Avid Technology, Inc.
Jul 20, 2006

Avid Reports Solid Second Quarter 2006 Results; Announces Authorization to Repurchase Up to $50 Million of Stock

TEWKSBURY, Mass.--(BUSINESS WIRE)--July 20, 2006--Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $222.2 million for the three month period ended June 30, 2006 compared to $160.1 million for the same period in 2005. GAAP net income for the quarter was $2.7 million, or $.06 per diluted share compared to GAAP net income of $13.6 million, or $.37 per diluted share, in the second quarter of 2005. GAAP net income in the second quarter of 2006 includes $11.8 million of non-cash acquisition related charges, non-cash stock-based compensation and related tax adjustments. This compares to $2.3 million of acquisition related charges, stock-based compensation and related tax adjustments included in GAAP net income for the second quarter of 2005.

"Our June quarter results were solid," said David Krall, Avid's president and chief executive officer. "Contributing substantially to these results was the on-schedule delivery of all of the new products announced at the National Association of Broadcasters convention in April, that were scheduled to ship during the second quarter. We continue to emphasize the importance of delivering new products to our customers on time, and our Interplay nonlinear workflow engine is still expected to ship in the third quarter. In broadcast, we had a strong bookings quarter and increased our backlog substantially. We continue to rebuild our consumer business, and the improvements that have been made to Pinnacle Studio 10 are being reflected by significant increases in user satisfaction ratings. Finally, our audio business had another good quarter, highlighted by strong performances in both our home recording and live sound markets."

Revenues for the six month period ended June 30, 2006, were $440.3 million compared to revenues of $326.1 million for the same period in 2005. GAAP net income for the first six months of 2006 was $6.0 million, or $.14 per diluted share, compared to GAAP net income of $33.3 million, or $.90 per diluted share, for the same period in 2005. GAAP net income for the six month period ended June 30, 2006 includes $24.6 million of non-cash acquisition-related amortization, stock-based compensation charges, restructuring charges, in-process research and development, and related tax adjustments. This compares to $4.8 million of acquisition-related amortization, stock-based compensation and related tax adjustments included in GAAP net income for the six month period ended June 30, 2005.

Stock Repurchase Program

Avid also announced that its Board of Directors approved a program to repurchase up to $50 million of stock through transactions on the open market, in block trades or otherwise. The stock repurchase program will be funded using the company's working capital. As of June 30, 2006, the company had cash, cash equivalents and marketable securities of approximately $238.1 million.

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 second quarter 2006 financial results and the company's outlook for the balance of 2006 will be held today, July 20, 2006, at 5:00 p.m. EDT. The call will be open to the public, and can be accessed by dialing (913) 981-5509 and referencing confirmation code 9034125. 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, fluctuating currency exchange rates, 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, Interplay, Media Composer, Pinnacle Studio 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,
                               ------------------- -------------------
                                  2006      2005      2006      2005
                               --------- --------- --------- ---------
Revenue
  Product                      $197,512  $141,434  $391,534  $288,812
  Service                        24,714    18,617    48,762    37,240
                               --------- --------- --------- ---------
       Total Revenue            222,226   160,051   440,296   326,052

Cost of Revenue
  Product                        93,819    61,244   185,180   122,141
  Service                        13,812    10,027    27,127    20,097
  Amortization of intangible
   assets                         5,016       282    10,096       563
                               --------- --------- --------- ---------
       Total Cost of Revenue    112,647    71,553   222,403   142,801

                               --------- --------- --------- ---------
Gross Profit                    109,579    88,498   217,893   183,251
                               --------- --------- --------- ---------

Operating Expenses
  Research and development       35,617    24,910    71,113    49,589
  Marketing and selling          52,583    38,452   102,495    76,294
  General and administrative     15,853    10,471    30,990    20,773
  In-process research and
   development                        -         -       310         -
  Amortization of intangible
   assets                         3,977     1,593     7,642     3,185
  Restructuring charges               -         -     1,066         -
                               --------- --------- --------- ---------
       Total Operating Expense  108,030    75,426   213,616   149,841

Operating income                  1,549    13,072     4,277    33,410
Interest and other income
 (expense), net                   1,881     1,179     3,852     2,016
                               --------- --------- --------- ---------
Income before income taxes        3,430    14,251     8,129    35,426

Provision for income taxes          731       685     2,084     2,114
                               --------- --------- --------- ---------

Net Income                       $2,699   $13,566    $6,045   $33,312
                               ========= ========= ========= =========

Net income per common share -
 basic                            $0.06     $0.39     $0.14     $0.95

Net income per common share -
 diluted                          $0.06     $0.37     $0.14     $0.90

Weighted average common shares
 outstanding - basic             42,273    35,177    42,205    35,083

Weighted average common shares
 outstanding - diluted           43,057    37,024    43,126    37,154



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

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

                                              Three Months Ended
                                                   June 30,
                                        ------------------------------
                                          2006           2005
                                        ------- ------- ------ -------
                                                per            per
                                                diluted        diluted
                                                share          share
                                        --------------- -------------
 Amortization of intangible assets       8,993   $0.21  1,875   $0.05
 Stock-based compensation                4,283   $0.10    601   $0.02
 Related tax adjustments                (1,481) $(0.03)  (172) $(0.01)
                                        -------         ------
    Total                               11,795   $0.28  2,304   $0.06


                                              Six Months Ended
                                                  June 30,
                                       -------------------------------
                                         2006           2005
                                       ------- ------- ------ --------
                                               per            per
                                               diluted        diluted
                                               share          share
                                      ---------------- --------------
 Amortization of intangible assets     17,738   $0.41  3,748    $0.10
 Stock-based compensation               8,718   $0.20  1,372    $0.04
 Restructuring charges                  1,066   $0.02      -       $-
 In-process research and development      310   $0.01      -       $-
 Related tax adjustments               (3,251) $(0.08)  (345)  $(0.01)
                                       -------         ------
    Total                              24,581   $0.57  4,775    $0.13



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

                                              June 30,    December 31,
                                               2006          2005
                                            ------------ -------------
ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                 $238,147      $238,430
   Accounts receivable, net of allowances
    of $22,212 and $22,233 at June 30, 2006
    and December 31, 2005, respectively         143,934       140,669
   Inventories                                  121,979        96,845
   Prepaid and other current assets              23,276        25,733
                                            ------------ -------------
       Total current assets                     527,336       501,677

   Property and equipment, net                   38,096        38,563
   Goodwill                                     410,895       396,902
   Intangible assets, net                       110,248       118,676
   Other assets                                   6,410         6,228
                                            ------------ -------------
       Total assets                          $1,092,985    $1,062,046
                                            ============ =============

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                             $52,459       $43,227
   Accrued expenses and other current
    liabilities                                  92,501        96,311
   Deferred revenues                             66,913        63,184
                                            ------------ -------------
       Total current liabilities                211,873       202,722

   Long term liabilities                         18,790        19,727
                                            ------------ -------------
       Total liabilities                        230,663       222,449
                                            ------------ -------------

Stockholders' equity:
   Common stock                                     423           421
   Additional paid-in capital                   939,907       928,703
   Accumulated deficit                          (82,750)      (88,795)
   Deferred compensation                              -        (1,830)
   Accumulated other comprehensive income         4,742         1,098
                                            ------------ -------------
   Total stockholders' equity                   862,322       839,597
                                            ------------ -------------

       Total liabilities and stockholders'
        equity                               $1,092,985    $1,062,046
                                            ============ =============



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



SOURCE: Avid Technology, Inc.