Avid Technology, Inc.
Oct 25, 2007

Avid Reports Third Quarter 2007 Results

TEWKSBURY, Mass.--(BUSINESS WIRE)--Oct. 25, 2007--Avid Technology, Inc. (NASDAQ: AVID) today reported revenue of $226.8 million for the three-month period ended September 30, 2007, compared to $231.2 million for the same period in 2006. GAAP net loss for the quarter was $5.9 million, or $.14 per share, compared to GAAP net income of $3.6 million, or $.08 per diluted share, in the third quarter of 2006.

GAAP net loss in the third quarter of 2007 includes $21.0 million of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $.37. For the third quarter of 2006, there was $14.3 million of amortization, stock-based compensation, restructuring recoveries, in-process research and development, and related tax adjustments included in GAAP net income. Excluding these items, non-GAAP earnings per diluted share were $.42 in the third quarter of 2006.

The company's cash balance increased to $197.2 million at September 30, 2007 primarily due to operating cash flow.

"Given the initiatives we have undertaken, we are pleased with this quarter's results," said Nancy Hawthorne, Avid's interim chief executive officer. "We remain focused on enhancing Avid's profitability by improving all aspects of the company's operations.

"Our professional video business had a solid quarter with stable revenue and improved profitability sequentially as we recognized some large deals from our backlog and had a modest increase in our run rate business," continued Hawthorne. "Audio performed well as strength in studio and live mixing consoles and products serving the home/hobbyist studio market offset weakness in core Pro Tools|HD upgrades and M-Audio. Finally, in consumer the PC-based TV viewing products were strong and the launch of the Studio 11 consumer video editor continued to go well."

Revenue for the nine-month period ended September 30, 2007 was $671.1 million, compared to revenue of $671.5 million for the same period in 2006. GAAP net loss for the first nine months of 2007 was $11.8 million, or $.29 per share, compared to GAAP net income of $9.6 million, or $.22 per diluted share, for the same period in 2006. GAAP net loss for the nine-month period ended September 30, 2007 includes $45.8 million of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. Excluding these items, non-GAAP earnings per share were $.82 per diluted share for the first nine months of 2007. GAAP net income for the nine-month period ended September 30, 2006 includes $38.9 million of amortization, stock-based compensation, restructuring costs, in-process research and development, and related tax adjustments. Excluding these items, non-GAAP earnings per diluted share were $1.13 for the first nine months of 2006.

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 nine-month periods ended September 30, 2007 and 2006 are in the tables attached to this press release.

We use non-GAAP financial measures internally to manage our business, for example, in establishing our annual operating budget, in assessing segment operating performance and for measuring performance under our employee incentive compensation plans. Non-GAAP financial measures are used by our management in its operating and financial decision-making because management believes these measures reflect our ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, we believe it is useful for our investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate our 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 our past financial results. The primary limitations associated with our 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 our operations. Our 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 third quarter 2007 financial results will be held today, October 25, 2007, 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 8148060. 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, Avid's ability to recognize revenue in a timely manner, 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 Technology, Inc. is the world leader in digital nonlinear media creation, management and distribution solutions, enabling film, video, audio, animation, games and broadcast professionals to work more efficiently, productively and creatively. For more information about the company's Oscar®, Grammy® and Emmy® award-winning products and services, please visit: www.avid.com.

© 2007 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer and Pro Tools are either registered trademarks or trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. 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. Digidesign, Avid's audio division, received an Oscar statuette representing the 2003 Scientific and Technical Award for the design, development and implementation of its Pro Tools® digital audio workstation. Oscar is a trademark and service mark of the Academy of Motion Picture Arts and Sciences. Emmy is a registered trademark of ATAS/NATAS. Grammy is a trademark of the National Academy of Recording Arts and Sciences, Inc. All other trademarks contained herein 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   Nine Months Ended
                                  September 30,       September 30,
                               ---------------------------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
Net revenues:
 Products                      $198,817  $203,274  $583,630  $595,597
 Services                        28,009    27,959    87,420    75,932
                               --------- --------- --------- ---------
      Total net revenues        226,826   231,233   671,050   671,529

Cost of revenues:
 Products                        93,397    99,202   279,100   284,382
 Services                        16,054    13,968    49,487    41,095
 Amortization of intangible
  assets                          4,096     6,208    13,329    16,304
 Restructuring costs              2,797         -     2,797         -
                               --------- --------- --------- ---------
      Total cost of revenues    116,344   119,378   344,713   341,781

                               --------- --------- --------- ---------
Gross profit                    110,482   111,855   326,337   329,748
                               --------- --------- --------- ---------

Operating expenses:
 Research and development        36,471    35,250   112,657   106,363
 Marketing and selling           48,832    50,641   157,031   153,136
 General and administrative      20,514    16,021    56,064    47,011
 Amortization of intangible
  assets                          3,432     3,298    10,295    10,940
 Restructuring costs
  (recoveries), net               6,297    (1,620)    8,072      (554)
 In-process research and
  development                         -       569         -       879
                               --------- --------- --------- ---------
      Total operating expenses  115,546   104,159   344,119   317,775

Operating income (loss)          (5,064)    7,696   (17,782)   11,973
Interest and other income
 (expense), net                   1,980     1,832     5,898     5,683
                               --------- --------- --------- ---------
Income (loss) before income
 taxes                           (3,084)    9,528   (11,884)   17,656

Provision for (benefit from)
 income taxes, net                2,769     5,935       (52)    8,018
                               --------- --------- --------- ---------

Net income (loss)              $ (5,853) $  3,593  $(11,832) $  9,638
                               ========= ========= ========= =========

