Avid Technology, Inc.
Jul 24, 2008

Avid Reports Second Quarter 2008 Results

TEWKSBURY, MA, Jul 24, 2008 (MARKET WIRE via COMTEX News Network) -- Avid Technology, Inc. (NASDAQ: AVID) today reported revenue of $222.9 million for the three-month period ended June 30, 2008, compared to $225.3 million for the same period in 2007. GAAP net loss for the quarter was $10.4 million, or $.28 per share, compared to GAAP net loss of $6.0 million, or $.15 per diluted share, in the second quarter of 2007.

GAAP net loss in the second quarter of 2008 included $10.5 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, non-GAAP earnings per share were $.00. For the second quarter of 2007, GAAP net loss included $14.2 million of amortization, stock-based compensation, restructuring charges, legal settlements and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.20 in the second quarter of 2007.

At June 30, 2008, the company's cash balance was $138.5 million, down $86.0 million since the end of 2007. During the first quarter of 2008, the company used $93.2 million in cash to repurchase 4.3 million shares of common stock under the previously-announced share buyback program.

"Our sequential improvement in revenue, margin and earnings in the second quarter is an indication that our transformation is on schedule," said Gary Greenfield, Avid chairman and CEO. "In the second half of the year, we plan to build on our strengths in both audio and video and align the organization to better position the company for long-term sustainable value."

Revenue for the six-month period ended June 30, 2008 was $421.1 million, compared to revenue of $444.2 million for the same period in 2007. GAAP net loss for the first six months of 2008 was $31.5 million, or $.83 per share, compared to GAAP net loss of $6.0 million, or $.15 per share, for the same period in 2007. GAAP net loss for the six-month period ended June 30, 2008 included $19.9 million of amortization, stock-based compensation, restructuring charges and related tax adjustments. Excluding these items, the non-GAAP loss per share was $.30 per share for the first half of 2008. GAAP net loss for the six-month period ended June 30, 2007 included $24.8 million of amortization, stock-based compensation, restructuring charges, legal settlements and related tax adjustments. Excluding these items, non-GAAP earnings per share were $.45 for the first half of 2007.

Recent Highlights

-- The release of Avid® Media Composer®, Symphony and NewsCutter® professional video editing products, each with upgraded HD capabilities, improves performance and support for additional camera and media formats.
-- Launch of the consumer video editor, Pinnacle Studio 12, helped to drive sales of the consumer editing software line to its highest level in over two years.


-- The availability of Pro Tools® 7.4.2 software provides Mac OS X 10.5.3 (Leopard) compatibility for Pro Tools|HD®, Pro Tools LE® and Pro Tools M-Powered users.
-- The introduction in July of SOFTIMAGE®|XSI® 7 3D animation software with the open platform ICE allows content producers to create, modify and deploy complex tools and effects more efficiently than ever before.
-- The release of Sibelius® First, a powerful new notation and composition tool for singers/songwriters, keyboard players and guitarists.

Use of Non-GAAP Financial Measures

This press release contains "non-GAAP financial measures" under the rules of the U.S. Securities and Exchange Commission. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. The reconciliation for net income and diluted earnings per share for the three- and six-month periods ended June 30, 2008 and 2007 are in the tables attached to this press release.

The company uses non-GAAP financial measures internally to manage its business, for example, in establishing its annual operating budget, in assessing segment operating performance and for measuring performance under employee incentive compensation plans. Non-GAAP financial measures are used by management in its operating and financial decision-making because management believes these measures reflect the company's ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate the company's current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company's current financial results with past financial results. The primary limitations associated with the company's use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect the company's operations. The company's management compensates for these limitations by considering the company's financial results as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in this press release.

Conference Call

A conference call to discuss Avid's second quarter 2008 financial results will be held today, July 24, 2008, at 5:00 p.m. EDT. The call will be open to the public and can be accessed by dialing (719) 457-2617 and referencing confirmation code 3538405. The call and subsequent replay will also be available on Avid's website. To listen via this alternative, go to the Investor Relations page under the About Us menu at www.avid.com for complete details prior to the start of the conference call.

Use of Forward-Looking Statements

The above release is subject to the completion and filing of our Quarterly Report on Form 10-Q. This release includes forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, about Avid's performance. There are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, such as Avid's ability to meet customer needs, market acceptance of Avid's existing and new products, competitive factors, pricing pressures, delays in product shipments and other important events and factors disclosed previously and from time to time in Avid's filings with the U.S. Securities and Exchange Commission. In addition, the forward-looking statements contained herein represent Avid's estimate only as of today and should not be relied upon as representing the company's estimate as of any subsequent date. While Avid may elect to update these forward-looking statements at some point in the future, Avid specifically disclaims any obligation to do so, even if the estimates change.

