AVT Corporation Announces Record Financial Results for Its Quarter and Year Ended December 31, 1998.

KIRKLAND, Wash.--(BUSINESS WIRE)--Jan. 26, 1999--AVT Corporation (Nasdaq:AVTC) today reported its financial results for the quarter ended Dec. 31, 1998.

Sales were at record levels for the quarter, increasing to 23,687,000, a 35% increase from 17,588,000 in the prior year quarter. Excluding non-recurring charges described below, quarterly earnings increased 52% and were 3,950,000 or 0.29 per diluted share, as compared to 2,604,000 or 0.20 per diluted share in the comparable prior-year quarter.

For the year ended December 31, 1998 sales were a record 81,126,000, a 40% increase over the comparable prior-year period. Excluding non-recurring charges described below, earnings increased 51% and were 11,793,000 or 0.90 per diluted share, as compared with 7,785,000 or 0.62 per diluted share in the prior-year.

"I'm pleased to report that continued strong sales across all operating groups helped us to achieve new records in revenue, operating income and earnings for the quarter and for the year." stated Richard J. LaPorte, Chairman and Chief Executive Officer. "The fourth quarter was the largest sales quarter in company history, as demand for our unified messaging and fax server product lines continued to grow. Our RightFAX and CommercePath business units hit new highs in sales volume and operating profits, and represented 57% of total corporate sales for the year. In our CTG business unit, a growing demand for unified messaging platforms and customer upgrades and trade-ups to our Y2K compliant software, resulted in new quarterly high-water marks for bookings and revenue. The quarter was also an excellent one in terms of operating profits and cash flow. We completed the year with an operating return on sales of 21% and our balance sheet has never been healthier with over 39,000,000 in cash and no debt. Furthermore, we finished the year with significant momentum in all areas of the company and a healthy backlog to help 1999 get off to a good start."

Commenting on the recently announced NEC agreement and other significant fourth quarter developments, LaPorte added: "The fourth quarter was also significant in validating our long range strategy to move AVT products into the enterprise market. Our partnership with NEC and several significant enterprise sales were symbolic of these efforts. We could not be more pleased to have NEC America's BNS organization become a premier distributor of CallXpress for Windows NT. Partnering with NEC will allow us to further penetrate the mid-range and high-end unified messaging markets and further validates our Windows NT strategy. Key enterprise customers in the quarter included one of the largest school districts in the country; a Regional Bell Operating Company; one of the best known insurance carriers in the U.S.; and one of the most prestigious investment management firms in the world. I believe we are on the right track, and certainly off to an excellent start for the new year."

Non-recurring charges. The company filed for a follow-on offering of its common stock in October 1997. In February 1998, this offering was withdrawn resulting in the 287,000 write-off of costs associated with the offering. In 1997, the Company acquired selected assets of Telcom Technologies (January) and CommercePath, Inc. (October) which resulted in the write-off of acquired in-process research and development of 3,898,000 and 7,127,000, respectively. Including these non-recurring charges, the company reported earnings of 11,610,000 and 729,000 for the years ended December 31, 1998 and 1997, respectively, and earnings of 3,950,000 and loss of 1,957,000 for the quarters then ended. Diluted earnings per share including these non-recurring charges were 0.88 and 0.06 for the years ended December 31, 1998 and 1997, respectively, and 0.29 and a loss of 0.17 for the quarters then ended.

AVT Corporation develops, manufactures, markets and supports a broad line of open systems-based advanced computer telephony products, specializing in unified messaging, high-performance fax processing, call center productivity and customer service applications. AVT is headquartered in Kirkland, Washington, USA, and does business through its Computer Telephony Products Group, based in Kirkland, Washington and through its wholly owned subsidiaries, RightFAX, Inc. based in Tucson, Arizona and CommercePath, Inc. based in Portland, Oregon. In addition, AVT has sales and support offices in the United Kingdom, Germany, Hong Kong and Dubai. Founded in 1982, AVT is publicly traded under the symbol "AVTC" on the Nasdaq National Market. AVT maintains a site on the World Wide Web at www.AVTC.com.

