Applied Microsystems Reports Near-Record Revenues

Company Posts First Profit Since 1998



Apr 25, 2001, 01:00 ET from Applied Microsystems Corporation

    REDMOND, Wash., April 25 /PRNewswire/ --
 Applied Microsystems Corporation (Applied)(Nasdaq: APMC), a leading provider
 of innovative technologies and software development solutions, today reported
 revenues of $10.1 million in the first quarter ended March 31, 2001, fueled by
 strong sales of Applied's new game development tools.  First quarter 2001
 revenues increased 32% from revenues of $7.7 million reported in the
 first quarter of 2000.  Applied posted a quarterly profit of $260,000, or
 $0.04 per share, compared to a net loss of $(2.9) million, or
 $(0.43) per share, in the first quarter of 2000.
     "Revenue grew in line with our business plan, leading to our first
 quarterly profit since the fourth quarter of 1998.  Our focus and our products
 have changed dramatically since that time, and we believe we are back on
 track," said Stephen J. Verleye, President and CEO.  "The key to our recent
 success was our investment in product development over the past few years,
 which led to initial shipments in the first quarter of development tools for
 Microsoft's Xbox video gaming system.  We expect other development investments
 to begin paying off in the near future.  We are particularly excited about
 improving the success of our software analysis technologies in three specific
 areas -- a software simulation and modeling capability that allows software
 developers to begin development before target hardware is available, extending
 our development and test tools to provide robust support for multiprocessor
 systems, and enhancing our development tools to provide support for remote
 analysis and debug of deployed systems."
     Revenues for Applied's leading software analysis product, CodeTEST,
 increased approximately 30% in the first quarter of 2001, compared to the
 first quarter of last year.  Total game development revenues were $4.5 million
 in the first quarter of 2001, compared to $790,000 in the first quarter of
 last year.  Revenues declined in the hardware-enhanced debugging tools product
 lines in the first three months of 2001, in comparison to the same period in
 2000, due in part to a planned shift in distribution channels, as well as
 generally soft demand from telecommunications customers.
     Despite significantly higher revenues, total operating expenses in the
 first quarter of 2001 decreased 6%, or $425,000, from the first quarter of
 2000, primarily due to lower sales, general and administrative
 personnel-related expenditures.  Sales of game development tools, which have
 lower sales-related expenses than Applied's other hardware and software
 products, contributed to lower operating expense levels.
 
     Outlook for 2001
     The following statements are based on management's current expectations,
 and management does not undertake any duty to update such statements.  These
 statements are forward-looking and based upon information that is inherently
 uncertain and by its nature is dynamic and subject to rapid and even abrupt
 changes.  Actual results may differ materially from those stated or implied
 due to many factors, including those listed below, the factors identified in
 Applied's public filings with the Securities and Exchange Commission, or other
 factors.
 
     -- Applied expects Q2 2001 revenues to exceed $10 million, with net income
 up to $500,000.
     -- Applied expects total 2001 revenues to exceed $40 million, which would
 represent an estimated 25% increase over 2000.  The Company anticipates
 that more than 25% of 2001 revenues will be derived from Applied's new game
 development tools.
     -- Applied expects quarterly gross margin to be in the 67% - 72% range in
 the remainder of 2001.
     -- Applied's operating expenses are anticipated to be less than
 $7.5 million in the second quarter of 2001.  Total 2001 operating expenses are
 expected to be less than $30 million.
 
     About Applied Microsystems
     Applied Microsystems is a leading provider of innovative technologies and
 software development tools that expedite complex software projects for OEM
 customers in the high-speed networking, games and other markets.  Applied
 offers sophisticated tools for software verification, application testing and
 debugging.
     Applied Microsystems' first quarter conference call, which will be held
 today at 2:00 p.m. PDT, is available live and on-demand at www.amc.com.
     The Company can be reached at P.O. Box 97002, Redmond, Washington
 98073-9702.  Telephone:  800-426-3925.  E-mail:  info@amc.com.
 Browse:  www.amc.com.
     As previously reported, the Company adopted the SEC's Staff Accounting
 Bulletin 101 in the fourth quarter of 2000 under the cumulative catch-up
 method of accounting, which was the manner prescribed under applicable
 accounting and reporting rules.  Under these rules, revenues and expenses in
 2000 quarters were adjusted as if the new accounting principle had been
 adopted since January 1, 2000, and the adjusted figures were reported in the
 Company's Form 10-K filed with the SEC for the year ended December 31, 2000.
 This press release reflects the revised 2000 figures under the new SEC rule.
     Forward-looking statements in this press release are made pursuant to the
 safe harbor provisions of the Private Securities Litigation Reform Act of
 1995.  These forward-looking statements are subject to various risks and
 uncertainties that could cause actual results to differ materially from
 historical results or those anticipated or stated or implied by such
 forward-looking statements.  These factors include, without limitation,
 availability of required components from suppliers, ability to successfully
 introduce new products and services, potentially lower game development tools
 revenues in future quarters after initial order fulfillment, market acceptance
 for planned products and services, relationships with third parties,
 sufficient availability and retention of qualified personnel, ability of the
 company to manage its costs and maintain/improve gross margins and operating
 margins, the overall economic climate of the businesses in which the Company
 operates, and other risks and uncertainties detailed in the Company's filings
 with the Securities and Exchange Commission.
 
