3/13/2007 4:06:00 PM
<![CDATA[
Microvision Completes Its 2006 Turnaround, Sets Foundation for
Growth in 2007
REDMOND, Wash.–(BUSINESS WIRE)–March 13, 2007–Microvision, Inc.
(NASDAQ:MVIS), a global leader in light scanning technologies, today
reported operating and financial results for the fourth quarter and
fiscal year of 2006 and announced its operating goals for 2007.
Operating Results
“In 2006, we completed a successful turnaround of Microvision as
we reinvented the Company around the primary goal of accelerating the
path to market for high volume consumer and automotive products while
lowering operating costs,” said President and CEO Alexander Tokman.
“Signing two strategic development agreements with major high
volume manufacturing partners and the rapid advancement of the
Integrated Photonics Module (IPM(TM)) roadmap during the fourth
quarter of 2006 continued our strong operational momentum started in
the second half of 2006.
“Throughout the year, we attained most of the significant
objectives established and communicated earlier in the year,
including:
- Completing the definition and implementation of a new business
strategy centered around our proprietary IPM platform; - Restructuring and realignment of the Company to improve focus,
execution and reduce operating costs; - Building a new senior management team;
- Reconstituting the Board of Directors;
- Simplifying the Company’s capital structure and completing a
significant financing; and - Setting new standards for strategic planning, execution and
accountability.
“Our most notable achievement for 2006 was the product definition,
accelerated design and commercial development of the IPM(TM), a tiny
display engine suitable for a variety of OEM products targeted at high
volume consumer and automotive applications. Our rapid progress
towards this new goal was validated in early January 2007 when we
received significant attention from global OEMs, as well as extensive
industry and media coverage at the Consumer Electronics Show in Las
Vegas where we demonstrated PicoP(TM), an ultra-thin, miniature
full-color projection display small enough to be embedded in portable
hand-held devices such as mobile phones. This advanced miniature
projector prototype was developed in collaboration with a high volume
manufacturing partner to better position us to meet the potential
worldwide demand by mobile users for a large screen viewing experience
inside a thin sleek portable package,” continued Tokman.
Potential applications for the IPM platform include tiny
projection displays embedded inside cell phones or other mobile
devices; ultra-miniature projection displays used as accessories to
personal media players, personal gaming devices, laptops, DVD players
and other video output devices; personal color eyewear; and head-up
and other displays for automobiles and airplanes.
Other significant accomplishments for 2006 include:
- Entered into an agreement with Visteon, a major global Tier 1
automotive supplier, to develop a commercial scanned-beam head-up
display (HUD) product for automotive applications; - General Dynamics C4 Systems awarding Microvision a $5.95 million
contract to develop and deliver full-color, daylight readable,
see-through helmet-mounted displays for the U.S. Army. This effort
includes strategic elements consistent with the development of the
IPM and personal color eyewear application; - Announced a strategic relationship with Fraunhofer Institute of
Photonic Microsystems that augments Microvision’s world-leading
expertise in the design and production of small MEMS scanning
mirrors, a key component of Microvision’s IPM platform strategy; - Made significant progress in building supply chain infrastructure
to accelerate the commercialization of the IPM:- Funded a green laser development partner to accelerate its
solid-state green laser development while aligning our
development roadmap with two other green laser development and
supply chain partners; and - Entered into joint development agreements with both a large
Asian consumer electronics manufacturer and a global optical
manufacturing partner to develop high-volume designs for
manufacturing of Microvision’s proprietary IPM.
- Funded a green laser development partner to accelerate its
- Improved the design and streamlined the supply chain through a Lean
initiative to improve performance, quality and capacity of Flic,
resulting in the following second half of 2006 improvements:- Reduced field returns by 85% from earlier periods;
- Increased capacity by 300% from earlier periods; and
- Released new connectivity software that we expect will grow the
mobility segment.
- To improve IPM focus in Redmond and reduce the bar code segment
operating costs, signed agreement with Network Systems &
Technologies (P) Ltd (NeST) in Trivandrum, India to establish an
offshore development center for the engineering design, development
and support of the Company’s laser barcode scanner product. NeST
has a strong history of delivering quality products to companies
like GE, Hitachi, Toshiba and Mitsubishi. - Raised over $35 million including the largest financing transaction
in the Company’s history. The Company will also retire the last of
its debt this week by making the final payment on its outstanding
notes.
