Avid Reports Best-Ever First Quarter Revenues and Net Income

    Business Editors/Technology Editors

    TEWKSBURY, Mass.--(BUSINESS WIRE)--April 28, 2005--Avid Technology, Inc. (NASDAQ: AVID) today reported revenues of $166.0 million for the three months ended March 31, 2005 - a 30% increase over the $127.4 million generated in the corresponding quarter in 2004. GAAP operating income for the first quarter of 2005 was $20.3 million, compared to $14.8 million for the same quarter in 2004. GAAP net income for the quarter was $19.7 million, or $.53 per diluted share, compared to GAAP net income of $14.7 million, or $.44 per diluted share, for the corresponding quarter in 2004. Excluding acquisition-related amortization and related tax benefits, acquisition-related stock-based compensation, non-recurring tax benefits, and expenses in the first quarter of 2004 related to the settlement of a lawsuit, pro forma non-GAAP net income for the first quarter of 2005 was $22.2 million, or $.60 per diluted share, compared to pro forma non-GAAP net income of $15.0 million, or $.45 per diluted share, in the first quarter of 2004.
    "We've started 2005 with strong results from both our video and audio businesses," said David Krall, Avid's president and chief executive officer. "Video revenues grew by 14%, on the strength of our broadcast and postproduction offerings - particularly the Avid DNA(TM) product family, which we recently upgraded to support a wide range of HD formats and resolutions. Our audio revenues were also up significantly, with a 74% increase over the first quarter of 2004 reflecting solid performance from Digidesign and from M-Audio following its addition to our audio business in the third quarter of 2004.
    Krall added, "We just returned from the National Association of Broadcasters convention in Las Vegas, where we had a great week. We made major announcements across our postproduction, broadcast, shared storage, and audio businesses, including the highly anticipated Avid(R) Symphony(TM) Nitris(R) finishing system and the new Avid iNEWS(R) Instinct(TM) journalist editor, both of which were recognized with awards at the show. All told, Avid won eleven industry awards, making it our most-decorated show in recent years."

    Use of Non-GAAP Financial Measures

    The pro forma operating results listed above are "non-GAAP financial measures" under the rules of the Securities and Exchange Commission. We have included this information because we believe it is a meaningful measure of our normalized operating performance and will assist investors in understanding our results of operations on a comparative basis. This pro forma 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 use this information internally to help our management more accurately assess the ongoing nature of our operations and measure our performance on a comparative basis.

    Conference Call

    A conference call to discuss Avid's first quarter 2005 financial results and the company's outlook for the balance of 2005 will be held today, April 28, at 5:00 p.m. EDT. The call will be open to the public. The conference call can be accessed by dialing (719) 457-2665 and referencing confirmation code 6477695. The call and subsequent replay will also be available on Avid's Web site. To listen via this alternative, go to the Investors page under the Company menu at www.avid.com for complete details 10-15 minutes prior to the start of the conference call.

    The above release includes a forward-looking statement, as defined by the Private Securities Litigation Reform Act of 1995, about Avid's future performance. There are a number of factors that could cause actual events or results to differ materially from that indicated by such forward-looking statement, such as the competitive market in which Avid operates, market acceptance of Avid's existing and new products, Avid's ability to anticipate customers' needs and the other factors set forth under the caption "Certain Factors That May Affect Future Results" in Avid's Form 10-K for the year ended December 31, 2004, and other filings with the SEC. In addition, the forward-looking statement contained herein represents 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 this forward-looking statement 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(R), Grammy(R), and Emmy(R) award-winning products and services, please visit: www.avid.com.

