Avid Reports Fourth Quarter 2006 Results

AVID reported revenues of $239.0 million for the three-month
period ended December 31, 2006 compared to $245.0 million for the same
period in 2005. GAAP net loss for the quarter was $52.6 million, or
$1.28 per share compared to GAAP net income of $18.4 million, or $.43
per diluted share, in the fourth quarter of 2005.

GAAP net loss in the fourth quarter of 2006 includes a non-cash
charge of $53.0 million for the impairment of goodwill associated with
the acquisition of Pinnacle Systems in August 2005. As a result of
completing its annual goodwill impairment test in the fourth quarter,
the company concluded that the fair value of the consumer business
unit had declined below the book value, resulting in the impairment
charge.

In addition, the company took a restructuring charge of $3.2
million as a result of reorganizations within the Professional Video
and Consumer Video segments that took place during the quarter.

These charges plus amortization, stock-based compensation and
related tax adjustments totaled $75.1 million during the fourth
quarter. Excluding these items, non-GAAP earnings per share were $.54.
For the fourth quarter of 2005, there was $11.6 million of
acquisition-related charges, including amortization, stock-based
compensation, restructuring costs and related tax adjustments included
in GAAP net income. Excluding these items, non-GAAP earnings per share
were $.69 in the fourth quarter of 2005.

“As we look back at our performance in Q4, and the full year of
2006, it’s clear that our results were mixed. While our big deal
backlog continued to build each quarter throughout the year, including
Q4, bringing us to record levels, recognizing revenue out of this
backlog continued to be unpredictable. This led to a shortfall in our
video business for the fourth quarter,” said David Krall, Avid’s
president and chief executive officer. “Our audio business recovered
nicely from the slowdown in demand that we saw in Q3 for Digidesign’s
Pro Tools|HD(R) systems, allowing a strong finish for the year. In
consumer, we had lower than expected results for the year as the
business was slow to recover from the product quality problems with
the Studio 10 software. We took an impairment charge in the fourth
quarter to reflect the decline in the fair value of the consumer
business unit. Nevertheless, we believe that the product quality
problems are now behind us, and are pleased that we achieved
higher-than expected consumer revenues in Q4 based on strong demand in

Europe. We have taken a number of steps to position all of our
businesses more favorably for the coming year, including a cost
restructuring in our consumer business which took place in Q4. Graham
Sharp, our new general manager for our video division, has already
implemented a number of changes that are intended to improve the
segment’s operations. However, we do not expect the full benefits of
these efforts to be realized immediately.”

Revenues for the year ended December 31, 2006, were $910.6 million
compared to revenues of $775.4 million for 2005. GAAP net loss for
2006 was $42.9 million, or $1.03 per share, compared to GAAP net
income of $34.0 million, or $.86 per diluted share, for 2005. GAAP net
loss for 2006 includes $113.9 million of impairment charges,
amortization, stock-based compensation, restructuring costs,
in-process research and development, and related tax adjustments.
Excluding these items, non-GAAP earnings per share were $1.67 for
2006. GAAP net income for 2005 includes $58.4 million of amortization,
stock-based compensation, restructuring costs, in-process research and
development, and related tax adjustments. Excluding these items
non-GAAP earnings per share were $2.34 for 2005.