Exhibit 99.1
eMagin Reports Results for the Third Quarter of 2008
Company Records Net Income of $361,000 or $0.02 per Diluted EPS Improved Production and Cost Reduction Drive Improved Performance
BELLEVUE, Wash.--(BUSINESS WIRE)--Nov. 13, 2008--eMagin Corporation (OTCBB: EMAN), the leader in OLED microdisplays, issued financial results for its third quarter ending September 30, 2008.
eMagin Corporation generated revenue of $5.2 million for the third quarter of 2008. Gross margin was 46% of revenue or $2.4 million for the quarter compared to 40% or $2.0 million for the same period in 2007. The Company has achieved significant improvement in gross margins over prior years due to higher production volumes with better yields.
Operating expenses in the period declined to $1.6 million, down 20% from the third quarter of 2007 and 31% sequentially from the second quarter of 2008. Lower operating expenses were due to cost reductions implemented by management and some R&D personnel being redeployed to contract services and their expenses charged to cost of goods sold rather than operating expenses. Operating income totaled $786,000 compared to $14,000 in the same quarter last year and up 170% from the previous quarter. Net income for the third quarter of 2008 was $0.3 million or $0.02 per diluted share versus a net loss of $12.6 million or $1.06 per diluted share in the same period last year.
"The growth in our customer base and steady stream of contracts to develop displays has enabled us to increase our production and improve our manufacturing processes. In addition, we have substantially reduced our costs and have now posted our second consecutive quarter of improved profitability and have generated $1.2 million in cash flow," noted Andrew G. Sculley, chief executive officer and president, eMagin Corporation. "While we recognize that there is still much to be done, this is an important milestone for eMagin and we believe that we have taken some significant steps forward on our path to profitable growth for the Company."
Nine Months Results
Revenues for the nine month period ending September 30, 2008 were $13.5 million, up 4.6% from the same period last year. Gross margin was 40% of revenue or $5.3 million for the period, compared to 29% or $3.8 million last year during the same period. Operating expenses for the first nine months of 2008 declined to $6.4 million, down 15.0% or $1.1 million from the comparable period a year ago. Operating losses declined to $1.1 million compared to $3.7 million during the same nine month period in 2007. The net loss for the first nine months of 2008 was $2.4 million or $0.18 per diluted share versus $17.3 million or a loss of $1.53 per diluted share for the 2007 period.
Outlook
Based on current market conditions, the Company expects revenue for the fourth quarter of 2008 to remain in the range of $4.5 to $5.5 million as previously announced. In addition, full year revenue for 2008 is anticipated to be greater than full year 2007, after the doubling of revenue from 2006 to 2007.
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Selected Business Highlights
-- At the Night Vision Conference, eMagin demonstrated its next generation SXGA and SVGA OLED microdisplays. Potential applications range from night vision, thermal imaging, tactical awareness, medical imaging and training and simulation to mobile video entertainment and electronic gaming. Highlighted products included:
- SXGA OLED-XL which is 4 times more power efficient than any competitive SXGA display,
- SVGA+ Rev3 display which offers the most power efficient OLED solution for near-eye personal viewer applications , and
- SVGA-3DShrink OLED-XL which has the world's smallest pixel pitch OLED, designed for increased functionality with no increase in power.
-- eMagin was awarded a purchase agreement for 20,000 displays to equip OASYS' Remote Eyepiece Display-Imager (RED-I) head mounted display system for the US Army's Thermal Weapon Sight (TWS)
Remote Viewer program
-- eMagin ranked 17th on Deloitte's Washington State Technology Fast 50 listing of the fastest growing technology, media, telecommunications, and life sciences companies, with 5 year revenue growth of over 500%.
Full results will be available in the company's 10Q report for the quarter ending September 30, 2008, to be filed with the SEC.
In conjunction with its third quarter 2008 financial results, eMagin will host a teleconference call for investors and analysts at 5:00 p.m. ET today. To access the call, investors should call 1-866-383-7989 and enter the passcode 56835413. A replay of the call will be available from one hour after the call ends until December 5, 2008. To access the replay, investors should dial 1-888-286-8010 and enter the passcode 56866521. The call will also be available as an archived audio webcast on the "Investors" section of eMagin's website, www.emagin.com for two weeks following the call.
About eMagin Corporation
A leader in OLED microdisplay technology and personal display systems, eMagin integrates high-resolution OLED microdisplays with magnifying optics to deliver virtual images comparable to large-screen computer and television displays in portable, low-power, lightweight personal displays. eMagin microdisplays provide near-eye imagery in a variety of products from military, industrial, medical and consumer OEMs. The company's own Z800 3DVisor provides 3D stereovision and headtracking for PC gaming, training and simulation, immersion therapy, and other applications. eMagin's microdisplay manufacturing and R&D operations are co-located with IBM on its campus in East Fishkill, New York. System design facilities and sales and marketing are located in Bellevue, Washington. More information about eMagin and its products is available at www.emagin.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including those regarding eMagin Corporation's expectations, intentions, strategies and beliefs pertaining to future events or future financial performance. Actual events or results may differ materially from those in the forward-looking statements as a result of various important factors, including those described in the Company's most recent filings with the SEC. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such statements should not be regarded as a representation by the Company, or any other person, that such forward-looking statements will be achieved. The business and operations of the Company are subject to substantial risks which increase the uncertainty inherent in forward-looking statements. We undertake no duty to update any of the forward-looking statements, whether as a result of new information, future events or otherwise. In light of the foregoing, readers are cautioned not to place undue reliance on such forward-looking statements.