 
     Condensed Consolidated Statements of Operations
 
     (in thousands, except per-share data)               Three Months Ended
                                                              March 31,
                                                        2001           2000
 
     Net sales                                        $10,114         $7,683
     Cost of sales                                      2,807          2,104
     Gross profit                                       7,307          5,579
 
     Operating expenses:
      Sales, general and administrative                 3,884          4,492
      Research and development                          3,264          3,081
     Total operating expenses                           7,148          7,573
     Income (loss) from operations                        159        (1,994)
     Interest income and other, net                       101            183
     Income (loss) before cumulative effect of change
      in accounting principle                             260        (1,811)
     Cumulative effect of change in accounting
      principle                                            --        (1,110)
     Net income (loss)                                   $260       $(2,921)
 
     Diluted income (loss) per share before
      cumulative effect of change in
      accounting principle                              $0.04        $(0.27)
     Cumulative effect of change in
      accounting principle                                 --         (0.16)
 
     Diluted income (loss) per share                    $0.04        $(0.43)
     Shares used in diluted per-share calculation       7,277          6,858
 
 
     Condensed Consolidated Balance Sheets           March 31,        Dec. 31,
     (in thousands)                                     2001           2000
 
     Assets:
     Cash and cash equivalents                         $6,343        $10,482
     Net accounts receivable                            9,140          5,729
     Inventories                                        2,397          2,358
     Other assets                                       2,941          2,884
       Total assets                                   $20,821        $21,453
 
     Liabilities and shareholders' equity:
     Liabilities                                       $9,968        $10,630
     Shareholders' equity                              10,853         10,823
       Total liabilities and shareholders' equity     $20,821        $21,453
 
     CONTACT:  Rob Bateman, Chief Financial Officer of Applied Microsystems
 Corporation, 425-882-5683, or rob.bateman@amc.com.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X72978232
 
 

SOURCE Applied Microsystems Corporation
    REDMOND, Wash., April 25 /PRNewswire/ --
 Applied Microsystems Corporation (Applied)(Nasdaq: APMC), a leading provider
 of innovative technologies and software development solutions, today reported
 revenues of $10.1 million in the first quarter ended March 31, 2001, fueled by
 strong sales of Applied's new game development tools.  First quarter 2001
 revenues increased 32% from revenues of $7.7 million reported in the
 first quarter of 2000.  Applied posted a quarterly profit of $260,000, or
 $0.04 per share, compared to a net loss of $(2.9) million, or
 $(0.43) per share, in the first quarter of 2000.
     "Revenue grew in line with our business plan, leading to our first
 quarterly profit since the fourth quarter of 1998.  Our focus and our products
 have changed dramatically since that time, and we believe we are back on
 track," said Stephen J. Verleye, President and CEO.  "The key to our recent
 success was our investment in product development over the past few years,
 which led to initial shipments in the first quarter of development tools for
 Microsoft's Xbox video gaming system.  We expect other development investments
 to begin paying off in the near future.  We are particularly excited about
 improving the success of our software analysis technologies in three specific
 areas -- a software simulation and modeling capability that allows software
 developers to begin development before target hardware is available, extending
 our development and test tools to provide robust support for multiprocessor
 systems, and enhancing our development tools to provide support for remote
 analysis and debug of deployed systems."
     Revenues for Applied's leading software analysis product, CodeTEST,
 increased approximately 30% in the first quarter of 2001, compared to the
 first quarter of last year.  Total game development revenues were $4.5 million
 in the first quarter of 2001, compared to $790,000 in the first quarter of
 last year.  Revenues declined in the hardware-enhanced debugging tools product
 lines in the first three months of 2001, in comparison to the same period in
 2000, due in part to a planned shift in distribution channels, as well as
 generally soft demand from telecommunications customers.
     Despite significantly higher revenues, total operating expenses in the
 first quarter of 2001 decreased 6%, or $425,000, from the first quarter of
 2000, primarily due to lower sales, general and administrative
 personnel-related expenditures.  Sales of game development tools, which have
 lower sales-related expenses than Applied's other hardware and software
 products, contributed to lower operating expense levels.
 
