Exhibit 99.1
Microvision Reports Record First Quarter Revenue of $4.0 Million
BOTHELL, Wash.--(BUSINESS WIRE)--May 5, 2005--
Q1 revenue up 20% over prior quarter and 50% (Microvision only)
over Q1 2004. Company targets sequential growth of 20 to 25% for Q2
driven by record product sales and strong contract revenue
Microvision, Inc. (Nasdaq:MVIS), a leader in light scanning
technologies, today reported financial results for the first quarter
2005. Revenue for the three months ended March 31, 2005 was $4.0
million compared to $2.7 million (Microvision only) for the same
period in 2004 (consolidated revenue for first quarter 2004 was $3.0
million, which included $316,000 of revenue attributable to Lumera).
The company had previously indicated that it expected first quarter
revenue of $4.2 million. First quarter revenue was impacted by
moderately lower than expected product sales and approximately
$100,000 related to a delay in a contract award.
The company indicated that it is targeting second quarter revenue
to be $4.8 million to $5.0 million, a 20 to 25% increase over the
first quarter and a record quarter for revenue. The company is
targeting record product revenue in the second quarter and continued
strong contract revenue.
Contract revenue was $3.4 million for first quarter 2005 compared
to $2.0 million (Microvision only) for the same period last year. In
the first quarter the company announced new contract bookings of more
than $7.6 million including it largest development contract ever, a
$6.6 million contract with Ethicon Endo Surgery, a subsidiary of
Johnson & Johnson. Product revenue for first quarter 2005 was $600,000
compared to $675,000 last year. Product revenue in the first quarter
2005 was comprised of $208,000 from sales of the Nomad system and
$392,000 from sales of the Flic bar code scanner.
As of March 31, 2005 backlog totaled $5.0 million of which $4.7
million was for development contracts and $302,000 was for the Nomad
System and Flic scanner. Earlier today the company announced that it
was awarded a $1.2 million contract by General Dynamics C4 Systems to
supply 165 ND2500 Nomad systems for the U.S. Army's Mounted Warrior
Soldier System.
The company reported a consolidated net loss available for common
shareholders of $7.2 million or $0.33 per share for first quarter 2005
compared to $6.7 million or $0.31 per share in the same period in
2004. First quarter 2005 net loss includes inventory writeoffs of
$443,000 or $.02 per share related to Nomad and the Flic scanner. The
inventory write-offs are associated with product design improvements
and cost reduction initiatives. The first quarter net loss also
includes $622,000 or $.03 per share in noncash expenses relating to
the company's $10 million preferred stock, $10 million convertible
exchangeable notes and embedded derivative features. The net loss
attributable to the Lumera investment was $944,000 or $.04 per share
and $299,000 or $.01 per share for the first quarter of 2005 and 2004,
respectively.
The company ended the quarter with $6.3 million in cash, cash
equivalents and investment securities. Microvision's cash used for
operations in first quarter 2005 was $5.0 million compared to $7.5
million for the same period last year. Cash used for operations in
first quarter 2005 included a change in accounts receivable of $3.2
million.
Gross Margin
Contract margins were 46% in first quarter 2005 compared to 48%
for the same period in 2004. Product margins were negative in first
quarter 2005 primarily due to inventory writeoffs and the move to full
absorption of manufacturing overhead for the Nomad system. As the
company reported in March, prior to October 2004, the company
classified production cost in excess of revenue on the Nomad system as
research and development expense. The company expects product margins
to improve from the combined effect of increased volume and cost
reductions.
Operating Expense
Operating expenses were $6.6 million in first quarter 2005
compared to $9.9 million for the same period last year. Last year's
operating expenses included $2.4 million related to Lumera. The change
to full absorption of manufacturing overhead resulted in approximately
an $800,000 reduction in operating expense in first quarter 2005.
"We had a record first quarter and are targeting a record second
quarter and first half," said Microvision CEO Rick Rutkowski. "Our
contract business is solidly on track. With the recent order for 165
Nomad ND2500 systems from General Dynamics, our existing product
backlog and the current sales pipeline for both the Nomad System and
Flic scanner, we expect to ramp product revenue to record levels in
the second quarter. We also expect to book significant additional
military and commercial development contracts during this quarter and
next.