</ulFinancial Results
For the three months ended December 31, 2006, the Company reported
revenue of $1.8 million compared to $2.7 million for the same period
in 2005, and $7.0 million for the full year ended December 31, 2006
compared to $14.7 million for 2005. The Company ended the year with a
backlog of $7.1 million compared to $3.4 million at December 31, 2005.Revenue for the year was lower than previous guidance of $8 to $9
million primarily due to management’s decision to temporarily
reallocate critical engineering resources from several revenue
generating programs in order to accelerate PicoP development and
achieve the Company’s key objective of successfully demonstrating to
global OEMs an ultra-thin, miniature full-color projection display
small enough to be embedded in portable hand-held devices at the
Consumer Electronics Show in early January 2007. A second factor was
lower than expected Flic revenue for the quarter due to longer
qualifying cycles in the mobility segment. Revenue in 2006 included
the recognition of $806,000 from a contract with Ethicon compared to
$4.9 million in 2005. In 2005, the Company recognized $1.2 million
from sales of the Nomad system to the U.S. government and no revenue
in 2006 as a result of the Company’s discontinuation of the Nomad
product.The Company reported an operating loss for the fourth quarter of
$7.9 million compared to $9.0 million in the same period in 2005. The
Company reported an operating loss for the year ended December 31,
2006 of $29.0 million compared to $27.3 million in 2005. The operating
loss for the fourth quarter and full year of 2006 includes severance
cost of $114,000 and $842,000, respectively, and share based
compensation costs associated with the adoption of FAS 123(R) of
$371,000 and $1.8 million, respectively. Neither cost was included in
2005 results.The Company reported a net loss available for common shareholders
of $8.7 million for the three months ended December 31, 2006 compared
to $5.6 million for the same period in 2005 and $27.3 million for 2006
compared to $30.3 million in 2005. The net loss per share was $(0.21)
for the three months ended December 31, 2006 compared to $(0.23) for
the same period in 2005 and $(0.81) for 2006, compared to $(1.35) for
2005. The net loss available for common shareholders in 2006 includes
a one-time $3.1 million charge associated with the conversion of the
Company’s preferred stock in May 2006.The Company ended the year with $14.6 million in cash, cash
equivalents and investment securities. The Company continues to own
1,750,000 shares of Lumera common stock with a market value of
approximately $7.5 million as of February 28, 2007. The shares are
pledged as collateral for the Company’s notes that are scheduled to be
retired this month.“Consistent with our strategic and operating plan, we were able to
reduce the year-over-year operating loss (adjusted for severance and
FAS 123(R) expenses) through restructuring of the business and very
rigorous cost controls, despite 2006 revenue being half of the amount
of 2005. In addition, we made several important mid-year strategic
cash investments in external green laser and MEMS developments that we
expect will better position Microvision for growth in 2007,” continued
Tokman. “We’ve also made great strides in building the revenue backlog
in the second half of 2006 and, as a result, we entered 2007 with a
backlog 210% of the previous year end.2007 Focus Areas
“In 2007 we expect to continue the focus on our primary goal of
accelerating the path to market for high volume consumer and
automotive products while reducing operating costs and continuing to
execute a detailed operating plan that provides focus and
accountability for everyone within the organization,” Tokman
continued.“During 2007 our primary goals include:
1) Developing new business growth opportunities with global
consumer OEMs, Tier 1 suppliers and the U.S. government;2) Continuing the rapid advancement of the integrated photonics
module platform and roadmap;3) Delivering on customer commitments on key existing commercial
contract and government programs; and4) Completing transformation of the bar code business segment.
“We believe that the 2006 turnaround results have significantly
improved the Company’s credibility with existing customers,
prospective partners and the investment community. Now we are primed
for growth in 2007 and we are ready to take the next step toward
achieving our vision of becoming an indispensable source for
illuminating information,” concluded Tokman.Conference Call
Microvision will host a conference call to discuss its fourth
quarter and full year 2006 financial results at 4:30 p.m. ET on March
13, 2007. Participants may join the conference call by dialing (800)
259-0251 (for U.S. participants) or (617) 614-3671 (for International
participants) ten minutes prior to the start of the conference. The
conference pass-code number is 34669293. Additionally, the call will
be broadcast over the Internet and can be accessed from the Company’s
web site at www.microvision.com. The web cast and information needed
to access the telephone replay will be available through the same link
following the conference call.About Microvision: www.microvision.com
Headquartered in Redmond, Wash., Microvision Inc. is the world
leader in the development of high-resolution displays and imaging
systems based on the Company’s proprietary silicon micro-mirror
technology. The Company’s technology has applications in a broad range
of military, medical, industrial, professional and consumer products.Forward-Looking Statements Disclaimer
Certain statements contained in this release, including those
relating to expected results, projections of future operations, plans
for product development and commercialization, future commercial
arrangements, growth in demand, future product applications and
benefits, as well as statements containing words like “goals,”
“believes,” “expects,” “anticipates,” and other similar expressions,