     Outlook for 2001
     The following statements are based on management's current expectations,
 and management does not undertake any duty to update such statements.  These
 statements are forward-looking and based upon information that is inherently
 uncertain and by its nature is dynamic and subject to rapid and even abrupt
 changes.  Actual results may differ materially from those stated or implied
 due to many factors, including those listed below, the factors identified in
 Applied's public filings with the Securities and Exchange Commission, or other
 factors.
 
     -- Applied expects Q2 2001 revenues to exceed $10 million, with net income
 up to $500,000.
     -- Applied expects total 2001 revenues to exceed $40 million, which would
 represent an estimated 25% increase over 2000.  The Company anticipates
 that more than 25% of 2001 revenues will be derived from Applied's new game
 development tools.
     -- Applied expects quarterly gross margin to be in the 67% - 72% range in
 the remainder of 2001.
     -- Applied's operating expenses are anticipated to be less than
 $7.5 million in the second quarter of 2001.  Total 2001 operating expenses are
 expected to be less than $30 million.
 
     About Applied Microsystems
     Applied Microsystems is a leading provider of innovative technologies and
 software development tools that expedite complex software projects for OEM
 customers in the high-speed networking, games and other markets.  Applied
 offers sophisticated tools for software verification, application testing and
 debugging.
     Applied Microsystems' first quarter conference call, which will be held
 today at 2:00 p.m. PDT, is available live and on-demand at www.amc.com.
     The Company can be reached at P.O. Box 97002, Redmond, Washington
 98073-9702.  Telephone:  800-426-3925.  E-mail:  info@amc.com.
 Browse:  www.amc.com.
     As previously reported, the Company adopted the SEC's Staff Accounting
 Bulletin 101 in the fourth quarter of 2000 under the cumulative catch-up
 method of accounting, which was the manner prescribed under applicable
 accounting and reporting rules.  Under these rules, revenues and expenses in
 2000 quarters were adjusted as if the new accounting principle had been
 adopted since January 1, 2000, and the adjusted figures were reported in the
 Company's Form 10-K filed with the SEC for the year ended December 31, 2000.
 This press release reflects the revised 2000 figures under the new SEC rule.
     Forward-looking statements in this press release are made pursuant to the
 safe harbor provisions of the Private Securities Litigation Reform Act of
 1995.  These forward-looking statements are subject to various risks and
 uncertainties that could cause actual results to differ materially from
 historical results or those anticipated or stated or implied by such
 forward-looking statements.  These factors include, without limitation,
 availability of required components from suppliers, ability to successfully
 introduce new products and services, potentially lower game development tools
 revenues in future quarters after initial order fulfillment, market acceptance
 for planned products and services, relationships with third parties,
 sufficient availability and retention of qualified personnel, ability of the
 company to manage its costs and maintain/improve gross margins and operating
 margins, the overall economic climate of the businesses in which the Company
 operates, and other risks and uncertainties detailed in the Company's filings
 with the Securities and Exchange Commission.
 
 
     Condensed Consolidated Statements of Operations
 
     (in thousands, except per-share data)               Three Months Ended
                                                              March 31,
                                                        2001           2000
 
     Net sales                                        $10,114         $7,683
     Cost of sales                                      2,807          2,104
     Gross profit                                       7,307          5,579
 
     Operating expenses:
      Sales, general and administrative                 3,884          4,492
      Research and development                          3,264          3,081
     Total operating expenses                           7,148          7,573
     Income (loss) from operations                        159        (1,994)
     Interest income and other, net                       101            183
     Income (loss) before cumulative effect of change
      in accounting principle                             260        (1,811)
     Cumulative effect of change in accounting
      principle                                            --        (1,110)
     Net income (loss)                                   $260       $(2,921)
 
     Diluted income (loss) per share before
      cumulative effect of change in
      accounting principle                              $0.04        $(0.27)
     Cumulative effect of change in
      accounting principle                                 --         (0.16)
 
     Diluted income (loss) per share                    $0.04        $(0.43)
     Shares used in diluted per-share calculation       7,277          6,858
 
 
     Condensed Consolidated Balance Sheets           March 31,        Dec. 31,
     (in thousands)                                     2001           2000
 
     Assets:
     Cash and cash equivalents                         $6,343        $10,482
     Net accounts receivable                            9,140          5,729
     Inventories                                        2,397          2,358
     Other assets                                       2,941          2,884
       Total assets                                   $20,821        $21,453
 
     Liabilities and shareholders' equity:
     Liabilities                                       $9,968        $10,630
     Shareholders' equity                              10,853         10,823
       Total liabilities and shareholders' equity     $20,821        $21,453
 
     CONTACT:  Rob Bateman, Chief Financial Officer of Applied Microsystems
 Corporation, 425-882-5683, or rob.bateman@amc.com.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X72978232
 
 SOURCE  Applied Microsystems Corporation