Green Hills Revenue Grows 40% to $13.2 Million for Third Quarter

12/2/2003 - Green Hills Software, Inc., the technology leader in real-time operating systems and embedded software development tools, announced that its revenue for the third quarter, ended on September 30, 2003, grew to $13.2 million, an increase of 40% over 2002. For the first three quarters of 2003, revenue was $37.2 million, reflecting year-over-year growth of 29%. Earnings were $2.7 million or $0.09 per share in the third quarter and $7.8 million or $0.25 per share through the first three quarters of 2003, reflecting year-over-year growth of 123% and 250%, respectively.

"We have now enjoyed four quarters of strong growth," commented Dan O'Dowd, president of Green Hills Software. "The embedded recession is now far behind us. During the recession, we invested heavily in new technology development enabling us to achieve a dominant leadership position. This is clearly resonating with electronics manufacturers and we are reaping the rewards of rapid growth and new opportunities in the embedded software market," he continued.

"Our customers are more cognizant than ever of the underlying economics of their businesses," added David Chandler, vice president of sales for Green Hills Software. "We are able to definitively demonstrate that with Green Hills Software solutions developers can get to market more quickly, at a lower cost and with a product that is more reliable, more secure, has higher performance and is less expensive to build. To a manufacturer, that means lower expenses, higher revenue and less risk-specifically, much higher profits."

Dominance in Safety-Critical and Royalty-Free RTOSes Much of Green Hills Software's growth and success in 2003 is attributable to its dominance in the two most rapidly growing segments of the real-time operating system (RTOS) market-safety critical and royalty free. Green Hills Software pioneered the market for safety-critical RTOSes, which provide developers with the highest possible levels of reliability and security. Safety-critical RTOSes are required in life-critical applications such as aerospace, defense, automotive and medical systems. Safety-critical RTOSes are also required in applications with high security requirements in which failure or a security breach could compromise national security, public safety or critical corporate data. These applications include communications equipment, monitoring instrumentation for baggage and explosives, defense electronics and process-control systems.

Green Hills Software's INTEGRITY-178B RTOS for safety-critical applications is the only commercially available partitioned RTOS that has been successfully certified to RTCA/DO-178B Level A, the highest level of software certification recognized by the Federal Aviation Administration (FAA) and other international aviation safety organizations. DO-178B Level A certification allows manufacturers to use INTEGRITY-178B in flight-critical avionics, the failure of which could have catastrophic consequences. INTEGRITY-178B has been selected to run flight-critical systems in the C-17, F-35 Joint Strike Fighter and Airbus A380 and has already been deployed in Level A certified applications on-board the Sikorsky S-92 helicopter and commercial aircraft flown by at least six carriers including FedEx and Northwest Airlines. This gives INTEGRITY-178B a significant competitive advantage over other RTOSes that have not yet passed the rigorous and expensive DO-178B Level A certification process.

Green Hills Software is also the dominant market leader in royalty-free RTOSes. Manufacturers prefer a royalty-free RTOS because it provides a lower manufacturing cost of goods than a traditional, royalty-bearing RTOS. This is particularly important for high-volume applications such as consumer, computer peripheral, communications and automotive.

Green Hills Software redefined the royalty-free RTOS market by combining royalty-free licensing with the world's most advanced embedded software development environment and features previously found only in royalty-bearing RTOSes such as memory protection, standard programming interfaces and advanced networking capabilities.

Strength in All Major Vertical Markets
During 2003, Green Hills Software has seen strength in all major embedded software vertical markets.

In the aerospace and defense market, success in Software Defined Radio (SDR) applications has contributed substantially to growth. SDR has resulted in several new design wins, including Boeing. SDR business is accelerating as contracts are awarded under the Joint Tactical Radio System (JTRS). Green Hills Software's success in defense applications will provide the company with significant leverage as SDR moves into the commercial sector. In telecommunications and networking, Green Hills Software has received significant orders from HP ProCurve Networking, Ericsson and several other telecom giants.

Green Hills Software has also seen a significant pickup in business from the automotive market. Key customers include Ford and Toyota. To foster additional growth, Green Hills Software is working closely with microprocessor suppliers, Motorola, Atmel and NEC, to provide deeper and more tightly integrated hardware-software solutions for telematics, powertrain, transmission and body and brake control applications.

Other Accomplishments
In the third quarter, Green Hills Software introduced a significant new product, the TimeMachine debugger. This unique and innovative product allows developers to debug backwards in time, after a bug has occurred, so that the hardest to find and most destructive bugs can be easily fixed in minutes. Venture Development Corporation selected TimeMachine as 'Best of Show' at the Embedded Systems Conference (ESC) held this past September.

Green Hills Software also completed its expansion plan announced in April with the opening of seven new offices in North America in 2003. "Given our success, it is our intent to continue to add industry veterans to our team in order to fuel additional growth in 2004," commented Chandler. "To that end, we are recruiting the industry's leading sales managers and field application engineers, both in North America and abroad," he concluded.

Looking Forward
Evaluating the outlook for the fourth quarter and beyond, Dan O'Dowd stated "Green Hills Software is on pace for a record year in terms of both sales and profitability. I am looking forward to achieving our goal of 30% annual revenue growth this year. Furthermore, based on the visibility we have with existing customers and new prospects, I believe that this trend will continue into 2004. The market has recovered and, operationally, we are firing on all cylinders. This puts Green Hills Software in the best position to capitalize on the new opportunities before us."

About Green Hills Software
Founded in 1982, Green Hills Software, Inc. is the technology leader for real-time operating systems and software development tools for 32- and 64-bit embedded systems. The royalty-free INTEGRITY RTOS, compilers, MULTI and AdaMULTI Integrated Development Environments and TimeMachine product line offer a complete development solution that addresses embedded systems from the lowest cost consumer products to the most safety-critical aircraft flight systems. Green Hills is headquartered in Santa Barbara, CA, with European headquarters in the United Kingdom.

Green Hills Software, the Green Hills logo, MULTI and INTEGRITY are registered trademarks. AdaMULTI and TimeMachine are trademarks of Green Hills Software, Inc.

North American Sales Contact: Green Hills Software, Inc., 30 West Sola Street, Santa Barbara, CA 93101, Tel: 805-965-6044, Fax: 805-965-6343, Website:, Email: Sales Contact: Green Hills Software Ltd., Dolphin House, St. Peter Street, Winchester Hampshire SO23 8BW, United Kingdom, Tel: +44 (0)1962 829820, Fax: +44 (0)1962 890300, Email:

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