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Avid Technology, Inc. to Acquire Pinnacle Systems, Inc.

Combination to provide immediate presence in consumer video

Avid Technology, Inc. and Pinnacle Systems, Inc.  today announced that Avid has entered into a definitive agreement to acquire Pinnacle in a cash and stock transaction. Under the terms of the agreement, Pinnacle shareholders will receive .0869 shares of Avid stock and $1.00 in cash for each Pinnacle share. At closing, it is expected that Avid will issue approximately 6.2 million shares and pay $71.3 million in cash, for a total estimated value of $462 million based on Avids stock price of $62.95 at market close on Friday, March 18, 2005. Upon completion of the transaction, the 6.2 million shares to be issued to Pinnacles former shareholders will represent approximately 15% of Avids outstanding common stock. The acquisition is subject to satisfying a number of closing conditions, including shareholder and regulatory approvals, and is expected to close in the second or third quarter of 2005.

The purchase price represents a 30% premium over Pinnacles closing stock price of $4.97 on March 18, 2005. Assuming a closing date of July 1, 2005, Avid expects the transaction, excluding acquisition-related charges, to be dilutive to its pro-forma earnings per share in the third quarter and accretive in the fourth quarter, resulting in full-year 2005 pro forma earnings per share of approximately $2.70 per diluted share. In 2006, Avid expects the transaction to be approximately 10 cents accretive, resulting in pro forma earnings per share of approximately $3.20 per diluted share. After payment of the cash portion of the purchase price, Avid expects its cash position to be $280-$300 million at the end of 2005.

Following the closing, the parties expect that Pinnacles award-winning professional products such as the MediaStream broadcast playout server and the Deko on-air graphics system will enhance Avids end-to-end broadcast production pipeline, which has helped Avid become a global leader in that industry. In addition, Pinnacles consumer video business which to date has shipped more than 10 million units -will form the basis for a new consumer video division at Avid, providing the company with an immediate avenue into that segment.

Avid president and CEO David Krall said, ?We see this acquisition as the next logical step in our long-term strategy. Just as our acquisition of M-Audio in 2004 brought us into the consumer audio business, by acquiring Pinnacles consumer video business, Avid will be able to tap into the next generation of video editors while they are still learning their craft. This creates a very large potential customer base for Avids future. At the same time, we believe that Pinnacles professional broadcast offerings will fit seamlessly with Avids business, extending our end-to-end broadcast solutions with servers and on-air graphics products. We think it would be hard to find a more complementary match for these two businesses than what this combination provides.

Krall added: ?As a result of this transaction, we expect to derive savings from a number of sources, including reducing public company expenses, combining infrastructure functions where appropriate, and providing our global sales teams with a broader portfolio of product offerings. Over the past five years, Avid has increased its profitability and shareholder value by growing our top line, expanding our gross margins, and leveraging our talent and technology across the entire company. By working with the dedicated team at Pinnacle, were confident that, together, we can succeed with this same strategy following the completion of the transaction.

Pinnacle chairman and CEO Patti Hart said, ?We believe that this transaction creates significant value for our shareholders and provides excellent opportunities for continued growth for the combined company. Avid has built a strong, well-deserved reputation for efficient business management while continuing to live up to its tradition of technological innovation in the video and audio industries. By bringing our own award-winning products to the table including Pinnacle Studio, Pinnacle Liquid Edition, and our broad array of broadcast systems were confident that Pinnacle will strengthen and diversify Avids business. Our customers can also anticipate a richer set of offerings within an organization that will be even better positioned moving ahead. We see this as the right move for Pinnacle, and we look forward to joining the Avid family.

The Boards of Directors of both Avid and Pinnacle have approved the definitive agreement. Avid will seek stockholder approval of the transaction at its annual meeting, and Pinnacle will hold a special meeting of shareholders to consider approval of the transaction. The dates of the shareholder meetings will be announced following completion of initial regulatory filings.

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