issued under the ESPP for the three months ended March 31, 2012 and 2011 :



	Three Months Ended March 31,
	2012	2011
Shares issued under the ESPP	32,841	20,766
Average price of shares issued	$8.24	$14.15

A total of 579,666 shares remained available for issuance under the ESPP at March 31, 2012 .

Stock-Based Compensation Expense

The Company estimates forfeiture rates at the time awards are made based on historical turnover rates and applies these rates in the calculation of estimated compensation cost. At March 31, 2012 , the Company's annualized estimated forfeiture rates were 0% for non-employee director awards, 10% for executive management awards and and 10% for awards to all other employees.

Stock-based compensation was included in the following captions in the Company's consolidated statements of operations for the three months ended March 31, 2012 and 2011 , respectively (in thousands):



	Three Months Ended March 31,
	2012		2011 (Revised)
Cost of products revenues	$	94	$	139
Cost of services revenues	157		268
Research and development expenses	306		472
Marketing and selling expenses	1,261		1,218
General and administrative expenses	1,315		2,036
	$	3,133	$	4,133

At March 31, 2012 , there was approximately $27 million of total unrecognized compensation cost, before forfeitures, related to non-vested stock-based compensation awards granted under the Company's stock-based compensation plans.


12.	RESTRUCTURING COSTS AND ACCRUALS

2011 Restructuring Plan

In October 2011, the Company committed to a restructuring plan (the “2011 Plan”) intended to improve operational efficiencies. Actions under the 2011 Plan included the elimination of approximately 190 positions and the closure of the Company's facility in Irwindale, CA. During 2011, the Company recorded restructuring charges of $9.1 million related to severance costs and $0.5 million for the closure of the Irwindale facility, which included non-cash amounts totaling $0.1 million for fixed asset write offs. During the three months ended March 31, 2012 , the Company recorded restructuring recoveries of approximately $0.4 million for reductions of the estimated severance obligations. Under the 2011 Plan, the Company expects to incur total expenses related to termination benefits and facility costs of $9 million to $10 million , most of which represents cash expenditures. The Company expects to complete all actions under the 2011 Plan prior to June 30, 2012.

2010 Restructuring Plans

In December 2010, the Company initiated a worldwide restructuring plan (the “2010 Plan”) designed to better align financial and human resources in accordance with its strategic plans for the 2011 fiscal year. During the fourth quarter of 2010, the Company recorded restructuring charges of $9.2 million related to severance costs for the elimination of 145 positions and $1.4 million for the partial closure of a facility. During 2011, the Company revised its previously recorded estimates of severance costs resulting in a restructuring benefit of $1.5 million and also recorded a restructuring charge of $0.3 million for the revised estimate of the costs associated with the partial facility closure. The severance revisions primarily resulted from the final severance negotiations for certain European employees, as well as the transferring of certain employees into alternative positions at Avid. During 2011, the Company also recorded facilities restructuring charges of approximately $1.0 million related to the closure of a facility in Germany, which included non-cash amounts totaling $0.1 million for fixed asset write offs. During the three months ended March 31, 2012 , the Company recorded additional facilities restructuring charges of approximately $0.1 million for revised estimate of the costs associated with a previously closed facility. To date, total restructuring charges of approximately $10 million have been recorded under the 2010 Plan, and no further restructuring actions are anticipated under this plan.

During 2010, the Company also initiated acquisition-related restructuring actions and recorded related 2010 and 2011 restructuring charges of $2.0 million for the severance costs for 24 former Euphonix employees and the closure of three Euphonix facilities. During the three months ended March 31, 2012 , the Company recorded additional facilities restructuring charges of approximately $0.2 million for a revised estimate of the costs associated with a previously closed facility. No further restructuring actions are anticipated under this plan.

2008 Restructuring Plan

In October 2008, the Company initiated a company-wide restructuring plan (the “2008 Plan”) that included a reduction in force of approximately 820 positions, including employees related to product line divestitures, and the closure of all or parts of eighteen facilities worldwide. During the fourth quarter of 2008 and in 2009, 2010 and 2011, the Company recorded total restructuring charges of $35.2 million related to employee termination costs, $12.8 million for the closure of facilities, $2.7 million related to the write-down of inventory and $4.3 million for revisions to previous estimates. During the three months ended March 31, 2012 , the Company recorded restructuring charges of $0.2 million for a revised estimate of the costs associated with a previously closed facility. No further restructuring actions are anticipated under the 2008 Plan.

Accounting for Restructuring Plans

The Company records facility-related restructuring charges in accordance with ASC Topic 420, Liabilities: Exit or Disposal Cost Obligations . Based on the Company's policies for the calculation and payment of severance benefits, the Company accounts for employee-related restructuring charges as an ongoing benefit arrangement in accordance with ASC Topic 712, Compensation - Nonretirement Postemployment Benefits . Restructuring charges and accruals require significant estimates and assumptions, including sub-lease income assumptions. These estimates and assumptions are monitored on at least a quarterly basis for changes in circumstances and any corresponding adjustments to the accrual are recorded in the Company's statement of operations in the period when such changes are known.

The following table sets forth the activity in the restructuring accruals for the three months ended March 31, 2012 (in thousands):

Non-Acquisition-Related

Restructuring <