About Avid Technology, Inc.

Avid is a worldwide leader in tools for film, video, audio, 3D animation, gaming and broadcast professionals -- as well as for home audio and video enthusiasts. Avid professional and consumer brands include Avid, Digidesign®, M-Audio®, Pinnacle Systems®, Sibelius, Softimage and Sundance Digital®. The vast majority of primetime television shows, feature films, commercials and chart-topping music hits are made using one or more Avid products. Whether used by seasoned professionals or beginning students, Avid's products and services enable customers to work more efficiently, productively and creatively. Avid received an Oscar® statuette representing the 1998 Scientific and Technical Award for the concept, design, and engineering of the Avid Film Composer® system for motion picture editing. For more information about the company's Oscar, Grammy® and Emmy® award-winning products and services, visit www.avid.com.

Copyright 2008 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, M-Audio, Media Composer, NewsCutter, Pinnacle Studio, Pinnacle Systems, Pro Tools, Pro Tools|HD, Pro Tools LE, Pro Tools M-Powered, Sibelius, Softimage, Sundance Digital, Symphony and XSI are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. Emmy is a registered trademark of ATAS/NATAS. Academy Awards and Oscar are trademarks and service marks of the Academy of Motion Picture Arts and Sciences. Grammy is a trademark of the National Academy of Recording Arts and Sciences, Inc. All other trademarks are the property of their respective owners.