"We recently teamed with General Dynamics C4 Systems to pursue the
Army's Mounted Warrior program, and have been awarded a $1.2 million
contract to supply 165 Nomad ND 2500 Systems for use in Stryker
vehicles. The Nomad systems are expected to be installed into an
in-theater Stryker Brigade for operational feedback. We are also
anticipating the award of an additional development contract to
further enhance and refine this product toward the goal of formal
qualification by the Army.
"We continue to develop great potential in the military market for
use of the Nomad 2500, as well as the Nomad 2100 and related products,
for both combat related applications and vehicle maintenance. We have
several significant opportunities in the pipeline.
"Channel development for commercial sales of the Nomad 2100 Expert
Technician system in automotive maintenance continues to be a primary
focus in support of ramping product revenue. We are working toward
finalizing a significant distribution agreement and one or more
co-marketing agreements in the automotive service segment for the
Nomad 2100 System.
"We are delighted to be among the 25 industry partners that
Microsoft has identified to work with in its recently announced Peak
Performance Initiative, an effort to encourage technological
innovation in the four core areas in the automotive industry. The
program will involve continued publication of case studies and other
marketing activities that should help promote Nomad success stories to
both automotive OEMs and major dealership groups.
"We are also making important inroads in factory automation and
plant maintenance applications. The Nomad is currently in trial and
evaluation phase with several of the world's leading manufacturing
companies as a maintenance solution and as a process control and
inventory management tool. Early feedback suggests that the Nomad
System is delivering compelling results against target metrics.
"We are pursuing a number of new OEM and reseller channel
opportunities for the Flic scanner. During the past quarter we
announced a solution that connects the Flic Cordless scanner to a
Blackberry device. Flic has established compatibility with a growing
range of mobile data devices for field force applications including
asset tracking and inventory management. We have made progress in
developing channels for mobile solutions providers, retail office
supplies, healthcare, and a variety of web-based ASP applications. We
believe that these represent large market opportunities and we
continue to believe that we will begin seeing accelerating growth in
Flic revenue in the second half of this year.
"Our development of the Virtual Cockpit display has recently
resulted in the delivery to the Army's Air Warrior program office, of
a very high performance full-color helmet mounted display with a
rack-mountable control unit.
"We continue to achieve milestones under development contracts
sponsored by world leading companies in the medical, automotive,
printing, and consumer electronics domain, and to make significant and
measurable progress towards commercialization of several compelling
OEM products to address large markets with exciting growth prospects.
"During the quarter we made highly successful deliveries of
Head-Up Display prototypes to VW Audi and to a major Tier 1 sponsor of
our development efforts, and we expect additional development
contracts in support of Automotive HUD development through the balance
of this year. We continue to make excellent progress on our
development program contracted by Johnson and Johnson's Ethicon Endo
Surgery division.
"Our ongoing work on display solutions for high-volume consumer
electronics applications including digital cameras, portable media
devices and electronic gaming systems, has led us to a new proprietary
systems design that we believe will uniquely enable a very high
quality cinema-like viewing experience in a compact, affordable
package. We believe that this is potentially a major breakthrough and
our announcement has already generated considerable interest from
consumer electronics companies.
"We are excited to be teamed with General Dynamics and Microsoft
to support new efforts, and are looking forward to reporting on new
channel partners for both the Nomad 2100 and the Flic Personal Barcode
scanner as well as ongoing developments in defense related activities.
Our work with Ethicon, VW / Audi and other global leaders in the areas
of automotive supply and manufacturing, consumer electronics, laser
printing and gaming devices is resulting in steady progress toward new
products that can result in exciting revenue opportunities to drive
future growth."
Conference Call
Microvision will host a conference call to discuss its first
quarter of 2005 financial results at 4:30 p.m. ET today. Participants
may join the conference call by dialing 800-901-5231 (for U.S.
participants) ten minutes prior to the start of the conference.
