Avid Technology (AVID) 8-K Avid Announces Third Quarter 2009 Results

EXHIBIT 99.1

Contact: Investor Contact: Tom Fitzsimmons, tom.fitzsimmons@avid.com, 978-640-3346

Media Contact: Christi Dean, christi.dean@avid.com, 978-640-5147

Avid Announces Third Quarter 2009 Results

TEWKSBURY, Mass., October 22, 2009 — Avid® (NASDAQ: AVID) today reported revenues of $153.7 million for the three-month period ended September 30, 2009, compared to $217.1 million for the same period in 2008. The GAAP net loss for the quarter was $16.2 million, or $.43 per share, compared to a GAAP net loss of $66.4 million, or $1.80 per share, in the third quarter of 2008. The third quarter 2008 results included a non-cash impairment charge of $51.3 million or $1.39 per share.

The GAAP net loss for the third quarter of 2009 included amortization of intangibles, stock-based compensation, restructuring charges, loss on asset sales and related tax adjustments, collectively totaling $17.0 million. Excluding these items, the non-GAAP net income was $787 thousand for the third quarter, or $.02 per share.

“We continue to execute on a number of strategic initiatives to improve the overall health and efficiency of our operations,” said Gary Greenfield, Avid’s chairman and CEO. “The third quarter showed sequential improvement in revenue and expanded gross margins, resulting in another quarter of improving results.”

Revenues for the nine-month period ended September 30, 2009 were $455.9 million, compared to revenues of $638.2 million for the same period in 2008. GAAP net loss for the first nine months of 2009 was $49.4 million, or $1.33 per share, compared to GAAP net loss of $97.9 million, or $2.59 per share, for the same period in 2008. GAAP net loss for the nine-month period ended September 30, 2009 included $39.1 million of amortization, stock-based compensation, restructuring charges, loss on asset sales and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $.28 for the nine-month period ended September 30, 2009. GAAP net loss for the nine-month period ended September 30, 2008 included $82.0 million of amortization, stock-based compensation, restructuring charges, impairment charges and related tax adjustments. Excluding these items, the non-GAAP net loss per share was $.42 for the first nine months of 2008.

The company’s cash balance on September 30, 2009 was $103.0 million, or approximately $2.76 per share. The company paid out approximately $4.9 million in cash in the third quarter related to restructuring activities.

Avid also announced that its Audit Committee is overseeing an investigation concerning the manner in which revenue was recognized on certain shipments of Audio products near the end of previous quarters from certain warehouses outside the United States. Based on the current progress of the investigation, Avid believes that there have been errors that affected the timing but not the amount of revenue recognized, and that correction of the errors likely will not have a material impact on its financial statements for the current or any prior period. This investigation was only recently commenced. Avid's expectations concerning the nature and materiality of these or any other errors are subject to change based on the final outcome of the investigation.

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 (loss) and earnings (loss) per share for the three- and nine-month periods ended September 30, 2009 and 2008 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 2009 financial results will be held today, October 22, 2009 at 4:30 p.m. ET. 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 Investors tab 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 results of the audit committee’s investigation described above and 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 the anticipated impact of the audit committee’s investigation described above, and these statements are subject to the outcome of such investigation. This release also makes forward-looking statements 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 corporate 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

Avid creates the digital audio and video technology used to make the most listened to, most watched and most loved media in the world – from the most prestigious and award-winning feature films, music recordings, television shows, live concert tours and news broadcasts, to music and movies made at home.  Some of Avid’s most influential and pioneering solutions include Media Composer®, Pro Tools®, Avid Unity™, Interplay®, Oxygen 8, Sibelius® and Pinnacle Studio™. For more information about Avid solutions and services, visit www.avid.com, del.icio.us, Flickr, Twitter and YouTube; connect with Avid on Facebook; or subscribe to Avid Industry Buzz.

© 2009 Avid Technology, Inc. All rights reserved. Product features, specifications, systems requirements and availability are subject to change without notice.  Avid, Pinnacle Studio, Avid Unity, Interplay, Media Composer, Pro Tools, Symphony, Nitris, ISIS and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of Interplay Entertainment Corp., which bears no responsibility for Avid products. 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,
		2009	2008	2009	2008
Net revenues:
	Products	$125,146	$183,686	$370,699	$540,977
	Services	28,597	33,380	85,216	97,218
	Total net revenues	153,743	217,066	455,915	638,195
Cost of revenues:
	Products	57,625	94,303	177,302	272,004
	Services	13,586	18,744	43,515	55,760
	Amortization of intangible assets	519	1,249	1,465	6,773
	Restructuring costs	-	-	799	-
	Total cost of revenues	71,730	114,296	223,081	334,537
Gross profit		82,013	102,770	232,834	303,658
Operating expenses:
	Research and development	29,262	37,825	90,974	115,307
	Marketing and selling	44,705	53,638	127,480	159,224
	General and administrative	12,093	19,734	39,765	61,169
	Amortization of intangible assets	2,782	3,307	7,779	10,017
	Impairment of goodwill and intangible asset	-	51,257	-	51,257
	Restructuring costs, net	7,891	2,107	17,132	4,107
	Loss on sales of assets	3,398	-	3,398	-
	Total operating expenses	100,131	167,868	286,528	401,081
Operating loss		(18,118)	(65,098)	(53,694)	(97,423)
Interest and other income (expense), net		(240)	507	(29)	2,605
Loss before income taxes		(18,358)	(64,591)	(53,723)	(94,818)
(Benefit from) provision for income taxes, net		(2,152)	1,800	(4,291)	3,106
Net loss		$(16,206)	$(66,391)	$(49,432)	$(97,924)
Net loss per common share - basic and diluted		$(0.43)	$(1.80)	$(1.33)	$(2.59)
Weighted-average common shares outstanding - basic and diluted		37,341	36,960	37,251	37,739

