11/4/2004 4:01:00 PM
BOTHELL, Wash.–(BUSINESS WIRE)–Nov. 4, 2004–Microvision, Inc.
(NASDAQ:MVIS), a leader in light scanning technologies, today reported
financial results for the third quarter of 2004. Consolidated revenue
for the three months ended September 30, 2004, was $2.7 million
compared to $2.6 million for the same period in 2003. Consolidated
revenue for the three months ended September 30, 2004, includes
$82,000 attributable to Lumera. Lumera was Microvision’s consolidated
subsidiary until it completed an initial public offering in July 2004.
Consolidated revenue for the three months ended September 30, 2003,
included $676,000 attributable to Lumera. Consolidated contract
revenue was $2.2 million for the third quarter of 2004 ($2.1 million
excluding Lumera) compared to $2.5 million for the same period last
year ($1.8 million excluding Lumera). Consolidated product revenue was
$572,000 for the third quarter of 2004 compared to $42,000 last year.
Consolidated product revenue in the third quarter of 2004 was
comprised of $224,000 from sales of Nomad and $348,000 from sales of
the Flic bar code scanner.
Consolidated revenue for the nine months ended September 30, 2004,
was $8.1 million ($7.4 million excluding Lumera) compared to $10.6
million ($9.2 million excluding Lumera) for the same period in 2003.
Revenue for the nine months of 2004 was down due to lower contract
revenue, partially offset by higher product revenue. Contract revenue
for 2004 was negatively impacted by the delay in the $3.85 million
VCOP contract award, which was awarded late in the second quarter and
the loss of an expected contract award by the government of
approximately $1.7 million. As of September 30, 2004, backlog totaled
$3.2 million of which $2.9 million was for development contracts,
$194,000 for Nomad and $86,000 for the Flic laser bar code scanner and
accessories.
The company reported a consolidated net loss available for common
shareholders of $10.1 million or $0.47 per share for the third quarter
of 2004 compared to $6.9 million or $0.39 per share in the same period
in 2003. The third quarter of 2004 net loss includes inventory
writeoffs totaling $800,000 related to Nomad and the Flic scanner;
increased production costs for starting up the production line for
Nomad of $300,000; an increase in sales and marketing costs of
approximately $1.0 million related to the Nomad product launch and a
net loss attributable to Lumera of $1.6 million, of which $750,000
relates to Microvision’s portion of Lumera’s net loss after Lumera’s
IPO and consequent deconsolidation. Microvision’s cash used for
operations in the third quarter of 2004 was $7.1 million.
The company ended the quarter with $8.8 million in cash and cash
equivalents. Microvision ended the quarter with an investment in
Lumera of $11.2 million, representing the company’s ownership of
Lumera’s net book value after the IPO. The company owns approximately
5.5 million shares of common stock of Lumera.
“We made important progress in the third quarter at getting
contract revenue ‘back on track’ as we indicated as a key objective in
our last quarterly report,” said Microvision CEO Rick Rutkowski.
“Contract revenue was down for the first six months of this year and
for the nine month period due to a protracted delay in the award of a
US Army contract and the delayed release of our Nomad product. During
the third quarter contract revenue increased significantly over the
prior quarter and also versus the third quarter of last year. Given
our current contract backlog of $2.9 million and prospects for new
commercial and government contract bookings during the current quarter
and the first half of next year, we expect this trend to continue.
“We also overcame production challenges that delayed the
commercial introduction of our Nomad Expert Technician System until
late in the past quarter. Production is now running smoothly and we
have been consistently achieving our current production and quality
goals.
“We are very pleased with market acceptance in the automotive
maintenance and repair sector for Nomad and have noted an increase in
sales activity across the board during the month of October. We
currently have over 400 dealers that have requested product
demonstrations. To date, we have installed 102 Nomad units in 23
dealerships in 18 states and across a wide number of brands, including
Honda, Volvo, Saab, Lexus, Ford and General Motors dealerships.
“Our Reference Account program has been very successful, resulting
in a sharp increase in brand awareness in each of the regions that we
have installed reference accounts. We have 4 high profile dealers in
our Reference Account program, including the largest Honda dealer in
the world, the largest Lexus dealer in the U.S., the 4 largest
Chevrolet dealer in the U.S. and one of the largest auto dealers in
the mid-Atlantic region. Additionally, Nomad was named a ‘Top 20 Tool’
by Motor Magazine News. We currently have 41 independent sales
representatives in place. We continue to build our sales channel by
adding additional sales representatives and we expect to see sales per
representative increase during the fourth quarter and beyond. We also
have initiatives underway to partner with leading software and
solutions providers to the automotive parts and service market.
“To date we have sold 132 units, including 57 sold in the third
quarter. Sales were constrained in the third quarter by production
issues that were resolved only a few weeks before the quarter’s end.
We ended Q3 with 38 units in backlog and had our best Nomad revenue
months in October.