Net income (loss) per common
 share - basic                 $  (0.14) $   0.09  $  (0.29) $   0.23

Net income (loss) per common
 share - diluted               $  (0.14) $   0.08  $  (0.29) $   0.22

Weighted-average common shares
 outstanding - basic             40,798    41,531    40,963    41,978

Weighted-average common shares
 outstanding - diluted           40,798    42,281    40,963    42,845
AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)


Segment revenue and operating
 income (loss):

                               Three Months Ended   Nine Months Ended
                                  September 30,       September 30,
                               ---------------------------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
 Professional Video:
    Revenues                   $118,855  $126,579  $351,844  $361,642
    Operating income              9,976    14,711    13,892    33,111

 Audio:
    Revenues                   $ 77,320  $ 74,189  $233,006  $221,199
    Operating income              7,797     8,391    21,495    26,481

 Consumer Video:
    Revenues                   $ 30,651  $ 30,465  $ 86,200  $ 88,688
    Operating loss               (1,877)   (2,625)   (5,210)   (7,006)

 Total:
    Total segment revenues     $226,826  $231,233  $671,050  $671,529
    Total segment operating
     income                      15,896    20,477    30,177    52,586



Reconciliation of GAAP
 operating income (loss) to
 Non-GAAP operating income:

                               Three Months Ended   Nine Months Ended
                                  September 30,       September 30,
                               ---------------------------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------

 Consolidated GAAP operating
  income (loss)                $ (5,064) $  7,696  $(17,782) $ 11,973

 Adjustments to reconcile to
  Non-GAAP operating income:
    Amortization of intangible
     assets                       7,528     9,506    23,624    27,244
    Stock-based compensation      3,988     4,326    12,091    13,044
    Restructuring costs
     (recoveries), net            9,094    (1,620)   10,869      (554)
    Other costs                     350         -     1,375         -
    In-process research and
     development                      -       569         -       879
                               --------- --------- --------- ---------
 Total operating income for
  reportable segments          $ 15,896  $ 20,477  $ 30,177  $ 52,586
                               ========= ========= ========= =========


Reconciliation of GAAP net
 income (loss) to Non-GAAP net
 income:

 GAAP net income (loss)        $ (5,853) $  3,593  $(11,832) $  9,638

 Adjustments to reconcile to
  Non-GAAP net income:
    Amortization of intangible
     assets                       7,528     9,506    23,624    27,244
    Stock-based compensation      3,988     4,326    12,091    13,044
    Restructuring costs
     (recoveries), net            9,094    (1,620)   10,869      (554)
    Other costs                     350         -     1,375         -
    In-process research and
     development                      -       569         -       879
    Related tax adjustments          74     1,494    (2,140)   (1,757)
                               --------- --------- --------- ---------
 Non-GAAP net income           $ 15,181  $ 17,868  $ 33,987  $ 48,494
                               ========= ========= ========= =========


 Weighted-average common
  shares outstanding - diluted   41,234    42,281    41,521    42,845

 Non-GAAP net income per
  common share - diluted       $   0.37  $   0.42  $   0.82  $   1.13


Stock-based compensation,
 which relates to the adoption
 of SFAS 123R, the acquisition
 of M-Audio, and the issuance
 of restricted stock and
 restricted stock units in
 2006 and 2007, is comprised
 of the following:

                               Three Months Ended   Nine Months Ended
Stock-based compensation          September 30,       September 30,
 included in:
                               ---------------------------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
 Cost of products revenues     $    182  $    128  $    505  $    398
 Cost of services revenues          248       196       696       623
 Research and development
  expense                         1,018     1,252     3,415     3,802
 Marketing and selling expense    1,092     1,190     3,228     3,638
 General and administrative
  expense                         1,448     1,560     4,247     4,583
                               --------- --------- --------- ---------
                               $  3,988  $  4,326  $ 12,091  $ 13,044
                               ========= ========= ========= =========
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

                                            September 30, December 31,
                                                2007          2006
                                            ------------- ------------

ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                              $    197,239  $   172,107
   Accounts receivable, net of allowances
    of $19,164 and $23,087 at September 30,
    2007 and December 31, 2006,
    respectively                                 140,363      138,578
   Inventories                                   133,732      144,238
   Prepaid and other current assets               33,336       29,016
                                            ------------- ------------
       Total current assets                      504,670      483,939

   Property and equipment, net                    45,780       40,483
   Intangible assets, net                         78,425      102,048
   Goodwill                                      360,550      360,143
   Other assets                                   11,983       10,421
                                            ------------- ------------

       Total assets                         $  1,001,408  $   997,034
                                            ============= ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                         $     35,442  $    34,108
   Accrued expenses and other current
    liabilities                                   91,262       88,331
   Deferred revenues                              82,159       73,743
                                            ------------- ------------
       Total current liabilities                 208,863      196,182

   Long-term liabilities                          19,029       20,471
                                            ------------- ------------
       Total liabilities                         227,892      216,653
                                            ------------- ------------

Stockholders' equity:
   Common stock                                      423          423
   Additional paid-in capital                    964,330      952,763
   Accumulated deficit                          (158,799)    (134,708)
   Treasury stock at cost, net of
    reissuances                                  (44,536)     (43,768)
   Accumulated other comprehensive income         12,098        5,671
                                            ------------- ------------
   Total stockholders' equity                    773,516      780,381
                                            ------------- ------------

       Total liabilities and stockholders'
        equity                              $  1,001,408  $   997,034
                                            ============= ============



CONTACT: Avid Technology, Inc.
Dean Ridlon, 978-640-5309
Investor Relations Director
Investor_Relations@avid.com

SOURCE: Avid Technology, Inc.