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Net revenues:
 Products                       $ 189,115  $ 192,370  $ 357,291  $ 384,813
 Services                          33,748     32,956     63,838     59,411
                                ---------  ---------  ---------  ---------
      Total net revenues          222,863    225,326    421,129    444,224
                                ---------  ---------  ---------  ---------
Cost of revenues:
 Products                          92,628     92,991    177,701    185,703
 Services                          19,629     17,454     37,016     33,433
 Amortization of intangible
  assets                            2,270      4,761      5,524      9,233
                                ---------  ---------  ---------  ---------
      Total cost of revenues      114,527    115,206    220,241    228,369
                                ---------  ---------  ---------  ---------
Gross profit                      108,336    110,120    200,888    215,855
                                ---------  ---------  ---------  ---------
Operating expenses:
 Research and development          38,972     38,444     77,482     76,186
 Marketing and selling             55,259     56,505    105,586    108,199
 General and administrative        19,492     17,698     41,435     35,550
 Amortization of intangible
  assets                            3,323      3,431      6,710      6,863
 Restructuring costs, net             937      1,517      2,000      1,775
                                ---------  ---------  ---------  ---------
      Total operating expenses    117,983    117,595    233,213    228,573
                                ---------  ---------  ---------  ---------
Operating loss                     (9,647)    (7,475)   (32,325)   (12,718)
Interest and other income
 (expense), net                       617      2,023      2,098      3,918
                                ---------  ---------  ---------  ---------
Loss before income taxes           (9,030)    (5,452)   (30,227)    (8,800)
Provision for (benefit from)
 income taxes, net                  1,355        547      1,306     (2,821)
                                ---------  ---------  ---------  ---------
Net loss                        $ (10,385) $  (5,999) $ (31,533) $  (5,979)
                                =========  =========  =========  =========
Net loss per common share -
 basic                          $   (0.28) $   (0.15) $   (0.83) $   (0.15)
Net loss per common share -
 diluted                        $   (0.28) $   (0.15) $   (0.83) $   (0.15)
Weighted-average common shares
 outstanding - basic               36,904     40,940     38,133     41,046
Weighted-average common shares
 outstanding - diluted             36,904     40,940     38,133     41,046
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Summary of the Company's revenues and contribution margin by reportable
segment and a reconciliation of segment contribution margin to consolidated
operating loss:
                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
 Revenues:
    Professional Video          $ 115,738  $ 120,318  $ 209,988  $ 232,989
    Audio                          75,315     76,763    148,554    155,686
    Consumer Video                 31,810     28,245     62,587     55,549
                                ---------  ---------  ---------  ---------
 Total revenues                 $ 222,863  $ 225,326  $ 421,129  $ 444,224
                                =========  =========  =========  =========
 Contribution Margin:
    Professional Video          $  10,563  $  12,136  $   9,243  $  23,737
    Audio                          10,626     12,109     21,496     25,262
    Consumer Video                     21      1,967        530      2,535
                                ---------  ---------  ---------  ---------
 Segment contribution margin       21,210     26,212     31,269     51,534
                                ---------  ---------  ---------  ---------
    Less:  Unallocated costs
     and expenses:
       Common costs and
        operating expenses        (19,739)   (18,402)   (42,627)   (37,253)
       Amortization of
        acquisition-related
        intangible assets          (5,593)    (8,192)   (12,234)   (16,096)
       Stock-based compensation    (4,588)    (4,551)    (6,733)    (8,103)
       Restructuring costs, net      (937)    (1,517)    (2,000)    (1,775)
       Legal settlements               --     (1,025)        --     (1,025)
                                ---------  ---------  ---------  ---------
 Consolidated operating loss    $  (9,647) $  (7,475) $ (32,325) $ (12,718)
                                =========  =========  =========  =========
Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss):
                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
GAAP net loss                   $ (10,385) $  (5,999) $ (31,533) $  (5,979)
Adjustments to reconcile to
 Non-GAAP net income:
   Amortization of intangible
    assets                          5,593      8,192     12,234     16,096
   Stock-based compensation         4,588      4,551      6,733      8,103
   Restructuring costs, net           937      1,517      2,000      1,775
   Legal settlements                   --      1,025         --      1,025
   Related tax adjustments           (614)    (1,099)    (1,048)    (2,214)
                                ---------  ---------  ---------  ---------
Non-GAAP net income (loss)      $     119  $   8,187  $ (11,614) $  18,806
                                =========  =========  =========  =========
Weighted-average common shares
 outstanding - diluted             37,056     41,517     38,133     41,653
Non-GAAP net income (loss) per
 common share - diluted         $    0.00  $    0.20  $   (0.30) $    0.45
Stock-based compensation         Three Months Ended     Six Months Ended
included in:                         June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Cost of products revenues       $     171  $     182  $     303  $     323
Cost of services revenues             166        251        264        448
Research and development
 expenses                           1,089      1,354      1,452      2,397
Marketing and selling expenses      1,109      1,201      1,638      2,136
General and administrative
 expenses                           2,053      1,563      3,076      2,799
                                ---------  ---------  ---------  ---------
                                $   4,588  $   4,551  $   6,733  $   8,103
                                =========  =========  =========  =========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
                                                    June 30,   December 31,
                                                      2008         2007
                                                  -----------  -----------
ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                    $   138,462  $   224,460
   Accounts receivable, net of allowances of
    $20,976 and $20,784 at June 30, 2008 and
    December 31, 2007, respectively                   114,080      138,692
   Inventories                                        120,728      117,324
   Prepaid and other current assets                    41,499       36,788
                                                  -----------  -----------
       Total current assets                           414,769      517,264
Property and equipment, net                            44,491       46,160
Intangible assets, net                                 59,193       71,427
Goodwill                                              360,521      360,584
Other assets                                           11,537       10,518
                                                  -----------  -----------
       Total assets                               $   890,511  $ 1,005,953
                                                  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                               $    36,358  $    34,992
   Accrued expenses and other current liabilities      93,142       93,912
   Deferred revenues                                   79,186       79,771
                                                  -----------  -----------
       Total current liabilities                      208,686      208,675
Long-term liabilities                                  17,539       17,495
                                                  -----------  -----------
       Total liabilities                              226,225      226,170
                                                  -----------  -----------
Stockholders' equity:
   Common stock                                           423          423
   Additional paid-in capital                         973,482      968,339
   Accumulated deficit                               (196,123)    (155,722)
   Treasury stock at cost, net of reissuances        (128,735)     (45,823)
   Accumulated other comprehensive income              15,239       12,566
                                                  -----------  -----------
       Total stockholders' equity                     664,286      779,783
                                                  -----------  -----------
       Total liabilities and stockholders' equity $   890,511  $ 1,005,953
                                                  ===========  ===========

Investor Contact:
Tom Fitzsimmons
tom_fitzsimmons@avid.com


978-640-3346

Media Contact:
Lisa Pistacchio
lisa_pistacchio@avid.com
650-930-3083

SOURCE: Avid Technology, Inc.

mailto:tom_fitzsimmons@avid.com
mailto:lisa_pistacchio@avid.com