Avid 1997 Annual Report Download - page 47

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40
becoming the beneficial owner of 30% or more of the Company’s common stock, the shareholders approving any plan or
proposal for the liquidation or dissolution of the Company, or within a twenty-four month period a majority of the
members of the Company’s Board of Directors ceasing to continue as members of the board unless their successors are each
approved by at least two-thirds of the Company’s directors. If at any time within two years of the change in control, the
officer’s employment is terminated by the Company for any reason other than cause or by the officer for good reason, as
such terms are defined in the agreement, then the employee is entitled to receive certain severance payments plus an amount
equal to compensation earned under the management incentive compensation plan during the previous two years as well as
accelerated vesting of options.
L. Financial Instruments
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist of temporary cash
investments and trade receivables. The Company places its excess cash in marketable investment grade securities. There are
no significant concentrations in any one issuer of debt securities. The Company places its cash, cash equivalents and
investments with financial institutions with high credit standing. Concentrations of credit risk with respect to trade
receivables are limited due to the large number of customers comprising the Company's customer bases, and their dispersion
across different regions. The Company also maintains reserves for potential credit losses and such losses have been within
management's expectations.
Forward Exchange Contracts
As of December 31, 1997 and 1996, the Company had approximately $22,138,000 and $24,738,000, respectively, of
foreign exchange forward contracts outstanding, denominated in various European and Asian currencies, the Canadian dollar
and the Australian dollar, as a hedge against its committed exposures. The following table summarizes the December 31,
1997 currencies and approximate U.S. dollar amounts involved; the Company is the seller with respect to each contract with
the exception of the Irish pound contract (in thousands):
Local Currency Amount Approximate
U.S. Dollar Equivalent
Australian Dollar 1,200 $787
Singapore Dollar 1,900 1,132
Canadian Dollar 2,600 1,809
German Mark 10,600 5,953
Italian Lire 4,500,000 2,566
Irish Pound 900 1,302
French Franc 26,000 4,361
Japanese Yen 548,000 4,228
$22,138
The forward exchange contracts generally have maturities of one month. Net gains (losses) of approximately $3,226,000,
$968,000 and $(687,000) resulting from forward exchange contracts were included in results of operations in 1997, 1996 and
1995, respectively. The fair values of these forward exchange contracts as of December 31, 1997 and 1996 approximate the
contract amounts.