8/9/2005 4:01:00 PM
BOTHELL, Wash.–(BUSINESS WIRE)–Aug. 9, 2005–Microvision, Inc.
(NASDAQ:MVIS), a leader in light scanning technologies, today reported
financial results for the second quarter and first six months of 2005.
The company reported revenue for the three months ended June 30, 2005
of $4.7 million, a record quarter for Microvision and an increase of
124% over the $2.1 million (Microvision only) reported in the same
quarter last year. Revenue for the first six months of 2005 was $8.7
million, compared to $4.8 million (Microvision only) for the same
period in 2004, an increase of 83%.
Contract revenue climbed 142% to $3.7 million for second quarter
2005 from $1.5 million (Microvision only) the year before and more
than doubled for the first half of 2005 to $7.1 million versus last
year’s $3.5 million (Microvision only). Product revenue for second
quarter 2005 also showed strong growth, increasing 78% from last year
to top $1.0 million. Product revenue in second quarter 2005 was
comprised of $669,000 from sales of the Nomad system and $374,000 from
sales of the Flic bar code scanner. Product revenue for the first six
months of 2005 was $1.6 million, a 30% improvement from the same
period last year, and was comprised of $878,000 from sales of the
Nomad system and $765,000 from sales of the Flic scanner. As of June
30, 2005, backlog totaled $6.8 million, up 51% from last year’s
backlog of $4.5 million (Microvision only). The backlog for the
current quarter was comprised of $5.9 million for development
contracts and $900,000 for the Nomad System and Flic scanner, setting
the stage for continued growth in product revenue for the third
quarter.
The company reduced its operating loss for both the second quarter
and the six months reporting a loss of $5.8 million for second quarter
2005 and $11.4 million for the first six months of 2005, down $2.6
million and $3.5 million (Microvision only), respectively from the
same periods last year. The improved operating loss was primarily due
to increases in both revenue and gross profitability. Contract gross
margin was 55% and 51% for the three months and six months ending June
30, 2005, respectively, compared to 34% and 43% (Microvision only) for
the same period last year.
Consolidated results, including effects of Lumera and other items
The company reported a consolidated net loss available for common
shareholders of $5.0 million or $0.23 per share for second quarter
2005 compared to $8.5 million or $0.40 per share in the same period in
2004. The company reported a consolidated net loss available for
common shareholders of $12.1 million or $.57 per share for the first
six months of 2005 compared to $15.2 million or $.71 per share for the
same period last year. The second quarter net loss includes $1.3
million or $.06 per share in a net non-cash gain relating to the
embedded derivative feature and warrants of the $10 million
convertible exchangeable notes and a $1.6 million or $.07 per share
gain on the sale of Lumera shares. Microvision’s share of Lumera’s net
loss in the second quarter was $934,000 or $.04 per share.
The company ended the quarter with $2.3 million in cash, cash
equivalents and investment securities. Earlier today the company
announced that it had raised an additional $5.0 million in new equity
capital and converted $5.0 million of its preferred stock to common
equity.
“We achieved solid financial results for the second quarter and
first half of 2005,” said Microvision CEO Rick Rutkowski. “We posted
record revenue in the second quarter and for the first half of 2005,
significantly increased our backlog from last year and narrowed our
operating loss. Our financial results reflect the record level of
contract revenue we have experienced this year as well as solid growth
in our product revenue. For the third quarter we are targeting
continued growth in product revenue and a strong improvement in
overall revenue versus last year’s results. We are targeting third
quarter 2005 revenue in the range of $4.1 to $4.5 million, up
significantly over the $2.7 million in revenue for third quarter 2004.
We are targeting continued sequential growth in product revenue for
the period. Contract revenue may decline versus the record levels
reported in the first two quarters while still showing strong gains
versus last year’s third quarter. This is in part due to the expected
successful completion during the quarter of the first phase
development contract with Ethicon. Contract revenue may attain higher
levels, if we are successful in one or more current negotiations.
However, because we anticipate that certain of these development
projects – similar to the arrangement with Ethicon – may include terms
that relate to our economic participation in high volume production
through royalty and/or supply agreements, we want to ensure that we
take the necessary time to structure agreements with the goal of
maximizing the long term growth and profitability of the company.
“We are pleased to have Alexander Tokman join the Microvision team
as President and Chief Operating Officer. Alec is an accomplished
executive with a strong track record who comes to us from G.E.
Healthcare where he has successfully taken powerful, new technologies
from the definition and development stages into commercialization,
resulting in products that not only added significant organic revenue
gains and profit to G.E. but also changed the way hospitals delivered
healthcare services to their patients.”
“I joined Microvision because I strongly believe that the company
has a unique mission that is enabled through its disruptive
technology. This technology can lead to the breakthrough commercial,
medical and military applications,” said Alexander Tokman, President
and Chief Operating Officer. “I have been very impressed by the
passion and knowledge exhibited by my colleagues at Microvision, all
of whom are willing to go above and beyond to achieve the set goals.
