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Aware, Inc. Reports Third Quarter 2008 Financial Results
BEDFORD, Mass., Oct. 23 /PRNewswire-FirstCall/ -- Aware, Inc. (Nasdaq: AWRE), a leading supplier of broadband technology and biometrics software, today reported financial results for its third quarter ended September 30, 2008.
Revenues for the third quarter of 2008 were $6.4 million, a decrease of 14% compared to $7.5 million in the same quarter last year. For the nine months ended September 30, 2008, revenues decreased 6% to $18.4 million, compared to $19.7 million in the same period a year ago.
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.
The GAAP net loss for the third quarter of 2008 was $0.7 million, or $0.03 per diluted share, which included $0.4 million of stock-based compensation charges in accordance with the provisions of FAS 123®. This compared to GAAP net income of $1.0 million, or $0.04 per diluted share, for the same period a year ago. GAAP net loss for the nine months ended September 30, 2008 was $3.2 million, or $0.13 per share, compared to a net loss of $32,000, or $0.00 per share, for the same period a year ago.
The Non-GAAP net loss for the third quarter of 2008, excluding the effect of stock-based compensation, was $0.3 million, or $0.01 per diluted share. For the nine months ended September 30, 2008, the company had a non-GAAP net loss, excluding the effect of stock-based compensation, of $2.1 million, or $0.09 per share.
Michael Tzannes, Aware's chief executive officer, said, "Biometrics revenues this quarter were again strong, driven by exposure to multiple segments of the biometrics market through a broad base of OEM and system integrator customers. In DSL Test and Diagnostics, we continue to make progress with test infrastructure opportunities driven by the deployment of VDSL2 and IPTV services. Our OEM customer base positions us well in multiple markets. In licensing, our strategy is to leverage our world class silicon intellectual property technology base, and diversify into new revenue opportunities."
Note: Aware's conference call will be broadcast live over the Internet today, October 23, 2008 at 5:00 p.m. Eastern Time. To listen to the call, please go to http://www.aware.com/ir. The conference call may also be heard by calling 719-325-4919 and referencing the confirmation number 4405951. A replay of the call will be archived on our website after the call.
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 Bedford, Massachusetts. http://www.aware.com
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 Securities and Exchange Commission, specifically the section titled Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2007 and other reports and filings made with the Securities and Exchange Commission.
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 Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenue:
Product sales $3,939 $5,097 $11,811 $12,333
Contract revenue 2,014 1,851 5,313 5,260
Royalties 437 508 1,310 2,092
Total revenue 6,390 7,456 18,434 19,685
Costs and expenses:
Cost of product sales(1) 528 901 1,976 3,087
Cost of contract revenue(1) 1,365 1,553 3,512 4,315
Research and development(1) 2,945 2,528 9,984 7,735
Selling and marketing (1) 1,141 936 3,297 2,808
General and administrative(1) 1,315 1,009 3,793 3,269
Total costs and expenses 7,294 6,927 22,562 21,214
Income/(loss) from operations (904) 529 (4,128) (1,529)
Interest income 244 512 942 1,520
Income/(loss) before provision for
income taxes (660) 1,041 (3,186) (9)
Provision for income taxes 3 6 16 23
Net income/(loss) ($663) $1,035 ($3,202) ($32)
Net income/(loss) per share -
basic ($0.03) $0.04 ($0.13) ($0.00)
Net income/(loss) per share -
diluted ($0.03) $0.04 ($0.13) ($0.00)
Weighted average shares -
basic 23,510 23,757 23,753 23,710
Weighted average shares -
diluted 23,510 24,996 23,753 23,710
(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 Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008 2007
Cost of product sales $3 $4 $9 $8
Cost of contract revenue 45 54 105 133
Research and development 136 127 463 311
Sales and marketing 52 32 133 78
General and administrative 161 88 405 262
Total stock-based compensation costs $397 $305 $1,115 $792
AWARE, INC.
Non-GAAP Financial Measures and Reconciliation
(In thousands, except per share data)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008 2007
GAAP net income/(loss) ($663) $1,035 ($3,202) ($32)
Stock-based compensation 397 305 1,115 792
Non-GAAP net income/(loss) ($266) $1,340 ($2,087) $760
Three Months Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008 2007
GAAP net income/(loss) per share ($0.03) $0.04 ($0.13) $0.00
Stock-based compensation 0.02 0.01 0.04 0.03
Non-GAAP net income/(loss) per share ($0.01) $0.05 ($0.09) $0.03
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
September December
30, 31,
2008 2007
ASSETS
Cash and investments $37,809 $38,549
Accounts receivable, net 4,366 7,661
Inventories, net 1,776 1,424
Property and equipment, net 7,621 7,872
Other assets, net 749 877
Total assets $52,321 $56,383
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $2,773 $2,817
Long-term deferred revenue 330 330
Total stockholders' equity 49,218 53,236
Total liabilities and stockholders' equity $52,321 $56,383
SOURCE Aware, Inc.