Dean Ridlon - Director of IR Gary Greenfield - Chairman and CEO Joel Legon - CFO Ken Sexton - CAO

Jim Ricchiuti - Needham & Company Andrew Abrams - Avian Securities Chris Rowen - Soleil Associates Samir Sika - Metrowest Capital Management Chuck Goldblum - Emancipation Capital

Good day and welcome everyone to the Avid Technology Fourth quarter 2007 Earnings Results conference call. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the conference over to the Director of Investor Relation, Mr. Dean Ridlon. Please go ahead, sir.

Thank you and good afternoon everyone. I'm Dean Ridlon, Avid Technology Inc's investor relations Director. I'd like to welcome you to today's call. Before we begin please note that this call will include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995 including statements about projected growth of existing all new markets and anticipated results of operations. There are a number of factors that could cause actual events or results to differ materially from those indicated by such statements. Such as competitive factors including Avid's ability to anticipate customer needs, pricing pressures, our ability to execute our strategic plan and adverse changes in general economic or market conditions particularly in the content creation industry. Other important events and factors appear in Avid's filings with the US Securities and Exchange Commission. In addition, our forward-looking statements represent our estimates only as of today, January 31, 2008 and should not be relied upon representing our views, as of any subsequent dates. Avid undertakes no obligation to review or update these forward-looking statements. During this call, we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principle. The most directly comparable financial measures calculated in accordance with GAAP and the reconciliation of GAAP measures to these non-GAAP measures are contained in the press release announcing this quarter's result and available in the investor section of our website www.avid.com. And now, I'd like to introduce Gary Greenfield, Avid's, Chairman and CEO.

Thank you, Dean. I'd like to welcome you to our fourth quarter 2007 results conference call, and my first earnings call as Avid's CEO. With me on the call are Joel Legon, our CFO and Ken Sexton our Chief Administrative Officer. Briefly, looking at our results, fourth quarter revenue was $258.5 million up year-on-year sequentially. However, our strong revenue performance was offset by a lower gross margin percentage and higher operating expenses both sequentially and year-on-year. As a result, non-GAAP net income for the fourth quarter was $0.42 per diluted share, a disciplined level of profitability. Now, I'd like to turn it over to Joel to go over our financial results in detail.

