Aware, Inc. Reports Record Fourth Quarter and Full Year 2000 Financial Results.Business/Technology Editors BEDFORD Bedford, town, England Bedford, town (1991 pop. 75,632), county seat of Bedfordshire, central England, on the Ouse River. It is an important industrial center; diesel engines, pumps, turbines, agricultural machinery, electrical equipment, and transistors , Mass.--(BUSINESS WIRE)--Jan. 30, 2001 Aware, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AWRE AWRE Atomic Weapons Research Establishment AWRE Australian Workshop on Requirements Engineering AWRE Automatic Write Reallocation Enable ), a worldwide leader in DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary (digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and ) technology for high-speed Internet See broadband. access over existing telephone networks, today reported record financial results for its fourth quarter and year ended December 31, 2000. Fourth quarter 2000 revenue increased 49 percent to $9.1 million, compared to $6.1 million for the quarter ended December 31, 1999. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the fourth quarter of 2000 was $4.2 million, or $0.18 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Including a non-recurring item, net income was $6.9 million, or $0.30 per diluted share. In the fourth quarter of 1999, net income was $1.9 million, or $0.08 per diluted share. For the year ended December 31, 2000, revenue increased 49 percent to $30.7 million, compared to $20.5 million for the full year 1999. Pro forma net income for the year 2000 was $12.3 million, or $0.52 per diluted share. Including non-recurring items, net income was $13.4 million, or $0.56 per diluted share. For the full year 1999, net income was $4.9 million, or $0.21 per diluted share. Pro forma net income for the quarter and year ended December 31, 2000 excludes a non-recurring income tax benefit and a charge resulting from the cumulative effect of a change in accounting principle as detailed in the attached pro forma results. Michael Tzannes, president and chief executive officer, said: "2000 was an outstanding year for Aware. Our results reflect a sharp increase in the number of ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line chipsets sold in 2000, the quality of our technology and the growing demand for high-speed Internet access." Commenting further, Tzannes said: "Customer development projects are moving forward on plan, and we continue to develop and integrate new technologies that enhance and extend the value of ADSL." Tzannes concluded: "While industry growth has slowed somewhat recently, market trends point to strong worldwide growth for ADSL over the coming years." Note: Aware's conference call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the today Tuesday, January 30, 2000 at 6:00 p.m. Eastern Time. To listen to the call, please go to www.aware.com, and click on "Investor Relations Investor relations The process by which the corporation communicates with its investors. ." About Aware Aware, Inc. designs, develops, licenses and markets DSL technology that enables broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communications over existing telephone networks. Its solutions, including splitterless G.lite, full-rate ADSL Refers to the standard ADSL technology in contrast to the slower-speed G.lite version. See DSL. , VeDSL, Dr. DSL and DMTflex, address central office as well consumer electronics requirements. The company licenses its intellectual property and software to semiconductor manufacturers and equipment manufacturers who sell products incorporating Aware's technology. Aware also markets to systems companies to encourage them to design its technology into their products, and to service providers to encourage them to deploy new broadband services See broadband and broadband service provider. based on its technology. More information about Aware can be found at http://www.aware.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Warning Portions of this release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future events and are subject to risks and uncertainties, such as estimates or projections of future revenue and earnings and the growth of the DSL market. Aware wishes to caution you that there are some factors that could cause actual results to differ materially from the results indicated by such statements. These factors include, but are not limited to: we have a unique and unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy business model, our quarterly results are difficult to predict, we depend on a limited number of licensees, we depend on equipment companies to incorporate our technology into their products, we face intense competition from other DSL vendors, DSL technology competes with other technologies for broadband access See broadband and wireless broadband. , our business is subject to rapid technological change, and we will require additional engineering personnel. We refer you to the documents Aware files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our quarterly report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2000 and other reports and filings made with the Securities and Exchange Commission.
AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2000 1999 2000 1999
Revenue:
Product sales $ 1,105 $ 1,638 $ 4,655 $ 5,535
Contract revenue 3,027 2,587 12,152 10,594
Royalties 4,935 1,878 13,860 4,398
Total revenue 9,067 6,103 30,667 20,527
Costs and expenses:
Cost of product
sales 225 406 831 1,363
Cost of contract
revenue 2,282 1,841 8,800 7,053
Research and
development 1,748 1,264 5,915 3,636
Selling and
marketing 591 598 2,533 2,574
General and
administrative 829 619 3,098 2,580
Total costs
and expenses 5,675 4,728 21,177 17,206
Income from
operations 3,392 1,375 9,490 3,321
Other income -- -- -- 18
Interest income 829 502 2,826 1,559
Income before
income taxes 4,221 1,877 12,316 4,898
Benefit from
income taxes 2,716 -- 2,716 --
Income before
cumulative effect 6,937 1,877 15,032 4,898
Cumulative effect
of change in
accounting
principle -- -- (1,618) --
Net income $ 6,937 $ 1,877 $ 13,414 $ 4,898
Net income per share:
Basic
$ 0.31 $ 0.09 $ 0.60 $ 0.23
Diluted
$ 0.30 $ 0.08 $ 0.56 $ 0.21
Weighted average
shares - basic 22,584 21,828 22,454 21,497
Weighted average
shares - diluted 23,442 23,496 23,807 23,585
PRO FORMA RESULTS (1)
Pro forma net income $ 4,221 $ 1,877 $ 12,316 $ 4,898
Pro forma net income
per share - diluted
$ 0.18 $ 0.08 $ 0.52 $ 0.21
Weighted average
shares - diluted 23,442 23,496 23,807 23,585
(1) Pro forma results exclude a non-recurring $2.716 million
income tax benefit and a ($1.618) million charge resulting from a
cumulative effect on prior years of a change in accounting principle
related to the adoption of Securities and Exchange Commission Staff
Accounting Bulletin No. 101, which provides guidance on revenue
recognition.
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2000 1999
ASSETS
Cash and investments $57,503 $36,265
Accounts receivable, net 5,200 5,706
Deferred tax assets 7,093 --
Other assets 467 891
Property and equipment, net 11,187 11,620
Total assets $81,450 $54,482
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 3,117 $ 1,513
Total stockholders' equity 78,333 52,969
Total liabilities and stockholders' equity $81,450 $54,482
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