3/16/2006 4:15:00 PM
REDMOND, Wash.–(BUSINESS WIRE)–March 16, 2006–Microvision, Inc.
(Nasdaq:MVIS), a leader in light scanning technologies, today reported
financial results for the fourth quarter and full year of 2005.
Revenues for the full-year 2005 were $14.7 million, an increase of 29%
over the $11.7 million reported for 2004. Operating loss for the year
was reduced by 20% to $27.3 million from $34 million in 2004
(excluding the $1.7 million effect of consolidating its share of
Lumera’s losses in 2004, the operating loss improvement was 18%) and
the net loss to common shareholders was reduced by 9.6% to $30.3
million or $1.35 per share versus the 2004 equivalents of $33.5
million or $1.56 per share. The company ended the year with a revenue
backlog of $3.4 million
Revenues for the fourth quarter were $2.7 million, a decrease of
18% from the prior revenue reported for the fourth quarter of 2004.
Operating loss increased by 29% to $9.0 million from $7.0 million in
2004; net loss for the fourth quarter available to common shareholders
was reduced by 32% to $5.6 million or $.23 per share from $8.2 million
or $.38 per share reported for the fourth quarter of last year.
2005 Highlights
— Ended a two year annual revenue slide and delivered $14.7
million in revenue for 2005 up 29% over 2004;
— Developed new sales channels and solid pipeline for Flic
product in the second half of the year which resulted in
record sales numbers in the fourth quarter;
— Strong commercial contract revenue performance fueled by
Ethicon Endo Surgery contract;
— Sold 165 Nomad systems to the military in a large volume sale;
— Delivered on key government programs;
— Made demonstrable progress toward accelerating the development
of the automotive head-up display;
— Developed and successfully demonstrated the first working
demonstration prototype of the personal projection display
(PicoP(TM)) in the fourth quarter of last year; and
— Defined new business roadmap, technology productization
strategy and organizational blueprint to commence Company
turnaround in 2006.
Alexander Tokman, Microvision’s President and CEO, commented: “We
are pleased with the Company’s overall top line performance for the
full year as we reversed a two-year trend of declining annual
revenues. However, the types of contract and sales activities pursued
in 2005 did not fully establish a revenue ramp consistent with
sustained long term growth. Consequently, after we defined the new
business and organizational strategy late last year, we have put in
place, over the last few months, initiatives and measures to build a
foundation for longer term sustained growth. These initiatives support
key elements of our turnaround strategy and 2006 operating plan
announced last month. We are in a rebuilding mode, and we’re
enthusiastic about the future and confident in our ability to deliver
value to our customers and shareholders.”
2006 Operating Plan Implementation
We are executing on our 2006 Plan, the highlights of which are as
follows:
— Flic Bar Code Scanner. Building a solid sales pipeline for the
year. Completing phase 1 product quality improvements targeted
on improving reliability and reducing the cost of quality on
Flic scanner.
— Nomad. Conducting an in depth evaluation of the potential for
Nomad in its current configuration in four major application
areas: inspection, situational awareness, troubleshooting and
diagnostics for primary markets that include transportation,
industrial and healthcare.
— Funded product quality improvement programs to reduce cost of
quality and implemented pricing and discounting rigor.
— Integrated Photonics Module (IPM). Defining our modular
embedded light scanning engine architecture to enable high
resolution, high-volume display products for a variety of
consumer, industrial, automotive and military applications.
— PicoP and Automotive Head-Up Display (HUD). Advancing
discussions with potential development and distribution
partners for HUD and personal projection display products,
collecting requirements and defining product specifications.
— Completed the realignment and restructuring of the Company.
Reduced the overall workforce by approximately 10%; expected
reduction in overall SG&A costs by approximately 25% in 2006
versus 2005. Reduced the number of executive positions by 30%
through reduction and consolidation.
— New organizational leadership. Hired Ian Brown who will be
driving synergies across our new sales and marketing
organization, strengthening our customer focus and positioning
us for future growth into new market segments.
— Board changes. Together with the Board, initiated a process of
better aligning the skills and experience of the directors to
the business and operating objectives of the company. The
first step was the addition of Marc Onetto. Onetto brings
extensive experience, knowledge and leadership in establishing
and managing global supply chain operations directly supports
our business objectives for 2006 and beyond in proliferating
high volume consumer and automotive products.
Liquidity and Financing
The company had $6.9 million in cash and cash equivalents on
December 31, 2005. On February 2, 2006, the company announced that it
had raised an additional $10.3 million from the sale of a portion of
its Lumera stock. The company disclosed that its independent
registered public accounting firm has included a going concern
qualification to their opinion on the December 31, 2005, consolidated
financial statements because the company requires additional cash to
fund its operations through December 31, 2006.
“Obviously, we would have preferred to not have a qualified audit
opinion on our 2005 financial results,” said Tokman. “However, it does
not represent any change in the viability of our business. We expect
to raise additional funds over the coming months. We have made the
choice not to pursue a complicated short-term financing at this point
simply for purposes of avoiding a qualified opinion; we have chosen
instead to pursue a financing strategy that we believe better aligns
our capital structure to our new business fundamentals and outlook. We
have recently engaged an investment banker to assist us with this
strategy.
“We are rebuilding the company with a new identity and new
strategy. I am very excited about the pace of change and the path that
we are on to grow the company.”
