Avid Technology, Inc. to Acquire Pinnacle Systems, Inc.
Posted Mar 21, 2005

Avid Technology, Inc. and Pinnacle Systems, Inc. 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 Avid's 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 Pinnacle's former shareholders will represent approximately 15% of Avid's 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 Pinnacle's 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 Pinnacle's professional products - such as the MediaStream broadcast playout server and the Deko on-air graphics system - will enhance Avid's end-to-end broadcast production pipeline, which has helped Avid become a global leader in that industry. In addition, Pinnacle's 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.

www.avid.com
www.pinnaclesys.com