International participants can dial 617-786-2961. The conference
passcode number is 92093219. 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 6:30 p.m. ET May 12, 2005 and can be accessed by dialing
888-286-8010 (for U.S. participants) or 617-801-6888 (for
international participants). The passcode is 67203841. 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 and future
operations, 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; risks
related to Lumera's business and the market for its equity, 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 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 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)
March 31, December 31,
2005 2004
------------- ------------
Assets
Current Assets
Cash and cash equivalents $ 5,025 $ 1,268
Investment securities, available-for-
sale 1,241 -
Accounts receivable, net of
allowances 2,004 5,227
Costs and estimated earnings in
excess of billings on uncompleted
contracts 526 597
Inventory 3,643 3,167
Other current assets 1,302 1,293
------------- ------------
Total current assets 13,741 11,552
Investment in Lumera 9,257 10,201
Property and equipment, net 1,915 2,318
Restricted investments 1,101 1,238
Other assets 324 229
------------- ------------
Total assets $ 26,338 $ 25,538
============= ============
Liabilities, Mandatorily Redeemable
Convertible Preferred Stock and
Shareholders' Equity
Current Liabilities
Accounts payable $ 1,793 $ 2,624
Accrued liabilities 4,376 4,538
Allowance for estimated contract
losses 53 53
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,592 3,318
Liability associated with common
stock warrants 1,641 -
Current portion of notes payable 2,281 -
Current portion of capital lease
obligations 28 39
Current portion of long-term debt 79 77
------------- ------------
Total current liabilities 11,843 10,649
Notes payable, net of current portion 3,258 -
Liability associated with embedded
derivative feature 3,249 -
Capital lease obligations, net of
current portion 8 9
Long-term debt, net of current portion 1 22
Deferred rent, net of current portion - 21
------------- ------------
Total liabilities 18,359 10,701
------------- ------------
Commitments and contingencies - -
Mandatorily redeemable convertible
preferred stock 7,840 7,647
------------- ------------
Shareholders' Equity
Common stock at par value 21 22
Additional paid-in capital 196,482 196,929
Deferred compensation (174) (305)
Subscriptions receivable from
related parties - (166)
Receivables from related parties,
net (1,823) (1,823)
Accumulated deficit (194,367) (187,467)
------------- ------------
Total shareholders' equity 139 7,190
------------- ------------
Total liabilities, mandatorily
redeemable convertible preferred
stock and shareholders' equity $ 26,338 $ 25,538
============= ============
Microvision, Inc.
Consolidated Statement of Operations
(In thousands, except earnings per share data)
(Unaudited)
Three months ended
March 31,
------------------
2005 2004
------- -------
Contract revenue $ 3,382 $ 2,299
Product revenue 600 675
------- -------
Total revenue 3,982 2,974
------- -------
Cost of contract revenue 1,828 1,205
Cost of product revenue 1,150 665
------- -------
Total cost of revenue 2,978 1,870
------- -------
Gross margin 1,004 1,104
------- -------
Research and development expense 1,884 4,619
Sales, marketing, general and administrative
expense 4,535 4,573
Non-cash compensation expense 131 683
------- -------
Total operating expenses 6,550 9,875
------- -------
Loss from operations (5,546) (8,771)
Interest income 57 102
Interest expense (191) (8)
Loss on derivative features of notes payable (285) -
Other income/expense 9 -
------- -------
Loss before minority interests and equity in
losses of Lumera $(5,956) $(8,677)
Minority interests in loss of consolidated
subsidiary - 1,987
Equity in losses of Lumera (944) -
------- -------
Net loss $(6,900) $(6,690)
Less: Stated dividend on mandatorily redeemable 0
convertible preferred stock (86) -
Accretion to par value (193) -
------- -------
Net loss available for common shareholders $(7,179) $(6,690)
======= =======
Net loss per share before non-cash compensation
expense $ (0.32) $ (0.28)
Non-cash compensation expense (0.01) (0.03)
------- -------
Net loss per share - basic and diluted $ (0.33) $ (0.31)
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Weighted-average shares outstanding -
basic and diluted 21,495 21,459
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CONTACT: Microvision, Inc.
Brian Heagler, 425-415-6794 (Investors)
Matt Nichols, 425-415-6657 (Media)