Avid Technology, Inc.
Feb 1, 2007

Avid Reports Fourth Quarter 2006 Results

TEWKSBURY, Mass.--(BUSINESS WIRE)--Feb. 1, 2007--Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $239.0 million for the three-month period ended December 31, 2006 compared to $245.0 million for the same period in 2005. GAAP net loss for the quarter was $52.6 million, or $1.28 per share compared to GAAP net income of $18.4 million, or $.43 per diluted share, in the fourth quarter of 2005.

GAAP net loss in the fourth quarter of 2006 includes a non-cash charge of $53.0 million for the impairment of goodwill associated with the acquisition of Pinnacle Systems in August 2005. As a result of completing its annual goodwill impairment test in the fourth quarter, the company concluded that the fair value of the consumer business unit had declined below the book value, resulting in the impairment charge.

In addition, the company took a restructuring charge of $3.2 million as a result of reorganizations within the Professional Video and Consumer Video segments that took place during the quarter.

These charges plus amortization, stock-based compensation and related tax adjustments totaled $75.1 million during the fourth quarter. Excluding these items, non-GAAP earnings per share were $.54. For the fourth quarter of 2005, there was $11.6 million of acquisition-related charges, including amortization, stock-based compensation, restructuring costs and related tax adjustments included in GAAP net income. Excluding these items, non-GAAP earnings per share were $.69 in the fourth quarter of 2005.

"As we look back at our performance in Q4, and the full year of 2006, it's clear that our results were mixed. While our big deal backlog continued to build each quarter throughout the year, including Q4, bringing us to record levels, recognizing revenue out of this backlog continued to be unpredictable. This led to a shortfall in our video business for the fourth quarter," said David Krall, Avid's president and chief executive officer. "Our audio business recovered nicely from the slowdown in demand that we saw in Q3 for Digidesign's Pro Tools|HD® systems, allowing a strong finish for the year. In consumer, we had lower than expected results for the year as the business was slow to recover from the product quality problems with the Studio 10 software. We took an impairment charge in the fourth quarter to reflect the decline in the fair value of the consumer business unit. Nevertheless, we believe that the product quality problems are now behind us, and are pleased that we achieved higher-than expected consumer revenues in Q4 based on strong demand in Europe. We have taken a number of steps to position all of our businesses more favorably for the coming year, including a cost restructuring in our consumer business which took place in Q4. Graham Sharp, our new general manager for our video division, has already implemented a number of changes that are intended to improve the segment's operations. However, we do not expect the full benefits of these efforts to be realized immediately."

Revenues for the year ended December 31, 2006, were $910.6 million compared to revenues of $775.4 million for 2005. GAAP net loss for 2006 was $42.9 million, or $1.03 per share, compared to GAAP net income of $34.0 million, or $.86 per diluted share, for 2005. GAAP net loss for 2006 includes $113.9 million of impairment charges, amortization, stock-based compensation, restructuring costs, in-process research and development, and related tax adjustments. Excluding these items, non-GAAP earnings per share were $1.67 for 2006. GAAP net income for 2005 includes $58.4 million of amortization, stock-based compensation, restructuring costs, in-process research and development, and related tax adjustments. Excluding these items non-GAAP earnings per share were $2.34 for 2005.

Use of Non-GAAP Financial Measures

This press release contains "non-GAAP financial measures" under the rules of the 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 fourth quarters of 2006 and 2005 and fiscal years 2006 and 2005 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, to assess segment operating performance and for measuring performance under our employee incentive compensation plans. Non-GAAP financial measures are used by our management in their 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 fourth quarter 2006 financial results will be held today, February 1, 2007, at 5:00 p.m. EST. The call will be open to the public, and can be accessed by dialing (719) 457-2681 and referencing confirmation code 8736424. The call and subsequent replay will also be available on Avid's web site. 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.

The above release is subject to the completion and filing of our Annual Report on Form 10-K. 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 market acceptance of Avid's existing and new products, Avid's ability to anticipate customer needs, competitive factors, including pricing pressures, delays in product shipments, and the 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, Pro Tools|HD 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  Twelve Months Ended
                                  December 31,        December 31,
                               ------------------- -------------------
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------
Net revenues
 Product                       $213,405  $219,812  $809,002  $692,787
 Services                        25,644    25,159   101,576    82,656
                               --------- --------- --------- ---------
      Total net revenues        239,049   244,971   910,578   775,443

Cost of revenues
 Product                        104,101   104,112   388,483   308,386
 Service                         15,123    13,590    56,218    45,274
 Amortization of intangible
  assets                          4,889     6,610    21,193    11,027
                               --------- --------- --------- ---------
      Total cost of revenues    124,113   124,312   465,894   364,687

                               --------- --------- --------- ---------
Gross Profit                    114,936   120,659   444,684   410,756
                               --------- --------- --------- ---------

