Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial Determinations of Its Accounting Evaluation

  Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial
  Determinations of Its Accounting Evaluation

Business Wire

BURLINGTON, Mass. -- May 21, 2013

In March 2013, Avid Technology, Inc. (NASDAQ:AVID) announced that due to the
delay in the filing of its annual report on Form 10-K for the year ended
December 31, 2012 (“Form 10-K”), it had received a notification letter from
the staff of the NASDAQ Listing Qualifications Department (the “NASDAQ Staff”)
stating that the Company does not comply with NASDAQ Listing Rule 5250(c)(1),
which requires timely filing of periodic reports with the Securities and
Exchange Commission (the “SEC”). Avid, announced today that on May 17, 2013,
it received from the NASDAQ Staff an anticipated notification of Avid's
continued noncompliance with NASDAQ Listing Rule 5250(c)(1) due to Avid's
delay in filing its Form 10-Q for the first quarter ended March 31, 2013
(“Form 10-Q”). These notifications were issued in accordance with NASDAQ
procedures and have no immediate effect on the listing of Avid's common stock
on the NASDAQ Global Market.

On May 20, 2013, Avid has, in accordance with the NASDAQ Staff's requirements
as set forth in the notification, submitted a plan explaining how it expects
to regain compliance with NASDAQ's continued listing requirements. If the
NASDAQ Staff accepts the Company's plan, the Company expects to have up to 180
calendar days from the initial due date for the Form 10-K, or until
September16, 2013, to regain compliance. If the NASDAQ Staff does not accept
Avid's plan, Avid will have the opportunity to appeal that decision to a
NASDAQ Hearings Panel.

The Company has, as previously reported, been unable to file the Form 10-K and
the Form 10-Q because it is continuing to evaluate the accounting treatment
related to bug fixes, upgrades, enhancements and compatibility extensions
(collectively, “Software Updates”). The first step in the Company's evaluation
was to undertake an initial review of whether Software Updates previously made
available by the Company to certain of its customers at no-charge included
upgrades, enhancements or compatibility extensions and if so, whether such
upgrades, enhancements or compatibility extensions met the definition of
post-contract customer support (PCS) under U.S. Generally Accepted Accounting
Principles (“GAAP”). During the course of this initial review, the Company
concluded that certain of these no-charge Software Updates should have been
accounted for as implied PCS when recognizing revenue for the original sale of
the related product. The Company management has evaluated the potential impact
of its findings on the Company's prior period financial statements and
concluded that the Company's unaudited interim consolidated financial
statements for the quarterly periods ended (i) September 30, 2012 and 2011,
(ii) June 30, 2012 and 2011, and (iii) March 31, 2012 and 2011, as well as its
audited consolidated financial statements for the years ended December 31,
2011, 2010 and 2009 should no longer be relied upon because of these errors in
the application of GAAP. In addition, any previously issued press release or
other publicly issued statement by the Company containing financial
information for such periods should not be relied upon.

The Company expects that the timing of revenue recognition for the impacted
customer arrangements will change from the historical presentation in the
Company's financial statements pursuant to which revenue was recognized up
front, generally to being recognized ratably over the estimated implied PCS
service period. In addition, the timing of recognition of certain costs
related to these customer arrangements may also be impacted, along with the
timing of related income taxes. The Company cannot at this time estimate the
full impact of the adjustments of revenue and costs, and the related impact on
income taxes, on any previously issued financial statements for any individual
reporting period, although it may be significant. However, while the
restatement adjustments will impact previously reported revenue and operating
results for prior periods, the restatement adjustments are not expected to
affect the amount of total revenue ultimately to be earned, or the amount or
timing of cash received or to be received, from the sales transactions or the
Company's liquidity or cash flow for any prior period.

In addition, the Company will revise its consolidated financial statements for
the years ended December 31, 2011, 2010 and 2009 for the correction of the
errors previously identified and disclosed in its Form 10-Q for the quarterly
periods ended September 30, 2012, June 30, 2012 and March 31, 2012.

The Company is also reassessing its accounting for certain restructuring
expenses related to lease obligations and other exit activities in the
quarters ended June 30, 2012 and September 30, 2012. While the Company
continues to analyze the accounting treatment of these restructuring expenses,
the Company has concluded that it has improperly accounted for such
restructuring expenses and currently estimates that the restructuring expenses
may have been cumulatively overstated by approximately $3.5 million on a
pre-tax basis at September 30, 2012.

