Avid 2004 Annual Report Download - page 64

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per share. See the above paragraph, Accounting for Stock-Based Compensation, for the pro forma impact on net income
(loss) and income (loss) per common share as if the Company had historically applied the fair value recognition provisions
of SFAS No. 123 to stock based employee awards.
On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (“the Act”). The Act creates a
temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85 percent
dividends-received deduction for certain dividends from controlled foreign corporations. Although the deduction is subject
to a number of limitations and significant uncertainty remains as to how to interpret numerous provisions in the Act, as of
December 31, 2004, the Company believes that it has the information necessary to make an informed decision on the impact
of the Act. Based on the information available, the Company has determined that its cash position in the U.S. is sufficient to
fund anticipated needs. The Company also believes that the repatriation of income earned abroad would result in significant
foreign withholding taxes that otherwise would not have been incurred as well as additional U.S. tax liabilities that may not
be sufficiently offset by foreign tax credits. Therefore, the Company does not currently plan to repatriate any income earned
abroad. These initial findings could change based on clarification of the rules and changes in facts and circumstances of the
Company’s operations and/or cash requirements in the U.S.
C. MARKETABLE SECURITIES
The cost (amortized cost of debt instruments) and fair value of marketable securities as of December 31, 2004 and 2003 are
as follows (in thousands):
Cost
Gross Unrealized
Gains (Losses)
Fair Value
2004
Government and government agency obligations
$22,964
($2)
$22,962
Corporate obligations
31,906
(146)
31,760
Municipal obligations
16,403
(14)
16,389
Asset-backed Securities
5,272
(22)
5,250
$76,545
($184)
$76,361
2003
Government and government agency obligations
$25,999
$9
$26,008
Corporate obligations
46,606
(30)
46,576
Municipal obligations
28,500
6
28,506
Asset-backed Securities
18,067
28
18,095
$119,172
$13
$119,185
With the exception of auction rate securities, all federal, state and municipal obligations held at December 31, 2004 and
2003 mature within one year. As of December 31, 2004 and 2003, municipal obligations include auction rate securities of
$12.0 million and $25.5 million, respectively. The Company’s investments in auction rate securities are recorded at cost,
which approximates fair value due to their variable interest rates. The interest rates generally reset every 28 days. Despite
the long-term nature of their stated contractual maturities, the Company has the ability to quickly liquidate investments in
auction rate securities. All income generated from these investments has been recorded as interest income. The Company
calculates realized gains and losses on a specific identification basis. Realized gains and losses from the sale of marketable
securities were immaterial for the years ended December 31, 2004, 2003 and 2002.
D. INVENTORIES
Inventories consist of the following (in thousands):
December 31,
2004
2003
Raw materials
$14,925
$12,086
Work in process
3,622
1,475
Finished goods
35,399
24,731
$53,946
$38,292