    (C) 2005 Avid Technology, Inc. All rights reserved. Avid, Avid DNA, Digidesign, Film Composer, Instinct, M-Audio, Nitris, Pro Tools and Symphony are either registered trademarks or trademarks of Avid Technology, Inc. in the United States and/or other countries. iNEWS is a registered trademark of iNews, LLC. Avid received an Oscar 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. 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(R) 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 for per share data)

GAAP NON - GAAP ------------------- ------------------- Three Months Ended Three Months Ended March 31st, March 31st, 2005 2004 2005 2004 --------- --------- --------- --------- Revenue Product $147,378 $113,584 $147,378 $113,584 Service 18,623 13,790 18,623 13,790 --------- --------- --------- --------- Total Revenue 166,001 127,374 166,001 127,374 --------- --------- --------- ---------

Cost of Revenue Product 60,897 46,514 60,897 46,514 Service 10,070 7,589 10,070 7,589 Amortization of intangible assets 281 - - - --------- --------- --------- --------- Total Cost of Revenue 71,248 54,103 70,967 54,103

--------- --------- --------- --------- Gross Profit 94,753 73,271 95,034 73,271 --------- --------- --------- ---------

Operating Expenses Research and development 24,624 22,292 24,624 22,292 Marketing and selling 39,455 29,854 39,455 29,854 General and administrative 7,973 5,886 7,973 5,886 Stock-based compensation (Note A) 771 - - - Amortization of intangible assets 1,592 439 - - --------- --------- --------- --------- Total Operating Expense 74,415 58,471 72,052 58,032 --------- --------- --------- ---------

Operating income 20,338 14,800 22,982 15,239 Interest and other income (expense), net 837 490 837 490 Legal settlement - (1,050) - - --------- --------- --------- --------- Income before income taxes 21,175 14,240 23,819 15,729 Provision for income taxes 1,602 700 1,602 700 Non-recurring and other tax benefits (173) (1,200) - - --------- --------- --------- ---------

Net Income $19,746 $14,740 $22,217 $15,029 ========= ========= ========= =========

Net income per common share - basic $0.56 $0.47 $0.64 $0.48

Net income per common share - diluted $0.53 $0.44 $0.60 $0.45

Weighted average common shares outstanding - basic 34,987 31,202 34,987 31,202

Weighted average common shares outstanding - diluted 37,263 33,740 37,263 33,740

Note ----

A. Stock based compensation related to stock options issued as part of the acquisition of M-Audio, is comprised of $55 of Research and development expense, $192 of Marketing and selling expense, and $524 of General and administrative expense, based on the departmental classification of the option holders.

Reconciliation of Non-GAAP net income to GAAP net income:

Three months ended March 31, 2005 2004 -------------- ------------

Non-GAAP net income $22,217 $15,029

Stock-based compensation (771) - Amortization of intangible assets (1,873) (439) Non-recurring tax benefit 1,200 Tax benefit related to amortization 173 Legal settlement - (1,050)

-------------- ------------ GAAP net income $19,746 $14,740 ============== ============

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

March 31, December 31, 2005 2004 ----------- ------------

ASSETS: Current assets: Cash and marketable securities $176,191 $155,419

Accounts receivable, net of allowances of $8,860 and $9,334 at March 31, 2005 and December 31, 2004, respectively 97,182 97,536 Inventories 55,150 53,946 Prepaid and other current assets 16,439 19,407 ----------- ------------ Total current assets 344,962 326,308

Property and equipment, net 29,523 29,092 Goodwill 166,473 165,803 Intangible assets, net 45,010 46,884 Other assets 8,450 8,147 ----------- ------------ Total assets $594,418 $576,234 =========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $25,877 $26,517 Accrued expenses and other current liabilities 61,572 74,727 Deferred revenue and deposits 55,742 48,680 ----------- ------------ Total current liabilities 143,191 149,924

Long term liabilities, less current portion 1,569 1,689 ----------- ------------ Total liabilities 144,760 151,613 ----------- ------------

Stockholders' equity: Common stock 351 348 Additional paid-in capital 552,494 546,849 Accumulated deficit (103,029) (122,775) Deferred compensation (3,548) (4,392) Accumulated other comprehensive income 3,390 4,591 ----------- ------------ Total stockholders' equity 449,658 424,621 ----------- ------------

Total liabilities and stockholders' equity $594,418 $576,234 =========== ============

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

KEYWORD: MASSACHUSETTS INDUSTRY KEYWORD: TELECOMMUNICATIONS SOFTWARE EARNINGS CONFERENCE CALLS SOURCE: Avid Technology, Inc.

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