“We have responded to a solicitation notice from the U.S. Army
Reserve to negotiate the purchase of 37 Nomad units plus accessories
for use in Army Reserve vehicle maintenance depots. We recently
completed a highly successful test and evaluation with US Air Force
maintenance crews in Yokota Japan and have seen strong and growing
interest from multiple branches of the US military for maintenance
applications. The U.S. Department of Defense reports that an estimated
700,000 military and civilian personnel are involved in defense
maintenance activities. These technicians are servicing the world’s
largest fleets of ships, aircraft and vehicles, including 300 ships,
15,000 aircraft and helicopters, 1,000 strategic missiles, and 350,000
ground combat and tactical vehicles. Microvision has an opportunity to
join the U.S. Air Force ‘FAST’ contract as a subcontractor to support
the needs of Air Force depots and the Defense Logistics Agency. The
FAST contract has $7.4 billion available to spend over the next 7
years and is to acquire products and services in support of defense
maintenance and logistics needs. This contract potentially gives us a
vehicle from which to sell Nomad systems and Flic scanners as well as
engineering development services to the Air Force.
“With the sharp increase in qualified leads, growing product
awareness, a larger sales force and increasing user experience and
‘word-of-mouth’ testimonials, we believe we are positioned for sales
volumes for the Nomad product to begin to accelerate beginning in the
current quarter.
“On October 25, we received a presolicitation notice from the
Army, stating that the U.S. government intends to negotiate, on a sole
source basis, with Microvision for a contract to immediately purchase
2 Nomad units with an option to purchase up to 250 additional Nomad
units within the next 12 months. According to the notice, the Army
anticipates awarding a contract by November 30. The Army has concluded
that the Nomad is the only commercially available day/night
see-through heads-up display that connects to the FBCB2 computer and
weapons sensors in the Stryker vehicle. This version of the Nomad will
include some enhanced features, such as enabling the user to toggle
between moving map information displayed by the FBCB2 system and other
thermal imaging systems in the Stryker vehicle. We believe this is a
very positive step toward the Army’s goal to outfit each Stryker
vehicle, both now and in the future, with a Nomad unit.
“The effort we began in the second quarter to focus on building
OEM relationships for the Flic scanner continued to bear fruit in the
third quarter. We announced a key distribution relationship with
Smead, a global leader in office filing products and records
management solutions. Smead intends to private label the Flic scanner
and market an integrated solutions package for retail distribution to
small and medium sized businesses. We believe that integrating the
Flic scanner into supply chain solutions with OEMs is the ‘sweet spot’
for the Flic scanner and we plan to continue to build that channel
with additional OEM relationships. We also announced a 1,000 unit
order from Trax Retail Solutions to add the Flic scanner to its loss
prevention products that is marketed to supermarkets, convenience
stores and general merchandisers.
“We are very excited about the progress we are making on a number
of development projects related to potential high-volume OEM products
in our pipeline. We are very pleased with the development of the
MicroHUD and the continuing support we have received from BMW and
Volkswagen of America and a major European Tier 1 auto supplier. We
expect to install a prototype HUD in a Volkswagen car later this month
and we are encouraged about our prospects for continued development
opportunities and the potential for design wins. We believe that we
are entering this market at a very opportune time. Analysts expect
that this product category will be the fastest growing segment of the
automotive display market and will become a very large market over the
next several years. According to information published by
DisplaySearch at the SID Vehicle Display Conference in October, the
market for heads-up displays in automobiles is expected to grow from
102,000 units in 2004 to over 4 million units (roughly 6% of vehicles)
by 2010, a compound annual growth rate of 84%. Clearly this is a large
and growing market opportunity and we are highly encouraged that our
performance and package size advantages position us very well to
benefit from this trend.
“During the third quarter we delivered prototype devices to Canon
for an electronic viewfinder for digital cameras, to an Asian company
for a high-speed laser print engine, and a 2D bar code reader. Each of
these prototypes is currently being evaluated and we are encouraged
that we will have follow-on development opportunities.
“We achieved a significant technological milestone in the third
quarter, demonstrating what we originally reported as a 7.6 million
pixel microdisplay. The actual pixel count was 9 million pixels. The
multi-zone scanning technique that we used to achieve this dramatic
increase in resolution offers the flexibility of increasing display
performance by adding inexpensive LEDs. The ability to combine lower
cost and higher resolution are key considerations for development of
consumer electronics products, especially those relating to electronic
gaming and media and entertainment.
“Finally, one of the highlights of the quarter was the initial
public offering of Lumera, which raised just under $42 million.
“We took some very important steps in the third quarter to grow
our business for the long term. We believe that Nomad and Flic are
poised to begin ramping sales volumes and that one or more of our
multiple development opportunities could begin to accelerate toward
product development.”
Conference Call
Microvision will host a conference call to discuss its third
quarter of 2004 financial results at 4:30 p.m. ET today. Participants
may join the conference call by dialing 800-706-7748 (for U.S.
participants) ten minutes prior to the start of the conference.
