EXHIBIT 99.1
| THE WORLD WIDE LEADER IN DIGITAL PROJECTION |
corporate headquarters
27700B sw parkway avenue
wilsonville
oregon
97070
503.685.8888
800.294.6400
www.infocus.com
Investor Relations Contacts: | Public Relations Contact: | |
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John V. Harker |
| John Fread |
Chief Executive Officer |
| Global Public Relations |
InFocus Corporation |
| InFocus Corporation |
(503) 685-8602 |
| (503) 685-8170 |
Michael Yonker
Chief Financial Officer
InFocus Corporation
(503) 685-8603
InFocus® Announces Second Quarter 2004 Financial Results
Company returns to profitability in second quarter
WILSONVILLE, Ore., July 27, 2004 – InFocus® Corporation (Nasdaq: INFS) today announced its second quarter 2004 financial results and a return to profitability for the quarter. On revenues of $162.2 million and improved gross margins of 18.1 percent, the company posted net income of $0.4 million in the second quarter, or $0.01 per share compared to a net loss of $4.4 million, or ($0.11) per share for the first quarter.
Quarterly Revenue, Unit, ASP and Gross Margin Comparisons
Second quarter revenues of $162.2 million were up 12 percent from revenues of $145.4 million in the first quarter and up 21 percent from $134.3 million in the second quarter of 2003. Unit shipments were up 20 percent compared to the first quarter and 33 percent compared to the second quarter of 2003. Average Sales Prices (ASP) for the second quarter declined 13 percent as overall industry availability of product improved relative to the first quarter combined with a mix shift to value priced products during the quarter. Gross margins for the second quarter increased sequentially for the fourth consecutive quarter to 18.1 percent from 17.2 percent in the first quarter.
Operating Expenses and Earnings Comparison Excluding Non-Recurring Items
Operating expenses were $29.8 million for the second quarter of 2004, a reduction of $0.7 million from the first quarter and a reduction of $4.8 million from the second quarter of 2003, exclusive of restructuring charges in each of these prior periods. The decline in operating expenses is a result of our ongoing efforts to reduce the company’s cost structure.
Net income for the second quarter is $0.4 million or $0.01 per share, which compares to a pro forma net loss of $4.0 million for the first quarter or ($0.10) per share and a pro forma net loss of $36.5 million for the second quarter of 2003 or ($0.93) per share.
Balance Sheet
Cash and marketable securities were $138.9 million with no debt at the end of the second quarter. The company invested cash during the second quarter into working capital, primarily for use in growing inventory supply to support growth in anticipated seasonal demand in the second half of
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the year. The use of cash for working capital was partially offset by an increase in value of the company’s strategic joint development investments in emerging technology companies. As of June 30, 2004, the total unrealized appreciation in these investments is approximately $39 million. Days sales outstanding on accounts receivable were 60 at the end of the second quarter, down 2 days from the end of the first quarter.
Outlook for Q3 and 2004
Historically, the third quarter slows due to the European holiday season offset somewhat by seasonally high U.S. education and government spending. In the third quarter, the company should also see the benefit of the front end of its first full holiday buying season in retail. Based on improved product availability, an improving global economy, a completely refreshed product lineup, and positive industry dynamics, revenues are expected to grow during the third quarter and remainder of 2004. Revenues are expected to increase in the third quarter to between $170 million and $180 million. Revenues for the full year are expected to grow between 10 percent and 15 percent above 2003 levels.
The company achieved its targeted gross margins of between 16 percent and 18 percent during the first half of the year and expects gross margins to remain in this range for the remainder of 2004. Where the company ends up within that range in any specific quarter will depend primarily on product mix, availability of key components and the competitive pricing environment during that particular quarter.
Operating expenses for the third and fourth quarter are expected to increase modestly from the second quarter with increased focus on sales and marketing activities to drive revenue growth and increased expenses incurred as the company completes its efforts to comply with the internal control certification requirements of the Sarbanes-Oxley Act.
The company expects profits to grow sequentially in each of the next two quarters from the second quarter level.
“Overall, we are pleased, but not yet satisfied, with the progress we have made achieving sequential quarterly financial improvement for the last four quarters,” said John V. Harker, Chairman and CEO. “We continued to make strategic investments in emerging technologies, product development, channel expansion, and infrastructure efficiency laying the foundation for transforming the company for expansion beyond front projection and into large area displays and rear projection. We believe we have positioned the company to take advantage of the market growth opportunities in our traditional front projection markets and in the fast growing RPTV and ultra-thin display markets to drive profitable growth as we go forward,” concluded Harker.
