11/2/2005 4:10:00 PM
BOTHELL, Wash.–(BUSINESS WIRE)–Nov. 2, 2005–
Company continues to exhibit strong year over year revenue growth,
increased backlog and reduced operating losses
Microvision, Inc. (NASDAQ:MVIS), a leader in light scanning
technologies, today reported financial results for the third quarter
and first nine months of 2005, continuing its trend of achieving
double digit year over year quarterly revenue growth and reduced
operating losses. The company reported revenue for the three months
ended September 30, 2005 of $3.3 million, an increase of 27% over the
$2.6 million (Microvision only) reported in the same quarter last
year. Revenue for the first nine months of 2005 was $12.0 million
compared to revenue of $7.4 million (Microvision only) for the same
period in 2004, an increase of 62%.
Product revenue increased to $1.2 million for third quarter 2005,
more than double last year’s third quarter and up 10% from second
quarter 2005 and was comprised of $782,000 from sales of the Nomad
System and $368,000 from sales of the Flic scanner. Product revenue
for the nine months ended September 30, 2005 was $2.8 million, up 52%
from the $1.8 million recorded in the same period last year and was
comprised of $1.7 from sales of the Nomad system and $1.1 from sales
of the Flic scanner. Contract revenue for third quarter 2005 was flat
at $2.2 million versus the same period last year. For the year,
contract revenue continued to demonstrate strong growth with year to
date revenue of $9.2 million, up 64% (Microvision only) from the same
period in 2004.
As of September 30, 2005 backlog totaled $4.9 million, up 53% when
compared to $3.2 million (Microvision only) for the same period last
year. The backlog for the current quarter was comprised of $4.6
million for development contracts and $276,000 for the Nomad System
and Flic scanner.
The company reported an operating loss of $6.9 million for third
quarter 2005 and $18.3 million for the first nine months of 2005, an
improvement of $1.6 million and $5.1 million (Microvision only),
respectively from the same periods last year.
The company’s consolidated net loss available to common
shareholders for third quarter 2005 includes non-cash items totaling
$5.1 million or $.23 per share. The third quarter loss included a
one-time, non-cash charge of $3.3 million or $0.15 per share resulting
from the July 2005 restructuring of the company’s $10 million senior
secured notes and a one-time, non-cash charge of $1.2 million or $.05
per share associated with the August 2005 conversion of $5 million of
preferred stock to common equity. Other non-cash charges include
Microvision’s share of Lumera’s net loss in the third quarter and nine
months which was $610,000 or $0.03 per share and $2.5 million or $0.11
per share, respectively. Beginning in July 2004, Lumera’s results are
accounted for under the equity method of accounting. Prior to July
2004, Lumera’s operations were consolidated with the company’s
results. The company reported a consolidated net loss available for
common shareholders of $12.6 million or $0.56 per share for third
quarter 2005 compared to $10.1 million or $0.47 per share in the same
period in 2004. The company reported a consolidated net loss available
for common shareholders of $24.7 million or $1.13 per share for the
first nine months of 2005 compared to $25.3 million or $1.18 per share
for the same period last year.
As a result of the debt restructuring and preferred stock
conversion, the company reduced its debt by $5.0 million. In
addition,subsequent to the end of the quarter, the company’s
noteholders converted $1.8 million of their notes to common stock. The
company ended the quarter with $1.4 million in cash and cash
equivalents.
“While revenue for the third quarter fell short of more aggressive
targets, we continue to show solid year over year growth for the
quarter and nine months,” stated Microvision CEO Rick Rutkowski. “In
addition to posting year over year revenue growth for the third
consecutive quarter, we once again improved operating losses and
increased backlog when compared to last year. Our lower than expected
revenue in the third quarter was partially attributable to lower
contract activity, which in part was due to a delay in completion of a
development contract. Product revenue was up sequentially and year
over year and was driven by the delivery 85 Nomad ND 2500 systems to
General Dynamics in the quarter, completing the 165 unit order for the
U.S. Army.
