Microvision Announces Third-Quarter 2010 Results
Company Achieves Product and Technology Advancements to Drive Near- and Long-Term Growth
REDMOND, Wash.--(BUSINESS WIRE)-- Microvision, Inc. (NASDAQ:MVIS), a leader in innovative ultra-miniature projection display technology, today reported its operating and financial results for the third quarter of 2010. Microvision made significant progress on two strategic milestones--the planned introduction of an exciting new pico projection product in time for this holiday season and the successful lab integration of early "direct green" lasers.
The new higher-performance product, an extension of the company's SHOWWX(TM) product line, strengthens Microvision's position as a premier provider of vibrant, focus-free, plug-and-play, ultra-miniature display solutions.
This morning, the company announced that it had integrated early samples of direct green lasers from two leading manufacturers into pico projector benchtop prototypes. Once commercialized, direct green lasers are expected to provide significant advantages in price, power and size over synthetic green lasers, attributes that are necessary for high-volume consumer and automotive applications.
"We are energized about the imminent launch of our new product and recent developments in our core technology platform," stated Alexander Tokman, president and CEO of Microvision. "These advancements, which are integral to our 2011 and long-term growth strategies, keep us optimistic for the future despite recent challenges that negatively impacted revenue for the quarter."
Other notable achievements included:
-- Increased the company's global distribution points and began executing
several new marketing and public relations campaigns to drive awareness
and sell-through of its products.
-- Further refined production and supply chain capabilities for PicoP
(R)-based products, which has increased the company's confidence that it
will be in a position to deliver higher production volumes in 2011.
-- Demonstrated ongoing momentum with government customers, including new
contract awards totaling $1 million from the U.S. Army and U.S. Air
Force for development of advanced see-through eyewear and an enhanced
laser projection display system.
-- Delivered head-up display demonstrators to two automakers, and provided
the PicoP display engine to a third customer to incorporate into its
head-up display, reflecting increased interest in customer development
of automotive applications.
-- Collaborated with Intel and Capcom to introduce a new gaming
experience--"Infinite Reality"--which is one of many applications that
leverage the unique competitive advantages of Microvision's focus-free
display technology.
-- Recognized as a finalist for the CEATEC 2010 Innovation Awards in the
Components category for SHOWWX.
-- Raised $12.4 million in cash through its previously announced equity
financing facility, strengthening the company's balance sheet.
Financial Results
Revenue and inventory for the quarter were negatively impacted by changing customer requirements which postponed embedded and accessory product deliveries previously scheduled for the third quarter. During the quarter, the company's previously announced embedded engine OEM customer revised the expected launch date of its high-end media player to the first half of 2011 to accommodate a longer-than-expected product development cycle. Additionally, a second customer changed its device compatibility requirements for its private-label product, impacting order fulfillment during the third quarter.
The following financial results are for the three-month and nine-month periods ended September 30, 2010, respectively, compared to the same periods a year earlier.
-- Revenue was $1.3 million compared to $924,000 for the quarter, and $4.1
million compared to $2.9 million for the first nine months.
-- Backlog was $18.0 million at September 30, 2010, compared to $2.0
million at September 30, 2009. The backlog was composed almost
exclusively of orders for PicoP products.
-- Operating loss was $12.3 million compared to $9.3 million for the
quarter, and $32.9 million compared to $27.9 million for the first nine
months. The increase in the operating loss was due to a higher cost of
goods sold and higher operating expenses associated with the
commercialization of PicoP products. The higher cost of goods sold
included inventory reserves of $2.0 million for the quarter and $3.4
million for the first nine months.
-- Net loss was $11.9 million, or $0.13 per share, compared to $11.5
million, or $0.15 per share for the quarter, and $32.0 million, or $0.36
per share, compared to $30.8 million, or $0.43 per share for the first
nine months.
-- Net cash used in operating activities for the first nine months of 2010
was $35.0 million compared to $23.4 million in the year-ago period. The
increase was primarily attributable to the build-up in inventory of
PicoP products to support scheduled deliveries in the second half of
2010, which subsequently were extended into the first half of 2011.
-- The company ended the quarter with $21.3 million in cash, cash
equivalents and investment securities.