International participants can dial 617-614-3473. The conference
passcode number is 67046555. 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 5:00 p.m. ET November 11, 2004, and can be accessed by dialing
888-286-8010 (for U.S. participants) or 617-801-6888 (for
international participants). The passcode is 51843989. 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)
Sept. 30, Dec. 31,
2004 2003
--------- ---------
Assets
Current Assets
Cash and cash equivalents $ 8,752 $ 10,700
Investment securities, available-for-sale - 11,078
Accounts receivable, net of allowances 789 1,896
Costs and estimated earnings in excess of
billings on
uncompleted contracts 960 664
Receivable from Lumera 46 -
Inventory 2,781 331
Other current assets 800 1,684
--------- ---------
Total current assets 14,128 26,353
Investment in Lumera 11,162 -
Property and equipment, net 2,776 5,958
Restricted investments 1,238 1,269
Other assets 232 338
--------- ---------
Total assets $ 29,536 $ 33,918
========= =========
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock
and Shareholders' Equity
Current Liabilities
Accounts payable $ 2,621 $ 1,223
Accrued liabilities 3,977 5,164
Allowance for estimated contract losses 31 -
Billings in excess of costs and estimated
earnings on uncompleted contracts 56 53
Current portion of capital lease obligations 48 62
Current portion of long-term debt 75 70
--------- ---------
Total current liabilities 6,808 6,572
Research liability, net of current portion - 1,948
Capital lease obligations, net of current
portion 12 34
Long-term debt, net of current portion 42 99
Deferred rent, net of current portion 43 107
Other long-term liabilities - 16
--------- ---------
Total liabilities 6,905 8,776
--------- ---------
Commitments and contingencies - -
Minority interest - 1,847
Mandatorily redeemable convertible preferred
stock 7,487 -
--------- ---------
Shareholders' Equity
Common stock at par value 22 21
Additional paid-in capital 197,096 180,354
Deferred compensation (462) (846)
Subscriptions receivable from related
parties (166) (166)
Receivables from related parties, net (1,823) (1,823)
Accumulated other comprehensive income - 25
Accumulated deficit (179,523) (154,270)
--------- ---------
Total shareholders' equity 15,144 23,295
--------- ---------
Total liabilities, mandatorily redeemable
convertible preferred stock and
shareholders' equity $ 29,536 $ 33,918
========= =========
Microvision, Inc.
Consolidated Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
2004 2003 2004 2003
--------- ------- -------- --------
Contract revenue $ 2,157 $ 2,523 $ 6,267 $ 10,290
Product revenue 572 42 1,834 323
--------- ------- -------- --------
Total revenue 2,729 2,565 8,101 10,613
--------- ------- -------- --------
Cost of contract revenue 1,580 1,469 3,977 4,825
Cost of product revenue 886 30 2,189 284
--------- ------- -------- --------
Total cost of revenue 2,466 1,499 6,166 5,109
--------- ------- -------- --------
Gross margin 263 1,066 1,935 5,504
--------- ------- -------- --------
Research and development
expense 4,666 5,524 12,628 18,403
Marketing, general and
administrative expense 4,722 3,615 14,486 12,286
Non-cash compensation expense 212 544 1,828 1,461
--------- ------- -------- --------
Total operating
expenses 9,600 9,683 28,942 32,150
--------- ------- -------- --------
Loss from operations (9,337) (8,617) (27,007) (26,646)
Interest income 43 76 224 290
Interest expense (40) (11) (137) (35)
Gain (loss) on disposal of
fixed assets (1) 64 (1) 33
Realized gain on sale of
investment securities - - - 39
--------- ------- -------- --------
Loss before minority interests
and equity in losses
of Lumera $ (9,335) $(8,488) $(26,921) $(26,319)
Minority interests in loss of
consolidated subsidiary 54 1,623 2,438 5,366
Equity in losses of Lumera (750) - (750) -
--------- ------- -------- --------
Net loss $ (10,031) $(6,865) $(25,233) $(20,953)
Less: Stated dividend on
preferred stock (20) - (20) -
Non-cash accretion of
discount on preferred
stock (43) - (43) -
--------- ------- -------- --------
Net loss available for common
shareholders $ (10,094) $(6,865) $(25,296) $(20,953)
========= ======= ======== ========
Net loss per share before non-
cash compensation expense $ (0.46) $ (0.36) $ (1.09) $ (1.13)
Non-cash compensation expense (0.01) (0.03) (0.09) (0.09)
--------- ------- -------- --------
Net loss per share - basic and
diluted $ (0.47) $ (0.39) $ (1.18) $ (1.22)
========= ======= ======== ========
Weighted-average shares
outstanding -
basic and diluted 21,508 17,799 21,488 17,188
========= ======= ======== ========
CONTACT: Microvision, Inc.
Brian Heagler (investors) 425-415-6794
Matt Nichols (media) 425-415-6657
SOURCE: Microvision, Inc.