“While we continue to focus on the identification of strategic
accounts and the development of channel partnerships for commercial
sales of the Nomad 2100 Expert Technician system in transportation
maintenance segments, we are also refining our strategy on qualifying
customers within this space, upgrading our ability to measure and
communicate the economic benefits of the product and focusing more on
training, acceptance and post-sale support,” said Alexander Tokman,
President and COO of Microvision. “Focus on specific applications
supported by quantifiable ROI and favorable content will be the key to
growth of the Nomad system as the productivity tool within the MRO
space. We are exhibiting the Nomad system this week in Las Vegas at
the Automotive Aftermarket Parts Exposition, highlighting both these
applications. We are encouraged with our initial success in the
military vehicle maintenance market. We now have installations in two
Army Reserve Regional Readiness Command Centers with a third
installation scheduled for next week. In parallel to these efforts, we
are actively evaluating additional applications for the Nomad system
with an eye toward potentially launching new sales efforts early next
year.
“Flic has built a solid base of business over the last several
quarters and we expect to be able to leverage that success. Our focus
is on developing channel partners in mobility and consumer household
applications. We signed a co-distribution agreement with Bitz & Pixels
to co-market the Flic scanner with Collectorz.com media collector
software, our first bundled Flic scanner solution that Microvision
will offer for sale. This, in addition to our distribution
arrangements with IntelliInnovations and Delicious Monster, represents
entry points into the consumer household market for bar code-enabled
personal computer applications. We also continued progress on a
reference account installation of Flic scanners into a large hospital
that is part of a national chain. We expect to use this reference
account to enable us to enter the healthcare market for bar code
scanners in 2006 to take advantage of the FDA unit-of-use mandate,
which requires drug manufacturers to place 1D bar codes on individual
doses of medication.”
“We continue to make measurable progress toward commercialization
of several OEM products,” stated Rutkowski. “We recently announced
that we signed a nonbinding letter of intent with Bosch to formalize
our ongoing collaboration towards bringing a laser scanning HUD to
market. We are encouraged at our prospects of receiving additional
development contracts leading to a potential design win.
“Work is progressing on our laser camera development project with
Ethicon Endo Surgery. We expect to complete our first development
phase later this year.
“We are continuing to develop our strategy with respect to
opportunities in the very high volume consumer markets, including
gaming and other mobile devices. We are pursuing opportunities to
partner with one or more leading companies to develop a range of
uniquely powerful consumer display solutions for both wearable and
projection devices.”
Conference Call
Microvision will host a conference call to discuss its third
quarter and year to date 2005 financial results at 4:30 p.m. ET today.
Participants may join the conference call by dialing 866-356-4279
(for U.S. participants) ten minutes prior to the start of the
conference. International participants can dial 617-597-5394. The
conference passcode number is 62005478. 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 until 6:30 p.m. ET November 9, 2005 and can be accessed by
dialing 888-286-8010 (for U.S. participants) or 617-801-6888 (for
international participants). The passcode is 95006285. 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, 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)
September 30, December 31,
2005 2004
------------- ------------
Assets
Current Assets
Cash and cash equivalents $ 1,415 $ 1,268
Investment securities, available-for-sale - -
Accounts receivable, net of allowances 1,504 5,227
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,218 597
Inventory 2,318 3,167
Current restricted investments 1,101 -
Other current assets 1,376 1,293
------------- ------------
