Avid 2014 Annual Report Download - page 79

73
K. 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, 2014 were as follows (in thousands):
Year Ending December 31,
2015 $ 14,964
2016 13,353
2017 11,796
2018 9,723
2019 9,702
Thereafter 10,128
Total $ 69,666
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 2021 and represent an aggregate obligation
of $8.2 million through 2021. The Company has restructuring accruals of $2.3 million at December 31, 2014, which represents the
difference between this aggregate future obligation and future sublease income under actual or estimated potential sublease
agreements, on a net present value basis, as well as other facilities-related obligations. The Company received $0.7 million of sublease
income during the year ended December 31, 2014, but none during the years ended December 31, 2013 and 2012, respectively.
The Company’s 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 $0.6 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
expense under operating leases was $15.0 million, $16.3 million and $18.1 million for the years ended December 31, 2014, 2013 and
2012, respectively.
Other Commitments
The Company has letters of credit at a bank that are used as security deposits in connection with the Company’s Burlington,
Massachusetts office space. In the event of default on the underlying leases, the landlords would, at December 31, 2014, 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 provided the Company is not in default under the underlying leases and meets certain financial performance conditions. In
no case will the letters of credit amounts be reduced to below $1.2 million in the aggregate throughout the lease periods, all of which
extend to May 2020.
The Company also has additional letters of credit totaling $1.3 million that support its ongoing operations. These letters of credit have
various terms and expire during 2015 and beyond, while some of the letters of credit may automatically renew based on the terms of
the underlying agreements.
Purchase Commitments and Sole-Source Suppliers
At December 31, 2014, the Company had entered into purchase commitments for certain inventory and other goods and services used
in its normal operations. The purchase commitments covered by these agreements are generally for a period of less than one year and
in the aggregate total $22.5 million.
The Company depends on sole-source suppliers for certain key hardware components of its products. Although the Company has
procedures in place to mitigate the risks associated with its sole-sourced suppliers, the Company cannot be certain that it will be able
to obtain sole-sourced components or finished goods from alternative suppliers or that it will be able to do so on commercially