Avid Technology, Inc.
Oct 26, 2006

Avid Reports Third Quarter 2006 Results

TEWKSBURY, Mass.--(BUSINESS WIRE)--Oct. 26, 2006--Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $231.2 million for the three-month period ended September 30, 2006 compared to $204.4 million for the same period in 2005. GAAP net income for the quarter was $3.6 million, or $.08 per diluted share compared to a GAAP net loss of $17.8 million, or $.46 per diluted share, in the third quarter of 2005. GAAP net income in the third quarter of 2006 includes $14.3 million of non-cash charges including amortization, in-process research and development, stock-based compensation, restructuring and related tax adjustments. This compares to $42 million of non-cash acquisition-related charges including amortization, in-process research and development, stock-based compensation, restructuring costs and related tax adjustments included in the GAAP net loss for the third quarter of 2005.

"Our professional video business had a solid quarter, with record broadcast bookings driving a 23% sequential increase in that segment's backlog, and healthy demand for our HD-enabled postproduction solutions yielding growth in our post business," said David Krall, Avid's president and chief executive officer. "As previously announced, we had a slowdown in demand at quarter-end for Digidesign's Pro Tools|HD® systems. Now that many of the best-selling third-party Pro Tools® plug-ins have been ported to the Intel-based Mac platform, we expect Pro Tools|HD demand to improve in Q4. We've also addressed the stability issue with Pinnacle Studio 10, and are now focusing our development efforts on an upcoming release of Pinnacle Studio for the new Windows Vista operating system."

Revenues for the nine-month period ended September 30, 2006, were $671.5 million compared to revenues of $530.5 million for the same period in 2005. GAAP net income for the first nine months of 2006 was $9.6 million, or $.22 per diluted share, compared to GAAP net income of $15.6 million, or $.41 per diluted share, for the same period in 2005. GAAP net income for the nine-month period ended September 30, 2006 includes $38.9 million of non-cash amortization, stock-based compensation, restructuring costs, in-process research and development, and related tax adjustments. This compares to $46.8 million of acquisition-related charges including in-process research and development, restructuring costs, stock-based compensation and related tax adjustments included in GAAP net income for the nine-month period ended September 30, 2005.

Use of Non-GAAP Financial Measures

This press release may contain "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. We believe it is useful for ourselves and investors to review both GAAP and non-GAAP measures in order to assess our performance. We also believe these non-GAAP financial measures are a meaningful measure of our operating performance and will assist investors in understanding our results of operations on a comparative basis.

Conference Call

A conference call to discuss Avid's third quarter 2006 financial results will be held today, October 26, 2006, at 5:00 p.m. EDT. The call will be open to the public, and can be accessed by dialing (913) 981-4902 and referencing confirmation code 8103614. 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 10-15 minutes prior to the start of the conference call.

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 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.

© 2006 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, Pinnacle Studio, 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   Nine Months Ended
                                  September 30,       September 30,
                               ------------------- -------------------
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------
Revenue
 Product                       $203,274  $183,658  $595,597  $472,975
 Service                         27,959    20,762    75,932    57,497
                               --------- --------- --------- ---------
    Total Revenue               231,233   204,420   671,529   530,472

Cost of Revenue
 Product                         99,202    82,133   284,382   204,274
 Service                         13,968    11,587    41,095    31,684
 Amortization of intangible
  assets                          6,208     3,854    16,304     4,417
                               --------- --------- --------- ---------
    Total Cost of Revenue       119,378    97,574   341,781   240,375

                               --------- --------- --------- ---------
Gross Profit                    111,855   106,846   329,748   290,097
                               --------- --------- --------- ---------

Operating Expenses
 Research and development        35,250    29,636   106,363    79,225
 Marketing and selling           50,641    44,601   153,136   120,895
 General and administrative      16,021    12,188    47,011    32,961
 In-process research and
  development                       569    32,390       879    32,390
 Amortization of intangible
  assets                          3,298     2,544    10,940     5,729
 Restructuring charges
  (recoveries)                   (1,620)    1,997      (554)    1,997
                               --------- --------- --------- ---------
    Total Operating Expenses    104,159   123,356   317,775   273,197

Operating income (loss)           7,696   (16,510)   11,973    16,900
Interest and other income
 (expense), net                   1,832     1,719     5,683     3,735
                               --------- --------- --------- ---------
Income (loss) before income
 taxes                            9,528   (14,791)   17,656    20,635

Provision for income taxes        5,935     2,966     8,018     5,080
                               --------- --------- --------- ---------