Total current assets 8,932 11,552
Investment in Lumera 4,544 10,201
Property and equipment, net 1,636 2,318
Restricted investments 1,000 1,238
Restricted investment in Lumera 2,457 -
Other assets 161 229
------------- ------------
Total assets $ 18,730 $ 25,538
============= ============
Liabilities, Mandatorily Redeemable
Convertible Preferred Stock
and Shareholders' (Deficit) Equity
Current Liabilities
Accounts payable $ 1,857 $ 2,624
Accrued liabilities 3,934 4,538
Allowance for estimated contract losses - 53
Billings in excess of costs and estimated
earnings on uncompleted contracts 119 3,318
Liability associated with common stock
warrants 3,169 -
Current portion of notes payable 6,292 -
Current portion of capital lease
obligations 28 39
Current portion of long-term debt 42 77
------------- ------------
Total current liabilities 15,441 10,649
Notes payable, net of current portion 2,920 -
Capital lease obligations, net of current
portion 100 9
Long-term debt, net of current portion - 22
Deferred rent, net of current portion 228 21
------------- ------------
Total liabilities 18,689 10,701
------------- ------------
Commitments and contingencies - -
Mandatorily redeemable convertible
preferred stock 4,063 7,647
------------- ------------
Shareholders' (Deficit) Equity
Common stock at par value 24 22
Additional paid-in capital 208,108 196,929
Deferred compensation (100) (305)
Subscriptions receivable from related
parties - (166)
Receivables from related parties, net (1,823) (1,823)
Accumulated deficit (210,231) (187,467)
------------- ------------
Total shareholders' (deficit) equity (4,022) 7,190
------------- ------------
Total liabilities, mandatorily
redeemable convertible preferred
stock and shareholders' (deficit)
equity $ 18,730 $ 25,538
============= ============
Microvision, Inc.
Consolidated Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- ------------------
2005 2004 2005 2004
-------- -------- -------- --------
Contract revenue $ 2,180 $ 2,157 $ 9,244 $ 6,267
Product revenue 1,150 572 2,793 1,834
-------- -------- -------- --------
Total revenue 3,330 2,729 12,037 8,101
-------- -------- -------- --------
Cost of contract revenue 1,647 1,580 5,143 3,977
Cost of product revenue 2,117 886 5,484 2,189
-------- -------- -------- --------
Total cost of revenue 3,764 2,466 10,627 6,166
-------- -------- -------- --------
Gross margin (434) 263 1,410 1,935
-------- -------- -------- --------
Research and development
expense 1,963 4,666 5,884 12,628
Sales, marketing, general and
administrative expense 4,405 4,722 13,456 14,486
Non-cash compensation expense 118 212 374 1,828
-------- -------- -------- --------
Total operating expenses 6,486 9,600 19,714 28,942
-------- -------- -------- --------
Loss from operations (6,920) (9,337) (18,304) (27,007)
Interest income 61 43 186 224
Interest expense (443) (40) (1,513) (137)
Gain (loss) on disposal of
fixed assets - (1) - (1)
Gain on derivative features
of notes payable 210 - 1,268 -
Loss on debt restructuring (3,313) - (3,313) -
Other income/expense (14) - (17) -
-------- -------- -------- --------
Loss before minority
interests and equity in
losses of Lumera $(10,419) $ (9,335) $(21,693) $(26,921)
Minority interests in loss of
consolidated subsidiary - 54 - 2,438
Equity in losses of Lumera (610) (750) (2,488) (750)
Gain on sale of equity method
investment - - 1,570 -
-------- -------- -------- --------
Net loss $(11,029) $(10,031) $(22,611) $(25,233)
Less: Stated dividend on
mandatorily redeemable
convertible preferred stock (62) (20) (236) (20)
Accretion to par value (143) (43) (534) (43)
Beneficial conversion
feature of notes payable (153) - (153) -
Inducement for
conversion of preferred
stock (1,184) - (1,184) -
-------- -------- -------- --------
Net loss available for common
shareholders $(12,571) $(10,094) $(24,718) $(25,296)
======== ======== ======== ========
Net loss per share - basic
and diluted $ (0.56) $ (0.47) $ (1.13) $ (1.18)
======== ======== ======== ========
Weighted-average shares
outstanding - basic and
diluted 22,637 21,508 21,875 21,488
======== ======== ======== ========
CONTACT: Microvision, Inc.
Brian Heagler, 425-415-6794 (Investors)
Matt Nichols, 425-415-6657 (Media)
SOURCE: Microvision, Inc.