Thank you, Gary and good afternoon everyone. Though, we had strong revenue in Q4, there were several items that adversely impacted our bottom line. Revenue for Q4 was $258.5 million the highest quarterly revenue in Avid's history. GAAP income before income taxes was $6.9 million and our GAAP tax provision was $3 million resulting in net income of $3.9 million or $0.09 per diluted share or $41.3 million average diluted shares outstanding. Our earnings release provides a table of certain items that are included in our GAAP results. For Q4, these items totaled $13.3 million and consisted of amortization, stock-based compensation, restructuring costs, other costs and related tax adjustments. When we measured the performance of our business units and disclosed our business segment results externally, we do not include these items. Adding the $13.3 million and charges to our GAAP earnings results in non-GAAP net income of $17.2 million for the fourth quarter using fully diluted shares outstanding up $41.3 million, non-GAAP earnings per share was $0.42. GAAP gross margins were 47.5% including $3.6 million of amortization, $1.5 million of restructuring costs and 307,000 of stock-based compensation. Without these charges, gross margins would be 49.6%. Gross margin percentage in all three of our business units declined sequentially. Professional Video gross margin percentage was affected by the mix of business during the quarter that included certain transactions with less than typical gross margins as a result of the inclusion of third-party product components. Audio's gross margins were lower primarily due to higher air freight expenses associated with shipping M-Audio product. Consumer gross margins were negatively affected by the write-off of inventory related to the discontinuation of an OEM product in our PCTV hardware business and might have contributed for the units revenue. Operating expenses increased from the third quarter in part due to the write-off of certain capital investments related to changes in our Video division development strategy, which we believe will improve our engineering efficiency and ultimately benefit our customers. In addition, operating expenses were affected by higher than expected costs related to the change in our executive management. Our tax rate was also higher than usual in Q4 due to the number of large deals in Europe, where our tax rate is higher. Now let's talk about the operating performance of our three business segments. Professional Video had revenue of a $133.3 million and an operating margin of 7.7%. Audio was $86 million with an operating margin of 11% and Consumer revenue was $39.2 million with an operating margin loss of 1.7%. In addition to interest, we exclude the following items from our business segment results in Q4. $7 million of non-cash amortization of intangibles, $3.9 million of non-cash stock compensation, $2.8 million of restructuring charges related to a final true-off of the inventory write down related to the decision to exit the transmission server business and charges related to vacating space in Mountain View and Montreal. $228,000 for other costs and $600,000 of tax adjustments for the items mentioned above. As I mentioned, Professional Video revenue was approximately $133 million, the highest quarterly revenue ever for the unit up over $14 million from Q3. This performance was helped by the recognition of more or large broadcast deals during the quarter. The units run rate business was up sequentially as they were coming off particularly strong U.S government business in Q3. Professional Video operating profits increased approximately $300,000 sequentially to $10.3 million. Video gross margin, as a percentage of revenue was down roughly 2 point sequentially primarily due to high third-party content. Expenses increased $4.6 million with engineering asset write-off mentioned earlier accounting for almost half the increase. Year-over-year Video revenue was up significantly, gross margin percentage was leveled and operating expenses were up. As a result, Professional Video operating profits in Q4 2007 were nearly $5 million higher than in Q4 2006. Audio revenue in Q4 was up both sequentially and year-over-year. The increased revenue was due to solid performance from all three audio lines. Audio operating profits increased sequentially from $7.8 million to $9.4 million or 10.9% of revenue. As higher revenue more than offset the impact of lower gross margin percentage and higher operating expenses. As I mentioned earlier, Audio's gross margin percentage was lower primarily due to the M-Audio related expenses. Operating expenses increased sequentially primarily due to higher compensation related costs. Year-over-year increased revenue was offset by lower gross margin percentage and higher operating expenses resulting in a $5.5 million decline in the Audio operating profits from $14.9 million in Q4 of 2006. The reasons for the year-over-year decline in gross margin percentage and increase in operating expenses are essentially the same as the sequential explanations. Reflecting holiday seasonality, Consumer revenue was up sequentially to $39.2 million. Although gross margin percentage was down sequentially and operating expenses were up modestly, the Consumer operating loss decreased sequentially to $700,000 from a $1.9 million loss in Q3. Year-over-year, revenue was up 3% but significantly lower gross margin percentage and modest increases in operating expenses resulted in consumer's bottom line moving in a positive contribution to a loss. I'd like to reiterate that the primary factor behind the decline in gross margin percentage was the write-off of inventory related to the discontinuation of the OEM PCTV hardware product. Without this write-off, Consumer would have posted a positive contribution for the fourth quarter. In addition like many other consumer oriented businesses, our Consumer unit's fourth quarter results were adversely affected by the deteriorating macroeconomic environment. In total, results for the fourth quarter of 2007, well revenue of $258.5 million, non-GAAP gross margins of 49.6% and non-GAAP operating expenses of a $109.1 million. Operating profits increased sequentially to $19.1 million or 7.4% of revenue. Year-over-year higher revenue was more than offset by a lower gross margin percentage and increased operating expenses resulting in non GAAP operating profit declining from $21.3 million in Q4 2006. Turing to the balance sheet, we have strong results. Our cash balance increased by over $27 million to $224 million at December 31 primarily due to operating cash flow. At the beginning of the year, we said our goal was to reduce inventory by $20 million from the $144 million balance at December 31, 2006. Through a focused inventory management in each of our business units, we beat that goal and our December 31, 2007 inventory balance was a $117.3 million, a decrease of nearly $27 million from the year end 2006 balance. DSOs declined to 48 days however this is unusually low due to the recognition of several large broadcast deals during the quarter for which payment had already been received. I'd now like to hand things back to Gary for a discussion of the operations in each of our businesses, Garry?

