Exhibit 99.1
FOR IMMEDIATE RELEASE
AWARE, INC. REPORTS 2006 FIRST QUARTER FINANCIAL RESULTS
BEDFORD, MASS. - MAY 4, 2006 - Aware, Inc. (NASDAQ: AWRE), a worldwide leader
and innovator of broadband intellectual property, today reported financial
results for its first quarter ended March 31, 2006.
Revenues for the first quarter of 2006 were $6.1 million compared to $4.2
million for the same period last year.
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 first quarter of 2006 was $0.5 million, or $0.02 per
share, which included $0.5 million of stock-based compensation charges, as this
was the Company's first quarter subject to the provisions of FAS 123(R). This
compared to a GAAP net loss of $0.3 million, or $0.01 per share, for the
year-ago period. GAAP results prior to 2006 do not include a charge for
stock-based compensation.
Non-GAAP net income for the first quarter of 2006, excluding the effect of
stock-based compensation, was $1.0 million, or $0.04 per share.
Michael Tzannes, Aware's chief executive officer, said, "This quarter was a
solid one from every perspective. Revenues were up because of the level of
demand for our technology and products. New product developments are underway in
all areas to continue to enhance the value we deliver to our customers. We have
a clear leadership position in VDSL2 and are encouraged by the trend that has
emerged to use VDSL2 for infrastructure upgrades involving fiber and DSL to
deliver IPTV and triple
play services. We are on track with our strategy to develop profitable product
lines in DSL licensing, biometrics and DSL test and diagnostics. "
Tzannes added, "From the conclusion of today's conference call until Friday, May
5, 2006 at 5:00 p.m., we invite stakeholders to submit questions via email to
INVESTORQUESTIONS@AWARE.COM. We will post questions and answers next week on our
website."
Note: Aware's conference call will be broadcast live over the Internet today,
May 4, 2006 at 5:00 p.m. Eastern Time. To listen to the call, please go to
WWW.AWARE.COM, and click on "Investor Relations." The conference call may also
be heard by calling (913) 312-1300 and referencing the confirmation number
2443711 (please note the dial-in number change from our previous announcement).
A replay of the call will be archived on our website after the call.
ABOUT AWARE
Aware, Inc. designs, develops, licenses and markets DSL technologies that enable
broadband communications over existing telephone networks. Its solutions,
including splitterless G.lite, full-rate ADSL, ADSL2, ADSL2+, VDSL2, Bonded
ADSL2+, Dr. DSL(R), StratiPHY(TM), StratiPHY-Bonded(TM), StratiPHY2+(TM),
StratiPHY3(TM) and G.SHDSL, address central office as well as customer premise
requirements. Aware is also a leading provider of standards-based biometric
transaction and image compression software toolkits. More information can be
found at HTTP://WWW.AWARE.COM.
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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 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 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, and our
business is subject to rapid technological change. 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, 2005 and other reports and filings made
with the Securities and Exchange Commission.
DR. DSL, STRATIPHY, STRATIPHY2+, STRATIPHY3, AND STRATIPHY-BONDED ARE
TRADEMARKS OR REGISTERED TRADEMARKS OF AWARE, INC.
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AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------------------
2006 2005
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Revenue:
Product sales................................................. $1,718 $ 961
Contract revenue.............................................. 3,692 2,163
Royalties..................................................... 724 1,100
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Total revenue 6,134 4,224
Costs and expenses:
Cost of product sales (1)..................................... 152 60
Cost of contract revenue (1).................................. 1,246 840
Research and development (1).................................. 2,790 2,553
Selling and marketing (1)..................................... 814 633
General and administrative (1)................................ 1,004 669
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Total costs and expenses 6,006 4,755
Net income (loss) from operations................................. 128 (531)
Interest income................................................... 394 217
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Net income (loss) before provision for income taxes............... 522 (314)
Provision for income taxes........................................ - -
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Net income (loss)................................................. $522 ($314)
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Net income (loss) per share - basic............................... $0.02 ($0.01)
Net income (loss) per share - diluted ............................ $0.02 ($0.01)
Weighted average shares - basic................................... 23,307 22,943
Weighted average shares - diluted................................. 24,840 22,943
(1) Effective January 1, 2006 the Company adopted Statement of Financial
Accounting Standard No. 123 (Revised), "Share-Based Payment" (SFAS 123(R)).
Accordingly, for the three months ended March 31, 2006, stock-based
compensation was accounted under SFAS 123(R) while, for the three months
March 31, 2005, stock-based compensation was accounted for under APB No. 25
"Accounting for Stock Issued to Employees." The amounts in the tables above
include stock-based compensation as follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
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2006 2005
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Cost of product sales......................................... $ 3 $ -
Cost of contract revenue...................................... 64 -
Research and development...................................... 149 -
Sales and marketing........................................... 68 -
General and administrative.................................... 213 -
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Total stock based compensation costs $ 497 $ -
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AWARE, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2006 MARCH 31, 2005
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GAAP net income................................................... $ 522 ($ 314)
Stock based compensation...................................... 497 -
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Non-GAAP net income............................................... $ 1,019 ($ 314)
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THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2006 MARCH 31, 2005
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GAAP basic and diluted net income per share....................... $ .02 ($ .01)
Stock based compensation...................................... .02 -
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Non-GAAP basic and diluted net income per share................... $ .04 ($ .01)
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AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2006 2005
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ASSETS
Cash and investments..................................................... $38,735 $36,763
Accounts receivable, net................................................. 3,250 3,749
Property and equipment, net.............................................. 8,011 8,075
Other assets, net........................................................ 1,178 1,154
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Total assets............................................................. $51,174 $49,741
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LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities................................................ $2,388 $2,238
Total stockholders' equity.............................................. 48,786 47,503
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Total liabilities and stockholders' equity............................... $51,174 $49,741
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