Reconciliation of GAAP and Pro Forma Information
In prior periods, the company has recorded non-recurring charges that are excluded from operating expenses and earnings for comparative purposes. In accordance with SEC FR-59, we have attached a Statement of Reconciliation of GAAP Earnings.
Conference Call Information
The company will hold a conference call today at 11:00 a.m. eastern time. The session will include brief remarks and a question and answer period. The conference can be accessed by calling (866) 904-2211 (U.S. participants) or (416) 641-2145 (outside U.S. participants), or via live audio Web cast at www.infocus.com. Upon completion of the call, the Web cast will be archived and accessible on our website for individuals unable to listen to the live telecast. The conference call replay will also be available through August 2, 2004 by calling (888) 509-0081 (U.S.) or (416) 695-9728 (outside U.S.). A Pin # is not required.
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This press release includes forward-looking statements, including statements related to anticipated revenues, gross margins, expenses, earnings, availability of components and subassemblies manufactured for the company, inventory, backlog and new product introductions. Investors are cautioned that all forward-looking statements involve risks and uncertainties and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: 1) in regard to revenues, gross margins, inventory and earnings uncertainties associated with market acceptance of and demand for the company’s products, the impact competitive and economic factors have on business buying decisions, dependence on third party suppliers and the impact of regulatory actions by authorities in the markets we serve; 2) in regard to product availability and backlog, uncertainties associated with manufacturing capabilities, availability of critical components and dependence on third party suppliers; and 3) in regard to new product introductions, ability of the company to make timely delivery of new platforms, uncertainties associated with the development of technology, uncertainties with product quality and availability with the transition to offshore contract manufacturing and the establishment of full manufacturing capabilities, dependence on third party suppliers and intellectual property rights. Investors are directed to the company’s filings with the Securities and Exchange Commission, including the company’s 2003 Form 10-K, which are available from the company without charge, for a more complete description of the risks and uncertainties relating to forward looking statements made by the company as well as to other aspects of the company’s business.
About InFocus Corporation
InFocus® Corporation (Nasdaq: INFS) has been innovating and developing new ways for people to share big pictures and ideas in business, education and home entertainment for almost twenty years. Beginning with our worldwide leadership in digital projectors, today our expertise extends beyond projection into large format displays, rear projection televisions, wireless connectivity, networking software and engine technology all designed to make the presentation of ideas, information, and entertainment an exhilarating experience.
InFocus Corporation’s global headquarters are located in Wilsonville, Oregon, USA, with regional offices in Europe and Asia. For more information, visit the InFocus Corporation web site at www.infocus.com or contact the company toll-free at 800.294.6400 (U.S. and Canada) or 503.685.8888 worldwide.
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InFocus, Proxima, LiteShow and LP are registered trademarks and ASK and ScreenPlay are trademarks of InFocus Corporation,” and Digital Light Processing” and “DLP” are trademarks of Texas Instruments.
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InFocus Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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| Three months ended June 30, |
| Six months ended June 30, |
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| 2004 |
| 2003 |
| 2004 |
| 2003 |
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Revenues |
| $ | 162,229 |
| $ | 134,333 |
| $ | 307,678 |
| $ | 279,448 |
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Cost of revenues |
| 132,820 |
| 134,226 |
| 253,277 |
| 255,282 |
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Gross margin |
| $ | 29,409 |
| $ | 107 |
| $ | 54,401 |
| $ | 24,166 |
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Operating expenses: |
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Marketing and sales |
| 17,077 |
| 19,194 |
| 34,878 |
| 37,829 |
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Research and development |
| 7,320 |
| 8,392 |
| 14,521 |
| 17,462 |
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General and administrative |
| 5,383 |
| 6,947 |
| 10,874 |
| 15,419 |
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Restructuring costs |
| — |
| 3,700 |
| 450 |
| 3,700 |
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| $ | 29,780 |
| $ | 38,233 |
| $ | 60,723 |
| $ | 74,410 |
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Loss from operations |
| $ | (371 | ) | $ | (38,126 | ) | $ | (6,322 | ) | $ | (50,244 | ) |
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Other income, net |
| 397 |
| 128 |
| 2,149 |
| 827 |
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Income (loss) before income taxes |
| 26 |
| (37,998 | ) | (4,173 | ) | (49,417 | ) | ||||
Provision (benefit) for income taxes |
| (400 | ) | 2,153 |
| (150 | ) | 3,198 |
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Net income (loss) |
| $ | 426 |
| $ | (40,151 | ) | $ | (4,023 | ) | $ | (52,615 | ) |
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Basic earnings (loss) per share |
| $ | 0.01 |
| $ | (1.02 | ) | $ | (0.10 | ) | $ | (1.34 | ) |
