Avid Announces Third Quarter 2008 Results and Continued Business Transformation

TEWKSBURY, MA, Oct 23 (MARKET WIRE) --
Avid Technology, Inc. (NASDAQ: AVID) today reported revenue of $217.1
million for the three-month period ended September 30, 2008, compared to
$226.8 million for the same period in 2007. GAAP net loss for the quarter
was $66.4 million, or $1.80 per share, compared to GAAP net loss of $5.9
million, or $.14 per share, in the third quarter of 2007.

GAAP net loss in the third quarter of 2008 included goodwill and
intangible asset impairment charges associated with the 2005 Pinnacle
acquisition, amortization, stock-based compensation, restructuring
charges and related tax adjustments totaling $62.0 million. Excluding
these items, non-GAAP loss per share was $.12. For the third quarter of
2007, GAAP net loss included $21.0 million of amortization, stock-based
compensation, restructuring charges, other costs and related tax
adjustments. Excluding these items, non-GAAP earnings per diluted share
were $.37 in the third quarter of 2007.

As part of the company's business transformation efforts, Avid also
announced today plans to divest the Softimage(R) 3D animation product
line. In addition, the company announced a reduction in workforce to
better align its cost structure around the core businesses.

"We've made solid progress in transforming Avid, by organizing around our
customers, delivering solutions that will help our customers succeed, and
taking necessary steps to align our cost structure to support our core
product lines," said Gary Greenfield, Avid's chairman and CEO. "We are
pleased with our progress and plan to leverage Avid's collective audio and
video strengths, from the consumer to the enterprise, in ways that will
deliver sustainable value to customers and prospects."

Revenue for the nine-month period ended September 30, 2008 was $638.2
million, compared to revenue of $671.1 million for the same period in
2007. GAAP net loss for the first nine months of 2008 was $97.9 million,
or $2.59 per share, compared to GAAP net loss of $11.8 million, or $.29
per share, for the same period in 2007. GAAP net loss for the nine-month
period ended September 30, 2008 included $82.0 million of impairment
charges, amortization, stock-based compensation, restructuring charges
and related tax adjustments. Excluding these items, the non-GAAP loss per
share was $.42 per share for the first nine months of 2008. GAAP net loss
for the nine-month period ended September 30, 2007 included $45.8 million
of amortization, stock-based compensation, restructuring charges, other
costs and related tax adjustments. Excluding these items, non-GAAP
earnings per diluted share were $.82 for the first nine months of 2007.

At September 30, 2008, the company's cash balance was $122.4 million, down
$102.0 million since the end of 2007. During the first quarter of 2008,
the company used $93.2 million in cash to repurchase 4.3 million shares of
common stock under the previously-announced share buyback program.

Recent Highlights

-- The release of Avid(R) DS 10 - a solution designed to save customers
time and money by offering professional editing, compositing, keying, image
retouching, and paint and graphics capabilities in a single application.

-- The introduction of Avid automation to the European marketplace for
the first time - integrating the broadcast master control solutions Avid
acquired from Sundance Digital.

-- BusinessWeek named Avid's Digidesign(R) 003(R) Factory, a portable
digital audio production console for aspiring musicians and producers, as a
recipient of this year's prestigious IDEA Award for Best Global Design. The
003 Factory was awarded a bronze medal in the highly competitive
Entertainment category. M-Audio also received the prestigious Best Buy
BRAVO! Award in the Musical Instruments category.

-- All of the Emmy(R) Award winners across 31 Outstanding Picture
Editing, Outstanding Sound Editing/Mixing, and Outstanding Program
categories at the 60th Annual Emmy Awards used at least one system from
Avid to create this year's top television programming. A majority of these
programs employed workflows consisting of multiple systems from the various
Avid brands. In total, more than 140 nominees in 38 categories used Avid
brand systems.

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 diluted
earnings per share for the three- and nine-month periods ended September
30, 2008 and 2007 are in the tables attached to 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 third quarter 2008 financial results
will be held today, October 23, 2008, at 4:30 p.m. EDT. The call will be
open to the public and can be accessed by dialing (719) 457-2617 and
referencing confirmation code 3538405. 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 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 Avid's ability to execute on its
transformation strategy and meet customer needs, market acceptance of
Avid's existing and new products, 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 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 estimates change.

About Avid Technology, Inc.

Avid is a worldwide leader in tools for film, video, audio, 3D animation,
gaming and broadcast professionals -- as well as for home audio and video
enthusiasts. Avid professional and consumer brands include Avid,
Digidesign, M-Audio(R), Pinnacle Systems(R), Sibelius(R), Softimage and
Sundance Digital(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 Film Composer(R) system for
motion picture editing. For more information about the company's Oscar,
Grammy(R) and Emmy award-winning products and services, visit
www.avid.com.

Copyright 2008 Avid Technology, Inc. All rights reserved. Avid,
Digidesign, Film Composer, M-Audio, Pinnacle Systems, Sibelius,
Softimage, Sundance Digital and 003 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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net revenues:
Products $ 183,686 $ 198,817 $ 540,977 $ 583,630
Services 33,380 28,009 97,218 87,420
--------- --------- --------- ---------
Total net revenues 217,066 226,826 638,195 671,050
--------- --------- --------- ---------

Cost of revenues:
Products 94,303 93,397 272,004 279,100
Services 18,744 16,054 55,760 49,487
Amortization of intangible
assets 1,249 4,096 6,773 13,329
Restructuring costs - 2,797 - 2,797
--------- --------- --------- ---------
Total cost of revenues 114,296 116,344 334,537 344,713

--------- --------- --------- ---------
Gross profit 102,770 110,482 303,658 326,337
--------- --------- --------- ---------