AVID TECHNOLOGY, INC.
(unaudited - in thousands, except per share data)
Change in Financial Presentation
Beginning January 1, 2009, we combined our professional video and consumer video businesses into a single reporting segment. We will now
consequently report on two business segments: Audio and Video. Please note that the segment contribution margin calculation has also changed
from last year. Segment contribution margin is now calculated as segment gross margin less research and development and product management
expenses directly attributable to the segment. Comparative results for the 2008 periods have been updated to reflect our new business structure.
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,
		2009	2008	2009	2008
	Revenues:
	Video (a)	$93,246	$144,835	$269,447	$417,410
	Audio	60,497	72,231	186,468	220,785
	Total revenues	$153,743	$217,066	$455,915	$638,195
	Contribution Margin:
	Video	$31,647	$40,791	$78,160	$112,877
	Audio	21,529	23,493	66,090	76,278
	Segment contribution margin	53,176	64,284	144,250	189,155
	Less unallocated costs and expenses:
	Research and development expenses	(1,633)	(1,890)	(5,224)	(5,391)
	Marketing and selling expenses	(41,018)	(48,841)	(116,589)	(146,019)
	General and administrative expenses	(11,187)	(16,374)	(35,650)	(51,924)
	Amortization of acquisition-related intangible assets	(3,301)	(4,556)	(9,244)	(16,790)
	Impairment of goodwill and intangible asset	-	(51,257)	-	(51,257)
	Stock-based compensation	(2,866)	(4,357)	(9,908)	(11,090)
	Restructuring costs, net	(7,891)	(2,107)	(17,931)	(4,107)
	Loss on sales of assets	(3,398)	-	(3,398)	-
	Consolidated operating loss	$(18,118)	$(65,098)	(53,694)	$(97,423)
	(a) Includes revenues from non-core product lines of:	$117	$15,121	$1,874	$50,214
Reconciliation of GAAP net loss to Non-GAAP net income (loss):
		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2009	2008	2009	2008
	GAAP net loss	$(16,206)	$(66,391)	$(49,432)	$(97,924)
	Adjustments to reconcile to Non-GAAP net income (loss):
	Amortization of intangible assets	3,301	4,556	9,244	16,790
	Impairment of goodwill and intangible asset	-	51,257	-	51,257
	Stock-based compensation	2,866	4,357	9,908	11,090
	Restructuring costs, net	7,891	2,107	17,931	4,107
	Loss on sales of assets	3,398	-	3,398	-
	Related tax adjustments	(463)	(240)	(1,357)	(1,288)
	Non-GAAP net income (loss):	$787	$(4,354)	$(10,308)	$(15,968)
	Weighted-average common shares outstanding - diluted	37,376	36,960	37,251	37,739
	Non-GAAP net income (loss) per common share - diluted	$0.02	$(0.12)	$(0.28)	$(0.42)
		Three Months Ended		Nine Months Ended
Stock-based compensation included in:		September 30,		September 30,
		2009	2008	2009	2008
	Cost of products revenues	$   163	$   177	$   666	$   480
	Cost of services revenues	247	144	868	408
	Research and development expenses	655	763	1,737	2,215
	Marketing and selling expenses	895	1,470	2,522	3,108
	General and administrative expenses	906	1,803	4,115	4,879
		$2,866	$4,357	$9,908	$11,090

AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
	September 30,	December 31,
	2009	2008
ASSETS:
Current assets:
Cash, cash equivalents and marketable securities	$102,981	$147,694
Accounts receivable, net of allowances of $14,458 and $23,182
at September 30, 2009 and December 31, 2008, respectively	89,503	103,527
Inventories	91,164	95,755
Prepaid and other current assets	33,378	43,969
Total current assets	317,026	390,945
Property and equipment, net	33,556	38,321
Intangible assets, net	32,451	38,143
Goodwill	227,118	225,375
Other assets	11,571	10,801
Total assets	$621,722	$703,585
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable	$22,744	$  29,419
Accrued expenses and other current liabilities	71,137	101,107
Deferred revenues	56,748	68,581
Total current liabilities	150,629	199,107
Long-term liabilities	13,320	11,823
Total liabilities	163,949	210,930
Stockholders' equity:
Common stock	423	423
Additional paid-in capital	989,018	980,563
Accumulated deficit	(424,335)	(365,431)
Treasury stock at cost, net of reissuances	(114,342)	(124,852)
Accumulated other comprehensive income	7,009	1,952
Total stockholders' equity	457,773	492,655
Total liabilities and stockholders' equity	$621,722	$703,585