The company will discuss its operating and financial results and current business operations during its conference call at 4:30 p.m. ET / 1:30 p.m. PT today.
Conference Call
Microvision will host a conference call today at 4:30 p.m. ET / 1:30 p.m. PT. Participants may join the conference call by dialing 866-356-3093 (for U.S. participants) or 617-597-5381 (for international participants) ten minutes prior to the start of the call. The conference call pass code number is 60813937. Additionally, the call will be broadcast over the Internet and can be accessed from the company's web site www.microvision.com/investors. The webcast and information needed to access the telephone replay will be available through the same link approximately one hour after the conference call concludes.
About Microvision
Microvision provides the PicoP(R) display technology platform designed to enable next-generation display and imaging products for pico projectors, vehicle displays and wearable displays that interface with mobile devices. The company's projection display engine uses highly efficient laser light sources which can create vivid images with high contrast and brightness. For more information, visit the company's website (www.microvision.com) and corporate blog (www.microvision.com/displayground).
Forward-Looking Statements
Certain statements contained in this release, including those relating to future delivery, order fulfillment, business success, operating results, company and third party product development, and potential product benefits, in addition to statements containing "expect" and similar words, 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; our customers' failure to perform under open purchase orders; our financial and technical resources relative to those of our competitors; our ability to keep up with rapid technological change; 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 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.
Balance Sheet
(In thousands)
(Unaudited)
September 30, December 31,
2010 2009
Assets
Current Assets
Cash and cash equivalents $ 18,658 $ 43,025
Investment securities, 2,612 2,710
available-for-sale
Accounts receivable, net of 1,801 913
allowances
Costs and estimated earnings in excess of billings 7 70
on uncompleted contracts
Inventory 7,713 926
Current restricted investments 305 -
Other current assets 973 751
Total current assets 32,069 48,395
Property and equipment, net 4,624 3,904
Restricted investments 1,189 1,189
Other assets 47 48
Total assets $ 37,929 $ 53,536
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 7,693 $ 4,949
Accrued liabilities 3,823 4,190
Billings in excess of costs and estimated earnings 57 55
on uncompleted contracts
Liability associated with common 11 840
stock warrants
Current portion of capital lease 44 62
obligations
Current portion of long-term debt 83 78
Total current liabilities 11,711 10,174
Capital lease obligations, net of 124 157
current portion
Long-term debt, net of current 181 244
portion
Deferred rent, net of current 792 1,070
portion
Total liabilities 12,808 11,645
Commitments and contingencies - -
Shareholders' Equity
Common stock at par value 95 89
Additional paid-in capital 388,667 373,405
Accumulated other comprehensive loss (31 ) (33 )
Accumulated deficit (363,610 ) (331,570 )
Total shareholders' equity 25,121 41,891
Total liabilities and shareholders' $ 37,929 $ 53,536
equity
Microvision, Inc.
Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months ended September Nine months ended September 30,
30,
2010 2009 2010 2009
Contract revenue $ 221 $ 817 $ 592 $ 2,342
Product revenue 1,080 107 3,465 520
Total revenue 1,301 924 4,057 2,862
Cost of contract 53 379 202 1,289
revenue
Cost of product 4,059 720 8,555 1,504
revenue
Total cost of 4,112 1,099 8,757 2,793
revenue
Gross margin (2,811 ) (175 ) (4,700 ) 69
Research and
development 5,920 5,839 16,961 17,165
expense
Sales,
marketing,
general and 3,555 3,283 11,260 10,764
administrative
expense
Total operating 9,475 9,122 28,221 27,929
expenses
Loss from (12,286 ) (9,297 ) (32,921 ) (27,860 )
operations
Interest income 15 45 94 188
Interest expense (15 ) (19 ) (48 ) (50 )
Gain (loss) on
derivative 446 (2,246 ) 875 (3,048 )
instruments, net
Other expense (10 ) (8 ) (40 ) (14 )
Net loss $ (11,850 ) $ (11,525 ) $ (32,040 ) $ (30,784 )
Net loss per
share - basic $ (0.13 ) $ (0.15 ) $ (0.36 ) $ (0.43 )
and diluted
Weighted-average
shares
outstanding - 89,376 76,265 88,948 71,105
basic and
diluted
Source: Microvision, Inc.
Released November 1, 2010