Thanks Joel. As Joel mentioned the completion and acceptance of several large deals in our Broadcast and Professional Video segment, while higher revenue but lower margins. Large enterprise deals were particularly strong for us in Europe, but by receipt and acceptance at TV2 Nordic, YLE in Finland, and Irish Broadcaster, RTE. Services were up significantly facing large part on the strong business we did in larger enterprise deals. During the fourth quarter, we also announced that we would not be exhibiting the National Associations of Broadcaster Show in April. NAB is the largest and most highly digital industry marketing event and it came as a surprise to many in the industry that we would not have a boot. However after significant customer dialogue and research, the company determined that our customers in the Professional Video segment were clearly telling us that we need to listen more and engage with them in new ways. The same Avid during the same trade show was then going to either accomplish our marketing objectives or enable our customers to provide more direct feedback. Instead, we are investing these dollars in a series of programs designed to have a more direct dialogue with our customers around the world and across the year rather than just one week in Las Vegas. While, we will not be exhibiting the NAB, we will surely be present in Las Vegas that week with a series of customer focused activities including scheduled meetings, two customer events and other opportunities to interact with our products and staff. And looking at the macro trends in the Broadcast and Professional Video markets the writers' strike is obviously on the minds of many of our customers and is having an affect on the industry as a whole. Our businesses not been negatively affected as of yet because equipment buying cycles are not necessarily tied to production schedules and some customers are taking advantage of open time in the facilities to do equipment upgrades. However, a prolonged strike may very well affect our business. We are watching the situation very carefully and we hope for a speedy settlement. Turning to our Audio segment, Digidesign, M-Audio and Sibelius, each group both sequentially and year-over-year combining for record quarterly revenue in the business units. Successful new product launches of high-end audio systems, and new M-Audio products contributed to the strong revenue although margins are down year-over-year due to operational costs. Among the new products launched in the quarter were new versions of our Flagship Pro Tools software, d24 our new control surface targeted midsize facilities and larger product studios. The second generation of our very successful MicroTrack handheld digital recorder the new guitar amp and cabinet emulator called Eleven. The Pro Tools launch was particularly noteworthy, as we had more than 10,000 customers purchase upgrade in the first 25 days on the market. At the lower end of our market, we saw sales increase in every M-Audio product category again driven primarily, but not exclusively by new product introductions. Rounding out the audio business, our Sibelius line of music notation products also had a best ever revenue quarter on the strength of sales of the flagship Sibelius 5 notation software, which was released in the summer. Finally in our Consumer Video segment, we are continuing to build on the successful launch of our Pinnacle 11 editing software and our strength in the PCTV segment with number one market share in video editing and either number one or number two position TV viewing depending on the month and the geography and collection. Overall strong sales in the US were partially offset by 2% year-on-year decline in Europe resulting in modest overall growth year-on-year. Well, we are encouraged by the stronger second half 2007 showing of our consumer products. We are also aware of the macroeconomic trends and the potential theft on consumer spending, so we will be watching this sector closely. We will work to maintain our share of gains from the second half of 2007 and launch a number of new products to continue our growth in 2008. As an example, we recently launched Pinnacle Video Transfer at the Consumer Electronics Show earlier this month to great reviews. PVT allows a user to record video from cable, satellite, over the air broadcast or even a video game session for playback on a video or iPod without the need for a computer. Called by one reviewer, "fiendishly simple to use" the device will appeal to the strategically important segment of casual users, who are not video editing enthusiasts, while it can actually provide an opportunity for us to absorb video editing capability for those who want to edit their videos to post them online. And I like to share this one with my initial impressions of the company. I'm exited to be here. I visited all of our major locations in the United States and spent time with a couple dozen of our customers. This is a company, whose products are at the core of the entertainment industry with passionate customers, who care deeply about Avid and wan us to succeed. Our products are essential to these customers completing their jobs. Some aren’t very happy with us right now, and we take their concerns very seriously. At the same time, we have many loyal customers that see Avid family, product and services as the key to their own success. I believe that by focusing on making our customer successful, we will win in the marketplace and ultimately deliver the most value to our shareholders. Clearly, we have a lot of work to do. I'm not yet in a position to provide a specific detail plan, but some things are emerging. We need to improve our efficiency. When you become more customer-centric and we need to better leverage the strength that we have in our brands and our market position across the Audio, Video and Consumer spaces. I'd now like to introduce Ken Sexton, who recently joined us as Executive Vice President and Chief Administrative Officer. Ken comes at Avid with more than 30 years of business leadership experience primarily in the technology sector. Ken and l have already worked together for over 12 years and look forward to his contribution to Avid's transformation. Ken will now provide thoughts about our outlook.

