Avid Technology, Inc.
Jan 29, 2009

Avid Announces Fourth Quarter 2008 Results

TEWKSBURY, MA, Jan 29, 2009 (MARKET WIRE via COMTEX News Network) -- Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $206.7 million for the three-month period ended December 31, 2008, compared to $258.5 million for the same period in 2007. Preliminary GAAP net loss for the quarter was $31.9 million, or $.86 per share, compared to GAAP net income of $3.9 million, or $.09 per share, in the fourth quarter of 2007.

Preliminary GAAP net loss for the fourth quarter of 2008 included goodwill and intangible asset non-cash impairment charges associated with the company's Consumer Video segment, amortization of intangibles, stock-based compensation, restructuring costs, net gains from product line divestitures and related taxes collectively totaling $22.6 million. Excluding these items, non-GAAP net loss was $9.3 million for the fourth quarter, or $.25 per share. The goodwill and intangible asset impairment charge related to the Consumer Video segment was estimated at $9.6 million. Therefore the 2008 GAAP results are preliminary and there may be additional charges recorded in the three-month period ended December 31, 2008 as the company completes its annual impairment analysis for all of its business segments. The company's non-GAAP results will not be impacted by any additional impairment charges resulting from this analysis.

"We have completed our internal reorganization and we have made great progress executing on our strategy, which we believe will have a positive impact on our business as we move forward, both for our customers and shareholders," said Gary Greenfield, Avid's chairman and CEO. "While the economic climate in 2009 will be challenging, the changes we have made to our company put us in a better position to meet these challenges."

Revenues for the year ended December 31, 2008 were $844.9 million compared to revenues of $929.6 million for 2007. The 2008 revenues include $61.5 million of revenues associated with divested or discontinued product lines. Preliminary GAAP net loss for 2008 was $129.8 million, or $3.46 per share, compared to GAAP net loss of $8.0 million, or $.19 per share, for 2007. Preliminary GAAP net loss for 2008 includes $104.6 million of impairment charges, amortization, stock-based compensation, restructuring charges, net gains from divested product lines and related tax adjustments. Excluding these items, non-GAAP net loss for 2008 was $25.2 million, or $.67 per share.

At the end of 2008, the company's cash balance was $147.7 million, up $25.3 million since the end of the third quarter of 2008 primarily related to the receipt of $28.8 million of proceeds from product line divestitures.

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 earnings per share for the three- and twelve-month periods ended December 31, 2008 and 2007 are in the tables in this press release.

The company uses non-GAAP financial measures internally to manage its business, for example, in establishing its annual operating budget, in assessing segment operating performance and for measuring performance under employee incentive compensation plans. Non-GAAP financial measures are used by management in its operating and financial decision-making because management believes these measures reflect the company's ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate the company's 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 past financial results. The primary limitations associated with the company's 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 the company's operations. The company's 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 2008 financial results will be held today, January 29, 2009 at 4:30 p.m. EST. The call will be open to the public and can be accessed by dialing 719.457.2617 and referencing confirmation code 4569475. 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 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 Avid's ability to execute on its transformation strategy and meet customer needs, general economic conditions, 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 estimates only as of today and should not be relied upon as representing the company's estimates 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 is a worldwide leader in tools for film, video, audio and broadcast professionals -- as well as for home audio and video enthusiasts. Avid professional and consumer brands include Avid(R), Digidesign(R), M-Audio(R), Pinnacle Systems(R) and Sibelius(R). The vast majority of primetime television shows, feature films, commercials and chart-topping music hits are made using one or more Avid products. Whether used by seasoned professionals or beginning students, Avid's products and services enable customers to work more efficiently, productively and creatively. Avid received an Oscar(R) statuette representing the 1998 Scientific and Technical Award for the concept, design and engineering of the Avid(R) Film Composer(R) system for motion picture editing. For more information about the company's Oscar, Grammy(R) and Emmy(R) award-winning products and services, visit www.avid.com, del.icio.us, Flickr, twitter and YouTube; connect with Avid on Facebook or subscribe to Avid Industry Buzz.

