Avid Technology, Inc.
Jul 26, 2007

Avid Reports Second Quarter 2007 Results

Appoints Joel Legon as CFO

TEWKSBURY, Mass., Jul 26, 2007 (BUSINESS WIRE) -- Avid Technology, Inc. (NASDAQ: AVID) today reported revenue of $225.3 million for the three-month period ended June 30, 2007, compared to $222.2 million for the same period in 2006. GAAP net loss for the quarter was $6.0 million, or $.15 per share, compared to GAAP net income of $2.7 million, or $.06 per diluted share, in the second quarter of 2006.

GAAP net income in the second quarter of 2007 includes $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. For the second quarter of 2006, there was $11.8 million of amortization, stock-based compensation and related tax adjustments included in GAAP net income. Excluding these items, non-GAAP earnings per share were $.34 in the second quarter of 2006.

Avid also announced the appointment of Joel Legon to serve as the company's vice president and chief financial officer. Since joining Avid in March 2006, Legon had served as vice president and corporate controller. He had additionally served as acting chief financial officer since March 2007.

"I am pleased to report a solid Q2, with revenue and profit that were in line with our expectations," said David Krall, who will be stepping down as president and chief executive officer on July 31. "Our Video division recognized several large deals out of backlog, including France 24, one of the largest orders in our history. In Audio, which is our most consistent and profitable segment, revenue was flat organically and up 3% year-on-year including revenue generated from Sibelius. In our Consumer segment, lower sales of the TV viewing line in Europe were counterbalanced by strong sales and market share growth of our flagship Studio 11 consumer video editor."

"With a strong balance sheet, innovative products and world-class customers, Avid is well positioned as a leader in the media and entertainment industry," said Nancy Hawthorne, who will take over as interim chief executive officer on August 1. "Our customers are looking to Avid to extend that leadership into new areas as their businesses evolve. By aligning ourselves more closely with our customers' business opportunities, and taking a fresh approach to our own business processes, we believe we can deliver more value to both our customers and our shareholders."

The company also announced a strategic realignment that will result in restructuring charges of between $8 and $10 million, $1.5 million of which was recorded in Q2. This action includes the transition of video server engineering from Mountain View, CA to existing Avid facilities in Edmonton, Canada and Tewksbury, MA; a reduction in space within certain facilities; and a reduction in force of approximately 150 positions, primarily, but not exclusively, in the company's Video business unit.

Revenue for the six-month period ended June 30, 2007 was $444.2 million, compared to revenue of $440.3 million for the same period in 2006. GAAP net loss for the first six months of 2007 was $6 million, or $.15 per share, compared to GAAP net income of $6.0 million, or $.14 per diluted share, for the same period in 2006. GAAP net loss for the six-month period ended June 30, 2007 includes $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 per diluted share for the first half of 2007. GAAP net income for the six-month period ended June 30, 2006 includes $24.6 million of amortization, stock-based compensation, restructuring charges, in-process research and development and related tax adjustments. Excluding these items non-GAAP earnings per share were $.71 for the first half 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 six-month periods ended June 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 second quarter 2007 financial results will be held today, July 26, 2007, at 5:00 p.m. EDT. The call will be open to the public and can be accessed by dialing (719) 457-2727 and referencing confirmation code 2323418. 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, including 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 estimate changes.

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  Six Months Ended
                                      June 30,           June 30,
                                 ------------------ ------------------
                                   2007      2006     2007      2006
                                 --------- -------- --------- --------
Net revenues
 Products                        $192,370  $197,960 $384,813  $392,323
 Services                          32,956    24,266   59,411    47,973
                                 --------- -------- --------- --------
      Total net revenues          225,326   222,226  444,224   440,296

Cost of revenues
 Products                          92,991    93,819  185,703   185,180
 Services                          17,454    13,812   33,433    27,127
 Amortization of intangible
  assets                            4,761     5,016    9,233    10,096
                                 --------- -------- --------- --------
      Total cost of revenues      115,206   112,647  228,369   222,403

                                 --------- -------- --------- --------
Gross profit                      110,120   109,579  215,855   217,893
                                 --------- -------- --------- --------

Operating expenses
 Research and development          38,444    35,617   76,186    71,113
 Marketing and selling             56,505    52,583  108,199   102,495
 General and administrative        17,698    15,853   35,550    30,990
 Amortization of intangible
  assets                            3,431     3,977    6,863     7,642
 Restructuring costs, net           1,517         -    1,775     1,066
 In-process research and
  development                           -         -        -       310
                                 --------- -------- --------- --------
      Total operating expenses    117,595   108,030  228,573   213,616

Operating income (loss)            (7,475)    1,549  (12,718)    4,277
Interest and other income
 (expense), net                     2,023     1,881    3,918     3,852
                                 --------- -------- --------- --------
Income (loss) before income
 taxes                             (5,452)    3,430   (8,800)    8,129

Provision for (benefit from)
 income taxes, net                    547       731   (2,821)    2,084
                                 --------- -------- --------- --------

Net income (loss)                $ (5,999) $  2,699 $ (5,979) $  6,045
                                 ========= ======== ========= ========

