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CREDIT AGREEMENT (Notes)
12 Months Ended
Dec. 31, 2013
Debt Disclosure [Abstract]  
CREDIT AGREEMENT
CREDIT AGREEMENT

On October 1, 2010, Avid Technology, Inc. and certain of its subsidiaries (the “Borrowers”) entered into a credit agreement with Wells Fargo that established two revolving credit facilities with combined maximum availability of up to $60 million for borrowings and letter of credit guarantees (the “Credit Agreement”). The actual amount of credit available to the Borrowers will vary depending upon changes in the level of the respective accounts receivable and inventory, and is subject to other terms and conditions that are more specifically described in the Credit Agreement. On August 29, 2014, the Company entered into an amendment to its Credit Agreement with Wells Fargo that extended the maturity date for the credit facilities from October 1, 2014 to October 1, 2015.

The amended Credit Agreement contains customary representations and warranties, covenants, mandatory prepayments, and events of default under which the Borrowers’ payment obligations may be accelerated, including guarantees and liens on substantially all of the Borrowers’ assets to secure their obligations under the Credit Agreement. The Credit Agreement prohibits the Company from declaring or paying any cash dividends. The Credit Agreement requires that Avid Technology, Inc. (“Avid Technology”) maintain liquidity (comprised of unused availability under its portion of the credit facilities plus certain unrestricted cash and cash equivalents) of $10.0 million, at least $5.0 million of which must be from unused availability under its portion of the credit facilities. The Amendment further limits the Company’s ability to access borrowings under the credit facilities if EBITDA (as defined in the Amendment) of $33.8 million is not achieved for the year ending December 31, 2014, or capital expenditures (as defined in the Amendment) exceed $16.0 million for the year ending December 31, 2014. In addition, its subsidiary, Avid Technology International B.V. (“Avid Europe”), is required to maintain liquidity (comprised of unused availability under Avid Europe's portion of the credit facilities plus certain unrestricted cash and cash equivalents) of $5.0 million, at least $2.5 million of which must be from unused availability under Avid Europe's portion of the credit facilities. Interest accrues on outstanding borrowings under the credit facilities at a rate of either LIBOR plus 2.75% or a base rate (as defined in the Credit Agreement) plus 1.75%, at the option of Avid Technology or Avid Europe, as applicable. The Borrowers must also pay Wells Fargo a monthly unused line fee at a rate of 0.625% per annum. Any borrowings under the Credit Agreement are secured by a lien on substantially all the Borrowers’ assets.

The Company incurs certain loan fees and costs associated with its credit facilities. Such costs are capitalized as deferred borrowing costs and amortized as interest expense on a straight-line basis over the term of the Credit Agreement. At December 31, 2013, the balance of the Company’s deferred borrowing costs was $0.2 million, net of accumulated amortization of $1.0 million, and at December 31, 2012, the balance of the deferred borrowing costs was $0.5 million, net of accumulated amortization of $0.7 million.

During the first quarter of 2012, Avid Technology borrowed $1.0 million against the credit facilities to meet certain short-term cash requirements, all of which was repaid during the first quarter of 2012. During the third quarter of 2012, Avid Technology and Avid Europe borrowed and repaid $10.0 million and $3.0 million, respectively, against the credit facilities, primarily to facilitate the settlement of certain intercompany balances and payment of intercompany dividends. At December 31, 2013, Avid Technology and Avid Europe had letters of credit guaranteed under the credit facilities of $3.4 million and $1.7 million, respectively. At December 31, 2013, Avid Technology and Avid Europe had available borrowings under the credit facilities of approximately $18.4 million and $15.5 million, respectively, after taking into consideration the outstanding letters of credit and related liquidity covenant.
Other than letters of credit guaranteed under the credit facilities, the Company had no outstanding borrowings under the credit facilities at December 31, 2013 and 2012.

At July 31, 2014, the Company had outstanding borrowings of $10.0 million under the Credit Agreement, and the remaining availability totaled $15.6 million.