My near and mid-term priorities are to focus our cross-functional
teams on driving growth and profitability of the Nomad and Flic
product lines and to refine our strategic growth roadmap and business
plans around rigorous operational discipline, quantitative goals and
metrics.”
“Second quarter product sales were highlighted by partial delivery
of Nomad ND 2500 systems to the U.S. Army under the $1.2 million
contract by General Dynamics,” said Rutkowski. “The remaining units
were shipped early in the third quarter and are expected to be
installed into an in-theater Stryker Brigade for operational feedback.
We are expecting the award of an additional development contract to
further enhance and refine this product toward the goal of formal
qualification by the Army. We continue to develop a number of
opportunities in the military market, for both combat related
applications and vehicle maintenance, and we remain enthusiastic about
the high growth potential in this large market.
“Channel development for commercial sales of the Nomad 2100 Expert
Technician system in automotive maintenance continues to be a primary
focus. Hunter Engineering – which holds a dominant market share in
wheel alignment systems – recently announced a new version of their
WinAlign software to support the use of Nomad with both new and
existing systems. This is a compelling application with measurable
benefits, and we are working with many of Hunter’s field reps to
target this very large installed base of potential customers. We are
also working toward finalizing a distribution agreement with another
party that we believe has the potential to accelerate the Nomad
system’s penetration into the automotive maintenance market. In
parallel, we are targeting strategic accounts and channel partners,
including systems integrators and equipment suppliers to address
significant growth opportunities in areas such as field service, plant
maintenance and manufacturing.
“With respect to the Flic scanner, we are focused on maximizing
the productivity of our existing sales force by growing their account
base of resellers and systems integrators. Our ability to support a
growing variety of interfaces and our user-friendly software
developers kit, we believe offer a unique opportunity for growth as a
simple and affordable scanning solution for portable and handheld
devices. We are working with channel partners to develop custom bar
code solutions for high volume, large market enterprise opportunities
and to develop “out of the box” solutions for small to medium
businesses. We are building a solid sales pipeline of opportunities
for the Flic scanner that we believe can provide sustainable revenue
growth for the product, and prospects are good for solid growth in the
current quarter.
“We continue to make significant and measurable progress towards
commercialization of several OEM products that address large markets.
To this end, we recently achieved some significant milestones that
advanced our progress towards design wins and commercialization.
“We achieved our first full color images with a prototype laser
scanning micro camera with a diameter of only 5 millimeters. The image
provides outstanding quality (especially for this phase of
development) over a 140 degree diagonal field of view. This represents
a truly groundbreaking combination of resolution, depth of field and
package size. We continue to optimize the camera’s performance.
“We recently developed and demonstrated a proprietary technique
for direct modulation of solid state lasers. This is a major milestone
that can impact our ability to provide affordable, compact,
see-through display solutions in full- or multi-color. The most
immediate impact for us relates to our development of in-dash,
automotive head-up displays. This development in effect increases the
range of potential sources for blue and green lasers, and potentially
significantly reduces the development risks associated with
commercialization of the MicroHUD.
“During the first half of the year, we made highly successful
deliveries of head-up display prototypes to VW Audi and a major Tier 1
sponsor of our development efforts. In July, Audi publicly announced
to the German press that it planned to introduce a laser scanning
head-up display in a future model year car. Given the continued
success of our work with VW Audi and other partners, we remain highly
encouraged at our prospects for additional development contracts
leading to a potential design win.
“In recent months we have alluded to a breakthrough in optical
systems design relating to wearable displays that would virtually
eliminate bulky, wide-angle projection optics from such systems to
enable the delivery of a very wide field of view (well in excess of
100” diagonal screen viewed at 10 ft.) and – HD or better – resolution
in a compact and affordable package. We have already seen strong
interest in development and commercialization of this design from a
range of prospective partners and customers in markets ranging from
professional and military simulation to high volume consumer
electronics categories such as electronic games and portable media
players. We believe the potential for delivering this combination of
image quality and immersive field of view in a compact package is
absolutely unique to a scanned beam approach. We are aggressively
pursuing the broadest possible protection of the intellectual property
relating to this invention.
“We are coming off the strongest revenue growth in the company’s
history and never before have the opportunities we have been pursuing
been so far advanced. We are making steady progress in both our
current product suite and in developing new product opportunities to
drive future growth.”
Conference Call
Microvision will host a conference call to discuss its second
quarter of 2005 financial results at 4:30 p.m. ET today. Participants
may join the conference call by dialing (866) 700-5192 (for U.S.
participants) ten minutes prior to the start of the conference.
International participants can dial (617) 213-8833. The conference
passcode number is 29067026. Additionally, the call will be broadcast
over the Internet and can be accessed from the company’s web site at
www.microvision.com. A telephone replay of the call will be available
through 6:30 p.m. ET August 16, 2005 and can be accessed by dialing
888-286-8010 (for U.S. participants) or 617-801-6888 (for
international participants). The passcode is 46573668. Also, a replay
of the conference call will be available on the company’s web site.