Thank you, Gary. The plan going forward is to provide annual guidance with quarterly updates. With that in mind, I'd like to share our initial thoughts regarding the business outlook for 2008. We expect 2008 to be a transitional year, as Avid works to become a more profitable and customer focused organization. Additionally, we see 2008 revenue somewhat flat with 2007 levels because of planned investments in the business, 2008 non-GAAP earnings are expected to be 30% to 40% below 2007 levels. We expect to incur losses early in 2008 followed by sequential revenue and earnings improvement, as the year progresses. This concludes our remarks. Now, we'd be happy to take your questions.

Thank you (Operator Instructions) Our first question comes from Jim Ricchiuti with Needham & Company. Jim Ricchiuti - Needham & Company: Yes. Thank you, question just with respect to the revenue guidance that you've given for the year. Are you assuming the revenues will be down in each of the business units any granularity you can give us in terms of how you are viewing the three business areas in '08?

So, right now, we don't have that level of guidance. We've to prepare to come back in Q2, and give much further guidance on that or further details. But, this is not in any particular view. This is basic, we are looking at flat across the company right now. Jim Ricchiuti - Needham & Company: Right. Joel with respect to some of the margin pressure that some of the issues that surfaced in Q4. Some of that I'd think goes away in Q1 for instance some of the issues you faced with M-Audio, if you've that behind you?

We believe so. Some of that was, I guess production scheduled related with the airfreight. And we are comfortable; we've that behind us now, so that we'll be able to plan this out a bit better and use the boat method of transportation versus the airfreight, which is much more expensive. Jim Ricchiuti - Needham & Company: And lastly, can you give us any feel for how much of the backlog is left in the broadcast area, is left to be converted over. It sounds like you've made some progress in Q4 with a few of the European deals. How much is left?

Basically our backlog is pretty fluid. There is ins and outs every quarter and really we've removed a lot of the, what we used to call struck in the backlog items. But we discussed backlog previously because it's having an impact on our results. The Q3 software release for our video product has allowed us to close some of the big deals in the backlog. And given this moment, we don't feel that backlog is a significant issue anymore and that needs to be focused on in discussing our results. Going forward, we are going to not be discussing backlog specifically as it trends to a more fluid and natural backlog of transactions that coming in and out on a more normal basis. Jim Ricchiuti - Needham & Company: Then Gary a question for you just in term of, are there any big picture views you can give us just with respect to Avid's cost structure and how you might be looking at sizing that over the course of the year to match what you see as the business outlook?

Well Jim, as I mentioned, I've been here just little over 30 days since they have been announced I'd really had been digging my head in trying to understand the financial picture, trying to understand our customers, our customer needs and uses. I think that as I commented and the key things there were emerging efficiencies, one of those key things. I think Ken, Joel and I'll all be working together in the next few weeks to try to size that. But I've not put a number on that. Certainly, where our goal is not to just to have increasing profitability over this year in the future, but to get to stronger margins. I've talked about that a little bit back in December as well but I've have not a number around at this stage. Jim Ricchiuti - Needham & Company: Okay, thanks.

