CAMBRIDGE, United Kingdom, Nov. 10, 2006 (PRIMEZONE) -- Cambridge Display Technology, Inc. (Nasdaq:OLED), a pioneer in the development of polymer light emitting diode (P-OLED) technology, today reported its financial results for the third quarter ended September 30, 2006.
Total Revenues for the third quarter of 2006 were $0.9 million, compared with $6.6 million for the same period in 2005 when the Company recorded Revenues from the sale of three inkjet printers and from two large technology services and development contracts.
Gross Profit for the three-month period ended September 30, 2006 was $0.4 million, compared with $2.9 million for the corresponding period last year.
Research and Development expenses for the third quarter of 2006 were $3.4 million, down $0.7 million from the $4.1 million reported in the third quarter of 2005. R&D expenses were impacted primarily by the $1.9 million reimbursement of R&D expenses in the current quarter by Sumation, the Company's 50%-owned joint venture (which was formed in November 2005), and were partially offset by an increase of $0.2 million in stock compensation expenses and $1.0 million in increased expenses related to research project costs and non-billable research costs.
Selling, General and Administrative expenses for the third quarter of 2006 decreased to $4.9 million, from $5.8 million during the same period of 2005, primarily due to changes in impairment charges. The Company recorded $2.0 million in impairment cost related to Company-held promissory notes in the third quarter of 2005 and $1.0 million in impairment cost related to Company-held marketable securities in the third quarter of 2006.
Net Loss was $9.6 million for the third quarter of 2006, compared with $8.6 million for the same period in 2005.
Cash used in operations was $6.8 million during the third quarter 2006, compared with cash used of $7.6 million in the third quarter 2005.
The Company's cash, cash equivalents and current marketable securities totaled $15.6 million at September 30, 2006, compared with $31.3 million at December 31, 2005.
The Company signed a major license in September 2006, for which the Revenues are being recognized between the fourth quarter and the first quarter of 2009. The first 50% cash payment for the license fee was received in October 2006, after the third quarter had closed. The Company has previously disclosed that the second installment of 40% will be received in the second quarter of 2007 and the final installment of 10% in the fourth quarter of 2008.
Chairman and CEO Dr. David Fyfe commented: "Although our financial results for the quarter continue to be impacted by the slow-down in discretionary R&D spending in the display industry, we completed a major license deal in September for which we expect to recognize significant revenues in future periods and we have continued to achieve significant improvements in P-OLED material lifetimes. During the third quarter, we were delighted to see one of our long-term licensees, MicroEmissive Displays, announce that it had raised funding for the construction of a volume manufacturing facility for its P-OLED microdisplay products. This facility will be located in Germany and is due to commence production in mid-2007."
"We are also pleased to announce that CDT will be appointed by a consortium of Brazilian state agencies and a private developer to carry out a feasibility study for a P-OLED manufacturing facility in Sao Paulo State. The funding for this study was agreed at a signing this week, witnessed by the Brazilian Minister of Science and Technology, Sr. Sergio Rezende."
"Finally, we have appointed a highly qualified new independent Director and Audit Committee Chair, Tom Rosencrants, CFA. We have also substantially strengthened our executive team with the appointment of Jim Veninger as Vice-President of Technology Development. Jim is a seasoned business leader who has gained extensive P-OLED expertise with the Philips Advanced Display Business."
The financial results included in this press release are unaudited. The interim financial statements of the Company for the quarter ended September 30, 2006 are included in the Company's Quarterly Report on Form 10-Q, which has been accepted for filing by the SEC, but is not yet available on the SEC's website. The Company has posted this Quarterly Report on Form 10-Q on its website, which can be accessed through the Internet at www.cdtltd.co.uk.
The Company will be holding a conference call to discuss the financial results included in this news release. Interested investors may listen to a live web cast on Friday, November 10, 2006 at Noon ET, (5:00 pm GMT). This call, as well as a copy of the Company's Quarterly Report on Form 10-Q, can be accessed through the Internet at www.cdtltd.co.uk.
About CDT
Cambridge Display Technology is a pioneer in the research, development and commercialization of polymer organic light emitting diodes (P-OLEDs), which are targeted for use in a wide range of electronic display products used for information management, communications and entertainment. Features include reduced power consumption, size, thickness and weight, wide viewing angle, superior video imaging performance and the potential for use on flexible display substrates. Current CDT licensees are actively developing their manufacturing strategies. Founded in 1992, the Company is headquartered in Cambridge, U.K. and listed on the NASDAQ Global Market under the ticker symbol "OLED".