are forward-looking statements that involve a number of risks and
uncertainties. Factors that could cause actual results to differ
materially from those projected in the Company’s forward-looking
statements include the following: our ability to raise additional
capital when needed; risks related to Lumera’s business and the market
for its equity, market acceptance of our technologies and products;
our financial and technical resources relative to those of our
competitors; our ability to keep up with rapid technological change;
our dependence on the defense industry and a limited number of
government development contracts; government regulation of our
technologies; our ability to enforce our intellectual property rights
and protect our proprietary technologies; the ability to obtain
additional contract awards; the timing of commercial product launches
and delays in product development; the ability to achieve key
technical milestones in key products; dependence on third parties to
develop, manufacture, sell and market our products; potential product
liability claims and other risk factors identified from time to time
in the Company’s SEC reports, including the Company’s Annual Report on
Form 10-K filed with the SEC. Except as expressly required by the
federal securities laws, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events, changes in circumstances or any other
reason.Microvision, Inc. Consolidated Balance Sheet (In thousands) (Unaudited) December December 31, 31, 2006 2005 --------- --------- Assets Current Assets Cash and cash equivalents $14,552 $6,860 Accounts receivable, net of allowances 1,166 1,380 Costs and estimated earnings in excess of billings on uncompleted contracts 565 1,204 Inventory 1,043 759 Current restricted investments - 1,856 Current restricted investment in Lumera 10,693 - Other current assets 1,986 1,512 --------- --------- Total current assets 30,005 13,571 Investment in Lumera - 3,582 Property and equipment, net 4,011 2,902 Restricted investments 1,268 1,000 Restricted investment in Lumera - 2,184 Other assets 41 124 --------- --------- Total assets $35,325 $23,363 ========= ========= Liabilities, Mandatorily Redeemable Convertible Preferred Stock and Shareholders' Equity (Deficit) Current Liabilities Accounts payable $1,785 $2,328 Accrued liabilities 3,698 4,513 Billings in excess of costs and estimated earnings on uncompleted contracts 200 51 Liability associated with common stock warrants 2,572 3,452 Liability associated with embedded derivative feature 68 - Current portion of notes payable 2,418 7,896 Current portion of capital lease obligations 45 32 Current portion of long-term debt 59 22 --------- --------- Total current liabilities 10,845 18,294 Notes payable, net of current portion - 1,447 Liability associated with embedded derivative feature - 1,368 Capital lease obligations, net of current portion 132 105 Long-term debt, net of current portion 457 - Deferred rent, net of current portion 2,027 1,492 --------- --------- Total liabilities 13,461 22,706 --------- --------- Commitments and contingencies - - Mandatorily redeemable convertible preferred stock - 4,166 --------- --------- Shareholders' Equity (Deficit) Common stock at par value 43 25 Additional paid-in capital 253,086 212,993 Deferred compensation - (85) Receivables from related parties, net (250) (792) Accumulated other comprehensive income 8,619 - Accumulated deficit (239,634) (215,650) --------- --------- Total shareholders' equity (deficit) 21,864 (3,509) --------- --------- Total liabilities, mandatorily redeemable convertible preferred stock and shareholders' equity (deficit) $35,325 $23,363 ========= =========Microvision, Inc. Consolidated Statement of Operations (In thousands, except earnings per share data) (Unaudited) Three months ended Twelve months December 31, ended December 31, ------------------------------------- 2006 2005 2006 2005 -------- -------- --------- --------- Contract revenue $1,618 $2,142 $5,275 $11,386 Product revenue 224 567 1,768 3,360 -------- -------- --------- --------- Total revenue 1,842 2,709 7,043 14,746 -------- -------- --------- --------- Cost of contract revenue 905 1,313 3,398 6,456 Cost of product revenue 1,118 3,152 4,768 8,636 -------- -------- --------- --------- Total cost of revenue 2,023 4,465 8,166 15,092 -------- -------- --------- --------- Gross margin (181) (1,756) (1,123) (346) -------- -------- --------- --------- Research and development expense 3,399 703 10,715 6,587 Sales, marketing, general and administrative expense 4,296 6,522 17,362 20,352 Gain on disposal of fixed assets - - (198) - -------- -------- --------- --------- Total operating expenses 7,695 7,225 27,879 26,939 -------- -------- --------- --------- Loss from operations (7,876) (8,981) (29,002) (27,285) Interest income 235 77 719 263 Interest expense (949) (1,186) (5,753) (3,253) (Loss) gain on derivative instruments, net (1,552) 4,306 1,627 5,975 Loss on debt extinguishment - - - (3,313) Other expense (7) (11) (23) (28) -------- -------- --------- --------- Net loss before minority interests and other Lumera transactions (10,149) (5,795) (32,432) (27,641) Equity in losses of Lumera - (754) (290) (3,242) Gain on sale of investment in Lumera 1,468 1,130 8,738 2,700 -------- -------- --------- --------- Net loss (8,681) (5,419) (23,984) (28,183) Stated dividend on mandatorily redeemable convertible preferred stock - (44) (59) (280) Accretion to par value of preferred stock - (103) (138) (637) Inducement for conversion of preferred stock - - (3,076) (1,184) -------- -------- --------- --------- Net loss available for common shareholders $(8,681) $(5,566) $(27,257) $(30,284) ======== ======== ========= ========= Net loss per share - basic and diluted $(0.21) $(0.23) $(0.81) $(1.35) ======== ======== ========= ========= Weighted-average shares outstanding - basic and diluted 41,214 24,347 33,572 22,498 ======== ======== ========= =========CONTACT: Microvision, Inc.
Jeff Wilson (investors), 425-882-6625
Matt Nichols (media), 425-882-6657SOURCE: Microvision, Inc.