Avid 2004 Annual Report Download - page 39

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25
During 2002, we made a cash payment of approximately $0.4 million to acquire selected assets of iKnowledge,
Inc. As part of the purchase agreement, we were required to make certain contingent cash payments, depending upon the
future revenues of the products acquired from iKnowledge through December 2004. As of December 31, 2004, contingent
payments paid to date or owed were immaterial. In connection with the acquisition of The Motion Factory in 2000, we
might have been required to make future contingent cash payments limited in the aggregate to $10.0 million, depending
upon future revenues and/or gross margin levels through December 2004 of the products including technology we acquired
from The Motion Factory. No contingent payments were paid or are owed through December 31, 2004.
During 2004, 2003 and 2002, we generated cash of approximately $29.4 million, $54.7 million and $12.7 million,
respectively, from the issuance of common stock related to the exercise of stock options and our employee stock purchase
plan. In 2002, we made a prepayment in full satisfaction of a $13.0 million note to Microsoft.
In connection with restructuring efforts during 2001 and prior periods, as well as with the identification in 2003
and 2002 of excess space in various locations, we have cash obligations of approximately $18.6 million under leases for
which we have vacated the underlying facilities. We have an associated restructuring accrual of $3.5 million at December
31, 2004 representing losses to be incurred or expected to be incurred on subleases of space or lease vacancies. These
payments will be made over the remaining terms of the leases, which have varying expiration dates through 2010, unless we
are able to negotiate an earlier termination. All restructuring related payments will be funded through working capital. See
Notes I and M to our consolidated financial statements.
Our cash requirements vary depending upon factors such as our planned growth, capital expenditures, the possible
acquisition of businesses or technologies complementary to our business and obligations under past restructuring programs.
We believe our existing cash, cash equivalents, marketable securities and funds generated from operations will be sufficient
to meet our operating cash requirements for at least the next twelve months. In the event we require additional financing, we
believe that we will be able to obtain such financing; however, there can be no assurance that we would be successful in
doing so, or that we could do so on favorable terms.
CONTRACTUAL AND COMMERCIAL OBLIGATIONS INCLUDING OFF-BALANCE SHEET
ARRANGEMENTS
The following table sets forth future payments that we are obligated to make, as of December 31, 2004, under existing debt
agreements, leases and other arrangements (in thousands):
Total
Less than
1 Year
1 – 3 Years
3 – 5 Years
After
5 Years
Capital lease obligations
$667
$502
$165
–
–
Operating leases
95,044
20,582
35,850
$27,898
$10,714
Unconditional purchase obligations
25,035
25,035
–
–
–
$120,746
$46,119
$36,015
$27,898
$10,714
Other contractual arrangements that may result in cash payments or the issuance of Avid stock or options to
purchase Avid stock consist of the following (in thousands):
Total
Less than 1 Year
1 – 3 Years
Transactions with recourse
$17,199
$17,199
–
Stand-by letter of credit
4,300
–
$4,300
Contingent consideration for acquisitions
46,763
1,763
45,000
$68,262
$18,962
$49,300
Through a third party, we offer lease financing options to our customers. During the terms of these financing
arrangements, which are generally for three years, we remain liable for any unpaid principal balance in the event of a default
on the lease by the end-user. Our liability is limited in the aggregate based on a percentage of initial amounts funded or, in
certain cases, amounts of unpaid balances. As of December 31, 2004, our maximum exposure under this program was
$17.2 million.
We have a stand-by letter of credit at a bank that is used as a security deposit in connection with our Daly City,
California office space lease. In the event of a default on our lease the landlord would, as of December 31, 2004, be eligible