Thanks, Jim.

(Operator Instructions) And we have a question from Andrew Abrams with Avian Securities. Andrew Abrams - Avian Securities: I wonder Joel if you could I don't need to harp on this backlog issue. But if you could just talk a little bit about the remaining backlog, is a lot of that third-party equipment or are we getting down to the point where that the third-party equipment isn't going to make a difference anymore?

So Andy, we don't believe, there is a lot of third-party equipment transactions left in our deal. We had a couple this year that as we said affected our margins, but where we were the primes but that is not typical and we do not have a lot of that in our backlog. Andrew Abrams - Avian Securities: And if you characterize what you have or what you are looking at going forward not only in backlog but what you are taking in backlog is there a lot of I mean, we've had this discussion before about doing a third-party business as a function of keeping clients happy, Would you expect that to continue to decrease down to almost nothing or is there a level that we've to kind of figure it's going to stay at?

It's not our typical business model to be using a lot of third-party products. When customers want us to be the prime, we do that and but that is not our typical model. Andrew Abrams - Avian Securities: And Gary, I know you've been there long enough, so you can probably give us an answer to this. But is there a particular area of focus that you guys are looking at in order either in order to rationalize or in order to really spend focus on in terms of your customer contact. Is it going to be more broadcast, more consumer is there any issue in Audio that you feel like you guys need to work on. Is there any color you can kind of give us at this point?

Well, I think Andy, it sort of sums it up in your sort of last comment, it is sort of color at this stage and sort of context. As I mentioned in my sort of initial observations, I literally visited a couple dozen customers, maybe more and I spent some time with them. And, what I can tell you is in terms of the end user customer of the consumer products of course, I haven't spent any time with those. It would be more than the intermediaries, of course. For our Pro Tools products and for our broadcast and for our video products I'll spend quiet bit of time with both post and broadcast, as we go through that. And there is a lot of -- what I discovered is, there is a lot of opportunity in both. I think there is -- in the pure video editing, I think there is a strong desire for their move towards collaboration, and again this is color, this is my just general sense as we do it. A lot decided to move towards collaboration, how do we headed in the collaborative environment multi-purposing. So, for the new range of digital media that is out there, working together. Of course in the broadcast area, only a small, a very small percentage of the broadcast works gone digital. They will take them several years because of capital equipment cycles that are out there. So, I think that you will see a renewed emphasis on both. And I think that's I tended -- our kickoff for video units a couple of weeks ago here in North America. I think you will see as going down both lines not emphasizing one, not over emphasizing one over the others we go there. What I've discovered is that there are lot of our customers that use both Pro Tools and they use, tend to use our video products and we are looking at ways we can make that an even better outcome for our customers that are there. So, those are just some color at this stage of the game. But that's something stuff that I learnt from our customers, who are out there. And as I mentioned our customers are clearly passionate. They are clearly, if I were to say that they are not happy with it started looking for us to help them even more. And I think we were to tell and look at what that means with them along with the dimensions that I described. Andrew Abrams - Avian Securities: If also we could just for a second I don't know whether Gary you are better at this or may be Joel talk about duplication in terms of product development or general R&D. I mean you guys have a lot of different lines all of which are under the Avid name but are almost run separately at least as far as I can understand. Is there a concerted effort to kind of put some of those R&D groups together and instead of having six guys working on six different projects and then kind of looking at each other when the projects are done, kind of having may be two projects or three projects working with a number of different people from each of those organizations?