About Microvision: www.microvision.com
Headquartered in Bothell, 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 expected
results, projections of future revenues, plans for product development
and production volume, future development contracts and commercial
arrangements, growth in demand, future product benefits and future
operations, as well as statements containing words like
“believes,””estimate,” “expects,” “anticipates,” “target,” “plans,”
“will”, “could” 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)
June 30, Dec. 31,
2005 2004
--------- ---------
Assets
Current Assets
Cash and cash equivalents $2,327 $1,268
Investment securities, available-for-sale - -
Accounts receivable, net of allowances 1,108 5,227
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,228 597
Inventory 3,240 3,167
Other current assets 1,236 1,293
--------- ---------
Total current assets 9,139 11,552
Investment in Lumera 4,938 10,201
Property and equipment, net 1,615 2,318
Restricted investments 1,101 1,238
Restricted investment in Lumera 2,673 -
Other assets 203 229
--------- ---------
Total assets $19,669 $25,538
========= =========
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock and Shareholders' (Deficit) Equity
Current Liabilities
Accounts payable $2,111 $2,624
Accrued liabilities 4,328 4,538
Allowance for estimated contract losses - 53
Billings in excess of costs and estimated
earnings on uncompleted contracts 50 3,318
Liability associated with common stock warrants 1,336 -
Current portion of notes payable 3,632 -
Current portion of capital lease obligations 15 39
Current portion of long-term debt 61 77
--------- ---------
Total current liabilities 11,533 10,649
Notes payable, net of current portion 2,576 -
Liability associated with embedded derivative
feature 2,211 -
Capital lease obligations, net of current portion 7 9
Long-term debt, net of current portion - 22
Deferred rent, net of current portion - 21
--------- ---------
Total liabilities 16,327 10,701
--------- ---------
Commitments and contingencies - -
Mandatorily redeemable convertible preferred stock 8,038 7,647
--------- ---------
Shareholders' (Deficit) Equity
Common stock at par value 21 22
Additional paid-in capital 196,204 196,929
Deferred compensation (49) (305)
Subscriptions receivable from related parties - (166)
Receivables from related parties, net (1,823) (1,823)
Accumulated deficit (199,049) (187,467)
--------- ---------
Total shareholders' (deficit) equity (4,696) 7,190
--------- ---------
Total liabilities, mandatorily redeemable
convertible preferred stock
and shareholders' (deficit) equity $19,669 $25,538
========= =========
Microvision, Inc.
Consolidated Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months Six months
ended ended
June 30, June 30,
-------------------------------------
2005 2004 2005 2004
-------- -------- --------- ---------
Contract revenue $3,682 $1,811 $7,064 $4,110
Product revenue 1,043 587 1,643 1,262
-------- -------- --------- ---------
Total revenue 4,725 2,398 8,707 5,372
-------- -------- --------- ---------
Cost of contract revenue 1,668 1,192 3,496 2,397
Cost of product revenue 2,217 638 3,367 1,303
-------- -------- --------- ---------
Total cost of revenue 3,885 1,830 6,863 3,700
-------- -------- --------- ---------
Gross margin 840 568 1,844 1,672
-------- -------- --------- ---------
Research and development
expense 2,037 3,343 3,921 7,962
Sales, marketing, general and
administrative expense 4,516 5,191 9,051 9,764
Non-cash compensation expense 125 933 256 1,616
-------- -------- --------- ---------
Total operating
expenses 6,678 9,467 13,228 19,342
-------- -------- --------- ---------
Loss from operations (5,838) (8,899) (11,384) (17,670)
Interest income 68 79 125 181
Interest expense (879) (89) (1,070) (97)
Gain on derivative features of
notes payable 1,343 - 1,058 -
Other income/expense (12) - (3) -
-------- -------- --------- ---------
Loss before minority interests
and equity in
losses of Lumera $(5,318) $(8,909) $(11,274) $(17,586)
Minority interests in loss of
consolidated subsidiary - 397 - 2,384
Equity in losses of Lumera (934) - (1,878) -
Gain on sale of equity method
investment 1,570 - 1,570 -
-------- -------- --------- ---------
Net loss $(4,682) $(8,512) $(11,582) $(15,202)
Less: Stated dividend on
mandatorily redeemable
convertible preferred stock (88) - (174) -
Accretion to par value (198) - (391) -
-------- -------- --------- ---------
Net loss available for common
shareholders $(4,968) $(8,512) $(12,147) $(15,202)
======== ======== ========= =========
Net loss per share before non-
cash compensation expense $(0.22) $(0.36) $(0.56) $(0.63)
Non-cash compensation expense (0.01) (0.04) (0.01) (0.08)
-------- -------- --------- ---------
Net loss per share - basic and
diluted $(0.23) $(0.40) $(0.57) $(0.71)
======== ======== ========= =========
Weighted-average shares
outstanding -
basic and diluted 21,481 21,497 21,488 21,478
======== ======== ========= =========
CONTACT: Microvision, Inc.
Brian Heagler (investors), 425-415-6794
Matt Nichols (media), 425-415-6657
SOURCE: Microvision, Inc.