The Company's management, including its Chief Executive Officer and Chief
Financial Officer, has concluded that the Company's disclosure controls and
procedures and internal controls over financial reporting were not effective
as of December 31, 2012 or March 31, 2013 because of the material weaknesses
in the Company's internal controls over financial reporting relating to the
matters disclosed in the Company's Form 10-Q for the quarterly periods ended
September 30, 2012, June 30, 2012 and March 31, 2012 and the matters described
in this press release.

The Company's evaluation of current and historical accounting treatment
related to Software Updates is ongoing and the Company may identify additional
issues, which could require further adjustments to the Company's prior
financial statements for one or more prior fiscal years or periods.

The Company is working diligently to complete the review and continues to
focus its efforts on completing and filing the delayed periodic reports,
including restatements, as soon as possible. During this evaluation, the
Company plans to continue to invest in its product innovation and execute on
its growth strategy. The Company believes it is well positioned to support its
customers' ongoing success.

Cautionary Note regarding Forward-Looking Statements

Except for historical information contained in this press release, this press
release contains forward-looking statements that involve risks and
uncertainties, including statements about Avid's anticipated plans,
objectives, expectations and intentions. Such statements include, without
limitation, statements regarding the additional time that may be granted for
Avid to regain compliance with the NASDAQ rules, Avid's ability to regain
compliance with NASDAQ's rules, the ongoing evaluation of Avid's current and
historical accounting practices and treatment of various items, including
Software Updates and the outcome and timing of such evaluation; the scope of
the ongoing evaluation; the impact of the evaluation on Avid's financial
results and the financial statements for the quarter ended March 31, 2013 and
prior periods, including on previously reported revenue, operating results and
liquidity and cash flow; the total timing of revenues, costs and taxes and the
total revenues, costs and taxes over time; and the timing of the filing of
restated financial statements, Avid's 2012 Form 10-K and Form 10-Q for the
quarter ended March 31, 2013 and any future filings. These forward-looking
statements are based on current expectations as of the date of this filing and
subject to known and unknown risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by such
statements, including but not limited to: the impact of restatement of
financial statements for prior periods; the impact of delays in Avid's
completion of its financial statements and the filing of its periodic reports;
the impact of the previously disclosed ongoing SEC and Department of Justice
inquiries; the impact of the ongoing evaluation and these inquiries on Avid's
financial results and financial statements for the quarter ended March 31,
2013 and prior and future periods including the cost associated with the
evaluation and inquiries; Avid's ability to regain compliance with NASDAQ's
continued listing requirements; the identified material weakness in Avid's
internal controls; recent changes in Avid's management; Avid's ability to
execute its strategic plan and meet customer needs; its ability to produce
innovative products in response to changing market demand, particularly in the
media industry; risks related to litigation; competitive factors; history of
losses; fluctuations in its revenue, based on, among other things, Avid's
performance in particular geographies or markets, fluctuations in foreign
currency exchange rates and seasonal factors; adverse changes in economic
conditions; and Avid's liquidity. Moreover, the business may be adversely
affected by future legislative, regulatory or tax changes as well as other
economic, business and/or competitive factors. The risks included above are
not exhaustive. Other factors that could adversely affect Avid's business and
prospects are described in the filings made by the Company with the SEC.

Avid expressly disclaims any obligation or undertaking to update or revise any
forward-looking statements whether as a result of new information, future
events or otherwise.

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, to live concert tours and news broadcasts.Some of Avid’s most
influential and pioneering solutions include Media Composer®, Pro Tools®,
Interplay®, ISIS®, VENUE, Sibelius®, and System 5. For more information about
Avid solutions and services, visit www.avid.com, connect with Avid on
Facebook, Twitter, YouTube, LinkedIn, Google+; or subscribe to Avid Blogs.

© 2013 Avid Technology, Inc. All rights reserved. Avid, the Avid logo,
Interplay, ISIS, Mbox, Media Composer, Pro Tools 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 the Interplay Entertainment Corp. which bears no responsibility
for Avid products. All other trademarks are the property of their respective
owners.

Contact:

Media Contact
Avid
Lisa Kilborn, 978-640-3230
lisa.kilborn@avid.com
or
Investor Contact
Avid
Tom Fitzsimmons, 978-640-3346
tom.fitzsimmons@avid.com
 
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