Yeah. I think, to answer the question, conservative would be too strong of a word but certainly, we are working. There were some initiatives begun even before I got here in terms of to be able to do that to be able to have resource, you have to have common development practices. It's not just about having great people or even some of the products. That's why our common development practices is about common development infrastructure etcetera and there has been any issues began already about with great cooperation among business units. But how to do that first within the individual business units for example, there is an M-Audio Digi in the Audio business and then going into next step further then how can we go to a common software development infrastructure across business units. As we take a look at taking advantage of some additional global location that's also important. And we are taking a look at, as we take a look at this global locations of having a pool of resource that would service all the divisions and not the product line, product line or division specific. I think that at the end of the day developers are tied to projects and we want to find the best people out there. And they just found even with standard practices, where you can just have suddenly assign three people from one business units or another because of expertise or whatever, audio and video expertise or -- both very skilled, doesn't quite right skill level, they are very different in terms of signal processing versus video processing and the playback as an example. So, there is some initial efforts, I'm stepping up that effort. The question I think Jim asked me about, opportunity for efficiencies and savings, I do think that engineering, which you highlighted Andy will be one of the areas that we will take a look and see how we will be more efficient in that area. Andrew Abrams - Avian Securities: Great. Well, thank you. I appreciate it.

And next, we will hear from Chris Rowen with Soleil Associates. Chris Rowen - Soleil Associates: Hi Joel. Can you just go over that guidance again; I want to make sure I got it right. Did you say earnings would be 30% or 40% below '07 levels?

Yeah, this is Ken speaking. That's what I said; the non-GAAP earnings would be 30% to 40% for 2007 levels on flat revenue. Chris Rowen - Soleil Associates: Not able to work through that, in my model quick enough to ask a question. But I mean, if we assume flat revenue and flat expenses, would we get that degree of drop or you expecting expenses to actually go up?

We're expecting expenses to actually go up during that. Chris Rowen - Soleil Associates: Yeah.

So, what we've talked about in the last call, Chris was that we've a number of these initiatives that we're looking at across the company and Gary alluded to that in R&D. Well, this is basically as we talk about last time, we are going to become -- we use the, get the power of the company and become more of cooperation versus a federation of independent acquired entities. And we're looking to use the power of the company across many areas and not just R&D. We talked about supply chain last time. We talked about shared services across s G&A and a number of areas. So, that requires investment.

I think, that's right. I think, as you all very well know as the company is transitioned to global locations, technology transfer etcetera you have a tendency to increase your cost in the short term to ensure that it across a proper transition. But it should be clear all of our investments designed to drive increased profitability in the company and we are very focused on obviously on our leadership position in the respective markets, but we are equally or more so focused on profitability for the company. Chris Rowen - Soleil Associates: I guess my question is well given the trajectory of the revenues over the last couple of years are you expecting that at some point average is going to be at much higher revenue levels than we are now and that's why you are comfortable. I mean, we just seen our first bluster, you would actually be coming in and maybe telling us this quarter you don't know what you're going to do here and the next quarter tell us you're going to cut expenses so you can be profitable at these revenue levels if they're indeed going to be flat?

So to address that question is I think I spend sometime with the management team both in terms of the budget planning for this year as well as their confidence in the forecast for the quarter. And I think that's what the revenue numbers reflect. And as I also comment, on we do -- we will have an increasing focus on revenue. I don't have a two or three year projection. I can't possibly give you two or three year projection at this stage of the game. I do have a lot of confidence in the time I spend with management about what we are doing for this year. I think you will see increased profitability as Ken mentioned during the course of the year. Chris Rowen - Soleil Associates: Okay.

And at this stage we are providing yearly guidance and to go from the positions that we are talking about earlier in the year to the end of the year you can look to the model on that.

I'm going to add to what Gary said going back to what we said on the last call. So, you can look at the initiatives we are doing right now is part of it is operational focused on being more efficient and effective in the number of the areas that where we spend money, and there is also strategic piece to that. And with Gary on board now we're getting more involved in the strategic side, and that's the piece that will drive, how we face the customer and what we do in the marketplace around driving revenue. So, there is two components do what we call Avid 20/20 less time operational and strategic. Chris Rowen - Soleil Associates: Okay, all right. Well, good luck.