The Company's website is www.cdtltd.co.uk
Statements contained in this press release that are not historical facts are "forward-looking statements" and their presence may be indicated by words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "seek," "will" and "may," as well as the negative thereof and similar expressions. There can be no assurance that future developments affecting Cambridge Display Technology, Inc. and its subsidiaries will be those anticipated by management. Among the factors, risks and uncertainties that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements are the following: the outcomes of the Company's ongoing and future research and development activities, as well as those of its licensees; the Company's ability to form and continue strategic relationships with manufacturers of P-OLED materials and displays; the successful commercialization of products that include the Company's P-OLED technology by its licensees; the willingness of the Company's manufacturers and licensees to continue to develop, manufacture and sell commercial products integrating the Company's technology; the future demand for products using the Company's P-OLED technology; the comparative advantages and disadvantages of any competing technologies; the Company's ability to maintain and improve its competitive position following the expiration of its fundamental patents; the adequacy of protections afforded to the Company by the patents that it owns or licenses and the cost to the Company of enforcing these patents; the Company's ability to obtain, expand and maintain patent protection in the future and to protect its unpatentable intellectual property; developments in and expenses associated with resolving matters currently in litigation; and the Company's future capital requirements and its ability to obtain additional financing when needed. Readers should also consider the additional factors described under the captions "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in the Company's 10-K and 10-Q reports filed with the SEC. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
CAMBRIDGE DISPLAY TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands, except share information)
September 30, December 31,
2006 2005
(unaudited)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $13,668 $31,263
Marketable securities 1,915 -
Inventory 253 32
Accounts receivable, net 4,656 2,266
Taxes receivable 3,229 2,045
Prepaid expenses and other
current assets 2,713 2,473
------------- -------------
Total current assets 26,434 38,079
Property, equipment and leasehold
improvements, net 10,771 13,593
Investments in affiliates 1,929 1,899
Marketable securities 195 633
Goodwill 65,612 65,612
Other intangible assets, net 1,712 2,897
Other non-current assets 117 -
------------- -------------
Total assets $ 106,770 $122,713
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $5,858 $7,910
Deferred revenue 5,450 1,290
Due to affiliate 4 52
Taxes payable - 6
Other current liabilities - -
------------- -------------
Total current liabilities 11,312 9,258
Other liabilities 579 567
Deferred revenue, non-current 994 -
Commitments and contingencies - -
Common shareholders' equity:
Preferred stock, voting $0.01
par value, 46,667 authorized,
none issued or outstanding - -
Common stock, $0.01 par value,
100,000,000 shares authorized
21,674,703 issued and
21,483,205 outstanding 215 215
Additional paid-in capital 283,986 287,514
Deferred compensation - (6,082)
Accumulated other comprehensive
loss (367) (1,052)
Accumulated deficit (189,949) (167,707)
------------- -------------
Total common shareholders' equity 93,885 112,888
------------- -------------
Total liabilities and shareholders'
equity $106,770 $122,713
============= =============
CAMBRIDGE DISPLAY TECHNOLOGY, INC.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
------ ------ ------ ------
Operating revenues:
License fees and royalties $ 167 $ 110 $ 2,248 $ 1,233
Technology services and
development 613 2,785 1,994 5,895
Equipment and supplies 145 3,670 415 3,670
------- ------- -------- -------
Total operating revenues 925 6,565 4,657 10,798
Cost of sales:
License fees and royalties 1 2 13 15
Technology services and
development 439 916 925 2,040
Equipment and supplies 78 2,756 247 2,756
------- -------- -------- -------
Total cost of sales 518 3,674 1,185 4,811
------- -------- -------- -------
Gross profit 407 2,891 3,472 5,987
------- -------- -------- -------
Operating expenses:
Research and development
expenses 3,397 4,116 9,702 12,280
Selling, general and
administrative expenses 4,941 5,813 12,515 14,196
Amortization of intangibles
acquired 395 395 1,185 1,185
------- -------- -------- -------
Total operating expenses 8,733 10,324 23,402 27,661
------- -------- -------- -------
Loss from operations (8,326) (7,433) (19,930) (21,674)
Other income/(expense):
Equity in loss of affiliates (1,854) (1,264) (4,868) (2,674)
Foreign currency transaction
(loss) / gain 203 (276) 479 (370)
Other income/(expense) (96) 91 514 (698)
Interest income 238 3 799 364
------- -------- -------- -------
Total other expense (1,509) (1,446) (3,076) (3,378)
------- -------- -------- -------
Loss before benefit for
income taxes (9,835) (8,879) (23,006) (25,052)
Benefit for income taxes (198) (288) (764) (1,083)
------- -------- -------- -------
Net loss $ (9,637) $ (8,591) $ (22,242) $(23,969)
========= ========= ========= ========
Net loss per common share
attributable to common
shareholders, basic and
diluted $ (0.45) $ (0.44) $ (1.04) $ (1.23)
========= ======== ========= ========
Weighted average number of
common shares outstanding,
basic and diluted 21,483 19,485 21,483 19,485
========= ======= ========== =======
CAMBRIDGE DISPLAY TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine months ended
September 30,
------------------------------
2006 2005
------------- -------------
Operating activities
Net loss $(22,242) $(23,969)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization of
property, equipment and leasehold
improvements 4,037 4,221
Loss on sale of property, equipment
and leasehold improvements (3) (14)
Impairment of marketable securities 1,009 -
Amortization of other intangible assets 1,185 1,185
Impairment of promissory notes - 1,996
Stock compensation expense 2,554 2,301
Equity in loss of affiliates 4,868 2,674
Changes in operating assets and
liabilities:
Accounts and tax receivable (3,574) 315
Due from affiliates - (13)
Inventories and demo machines (221) -
Prepaid expenses and other assets (357) 590
Accounts and tax payable and
accrued expenses (2,058) (2,464)
Due to affiliates (48) -
Deferred revenue 5,154 (2,345)
Other current and non-current
liabilities 12 27
------------- -------------
Net cash used in operating activities (9,684) (15,496)
Investing activities
Acquisition of property, equipment and
leasehold improvements (1,215) (2,905)
Disposal of property, equipment and
leasehold improvements 3 21
Loans advanced to affiliate (Litrex) - (1,715)
Investment in affiliates (4,784) (1,097)
Investment in marketable securities (1,915) -
------------- -------------
Net cash used in investing activities (7,911) (5,696)
------------- -------------
Net decrease in cash (17,595) (21,192)
Cash and cash equivalents -- beginning
of period 31,263 26,892
------------- -------------
Cash and cash equivalents -- end
of period $ 13,668 $ 5,700
============= =============
Supplemental disclosures of cash
flow information
Interest paid $ 1 -
Taxes paid $ 136 $ 144