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Microvision Reports Results for Fourth Quarter and Full Year of 2005

Microvision Reports Results for Fourth Quarter and Full Year of 2005

Company Reiterates Its 2006 Turnaround Strategy

REDMOND, Wash.--(BUSINESS WIRE)--March 16, 2006--Microvision, Inc. (Nasdaq:MVIS - News), a leader in light scanning technologies, today reported financial results for the fourth quarter and full year of 2005. Revenues for the full-year 2005 were $14.7 million, an increase of 29% over the $11.7 million reported for 2004. Operating loss for the year was reduced by 20% to $27.3 million from $34 million in 2004 (excluding the $1.7 million effect of consolidating its share of Lumera's losses in 2004, the operating loss improvement was 18%) and the net loss to common shareholders was reduced by 9.6% to $30.3 million or $1.35 per share versus the 2004 equivalents of $33.5 million or $1.56 per share. The company ended the year with a revenue backlog of $3.4 million
Revenues for the fourth quarter were $2.7 million, a decrease of 18% from the prior revenue reported for the fourth quarter of 2004. Operating loss increased by 29% to $9.0 million from $7.0 million in 2004; net loss for the fourth quarter available to common shareholders was reduced by 32% to $5.6 million or $.23 per share from $8.2 million or $.38 per share reported for the fourth quarter of last year.

2005 Highlights

Ended a two year annual revenue slide and delivered $14.7 million in revenue for 2005 up 29% over 2004;
Developed new sales channels and solid pipeline for Flic product in the second half of the year which resulted in record sales numbers in the fourth quarter;
Strong commercial contract revenue performance fueled by Ethicon Endo Surgery contract;
Sold 165 Nomad systems to the military in a large volume sale;
Delivered on key government programs;
Made demonstrable progress toward accelerating the development of the automotive head-up display;
Developed and successfully demonstrated the first working demonstration prototype of the personal projection display (PicoP(TM)) in the fourth quarter of last year; and
Defined new business roadmap, technology productization strategy and organizational blueprint to commence Company turnaround in 2006.

Alexander Tokman, Microvision's President and CEO, commented: "We are pleased with the Company's overall top line performance for the full year as we reversed a two-year trend of declining annual revenues. However, the types of contract and sales activities pursued in 2005 did not fully establish a revenue ramp consistent with sustained long term growth. Consequently, after we defined the new business and organizational strategy late last year, we have put in place, over the last few months, initiatives and measures to build a foundation for longer term sustained growth. These initiatives support key elements of our turnaround strategy and 2006 operating plan announced last month. We are in a rebuilding mode, and we're enthusiastic about the future and confident in our ability to deliver value to our customers and shareholders."

2006 Operating Plan Implementation

We are executing on our 2006 Plan, the highlights of which are as follows:

Flic Bar Code Scanner. Building a solid sales pipeline for the year. Completing phase 1 product quality improvements targeted on improving reliability and reducing the cost of quality on Flic scanner.

Nomad. Conducting an in depth evaluation of the potential for Nomad in its current configuration in four major application areas: inspection, situational awareness, troubleshooting and diagnostics for primary markets that include transportation, industrial and healthcare.

Funded product quality improvement programs to reduce cost of quality and implemented pricing and discounting rigor.

Integrated Photonics Module (IPM). Defining our modular embedded light scanning engine architecture to enable high resolution, high-volume display products for a variety of consumer, industrial, automotive and military applications.

PicoP and Automotive Head-Up Display (HUD). Advancing discussions with potential development and distribution partners for HUD and personal projection display products, collecting requirements and defining product specifications.

Completed the realignment and restructuring of the Company. Reduced the overall workforce by approximately 10%; expected reduction in overall SG&A costs by approximately 25% in 2006 versus 2005. Reduced the number of executive positions by 30% through reduction and consolidation.

New organizational leadership. Hired Ian Brown who will be driving synergies across our new sales and marketing organization, strengthening our customer focus and positioning us for future growth into new market segments.

Board changes. Together with the Board, initiated a process of better aligning the skills and experience of the directors to the business and operating objectives of the company. The first step was the addition of Marc Onetto. Onetto brings extensive experience, knowledge and leadership in establishing and managing global supply chain operations directly supports our business objectives for 2006 and beyond in proliferating high volume consumer and automotive products.

Liquidity and Financing

The company had $6.9 million in cash and cash equivalents on December 31, 2005. On February 2, 2006, the company announced that it had raised an additional $10.3 million from the sale of a portion of its Lumera stock. The company disclosed that its independent registered public accounting firm has included a going concern qualification to their opinion on the December 31, 2005, consolidated financial statements because the company requires additional cash to fund its operations through December 31, 2006.

"Obviously, we would have preferred to not have a qualified audit opinion on our 2005 financial results," said Tokman. "However, it does not represent any change in the viability of our business. We expect to raise additional funds over the coming months. We have made the choice not to pursue a complicated short-term financing at this point simply for purposes of avoiding a qualified opinion; we have chosen instead to pursue a financing strategy that we believe better aligns our capital structure to our new business fundamentals and outlook. We have recently engaged an investment banker to assist us with this strategy.

"We are rebuilding the company with a new identity and new strategy. I am very excited about the pace of change and the path that we are on to grow the company."

Comments

  1. I think the company ought to release some photos of the Pico Projector. I was hoping it might have been discussed in more detail in the CC. I'm still trying to figure out exactly how it's to be used.

    The new full color Nomad with improved everything sounds very promising, especially for other product lines, (consumer).

    A bit dissappointing that Ethicon would be the last to come to market, after HUD and Pico Projector. I thought it was nearly ready to go.

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  2. Ethicon probably takes time to get approval since it's a medical device.

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