Copyright 2009 Avid Technology, Inc. All rights reserved. Avid, Digidesign, Film Composer, M-Audio, Pinnacle Systems and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. Emmy is a registered trademark of ATAS/NATAS. Academy Awards and Oscar are trademarks and service marks of the Academy of Motion Picture Arts and Sciences. Grammy is a trademark of the National Academy of Recording Arts and Sciences, Inc. All other trademarks 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,
                            ----------------------- ----------------------
                               2008        2007        2008        2007
                            ----------  ----------- ----------  ----------
Net revenues:
 Products                   $  173,255  $   222,473 $  714,232  $  806,103
 Services                       33,451       36,047    130,669     123,467
                            ----------  ----------- ----------  ----------
      Total net revenues       206,706      258,520    844,901     929,570
                            ----------  ----------- ----------  ----------
Cost of revenues:
 Products                       97,182      111,625    369,186     390,725
 Services                       18,128       19,042     73,888      68,529
 Amortization of intangible
  assets                           753        3,566      7,526      16,895
 Restructuring costs             1,876        1,481      1,876       4,278
                            ----------  ----------- ----------  ----------
      Total cost of revenues   117,939      135,714    452,476     480,427
                            ----------  ----------- ----------  ----------
Gross profit                    88,767      122,806    392,425     449,143
                            ----------  ----------- ----------  ----------
Operating expenses:
 Research and development       33,291       38,050    148,598     150,707
 Marketing and selling          49,511       53,425    208,735     210,456
 General and administrative     17,422       21,399     78,591      77,463
 Amortization of intangible
  assets                         2,837        3,431     12,854      13,726
 Impairment of goodwill and
  intangible assets              9,595            -     60,852           -
 Restructuring costs, net       22,060        1,338     26,167       9,410
 Gain on sale of assets        (13,287)           -    (13,287)          -
                            ----------  ----------- ----------  ----------
      Total operating
       expenses                121,429      117,643    522,510     461,762
                            ----------  ----------- ----------  ----------
Operating income (loss)        (32,662)       5,163   (130,085)    (12,619)
Interest and other income
 (expense), net                    331        1,739      2,936       7,637
                            ----------  ----------- ----------  ----------
Income (loss) before income
 taxes                         (32,331)       6,902   (127,149)     (4,982)
Provision for (Benefit from)
 income taxes, net                (444)       3,049      2,663       2,997
                            ----------  ----------- ----------  ----------
Net income (loss)           $  (31,887) $     3,853 $ (129,812) $   (7,979)
                            ==========  =========== ==========  ==========
Net income (loss) per
 common share - basic       $    (0.86) $      0.09 $    (3.46) $    (0.19)
Net income (loss) per
 common share - diluted     $    (0.86) $      0.09 $    (3.46) $    (0.19)
Weighted-average common
 shares outstanding - basic     37,012       41,008     37,556      40,974
Weighted-average common
 shares outstanding - diluted   37,012       41,253     37,556      40,974
AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Summary of the Company's revenues and contribution margin by reportable
segment and a reconciliation of segment contribution margin to consolidated
operating income (loss):
                              Three Months Ended      Twelve Months Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
 Revenues:
    Professional Video      $  111,230  $  133,342  $  438,420  $  485,186
    Audio                       72,410      85,987     293,195     318,993
    Consumer Video              23,066      39,191     113,286     125,391
                            ----------  ----------  ----------  ----------
 Total revenues  (a)        $  206,706  $  258,520  $  844,901  $  929,570
                            ==========  ==========  ==========  ==========
 Contribution Margin:
    Professional Video      $   16,822  $   22,018  $   40,917  $   66,502
    Audio                       10,926      16,121      40,541      55,710
    Consumer Video             (11,904)      2,799     (16,135)      6,552
                            ----------  ----------  ----------  ----------
 Segment contribution margin    15,844      40,938      65,323     128,764
                            ----------  ----------  ----------  ----------
    Less:  Unallocated
     costs and expenses:
       Common costs and
        operating expenses     (21,561)    (21,874)    (85,219)    (79,523)
       Amortization of
        acquisition-related
        intangible assets       (3,590)     (6,997)    (20,380)    (30,621)
       Impairment of
        goodwill and
        intangible asset        (9,595)          -     (60,852)          -
       Stock-based
        compensation            (3,111)     (3,858)    (14,201)    (15,949)
       Restructuring costs,
        net                    (23,936)     (2,819)    (28,043)    (13,688)
       Gain on sale of
        assets                  13,287           -      13,287           -
