Avid 2015 Annual Report Download - page 97

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The following table presents the Company’s long-lived assets, excluding intangible assets, by geography at December 31, 2015 and
2014 (in thousands):
December 31,
2015 2014
Long-lived assets:
United States $ 30,684 $ 30,465
Other countries 11,920 3,945
Total long-lived assets $ 42,604 $ 34,410
R. LONG TERM DEBT AND CREDIT AGREEMENT
2.00% Convertible Senior Notes due 2020
On June 15, 2015, the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2020
(the “Notes”) in an offering conducted in accordance with Rule 144A under the Securities Act of 1933. The net proceeds from the
offering were $120.3 million after deducting the offering expenses.
The Notes pay interest semi-annually on June 15 and December 15 of each year, beginning on December 15, 2015, at an annual rate of
2.00% and mature on June 15, 2020 unless earlier converted or repurchased in accordance with their terms prior to such date.
Additional interest may be payable upon the occurrence of certain event of default relating to the Company’s failure to deliver certain
documents or reports to the Trustee, the Company’s failure to timely file any document or report required pursuant to Section 13 or 15
(d) of the Exchange Act or if the Notes are not freely tradable as of one year after the last date of original issuance of the Notes. The
Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the
Company’s election, based on an initial conversion rate, subject to adjustment, of 45.5840 shares per $1,000 principal amount of
Notes, which is equal to an initial conversion price of $21.94 per share. Prior to December 15, 2019, the Notes are convertible only in
the following circumstances: (1) during any calendar quarter commencing after September 30, 2015, if the last reported sale price of
the Company’s common stock is greater than or equal to 130% of the applicable conversion price for at least 20 trading days during a
period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter; (2) during the five business day
period after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal
amount of Notes for each trading day in the Measurement Period was less than 98% of the product of the last reported sale price of the
Company’s common stock and the conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions.
On or after December 15, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity
date, holders may convert their Notes at any time, regardless of the foregoing circumstances. The Company may not redeem the Notes
prior to their maturity, which means that the Company is not required to redeem or retire the Notes periodically.
The Notes are senior unsecured obligations. Upon the occurrence of certain specified fundamental changes, the holders may require
the Company to repurchase all or a portion of the Notes for cash at 100% of the principal amount of the Notes being purchased, plus
any accrued and unpaid interest.
In accounting for the Notes at issuance, the Company allocated proceeds from the Notes into debt and equity components according to
the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion. The initial
carrying amount of the debt component, which approximates its fair value, was estimated by using an interest rate for nonconvertible
debt, with terms similar to the Notes. The excess of the principal amount of the Notes over the fair value of the debt component was
recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to the carrying
value of the Notes over their term as interest expense using the interest method. Upon issuance of the Notes, the Company recorded
$96.7 million as debt and $28.3 million as additional paid-in capital in stockholders’ equity. The effective interest rate used to
estimate the fair value of the debt was 7.66%. The Company recorded $2.9 million debt discount accretion as interest expenses in the
Company’s statement of operations for the year ended December 31, 2015. Total interest expense for the year ended December 31,
2015 was $4.3 million, reflecting the coupon and accretion of the discount.
In connection with the issuance of the Notes, the Company recorded an income tax benefit of $6.5 million as a discrete item for the
year ended December 31, 2015 as a result of the creation of a deferred tax liability associated with the portion of the Notes that was
classified within stockholders’ equity. While GAAP requires the offset of the deferred tax liability to be recorded in additional paid-in
capital, consistent with the equity portion of the Notes, the creation of the deferred tax liability produced evidence of recoverability of