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Diluted earnings (loss) per share |
| $ | 0.01 |
| $ | (1.02 | ) | $ | (0.10 | ) | $ | (1.34 | ) |
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Basis shares outstanding |
| 39,591 |
| 39,396 |
| 39,570 |
| 39,364 |
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Fully diluted shares outstanding |
| 40,365 |
| 39,396 |
| 39,570 |
| 39,364 |
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InFocus Corporation
Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
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| June 30, |
| December 31, |
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Assets |
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Current Assets: |
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Cash, cash equivalents and restricted cash |
| $ | 75,707 |
| $ | 94,627 |
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Marketable securities |
| 58,938 |
| 44,786 |
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Accounts receivable, net of allowances |
| 108,746 |
| 116,138 |
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Inventories |
| 107,975 |
| 62,255 |
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Outsourced manufacturer receivables |
| 478 |
| 3,947 |
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Other current assets |
| 13,949 |
| 17,642 |
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Total Current Assets |
| 365,793 |
| 339,395 |
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Marketable securities |
| 4,259 |
| 4,822 |
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Property and equipment, net |
| 17,972 |
| 15,890 |
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Other assets, net |
| 8,600 |
| 5,991 |
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Total Assets |
| $ | 396,624 |
| $ | 366,098 |
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Liabilities and Shareholders’ Equity |
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Current Liabilities: |
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Accounts payable |
| $ | 99,087 |
| $ | 85,869 |
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Other current liabilities |
| 33,681 |
| 38,673 |
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Total Current Liabilities |
| 132,768 |
| 124,542 |
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Other Long-Term Liabilities |
| 3,430 |
| 3,677 |
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Shareholders’ Equity: |
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Common stock and additional paid-in capital |
| 165,242 |
| 164,622 |
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Other comprehensive income: |
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Foreign currency translation |
| 24,301 |
| 28,608 |
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Unrealized gain on equity securities |
| 38,609 |
| 8,352 |
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Retained earnings |
| 32,274 |
| 36,297 |
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Total Shareholders’ Equity |
| 260,426 |
| 237,879 |
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Total Liabilities and Shareholders’ Equity |
| $ | 396,624 |
| $ | 366,098 |
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InFocus Corporation
Reconciliation of GAAP Earnings
(In millions, except per share amounts)
(Unaudited)
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| Second Quarter 2004 |
| First Quarter 2004 |
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| Net Loss |
| Net Income |
| Operating |
| Net Loss |
| Net Income |
| Operating |
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GAAP |
| $ | 0.4 |
| $ | 0.01 |
| $ | 29.8 |
| $ | (4.4 | ) | $ | (0.11 | ) | $ | 30.9 |
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Adjustments: |
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Restructuring charges, net of income taxes |
| $ | — |
| $ | — |
| $ | — |
| $ | 0.5 |
| $ | 0.01 |
| $ | (0.5 | ) |
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Proforma excluding non-recurring adjustments |
| $ | 0.4 |
| $ | 0.01 |
| $ | 29.8 |
| $ | (4.0 | ) | $ | (0.10 | ) | $ | 30.5 |
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| Second Quarter 2004 |
| Second Quarter 2003 |
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| Net Loss |
| Net Income |
| Operating |
| Net Loss |
| Net Income |
| Operating |
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GAAP |
| $ | 0.4 |
| $ | 0.01 |
| $ | 29.8 |
| $ | (40.2 | ) | $ | (1.02 | ) | $ | 38.2 |
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Adjustments: |
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Restructuring charges, net of income taxes |
| $ | — |
| $ | — |
| $ | — |
| $ | 3.7 |
| $ | 0.09 |
| $ | (3.7 | ) |
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Proforma excluding non-recurring adjustments |
| $ | 0.4 |
| $ | 0.01 |
| $ | 29.8 |
| $ | (36.5 | ) | $ | (0.93 | ) | $ | 34.5 |
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| Year-to-Date 2004 |
| Year-to-Date 2003 |
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| Net Loss |
| Net Income |
| Operating |
| Net Loss |
| Net Income |
| Operating |
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GAAP |
| $ | (4.0 | ) | $ | (0.10 | ) | $ | 60.7 |
| $ | (52.6 | ) | $ | (1.34 | ) | $ | 74.4 |
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Adjustments: |
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Restructuring charges, net of income taxes |
| $ | 0.5 |
| $ | 0.01 |
| $ | (0.5 | ) | $ | 3.7 |
| $ | 0.09 |
| $ | (3.7 | ) |
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Proforma excluding non-recurring adjustments |
| $ | (3.6 | ) | $ | (0.09 | ) | $ | 60.3 |
| $ | (48.9 | ) | $ | (1.24 | ) | $ | 70.7 |
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