Operating expenses
 Research and development        35,000    32,109   141,363   111,334
 Marketing and selling           50,831    49,892   203,967   170,787
 General and administrative      16,239    14,186    63,250    47,147
 Amortization of intangible
  assets                          3,520     3,465    14,460     9,194
 Impairment of intangible
  assets                         53,000         -    53,000         -
 Restructuring costs              3,167     1,158     2,613     3,155
 In-process research and
  development                         -         -       879    32,390
                               --------- --------- --------- ---------
      Total operating expenses  161,757   100,810   479,532   374,007

Operating income (loss)         (46,821)   19,849   (34,848)   36,749
Interest and other income
 (expense), net                   1,591     1,851     7,274     5,586
                               --------- --------- --------- ---------
Income (loss) before income
 taxes                          (45,230)   21,700   (27,574)   42,335

Provision for income taxes, net   7,335     3,275    15,353     8,355
                               --------- --------- --------- ---------

Net Income (Loss)              $(52,565)  $18,425  $(42,927)  $33,980
                               ========= ========= ========= =========

Net income (loss) per common
 share - basic                   $(1.28)    $0.44    $(1.03)    $0.90

Net income (loss) per common
 share - diluted                 $(1.28)    $0.43    $(1.03)    $0.86

Weighted average common shares
 outstanding - basic             41,016    41,859    41,736    37,762

Weighted average common shares
 outstanding - diluted           41,016    43,309    41,736    39,517
AVID TECHNOLOGY, INC
(unaudited - in thousands, except per share data)


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

                                 Three Months Ended   Twelve Months
                                                           Ended
                                    December 31,       December 31,
                                 ------------------ ------------------
                                   2006     2005      2006     2005
                                 --------- -------- --------- --------

 GAAP net income (loss)          $(52,565) $18,425  $(42,927) $33,980

 Adjustments to reconcile to Non-
  GAAP net income:
    Amortization of intangible
     assets                         8,409   10,075    35,653   20,221
    Impairment of intangible
     assets                        53,000        -    53,000        -
    Stock-based compensation        3,561      333    16,605    2,163
    Restructuring costs             3,167    1,158     2,613    3,155
    In-process research and
     development                        -        -       879   32,390
    Related tax adjustments         6,954       61     5,197      451
                                 --------- -------- --------- --------
 Total adjustments to reconcile
  to Non-GAAP net income           75,091   11,627   113,947   58,380

                                 --------- -------- --------- --------
 Non-GAAP net income              $22,526  $30,052   $71,020  $92,360
                                 ========= ======== ========= ========

 Weighted average common shares
  outstanding - diluted            41,734   43,309    42,570   39,517

 Non-GAAP net income per common
  share - diluted                   $0.54    $0.69     $1.67    $2.34



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 Q4 2006 and YTD 2006, is comprised of the
 following:

                                 Three Months Ended   Twelve Months
                                                           Ended
Stock-based compensation included   December 31,       December 31,
 in:
                                 ------------------ ------------------
                                   2006     2005      2006     2005
                                 --------- -------- --------- --------
 Cost of product revenues            $118       $-      $516       $-
 Cost of services revenues            178        -       801        -
 Research and development expense   1,028       29     4,830      158
 Marketing and selling expense      1,054      110     4,692      602
 General and administrative
  expense                           1,183      194     5,766    1,403
                                 --------- -------- --------- --------
                                   $3,561     $333   $16,605   $2,163
                                 ========= ======== ========= ========
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

                                                December    December
                                                    31,        31,
                                                  2006        2005
                                                ---------- -----------

ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                  $ 172,107    $238,430
   Accounts receivable, net of allowances of
    $22,331 and $22,233 at December 31, 2006
    and 2005, respectively                        138,578     140,669
   Inventories                                    144,238      96,845
   Prepaid and other current assets                29,016      25,733
                                                ---------- -----------
       Total current assets                       483,939     501,677

   Property and equipment, net                     40,483      38,563
   Goodwill                                       360,143     396,902
   Intangible assets, net                         102,048     118,676
   Other assets                                    10,421       6,228
                                                ---------- -----------

       Total assets                             $ 997,034  $1,062,046
                                                ========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                               $34,108     $43,227
   Accrued expenses and other current
    liabilities                                    88,331      96,311
   Deferred revenues                               73,743      62,863
                                                ---------- -----------
       Total current liabilities                  196,182     202,401

   Long term liabilities                           20,471      20,048
                                                ---------- -----------
       Total liabilities                          216,653     222,449
                                                ---------- -----------

Stockholders' equity:
   Common stock                                       423         421
   Additional paid-in capital                     952,763     928,703
   Accumulated deficit                           (134,708)    (88,795)
   Treasury stock at cost, net of reissuances     (43,768)          -
   Deferred compensation                                -      (1,830)
   Accumulated other comprehensive income           5,671       1,098
                                                ---------- -----------
   Total stockholders' equity                     780,381     839,597
                                                ---------- -----------

       Total liabilities and stockholders'
        equity                                  $ 997,034  $1,062,046
                                                ========== ===========

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

SOURCE: Avid Technology, Inc.