Operating expenses:
Research and development 37,825 36,471 115,307 112,657
Marketing and selling 53,638 48,832 159,224 157,031
General and administrative 19,734 20,514 61,169 56,064
Amortization of intangible
assets 3,307 3,432 10,017 10,295
Impairment of goodwill and
intangible asset 51,257 - 51,257 -
Restructuring costs, net 2,107 6,297 4,107 8,072
--------- --------- --------- ---------
Total operating expenses 167,868 115,546 401,081 344,119
--------- --------- --------- ---------

Operating loss (65,098) (5,064) (97,423) (17,782)

Interest and other income
(expense), net 507 1,980 2,605 5,898
--------- --------- --------- ---------
Loss before income taxes (64,591) (3,084) (94,818) (11,884)

Provision for (benefit from)
income taxes, net 1,800 2,769 3,106 (52)
--------- --------- --------- ---------

Net loss $ (66,391) $ (5,853) $ (97,924) $ (11,832)
========= ========= ========= =========

Net loss per common share -
basic and diluted $ (1.80) $ (0.14) $ (2.59) $ (0.29)

Weighted-average common shares
outstanding - basic
and diluted 36,960 40,798 37,739 40,963

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 loss:

Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Professional Video $ 117,202 $ 118,855 $ 327,190 $ 351,844
Audio 72,231 77,320 220,785 233,006
Consumer Video 27,633 30,651 90,220 86,200
--------- --------- --------- ---------
Total revenues $ 217,066 $ 226,826 $ 638,195 $ 671,050
========= ========= ========= =========

Contribution Margin:
Professional Video $ 14,852 $ 20,747 $ 24,095 $ 44,484
Audio 8,119 14,327 29,615 39,589
Consumer Video (4,761) 1,218 (4,231) 3,753
--------- --------- --------- ---------
Segment contribution margin 18,210 36,292 49,479 87,826
--------- --------- --------- ---------

Less: Unallocated costs
and expenses:
Common costs and
operating expenses (21,031) (20,396) (63,658) (57,649)
Amortization of
acquisition-related
intangible assets (4,556) (7,528) (16,790) (23,624)
Impairment of goodwill
and intangible asset (51,257) - (51,257) -
Stock-based compensation (4,357) (3,988) (11,090) (12,091)
Restructuring costs, net (2,107) (9,094) (4,107) (10,869)
Other costs - (350) - (1,375)
--------- --------- --------- ---------
Consolidated operating loss $ (65,098) $ (5,064) $ (97,423) $ (17,782)
========= ========= ========= =========

Reconciliation of GAAP net loss
to Non-GAAP net income (loss):
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
GAAP net loss $ (66,391) $ (5,853) $ (97,924) $ (11,832)

Adjustments to reconcile to
Non-GAAP net income:
Amortization of intangible
assets 4,556 7,528 16,790 23,624
Impairment of goodwill and
intangible asset 51,257 - 51,257 -
Stock-based compensation 4,357 3,988 11,090 12,091
Restructuring costs, net 2,107 9,094 4,107 10,869
Other costs - 350 - 1,375
Related tax adjustments (240) 74 (1,288) (2,140)
--------- --------- --------- ---------
Non-GAAP net income (loss) $ (4,354) $ 15,181 $ (15,968) $ 33,987
========= ========= ========= =========

Weighted-average common shares
outstanding - diluted 36,960 41,234 37,739 41,521

Non-GAAP net income (loss) per
common share - diluted $ (0.12) $ 0.37 $ (0.42) $ 0.82

Stock-based compensation included
in: Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Cost of products revenues $ 177 $ 182 $ 480 $ 505
Cost of services revenues 144 248 408 696
Research and development
expenses 763 1,018 2,215 3,415
Marketing and selling expenses 1,470 1,092 3,108 3,228
General and administrative
expenses 1,803 1,448 4,879 4,247
--------- --------- --------- ---------
$ 4,357 $ 3,988 $ 11,090 $ 12,091
========= ========= ========= =========

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

September 30, December 31,
2008 2007
----------- -----------
ASSETS:
Current assets:
Cash, cash equivalents and marketable
securities $ 122,434 $ 224,460
Accounts receivable, net of allowances of
$20,390 and $20,784 at September 30, 2008
and December 31, 2007, respectively 112,144 138,692
Inventories 122,867 117,324
Prepaid and other current assets 35,683 36,788
----------- -----------
Total current assets 393,128 517,264

Property and equipment, net 41,734 46,160
Intangible assets, net 49,980 71,427
Goodwill 313,924 360,584
Other assets 10,801 10,518
----------- -----------
Total assets $ 809,567 $ 1,005,953
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 29,471 $ 34,992
Accrued expenses and other current liabilities 89,003 93,912
Deferred revenues 79,963 79,771
----------- -----------
Total current liabilities 198,437 208,675

Long-term liabilities 16,197 17,495
----------- -----------
Total liabilities 214,634 226,170
----------- -----------

Stockholders' equity:
Common stock 423 423
Additional paid-in capital 977,735 968,339
Accumulated deficit (264,024) (155,722)
Treasury stock at cost, net of reissuances (126,327) (45,823)
Accumulated other comprehensive income 7,126 12,566
----------- -----------
Total stockholders' equity 594,933 779,783
----------- -----------
Total liabilities and stockholders' equity $ 809,567 $ 1,005,953
=========== ===========

Investor Contact:
Tom Fitzsimmons
tom_fitzsimmons@avid.com
978-640-3346

Media Contact:
Lisa Pistacchio
lisa_pistacchio@avid.com
650-731-6823

Copyright 2008, Market Wire, All rights reserved.

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