Conference Call
Microvision will host a conference call to discuss its 2005
financial results at 4:30 p.m. ET today. Participants may join the
conference call by dialing 888-396-2386 (for U.S. participants) ten
minutes prior to the start of the conference. International
participants can dial 617-847-8712. The conference passcode is
10873003. 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 March 23, 2006, and can be accessed by dialing
888-286-8010 (for U.S. participants) or 617-801-6888 (for
international participants). The conference passcode for the replay is
88926988. Also, a replay of the conference call will be available on
the company’s web site.
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 enables solutions and products in
a broad range of industrial, consumer, military, and medical
applications.
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, future
operations and the benefits of our equity interest in Lumera, 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; 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, risks related to Lumera’s business and the market
for its equity and other risk factors identified from time to time in
the company’s SEC reports and other filings, 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)
Dec. 31, Dec. 31,
2005 2004
--------- ---------
Assets
Current Assets
Cash and cash equivalents $ 6,860 $ 1,268
Accounts receivable, net of allowances 1,380 5,227
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,204 597
Inventory 759 3,167
Current restricted cash and investments 1,856 -
Other current assets 1,512 1,293
--------- ---------
Total current assets 13,571 11,552
Investment in Lumera 3,582 10,201
Property and equipment, net 2,902 2,318
Restricted investments 1,000 1,238
Restricted investment in Lumera 2,184 -
Other assets 124 229
--------- ---------
Total assets $ 23,363 $ 25,538
========= =========
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock and Shareholders' (Deficit) Equity
Current Liabilities
Accounts payable $ 2,328 $ 2,624
Accrued liabilities 4,513 4,538
Allowance for estimated contract losses - 53
Billings in excess of costs and estimated
earnings on uncompleted contracts 51 3,318
Liability associated with common stock
warrants 3,452 -
Current portion of notes payable 7,896 -
Current portion of capital lease obligations 32 39
Current portion of long-term debt 22 77
--------- ---------
Total current liabilities 18,294 10,649
Notes payable, net of current portion 1,447 -
Liability associated with embedded derivative
feature 1,368 -
Capital lease obligations, net of current
portion 105 9
Long-term debt, net of current portion - 22
Deferred rent, net of current portion 1,492 21
--------- ---------
Total liabilities 22,706 10,701
--------- ---------
Commitments and contingencies - -
Mandatorily redeemable convertible preferred
stock 4,166 7,647
--------- ---------
Shareholders' (Deficit) Equity
Common stock at par value 25 22
Additional paid-in capital 212,993 196,929
Deferred compensation (85) (305)
Subscriptions receivable from related
parties - (166)
Receivables from related parties, net (792) (1,823)
Accumulated deficit (215,650) (187,467)
--------- ---------
Total shareholders' (deficit) equity (3,509) 7,190
--------- ---------
Total liabilities, mandatorily redeemable
convertible preferred stock
and shareholders' equity $ 23,363 $ 25,538
========= =========
Microvision, Inc.
Consolidated Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months Twelve months
ended Dec.31, ended Dec. 31,
--------------------------------------
2005 2004 2005 2004
------- ------- -------- --------
Contract revenue $ 2,142 $ 2,554 $ 11,386 $ 8,821
Product revenue 567 763 3,360 2,597
------- ------- -------- --------
Total revenue 2,709 3,317 14,746 11,418
------- ------- -------- --------
Cost of contract revenue 1,313 1,562 6,456 5,539
Cost of product revenue 3,152 1,679 8,636 3,868
------- ------- -------- --------
Total cost of revenue 4,465 3,241 15,092 9,407
------- ------- -------- --------
Gross margin (1,756) 76 (346) 2,011
------- ------- -------- --------
Research and development
expense 703 2,081 6,587 14,709
Sales, marketing, general and
administrative expense 6,467 4,742 19,923 19,228
Non-cash compensation expense 55 290 429 2,118
------- ------- -------- --------
Total operating
expenses 7,225 7,113 26,939 36,055
------- ------- -------- --------
Loss from operations (8,981) (7,037) (27,285) (34,044)
Interest income 77 48 263 272
Interest expense (1,186) (14) (3,253) (151)
Gain on derivative features of
notes payable 4,306 - 5,975 -
Loss on debt extinguishment - - (3,313) -
Other income (expense) (11) - (28) (1)
------- ------- -------- --------
Loss before minority interests
and equity in losses of Lumera (5,795) (7,003) (27,641) (33,924)
Minority interests in loss of
consolidated subsidiary - - - 2,438
Equity in losses of Lumera (754) (961) (3,242) (1,711)
Gain on sale of securities of
equity subsidiary 1,130 - 2,700 -
------- ------- -------- --------
Net loss (5,419) (7,964) (28,183) (33,197)
Less: Stated dividend on
mandatorily redeemable
convertible preferred stock (44) (88) (280) (108)
Accretion to par value of
preferred stock (103) (195) (637) (238)
Inducement for conversion
of preferred stock - - (1,184) -
------- ------- -------- --------
Net loss available for common
shareholders $(5,566) $(8,247) $(30,284) $(33,543)
======= ======= ======== ========
Net loss per share - basic and
diluted $ (0.23) $ (0.38) $ (1.35) $ (1.56)
======= ======= ======== ========
Weighted-average shares
outstanding -
basic and diluted 24,347 21,508 22,498 21,493
======= ======= ======== ========
CONTACT: Microvision, Inc.
Brian Heagler, 425-882-6794 (investors)
Matt Nichols, 425-882-6657 (media)
SOURCE: Microvision, Inc.