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Aware, Inc. Reports Fourth Quarter and 2008 Financial Results
Revenues for the fourth quarter of 2008 were
The Company reports its net income and basic and diluted net income per share in accordance with U.S. generally accepted accounting principles (GAAP), and additionally, on a non-GAAP basis. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation expense. The company uses the non-GAAP information internally to evaluate its operating performance and believes these non-GAAP measures are useful to investors as they provide additional insight into the underlying operating results. However, non-GAAP measures are not stated in accordance with, should not be considered in isolation from, and are not a substitute for, GAAP measures. A reconciliation of GAAP to non-GAAP results has been provided in the attached financial tables.
GAAP net income for the fourth quarter of 2008 was
Non-GAAP net income for the fourth quarter of 2008, excluding the effect
of stock-based compensation, was
Michael Tzannes, Aware's chief executive officer, said, "Overall, 2008 was encouraging in many respects. We are pleased that annual revenues grew for the third year in a row and that we were profitable. Biometrics revenues grew nearly 60% and maintained strong operating metrics. We expanded our DSL test and diagnostics product offerings and are positioned to capitalize on test infrastructure deployments by phone companies. We also executed a significant contract relating to a portion of our patent portfolio, validating the market opportunity for high-quality patents.
However, the slowing economy has had a negative impact on us and is likely to continue to do so. We saw revenues trend down in most of our traditional product offerings in the fourth quarter. While we have a strong cash position, we are closely monitoring expenses across all elements of our business.
We remain optimistic that despite the current challenging market conditions, we continue to make progress towards achieving our long term goal of generating shareholder value by leveraging a strong technology base into innovative product and service offerings."
Note: Aware's conference call will be broadcast live over the Internet
today,
About Aware
Aware is a leading technology and software supplier for the
telecommunications and biometrics industries. For more than ten years, Aware
has pioneered innovations at telecommunications standards-setting
organizations and continues to develop and market DSL silicon intellectual
property and test and diagnostics products. Its StratiPHY IP product line
supports DSL standards, including ADSL2+ and VDSL2, and has been broadly
licensed to leading semiconductor companies. Telecom equipment vendors and
phone companies use Aware's DSL test and diagnostics modules and Dr. DSL®
software to help provision DSL circuits globally. Aware is also a veteran of
the biometrics industry, providing biometric and imaging software components
used in government systems worldwide since 1992. Aware's interoperable,
standard-compliant, field-proven imaging products are used in a number of
applications, from border management to criminal justice to medical imaging.
Aware is a publicly held company (Nasdaq: AWRE) based in
Safe Harbor Warning
Portions of this release contain forward-looking statements 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 and
biometrics markets. Aware wishes to caution you that there are factors that
could cause actual results to differ materially from the results indicated by
such statements. The DSL factors include, but are not limited to: we have a
unique business model, our quarterly results are difficult to predict, our DSL
licensing and DSL test and diagnostic businesses depend upon a limited number
of customers, we derive a significant amount of revenue from a small number of
customers, 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, our business
could be harmed if our test and diagnostic hardware and software products have
quality problems, we depend on a single source contract manufacturer for the
manufacture of our DSL hardware products, our manufacturing systems may not
be adequate for our DSL test and diagnostics hardware products, we depend on
single source suppliers for components in our DSL hardware products, and our
business is subject to rapid technological change. The biometric factors
include, but are not limited to: market acceptance of our biometric products,
changes in contracting practices of government or law enforcement agencies,
announcements or introductions of new products by our competitors, delays,
failures or problems in our biometric products, problems in our biometrics
services business, delays in the adoption of new industry biometric standards,
and competitive pressures resulting in lower software product revenues. We
refer you to the documents Aware files from time to time with the
Aware, StratiPHY, and Dr. DSL are trademarks or registered trademarks of
Aware, Inc.
AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Revenue:
Product sales $2,210 $5,158 $14,022 $17,491
Contract revenue 9,346 1,077 14,658 6,337
Royalties 527 518 1,837 2,609
Total revenue 12,083 6,753 30,517 26,437
Costs and expenses:
Cost of product sales (1) 613 912 2,589 3,998
Cost of contract
revenue (1) 667 1,110 4,180 5,425
Research and
development (1) 3,187 3,134 13,171 10,869
Selling and
marketing (1) 1,443 930 4,739 3,738
General and
administrative (1) 1,416 967 5,209 4,237
Total costs and
expenses 7,326 7,053 29,888 28,267
Net income (loss)
from operations 4,757 (300) 629 (1,830)
Interest income 222 496 1,163 2,016
Net income before
provision for
income taxes 4,979 196 1,792 186
Provision for income taxes (1) (3) (16) (26)
Net income $4,978 $193 $1,776 $160
Net income per share
- basic $0.21 $0.01 $0.08 $0.01
Net income per share
- diluted $0.21 $0.01 $0.07 $0.01
Weighted average
shares - basic 23,290,502 23,818,467 23,637,950 23,737,715
Weighted average
shares - diluted 23,292,639 24,917,360 23,696,519 25,083,700
(1) Effective January 1, 2006 the Company adopted Statement of Financial
Accounting Standard No. 123 (Revised), "Share-Based Payment" (FAS 123(R)).
The amounts in the tables above include stock-based compensation as
follows (in thousands):
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Cost of product sales $3 $5 $11 $13
Cost of contract revenue 29 43 135 176
Research and development 148 172 611 483
Sales and marketing 52 41 186 119
General and administrative 158 85 562 347
Total stock-based compensation
costs $390 $346 $1,505 $1,138
AWARE, INC.
Non-GAAP Financial Measures and Reconciliation
(In thousands, except per share data)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
GAAP net income $4,978 $193 $1,776 $160
Stock-based compensation 390 346 1,505 1,138
Non-GAAP net income $5,368 $539 $3,281 $1,298
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
GAAP diluted net income per share $0.21 $0.01 $0.07 $0.01
Stock-based compensation per share 0.02 0.01 0.07 0.04
Non-GAAP diluted net income per
share $0.23 $0.02 $0.14 $0.05
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
December 31, December 31,
2008 2007
ASSETS
Cash and investments $45,516 $38,549
Accounts receivable, net 2,211 7,661
Inventories, net 1,656 1,424
Property and equipment, net 7,463 7,872
Other assets, net 700 877
Total assets $57,546 $56,383
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $2,693 $2,817
Long-term deferred revenue 330 330
Total stockholders' equity 54,523 53,236
Total liabilities and stockholders' equity $57,546 $56,383
SOURCEAware, Inc.