RightFAX is a registered trademark of AVT Corporation. Windows NT is a registered trademark of Microsoft Corporation. Other products mentioned are trademarks of their respective owners.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including technical and competitive factors, which could cause the Company's results and the timing of certain events to differ materially from those discussed in the forward-looking statements. Such risks are detailed in AVT's latest Annual Report on Form 10-K and Quarter Reports on Form 10-Q filed with the Securities and Exchange Commission.

NOTE TO EDITORS: News releases are available from AVT's Newsroom fax server.

Call 425/820-4089 and follow the prompts. This is document number 77103. News releases can also be found on AVT's World Wide Web site at www.AVTC.com. -0-

                            AVT Corporation
             Consolidated Statements of Income (Unaudited)
               (in thousands, except per share amounts)

                               Quarter ended       Year ended
                                December 31,       December 31,
                               1998     1997      1998     1997

Net sales                    $23,687  $17,588   $81,126  $58,091
Cost of sales                  7,848    6,043    28,098   21,066
  Gross profit                15,839   11,545    53,028   37,025
Operating expenses:
  Research and
   development                 2,081    1,972     8,082    6,719
  Sales, general
   and administrative          7,933    5,790    27,663   19,212
  Non-recurring
   charges (1)                  --      7,127       287   11,025
Total operating expenses      10,014   14,889    36,032   36,956

Operating income (loss)        5,825   (3,344)   16,996       69
Other income, net                348      287     1,145    1,070
Income (loss) before
  income tax expense           6,173   (3,057)   18,141    1,139
Income tax
  expense (benefit)            2,223   (1,100)    6,531      410
Net income (loss)            $ 3,950  $(1,957)  $11,610  $   729

Basic net income
  per share                  $  0.32  $ (0.17)  $  0.96  $  0.06
Diluted net income
  per share                  $  0.29  $ (0.17)  $  0.88  $  0.06

Weighted average
 common shares
 outstanding                  12,508   11,520    12,115   11,364
Diluted weighted
 average common
 shares outstanding           13,615   11,520    13,165   12,598

Net income excluding
 non-recurring
 items (1)                   $ 3,950  $ 2,604   $11,793  $ 7,785
Diluted net income
 per common share
 excluding non-
 recurring items(1)          $  0.29  $  0.20   $  0.90  $  0.62

Diluted weighted
 average common
 shares outstanding(1)        13,615   11,520    13,165   12,598

(1) Non-recurring charges consist of write-off of costs related to the
withdrawal of the follow-on stock offering in February 1998
(originally filed in October 1997) and write-off of acquired
in-process research and development associated with the acquisition of
Telcom Technologies in January 1997 and CommercePath in October 1997.


                            AVT Corporation
                Consolidated Balance Sheets (Unaudited)
                            (in thousands)

                                          Dec. 31,   Dec. 31,
                                             1998       1997
ASSETS:
Current assets:
  Cash, cash equivalents,
   and short-term investments              $39,049    $22,233
  Accounts receivable, net                  14,153     10,098
  Inventories                                5,560      4,908
  Deferred and prepaid
   income taxes                              1,430      1,119
  Prepaid expenses and
   other assets                              1,393        968
      Total current assets                  61,585     39,326

Equipment and leasehold
  improvements, net                          3,263      2,364
Intangibles, net                             7,677      8,815
Deferred income taxes                        3,582      3,905
      Total assets                         $76,107    $54,410

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
  Accounts payable                         $ 3,669    $ 2,352
  Other current liabilities                  8,669      6,427
  Income taxes payable                         374      2,621
      Total current liabilities             12,712     11,400

Commitments

Shareholders' equity:
   Preferred stock, par value
     .01 per share, 2,000,000
     authorized, none outstanding             --         --
   Common stock, par value .01
     per share, 60,000,000
     authorized, 12,623,255
     and 11,522,558 outstanding,
     respectively                              126        115
   Additional paid-in capital               40,368     31,604
   Retained earnings                        22,901     11,291
      Total shareholders' equity            63,395     43,010

      Total liabilities and
       shareholders' equity                $76,107    $54,410