Note: eMagin is a trademark of eMagin Corporation.
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eMAGIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, | ||||||||
2008 (unaudited) | December 31, 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,272 | $ | 713 | ||||
Investments – held to maturity | 94 | 94 | ||||||
Accounts receivable, net | 4,002 | 2,383 | ||||||
Inventory | 1,978 | 1,815 | ||||||
Prepaid expenses and other current assets | 711 | 850 | ||||||
Total current assets | 8,057 | 5,855 | ||||||
Equipment, furniture and leasehold improvements, net | 348 | 292 | ||||||
Intangible assets, net | 48 | 51 | ||||||
Other assets | 231 | 232 | ||||||
Deferred financing costs, net | 507 | 218 | ||||||
Total assets | $ | 9,191 | $ | 6,648 | ||||
LIABILITIES AND CAPITAL DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 746 | $ | 620 | ||||
Accrued compensation | 886 | 891 | ||||||
Other accrued expenses | 737 | 729 | ||||||
Advance payments | — | 35 | ||||||
Deferred revenue | 125 | 179 | ||||||
Current portion of debt | 8,375 | 7,089 | ||||||
Other current liabilities | 743 | 1,020 | ||||||
Total current liabilities | 11,612 | 10,563 | ||||||
Long-term debt | 38 | 60 | ||||||
Total liabilities | 11,650 | 10,623 | ||||||
Commitments and contingencies | ||||||||
Redeemable common stock,: 525,500 shares redeemable for $429 | 429 | 195 | ||||||
Capital deficit: | ||||||||
Preferred stock, $.001 par value: authorized 10,000,000 shares; no shares issued and outstanding | — | — | ||||||
Series A Senior Secured Convertible Preferred stock, stated value $1,000 per share, $.001 par value: 3,198 shares designated and none issued | — | — | ||||||
Common stock, $.001 par value: authorized 200,000,000 shares, issued and outstanding, 14,496,339 shares as of September 30, 2008 and 12,458,400 shares as of December 31, 2007 | 14 | 12 | ||||||
Additional paid-in capital | 198,846 | 195,131 | ||||||
Accumulated deficit | (201,748 | ) | (199,313 | ) | ||||
Total capital deficit | ( 2,459 | ) | ( 3,975 | ) | ||||
Total liabilities and capital deficit | $ | 9,191 | $ | 6,648 | ||||
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eMAGIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenue: | ||||||||||||||||
Product revenue | $ | 4,181 | $ | 4,318 | $ | 11,139 | $ | 11,985 | ||||||||
Contract revenue | 1,004 | 753 | 2,330 | 927 | ||||||||||||
Total revenue, net | 5,185 | 5,071 | 13,469 | 12,912 | ||||||||||||
Cost of goods sold | 2,801 | 3,059 | 8,110 | 9,120 | ||||||||||||
Gross profit | 2,384 | 2,012 | 5,359 | 3,792 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 306 | 564 | 1,614 | 2,304 | ||||||||||||
Selling, general and administrative | 1,293 | 1,434 | 4,797 | 5,198 | ||||||||||||
Total operating expenses | 1,599 | 1,998 | 6,411 | 7,502 | ||||||||||||
Income (loss) from operations | 785 | 14 | (1,052 | ) | (3,710 | ) | ||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (508 | ) | (592 | ) | (1,677 | ) | (2,766 | ) | ||||||||
Loss on extinguishment of debt | — | (10,749 | ) | — | (10,749 | ) | ||||||||||
Loss on warrant derivative liability | — | (1,496 | ) | — | (853 | ) | ||||||||||
Other income, net | 84 | 172 | 294 | 762 | ||||||||||||
Total other expense | (424 | ) | (12,665 | ) | (1,383 | ) | (13,606 | ) | ||||||||
Net income (loss) | $ | 361 | $ | (12,651 | ) | $ | (2,435 | ) | $ | (17,316 | ) | |||||
Income (loss) per share, basic | $ | 0.02 | $ | (1.06 | ) | $ | (0.18 | ) | $ | (1.53 | ) | |||||
Income (loss) per share, diluted | $ | 0.02 | $ | (1.06 | ) | $ | (0.18 | ) | $ | (1.53 | ) | |||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 14,617,235 | 11,934,705 | 13,854,860 | 11,300,757 | ||||||||||||
Diluted | 23,430,416 | 11,934,705 | 13,854,860 | 11,300,757 | ||||||||||||
CONTACT: eMagin Corporation
Paul Campbell, 425-749-3622
pcampbell@emagin.com
SOURCE: eMagin Corporation
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