Net income (loss) per common
 share - basic                   $  (0.15) $   0.06 $  (0.15) $   0.14

Net income (loss) per common
 share - diluted                 $  (0.15) $   0.06 $  (0.15) $   0.14

Weighted-average common shares
 outstanding - basic               40,940    42,273   41,046    42,205

Weighted-average common shares
 outstanding - diluted             40,940    43,057   41,046    43,126

AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)


Segment revenue and operating income (loss):

                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                               ------------------- -------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
 Professional Video
    Revenue                    $120,318  $118,864  $232,989  $235,064
    Operating income              2,340     7,297     3,916    18,400

 Audio
    Revenue                    $ 76,763  $ 74,262  $155,686  $147,009
    Operating income              6,432     9,337    13,698    18,090

 Consumer Video
    Revenue                    $ 28,245  $ 29,100  $ 55,549  $ 58,223
    Operating loss                 (962)   (1,809)   (3,333)   (4,381)

 Total
    Total segment revenue      $225,326  $222,226  $444,224  $440,296
    Total segment operating
     income                       7,810    14,825    14,281    32,109



Reconciliation of GAAP operating income to Non-
 GAAP operating income:

                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                               ------------------- -------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------

 Consolidated GAAP operating
  income (loss)                $ (7,475) $  1,549  $(12,718) $  4,277

 Adjustments to reconcile to
  Non-GAAP operating income:
    Amortization of intangible
     assets                       8,192     8,993    16,096    17,738
    Stock-based compensation      4,551     4,283     8,103     8,718
    Restructuring costs, net      1,517         -     1,775     1,066
    Legal Settlements             1,025         -     1,025         -
    In-process research and
     development                      -         -         -       310
                               --------- --------- --------- ---------
 Total operating income for
  reportable segments          $  7,810  $ 14,825  $ 14,281  $ 32,109
                               ========= ========= ========= =========


Reconciliation of GAAP net income to Non-GAAP net
 income:

 GAAP net income (loss)        $ (5,999) $  2,699  $ (5,979) $  6,045

 Adjustments to reconcile to
  Non-GAAP net income:
    Amortization of intangible
     assets                       8,192     8,993    16,096    17,738
    Stock-based compensation      4,551     4,283     8,103     8,718
    Restructuring costs, net      1,517         -     1,775     1,066
    Legal Settlements             1,025         -     1,025         -
    In-process research and
     development                      -         -         -       310
    Related tax adjustments      (1,099)   (1,481)   (2,214)   (3,251)
                               --------- --------- --------- ---------
 Non-GAAP net income           $  8,187  $ 14,494  $ 18,806  $ 30,626
                               ========= ========= ========= =========


 Weighted-average common
  shares outstanding - diluted   41,517    43,057    41,653    43,126

 Non-GAAP net income per
  common share - diluted       $   0.20  $   0.34  $   0.45  $   0.71


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   Six Months Ended
Stock-based compensation            June 30,            June 30,
 included in:
                               ------------------- -------------------
                                 2007      2006      2007      2006
                               --------- --------- --------- ---------
 Cost of products revenues     $    182  $    131  $    323  $    270
 Cost of services revenues          251       208       448       427
 Research and development
  expense                         1,354     1,244     2,397     2,550
 Marketing and selling expense    1,201     1,187     2,136     2,448
 General and administrative
  expense                         1,563     1,513     2,799     3,023
                               --------- --------- --------- ---------
                               $  4,551  $  4,283  $  8,103  $  8,718
                               ========= ========= ========= =========

AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

                                                June 30,  December 31,
                                                  2007        2006
                                               ---------- ------------

ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                 $ 160,048   $  172,107
   Accounts receivable, net of allowances of
    $19,333 and $23,087 at June 30, 2007 and
    December 31, 2006, respectively              138,450      138,578
   Inventories                                   140,290      144,238
   Prepaid and other current assets               35,772       29,016
                                               ---------- ------------
       Total current assets                      474,560      483,939

   Property and equipment, net                    45,004       40,483
   Intangible assets, net                         85,952      102,048
   Goodwill                                      360,550      360,143
   Other assets                                   10,713       10,421
                                               ---------- ------------

       Total assets                            $ 976,779   $  997,034
                                               ========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                            $  32,090   $   34,108
   Accrued expenses and other current
    liabilities                                   82,257       88,331
   Deferred revenues                              79,235       73,743
                                               ---------- ------------
       Total current liabilities                 193,582      196,182

   Long-term liabilities                          18,190       20,471
                                               ---------- ------------
       Total liabilities                         211,772      216,653
                                               ---------- ------------

Stockholders' equity:
   Common stock                                      423          423
   Additional paid-in capital                    960,345      952,763
   Accumulated deficit                          (146,298)    (134,708)
   Treasury stock at cost, net of reissuances    (57,578)     (43,768)
   Accumulated other comprehensive income          8,115        5,671
                                               ---------- ------------
   Total stockholders' equity                    765,007      780,381
                                               ---------- ------------

       Total liabilities and stockholders'
        equity                                 $ 976,779   $  997,034
                                               ========== ============

SOURCE: Avid Technology, Inc.

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