And next, we'll hear from [Samir Sika with Metrowest Capital Management]. Samir Sika - Metrowest Capital Management: I'm having a difficulty building a bridge from where you are on the guidance that you've provided. So, I guess, if I look at it roughly what you talked about it you're going to be doing 3% to 4% operating margin next year. Is that fair?

Yes. Samir Sika - Metrowest Capital Management: Okay. So even, we could throw this out, year out and may be in the next year out. Based on the investments you are making, once you get this working as one corporation. What is the sustainable margin do you think in this business?

I don't want to really comment on what that is because I haven't -- haven't no one up there yet. But I think it's fair to say that we think the margin, the sustainable margin and I certainly don't plan on throwing out next year as we take a look at that. However the sustainable margin is significantly higher than where we are and we will be driving the company towards that goal. I don’t have a number in mind at this stage of the game. At some point, we will talk about what that number might be going downstream. In terms of sort of a question, a similar question that Andy, Chris, yourself asked and also Jim is sort of the timing to make sure we do -- the proper investments and also proper reductions in expenses here. I want to be sure we are doing it surgically and we don't -- we not only grow the company but we don't repeat the progress of the company. So, you will, I think you can anticipate that, Joel, myself, Ken rest of the management team we will all be very focused on that. And it will, take a little while short time, but little while to figure that out, and then to be an implemented to be -- we will be implementing that during the course of the first half this year. Samir Sika - Metrowest Capital Management: Right. So, would you be able to in three to six months, I guess identify for us what are the expenses that you are making which are so called investments. But it's almost like instead of cutting expenses you are investing in the future to get to that, whatever that future margin goal is. So, hopefully some of those expenses would be one time in nature?

That's right. As an example, when you take advantage of global locations there is overlap as you do technology transfer as an example. And that's, you can call it one time expense you can call it overlap expense, call whatever you want. But it certainly leads to an ultimate reduction in expenses, as one example, the types of things that you might be doing when you are out there. We are making some strategic investments in education as an example making sure that we drive a broader; a companywide approach to education as you know Sibelius in particular is very strong in the educational market. Our video products are the most leading, they are in most of the leading film schools and cinematic schools etcetera, that's an example of strategic investment. We actually believe that as we've have a go to market that's companywide on that, we cannot only reduce our costs in that, but we've to do some transition into -- we've to do some transition to that and to GAAP reporting that does show up in the or even non-GAAP it shows up in the operating numbers there. Samir Sika - Metrowest Capital Management: One more question?

So I can assure you there is no loss of focus on profitability here Samir Sika - Metrowest Capital Management: One last question, so even in this quarter when you talked about some of these write-offs that you have taken, can you quantify how much of that is the net amount so that we can at least figure out what the profitability in the business is and how much whether these write-offs that you've taken in different businesses?

So, I'd like to summarize somewhere around $0.12 to $0.13 of those specific items I mentioned related to this quarter that you are referring to. Of course, that was around $0.12 to $0.13. Samir Sika - Metrowest Capital Management: $0.12 to $0.13, okay. All the different segments basically.

Yes. Across the company for those items we talked about, it was about $0.12 to $0.13.

And those are examples of things that we are now discontinuing and we won't be investing in incremental R & D dollars. Samir Sika - Metrowest Capital Management: Are you going to be providing the similar sort of disclosure going forward every quarter till you are implementing these steps?

Similar type of disclosure on --. Samir Sika - Metrowest Capital Management: Well like what you did this quarter. I guess you plan to do that at least for the next one year, right. Like when you are talking about these investments that you are making?

So, we should be clear that what we talk about was some expenses we've in the quarter that those really weren't part of the 20:20 project that we are discussing. Those are items that we had during the quarter that we are not typical we are not expecting those to repeat. Samir Sika - Metrowest Capital Management: Right.

I differentiate from that versus the 20:20 project that we are undertaking. Samir Sika - Metrowest Capital Management: Right. Okay, thank you.

