Aware, Inc. Reports Third Quarter 2001 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)--Oct. 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 ) reported financial results for its third quarter ended September September: see month. 30, 2001. Third quarter 2001 revenue decreased 61 percent to $3.1 million, compared to $8.0 million for the quarter ended September 30, 2000. Net loss this quarter was $2.0 million, or ($0.09) 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. Net income in the third quarter of 2000 was $3.4 million, or $0.14 per diluted share. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Tzannes, chief executive officer, said: "Our results this quarter reflect macro trends taking place in the communications industry communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. as a whole and the 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 industry in particular. While unpleasant in the short run, we believe that this condition is temporary. We continue to believe that the DSL and communications industry will return to a more healthy and stable state in 2002. We remain focused on strengthening our technology portfolio to address what we see as an emerging trend toward greater use of intellectual property by semiconductor manufacturers for DSL and other 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 applications." 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, October October: see month. 30, 2001 at 5:00 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, and licenses DSL technology to semiconductor and equipment manufacturers to enable broadband communications over existing telephone networks. More information about Aware can be found at 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 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 business model, our quarterly results are difficult to predict, we depend on a limited number of licensees, we derive a significant amount of revenue from one customer, 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 June 30, 2001 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 Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenue:
Product sales $ 819 $ 1,184 $ 2,959 $ 3,550
Contract revenue 1,538 3,021 6,412 9,126
Royalties 751 3,814 5,972 8,924
Total revenue 3,108 8,019 15,343 21,600
Costs and expenses:
Cost of product
sales 173 231 447 606
Cost of contract
revenue 1,376 2,342 5,516 6,518
Research and
development 3,007 1,414 6,917 4,167
Selling and
marketing 704 602 2,186 1,942
General and
administrative 722 766 2,172 2,269
Total costs and
expenses 5,982 5,355 17,238 15,502
Income (loss) from
operations (2,874) 2,664 (1,895) 6,098
Interest income 522 757 1,953 1,997
Income (loss) before
provision for income
taxes and cumulative
effect of change in
accounting principle (2,352) 3,421 58 8,095
Benefit from income
taxes 313 -- -- --
Income (loss) before
cumulative effect of
change in accounting
principle (2,039) 3,421 58 8,095
Cumulative effect of
change in accounting
principle -- -- -- (1,618)
Net income (loss) ($ 2,039) $ 3,421 $ 58 $ 6,477
Basic income (loss) per
share:
Income (loss) before
cumulative effect of
change in accounting
principle ($ 0.09) $ 0.15 $ 0.00 $ 0.36
Cumulative effect of
change in accounting
principle -- -- -- ($ 0.07)
Net income (loss) per
share ($ 0.09) $ 0.15 $ 0.00 $ 0.29
Diluted income (loss) per
share:
Income (loss) before
cumulative effect of
change in accounting
principle ($ 0.09) $ 0.14 $ 0.00 $ 0.34
Cumulative effect of
change in accounting
principle -- -- -- ($ 0.07)
Net income (loss) per
share ($ 0.09) $ 0.14 $ 0.00 $ 0.27
Weighted average shares -
basic 22,639 22,529 22,621 22,412
Weighted average shares -
diluted 22,639 23,957 22,876 23,879
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2001 2000
ASSETS
Cash and investments $58,169 $57,503
Accounts receivable, net 2,985 5,200
Deferred tax assets 7,093 7,093
Property and equipment, net 10,983 11,187
Other assets, net 1,029 467
Total assets $80,259 $81,450
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 1,606 $ 3,117
Total stockholders' equity 78,653 78,333
Total liabilities and stockholders'
equity $80,259 $81,450
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