Avid 2004 Annual Report Download - page 71

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to Avid stock options forfeited by Softimage employees plus all unpaid accrued interest, was due on June 15, 2003. The
Note bore interest at 9.5% per year, payable quarterly. Through December 31, 2001, the Note had been increased by
approximately $16.0 million for forfeited Avid stock options. During 1999, Avid made a principal payment of $8.0
million. In February 2002, Avid made a payment of approximately $13.0 million in full satisfaction of the outstanding Note
to Microsoft.
Capital Leases
During 2002 and 2001, the Company entered into vendor-financed equipment leases at various interest rates (ranging from
5.3% to 8.7%) for certain information system purchases, which were assessed as operating leases for accounting purposes.
In 2002, due to changes in certain of the agreements’ terms, including consolidation of various lease schedules and an
extension of the term, certain of these arrangements were determined to be capital leases for accounting purposes. As of
December 31, 2004, future minimum lease payments under capital leases are due as follows (in thousands):
Year
2005
$502
2006
112
2007
53
Total minimum lease payments
667
Less amount representing interest
29
Present value of minimum lease payments
638
Less current portion
489
Long-term portion of capital lease obligations
$149
The current portion of these capital lease obligations is recorded in accrued expenses and other current liabilities at
December 31, 2004.
I. COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
The Company leases its office space and certain equipment under non-cancelable operating leases. The future minimum
lease commitments under these non-cancelable leases at December 31, 2004 are as follows (in thousands):
Year
2005
$20,582
2006
19,429
2007
16,421
2008
15,348
2009
12,550
Thereafter
10,714
Total
$95,044
The total of future minimum rentals to be received by the Company under non-cancelable subleases related to the above
leases is $10.2 million as of December 31, 2004. Such sublease income amounts are not reflected in the schedule of
minimum lease payments above. Included in our operating lease commitments above are obligations under leases for which
we have vacated the underlying facilities as part of various restructuring plans. These leases expire at various dates through
2010, and represent an aggregate obligation of $18.6 million through 2010. The Company has a restructuring accrual of
$3.5 million at December 31, 2004 which represents the difference between this aggregate future obligation and expected
future sublease income under actual or estimated potential sublease agreements, on a net present value basis. See Note M.
The Company's two leases for corporate office space in Tewksbury, Massachusetts, expiring in June 2010, contain renewal
options to extend the respective terms of each lease for an additional 60 months. The Company has other leases for office
space that have termination options, which if exercised by the Company, would result in a penalty of approximately $0.5
million in the aggregate. The future minimum lease commitments above include the Company’s obligations through the
original lease terms and do not include these penalties.
The Company 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, as of December 31, 2004,
be eligible to draw against this letter of credit to a maximum of $4.3 million, subject to an annual reduction of