Avid 2009 Annual Report Download - page 74

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69
J. 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, 2009 were as follows (in thousands):
Year
2010
$
21,303
2011
19,662
2012
15,863
2013
15,042
2014
13,299
Thereafter
39,629
Total
$
124,798
Included in the operating lease commitments above are obligations under leases for which the Company has vacated the
underlying facilities as part of various restructuring plans. These leases expire at various dates through 2017 and represent
an aggregate obligation of $13.4 million through 2017. The Company currently has sublease income related to portions of
the restructured space. The total of future minimum rentals to be received by the Company under non-cancelable subleases
related to the above leases was $1.4 million at December 31, 2009. Such sublease income amounts are not reflected in the
schedule of minimum lease payments above. The Company has restructuring accruals of $7.7 million at December 31,
2009, 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, as well as other facilities-related obligations
(see Note N).
The Company's recently signed leases for corporate office space in Burlington, Massachusetts, which expire in May 2020,
contain renewal options to extend the respective terms of each lease for up to two additional five year periods. The
Company has some leases for office space that have early termination options, which, if exercised by the Company, would
result in penalties of approximately $1.6 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 accompanying consolidated results of operations reflect rent expense on a straight-line basis over the term of the leases.
Total rent expense under operating leases, net of operating subleases, was approximately $19.2 million, $22.9 million and
$22.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. Total rent received from the
Company’s operating subleases was approximately $1.8 million, $2.6 million and $3.2 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
The Company has three letters of credit at a bank that are used as security deposits in connection with the Company’s
recently leased Burlington, Massachusetts office space. In the event of default on the underlying leases, the landlords
would, at December 31, 2009, 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 December 31, 2009, 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 December
31, 2009, be eligible to draw against this letter of credit to a maximum of $750 thousand. The letter of credit will remain in
effect at $750 thousand throughout the remaining lease period, which extends to September 2014. At December 31, 2009,
the Company was not in default of this lease.
Purchase Commitments and Sole-Source Suppliers
At December 31, 2009, the Company had entered into non-cancelable purchase commitments for certain inventory
components used in its normal operations. The purchase commitments covered by these agreements are generally less than
one year and in the aggregate total approximately $49.5 million.