(Operator Instructions) And we have a follow-up from Jim Ricchiuti. Jim Ricchiuti - Needham & Company: Just with I was wondering if you can give us any flavor Joel for the domestic business how that performs particularly on the video area in the quarter. What I'm getting at is I'm just wondering if you are beginning to see any progress from sales and certainly more from a profit standpoint from some of the changes you've made within the sales organizations?

So, well, what I can tell you was looking at our business the European video business performed very well in the quarter. They had a number of these large deals were focused in Europe. So, where the U.S was kind of a run rate or even down a bit takedown since last quarter, where in Q3 we had a number of things going on, if you look at it sequentially with the high government business that comes into third quarter for the video segment. It was really the European business this quarter that pushed our performance up. And that answer your question? Jim Ricchiuti - Needham & Company: Yeah. On a year-over-year basis can I assume the U.S. business was down what?

That’s correct. Jim Ricchiuti - Needham & Company: Okay. Can you give us a sense as to how much it was down?

Domestic was down, you're talking about overall business. Jim Ricchiuti - Needham & Company: Domestic videos, domestic professional video, how much was that down?

They were down about 10% Jim Ricchiuti - Needham & Company: Okay, thank you.

And next we’ll hear from Chuck Goldblum with Emancipation Capital. Chuck Goldblum - Emancipation Capital: Hi, guys. I want to clarify few things one Joel you just said that there was some write-offs quarter, there was some element of them which were not Avid 20-20. What is the distinction there? I would imagine anything in the restructuring is 20-20?

Yeah, let me clarify.

Chuck, let me clarify that a little bit. What Joel distinguished between was 20-20 investments. And he wasn't giving an investment amount nor do we intend to, where we are investing in every quarter to 20-20. He was talking about write-offs that may in fact as you pointed out were driven by our 20-20 initiatives. He was just telling you how much those additional costs were associated with discontinuing some product lines; some inventory write downs etcetera this way he was differentiating between. So, you are right it's all 20-20 initiatives.

And to be clear I didn't say that they were restructuring amounts they were in operating expenses, correct. Chuck Goldblum - Emancipation Capital: Okay. And then as a follow-up on that would be, okay. There is fair amount of these sorts of one time charges in nature and maybe that's my characterization that you're running through your non-GAAP operating numbers?

Yes. Chuck Goldblum - Emancipation Capital: For the purpose or it seems there has been questions like this already and for the purpose of the folks in the outsides sort of following your progress. I don't know whether comes to non-GAAP or do something else. Is there is some way that you guys sort of doing this process will allow outside investors to follow the underlying profitability of the business, sort of clean above the juggling that's going on?

Well, Chuck it's we are trying our best to provide that clarity. As you know, GAAP and non GAAP is even we only try helping to understand the business that we even deal with non-GAAP numbers at all and we want to be sure that we stick to GAAP as much as possible. We, yeah, I think the question is a about transparent, we will try to be as transparent as we can with impendency. Chuck Goldblum - Emancipation Capital: I guess my point is I guess the joy of non-GAAP is that you got to make the rules so long as you tell us what the rules are and I would encourage you to use that opportunity to be as transparent as possible?

I appreciate that and I wish your zeal is that. But, Joel helped provide some of that clarity; we are just answering the questionnaire where we are on. Chuck Goldblum - Emancipation Capital: Thank you.

We will try.

And that's our intent to be with what we said on the call today. We did highlight those items for you. Chuck Goldblum - Emancipation Capital: Off course, thanks.

And we've no further questions in the queue at this time. I'd like to turn the conference back over to our speakers for additional or closing remarks.

Well, thanks a lot everyone and look forward to few of you have not met personally then so look forward to that rather hear of course on your side. Did you have any further questions, just give us a call, we are all available and look forward to giving you an update next quarter.

That does conclude today's conference. We do thank you for your participation. Have a great day.