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October 16, 2003 at 12:00 AM EDT

Avid Reports Strong Revenue and Profit Growth in Third Quarter

Avid Reports Strong Revenue and Profit Growth in Third QuarterTEWKSBURY, Mass.--(BUSINESS WIRE)--Oct. 16, 2003--Avid Technology, Inc. (Nasdaq: AVID) today reported strong revenue growth and increased profitability for the third quarter ended September 30, 2003. Revenues for the quarter increased by more than 10 percent to $119.1 million compared to the $107.8 million reported in the corresponding quarter in 2002. For the nine months ended September 30, 2003, revenues were $344.6 million, an increase of almost 13 percent compared to $305.9 million for the first three quarters of 2002.

Net income for the third quarter was $11.8 million or $.35 per diluted share compared to net income of $2.3 million or $.09 per diluted share for the corresponding quarter in 2002. Net income for the nine-month period ended September 30, 2003 was $25.1 million or $.78 per diluted share compared to a net loss of $1.3 million or $.05 per share for the same period in 2002.

Avid's cash and marketable securities increased during the third quarter by $36.6 million to $171.6 million on September 30, 2003. Approximately $17 million of the increase was generated through operations and the balance from employee stock program activity. Since the beginning of 2003, the company's cash and marketable securities balance has nearly doubled.

"Our third quarter results are another indicator that our long-term strategy is paying off," said David Krall, Avid's president and chief executive officer. "Year-over-year, the combination of our increasing revenue, expanding gross margins, and cost containment efforts enabled us to generate more than five times the quarterly net income posted just one year ago. We believe we've put the essential building blocks in place in all areas of our business to enable further increases in Avid's revenue and profitability."

Conference Call

A conference call to discuss Avid's third quarter 2003 financial results and the company's outlook for the fourth quarter of 2003 and full year 2004 will be held today, October 16 at 5:00 p.m. ET. The call will be open to the public. The conference call can be accessed by dialing (913) 981-5542 and referencing confirmation code 770128. 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 at for complete details 10-15 minutes prior to the start of the conference call.

The above release includes forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1996, including statements about Avid's financial outlook, products and functionality, and size and growth of existing markets. There are a number of factors that could cause actual events or results of operations to differ materially from those indicated by such forward-looking statements, such as market acceptance of Avid's products, further weakening of worldwide economic conditions and the other factors set forth under the caption "Certain Factors That May Affect Future Results" in Avid's Form 10-Q for the quarter ended June 30, 2003 and other filings with the Securities and Exchange Commission. In addition, any 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 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 Technology, Inc. is the world leader in digital nonlinear media creation, management and distribution solutions, enabling film, video, audio, animation, games, and broadcast news 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:

© 2003 Avid Technology, Inc. All rights reserved. Avid and Film Composer are either registered trademarks or trademarks of Avid Technology, Inc. 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. Oscar is a registered 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 & Sciences, Inc. All other trademarks contained herein are the property of their respective owners.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)

                           Three Months Ended     Nine Months Ended
                             September 30,           September 30,
                            2003       2002       2003        2002
                         (unaudited) (unaudited)(unaudited)(unaudited)

Net revenues               $119,090   $107,832   $344,584    $305,935
Cost of revenues             52,784     53,222    155,619     153,528
   Gross profit              66,306     54,610    188,965     152,407

Operating expenses:
   Research and
    development              20,706     20,916     63,833      61,145
   Marketing and selling     27,959     25,677     80,971      75,418
   General and
    administrative            5,670      5,454     16,632      14,985
   Restructuring and
    other costs, net             76                 1,859        (327)
   Amortization of
    intangible assets           341        257        975         861
       Total operating
        expenses             54,752     52,304    164,270     152,082

Operating income             11,554      2,306     24,695         325
Interest and other income
 (expense), net                 592        259      1,330        (192)
Income before
 income taxes                12,146      2,565     26,025         133
Provision for income
 taxes                          300        300        900       1,400

Net income (loss)           $11,846     $2,265    $25,125     ($1,267)

Net income (loss) per
 common share - basic         $0.40      $0.09      $0.88      ($0.05)

Net income (loss) per
 common share - diluted       $0.35      $0.09      $0.78      ($0.05)

Weighted average common
 shares outstanding -
 basic                       29,865     26,287     28,663      26,064

Weighted average common
 shares outstanding -
 diluted                     33,380     26,550     32,059      26,064

Condensed Consolidated Balance Sheets
(in thousands)

                                           September 30,  December 31,
                                               2003          2002
Current assets:
   Cash and marketable securities              $171,649       $89,034
   Accounts receivable, net of allowances
    of $9,646 and $10,614 at September 30,
    2003 and December 31, 2002,
    respectively                                 60,843        65,942
   Inventories                                   38,558        38,047
   Prepaid and other current assets              12,166        11,919
       Total current assets                     283,216       204,942

   Property and equipment, net                   22,309        25,731
   Acquisition-related intangible assets, net     2,205         2,600
   Other assets                                   2,869         2,530
       Total assets                            $310,599      $235,803

Current liabilities:
   Accounts payable                             $16,477       $24,297
   Accrued expenses and other current
    liabilities                                  53,789        51,032
   Deferred revenues                             42,115        35,483
       Total current liabilities                112,381       110,812

   Long term liabilities, less current
    portion                                         759         1,427

      Total stockholders' equity                197,459       123,564

       Total liabilities and stockholders'
        equity                                 $310,599      $235,803

CONTACT: Avid Technology, Inc.
Dean Ridlon, 978-640-5309

SOURCE: Avid Technology, Inc.