Net Income (Loss)                $3,593  ($17,757)   $9,638   $15,555
                               ========= ========= ========= =========

Net income (loss) per common
 share - basic                    $0.09    ($0.46)    $0.23     $0.43

Net income (loss) per common
 share - diluted                  $0.08    ($0.46)    $0.22     $0.41

Weighted average common shares
 outstanding - basic             41,531    38,935    41,978    36,381

Weighted average common shares
 outstanding - diluted           42,281    38,935    42,845    38,217


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


Net income (loss) includes the following items that were highlighted
 in the text of this press release:


                                           Three Months Ended
                                              September 30,
                                   -----------------------------------
                                         2006              2005
                                   ----------------- -----------------

                                              per               per
                                             diluted           diluted
                                              share             share
                                   -------- ----------------- --------
  Amortization of intangible
   assets                           $9,506    $0.23   $6,398    $0.16
  Stock-based compensation           4,326    $0.10      458    $0.01
  Restructuring charges
   (recoveries)                     (1,620)  $(0.04)   1,997    $0.05
  In-process research and
   development                         569    $0.01   32,390    $0.80
  Related tax adjustments            1,494    $0.04      735    $0.02
                                   -------- -------- -------- --------
     Total                         $14,275    $0.34  $41,978    $1.04


                                            Nine Months Ended
                                              September 30,
                                   -----------------------------------
                                         2006              2005
                                   ----------------- -----------------

                                              per               per
                                             diluted           diluted
                                              share             share
                                  --------- ----------------- --------
  Amortization of intangible
   assets                          $27,244    $0.64  $10,146    $0.26
  Stock-based compensation          13,044    $0.30    1,830    $0.05
  Restructuring charges
   (recoveries)                       (554)  $(0.01)   1,997    $0.05
  In-process research and
   development                         879    $0.02   32,390    $0.85
  Related tax adjustments           (1,757)  $(0.04)     390    $0.01
                                   -------- -------- -------- --------
     Total                         $38,856    $0.91  $46,753    $1.22
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 Q3 2006 and Q3 YTD 2006, is comprised of
 the following:

                                       Three Months     Nine Months
                                            Ended           Ended
Stock-based compensation included in:  September 30,   September 30,
                                       -------------- ----------------
                                        2006    2005    2006    2005
                                       ------- ------ -------- -------
 Cost of product revenues              $  128  $   -  $   398  $    -
 Cost of service revenues                 196      -      623       -
 Research and development expense       1,252     36    3,802     129
 Marketing and selling expense          1,190    137    3,638     492
 General and administrative expense     1,560    285    4,583   1,209
                                       ------- ------ -------- -------
                                       $4,326  $ 458  $13,044  $1,830
                                       ======= ====== ======== =======
AVID TECHNOLOGY, INC
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

                                          September 30,   December 31,
                                             2006            2005
                                        ---------------- -------------

ASSETS:
Current assets:
   Cash, cash equivalents and
    marketable securities                    $  159,731    $  238,430
   Accounts receivable, net of
    allowances of $22,326 and $22,233
    at September 30, 2006 and December
    31, 2005, respectively                      149,073       140,669
   Inventories                                  134,390        96,845
   Prepaid and other current assets              26,186        25,733
                                        ---------------- -------------
       Total current assets                     469,380       501,677

   Property and equipment, net                   39,362        38,563
   Goodwill                                     424,735       396,902
   Intangible assets, net                       110,451       118,676
   Other assets                                   6,421         6,228
                                        ---------------- -------------

       Total assets                          $1,050,349    $1,062,046
                                        ================ =============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                          $   44,759    $   43,227
   Accrued expenses and other current
    liabilities                                  96,728        96,311
   Deferred revenues                             67,235        62,863
                                        ---------------- -------------
       Total current liabilities                208,722       202,401

   Long term liabilities                         20,105        20,048
                                        ---------------- -------------
       Total liabilities                        228,827       222,449
                                        ---------------- -------------

Stockholders' equity:
   Common stock                                     423           421
   Additional paid-in capital                   944,911       928,703
   Accumulated deficit                          (80,282)      (88,795)
   Treasury stock at cost, net of
    reissuances                                 (47,924)            -
   Deferred compensation                              -        (1,830)
   Accumulated other comprehensive
    income                                        4,394         1,098
                                        ---------------- -------------
   Total stockholders' equity                   821,522       839,597
                                        ---------------- -------------

       Total liabilities and
        stockholders' equity                 $1,050,349    $1,062,046
                                        ================ =============



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

SOURCE: Avid Technology, Inc.