       Other costs                   -        (227)          -      (1,602)
                            ----------  ----------  ----------  ----------
 Consolidated operating
  income (loss)             $  (32,662) $    5,163  $ (130,085) $  (12,619)
                            ==========  ==========  ==========  ==========
 (a) Includes revenues
      from divestitures
      and discontinued
      product lines of:     $   11,294  $   19,899  $   61,508  $   68,692
Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss):
                              Three Months Ended      Twelve Months Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
 GAAP net income (loss)     $  (31,887) $    3,853  $ (129,812) $   (7,979)
 Adjustments to reconcile
  to Non-GAAP net income:
    Amortization of
     intangible assets           3,590       6,997      20,380      30,621
    Impairment of goodwill
     and intangible asset        9,595           -      60,852           -
    Stock-based compensation     3,111       3,858      14,201      15,949
    Restructuring costs, net    23,936       2,819      28,043      13,688
    Gain on sale of assets     (13,287)          -     (13,287)          -
    Other costs                      -         227           -       1,602
    Related tax adjustments     (4,331)       (600)     (5,619)     (2,740)
                            ----------  ----------  ----------  ----------
 Non-GAAP net income (loss) $   (9,273) $   17,154  $  (25,242) $   51,141
                            ==========  ==========  ==========  ==========
 Weighted-average common
  shares outstanding -
  diluted                       37,012      41,253      37,556      41,450
 Non-GAAP net income (loss)
  per common share -
  diluted                   $    (0.25) $     0.42  $    (0.67) $     1.23
Stock-based compensation included in:
                              Three Months Ended      Twelve Months Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
 Cost of products revenues  $      136  $      174  $      616  $      679
 Cost of services revenues         131         133         539         829
 Research and development
  expenses                         605       1,106       2,820       4,521
 Marketing and selling
  expenses                         897       1,242       4,005       4,470
 General and administrative
  expenses                       1,342       1,203       6,221       5,450
                            ----------  ----------  ----------  ----------
                            $    3,111  $    3,858  $   14,201  $   15,949
                            ==========  ==========  ==========  ==========
AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
                                                  December 31, December 31,
                                                      2008         2007
                                                  -----------  -----------
ASSETS:
Current assets:
   Cash, cash equivalents and marketable
    securities                                    $   147,694  $   224,460
   Accounts receivable, net of allowances of
    $23,182 and $20,784 at December 31, 2008
    and 2007, respectively                            103,527      138,692
   Inventories                                         95,755      117,324
   Prepaid and other current assets                    43,969       36,788
                                                  -----------  -----------
       Total current assets                           390,945      517,264
Property and equipment, net                            38,321       46,160
Intangible assets, net                                 40,063       71,427
Goodwill                                              292,575      360,584
Other assets                                           10,801       10,518
                                                  -----------  -----------
       Total assets                               $   772,705  $ 1,005,953
                                                  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
   Accounts payable                               $    29,419  $    34,992
   Accrued expenses and other current liabilities     101,862       93,912
   Deferred revenues                                   68,581       79,771
                                                  -----------  -----------
       Total current liabilities                      199,862      208,675
Long-term liabilities                                  11,823       17,495
                                                  -----------  -----------
       Total liabilities                              211,685      226,170
                                                  -----------  -----------
Stockholders' equity:
   Common stock                                           423          423
   Additional paid-in capital                         980,563      968,339
   Accumulated deficit                               (296,974)    (155,722)
   Treasury stock at cost, net of reissuances        (124,852)     (45,823)
   Accumulated other comprehensive income               1,860       12,566
                                                  -----------  -----------
       Total stockholders' equity                     561,020      779,783
                                                  -----------  -----------
       Total liabilities and stockholders' equity $   772,705  $ 1,005,953
                                                  ===========  ===========

Investor Contact:
Tom Fitzsimmons
Email Contact
978-640-3346

Media Contact:
Amy Peterson
Email Contact
978-640-3448


SOURCE: Avid Technology, Inc.

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