Cambridge Display Technology, Inc. (Nasdaq: OLED) today reported its financial results for the year ended December 31, 2005. The Company, which completed its IPO in December 2004, is a pioneer in the development of polymer organic light emitting diode (P-OLED) technology.
In December 2005, it completed a private placement of its common stock with gross proceeds of $17.5 million.
The Company reported its highest quarterly revenue of the year with 2005 fourth quarter revenues of $7.3 million. Total revenues for the full year were $18.1 million in 2005, an increase of $4.8 million, or 36% over 2004 total revenues of $13.3 million.
The Company reported a net profit of $10.2 million for the fourth quarter, including an overall gain of $15.9 million from the sale, in two tranches, of its shares in Litrex, its former subsidiary. For the full year the loss was $13.8 million, a decrease of $8.8 million, or 39%, compared with the 2004 loss (before the cumulative effect of accounting change) of $22.6 million.
Cash used in operations was $15.8 million in 2005, compared with $6.1 million in 2004. The increase includes the impact of increased, lower-margin printer sales relative to high-margin licensing and royalty revenue in 2005 compared with 2004, increased corporate governance costs following the Company's IPO at the end of 2004 and the impact on working capital of a reduction in deferred revenue.
Capital expenditures were $3.2 million in 2005 and $2.4 million in 2004. The Company's cash and cash equivalents were $31.3 million at December 31, 2005.
Details of revenues and expenses
Revenues from sale of equipment and supplies were $7.3 million in 2005, principally from the sale of nine ink jet printers, but also including sales of inks and test equipment; CDT has an exclusive distribution agreement for P- OLED printers with Litrex, its former subsidiary.
Technology services and development revenues grew again in 2005 to $7.5 million from $5.0 million in 2004, continuing the trend in customer demand for stand-alone development projects, or development services as part of equipment and services packages.
Revenues from royalties were $3.3 million in 2005, compared with $2.6 million in 2004. Nine licensees paid royalties in 2005, and no new license was signed. In 2004, revenues from license fees were $4.2 million.
Research and development expenditure increased from $14.2 million in 2004 to $16.1 million in 2005 as the Company continued to invest in developing the materials performance of P-OLED technology and associated manufacturing processes.
Selling, general and administrative expense decreased from $18.8 million in 2004 to $17.4 million in 2005.
David Fyfe, the Company's Chairman and Chief Executive Officer, noted: "We made important progress on a number of strategically important fronts in 2005. The sale of our remaining stake in Litrex to our long-term partner Ulvac was followed by early sales of ink jet printers in our new role as distributor of the Litrex product range.
"Our establishment of a joint venture (Sumation(TM)) with Sumitomo Chemical provides a strong focus for the acceleration of material and device performance as well as a source of supply for high quality P-OLED materials to commercial display makers. We are already seeing the fruits of this collaboration as well as the joint venture having access to the IP of Dow Chemical in P-OLED technology, acquired by Sumitomo Chemical in 2005.
"Our private placement of shares in December 2005, through which we raised gross proceeds of $17.5 million, has resulted in a strengthened balance sheet of substantial importance in upcoming license negotiations and in maintaining the current level of investment in development of our technology at this crucial period of adoption by 'tier one' display makers.
"We are in good shape as we continue in 2006 to offer our customers a unique range of products and services to support their adoption of P-OLED technology. We believe that revenues have the potential for further growth in 2006."
The Company will be holding a conference call to discuss its 2005 results. Interested investors may listen to a live web cast on Monday, March 13, 2006 at 12:00 noon ET, 17:00 GMT. This call can be accessed through the internet at http://www.earnings.com.
The financial results included in this press release are unaudited. The complete, audited financial statements of the Company for the fiscal year ended December 31, 2005 will be included in the Company's Annual Report on Form 10-K to be filed with the SEC.
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, UK and listed on the NASDAQ National Market under the ticker symbol "OLED".
The Company's website is http://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; 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 caption "Risk Factors" and "Factors That May Affect Our Operating Results" 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
December 31,
2005 2004
ASSETS (in thousands, except for
share information)
Current assets:
Cash and cash equivalents $31,263 $26,892
Inventory 32 --
Marketable securities -- 1,151
Accounts receivable, net 2,266 1,458
Due from affiliates -- 107
Taxes receivable 2,045 3,984
Prepaid expenses and other current assets 2,473 6,903
Total current assets 38,079 40,495
Property, equipment and leasehold
improvements, net 13,593 15,995
Investments in affiliates 1,899 2,574
Marketable securities 633 --
Goodwill 65,612 65,612
Other intangible assets, net 2,897 4,477
Total assets $122,713 $129,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $7,910 $8,604
Deferred revenue 1,290 6,936
Due to affiliate 52 109
Taxes payable 6 --
Total current liabilities 9,258 15,649
Deferred revenue -- 800
Deferred proceeds on sale of subsidiary stock -- 5,785
Other liabilities 567 480
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. 21,483,205 issued and
outstanding 215 195
Additional paid-in capital 287,514 273,079
Deferred compensation (6,082) (9,266)
Common stock subscribed -- (3,163)
Accumulated other comprehensive loss (1,052) (514)
Accumulated deficit (167,707) (153,892)
Total common shareholders' equity 112,888 106,439
Total liabilities and shareholders' equity $122,713 $129,153
Cambridge Display Technology, Inc.
Consolidated Statements of Operations
Year ended December 31
2005 2004 2003
Operating revenues: (in thousands, except per share amount)
License fees and royalties $3,285 $6,791 $4,314
Other license related -- 900 --
Technology services and
development 7,478 4,982 3,758
Litrex revenue -- -- 2,608
Equipment and supplies 7,330 613 --
Total operating revenues 18,093 13,286 10,680
Cost of sales:
License fees and royalties 47 186 245
Other license related -- 9 --
Technology services and
development 3,798 1,481 109
Litrex revenue -- -- 1,173
Equipment and supplies 5,880 318 --
Total cost of sales 9,725 1,994 1,527
Gross profit 8,368 11,292 9,153
Operating expenses:
Research and development
expenses 16,129 14,181 16,841
Selling, general and
administrative expenses 17,426 18,751 12,769
Amortization of intangibles
acquired 1,580 1,580 1,625
Total operating expenses 35,135 34,512 31,235
Loss from operations (26,767) (23,220) (22,082)
Other income/(expense):
Equity in loss of affiliates (3,802) (2,546) (3,639)
Foreign currency transaction
(loss) / gain (790) 1,045 1,603
Gain on sale of Litrex 15,935 -- --
Other (expense)/income (721) 210 --
Interest income 497 347 415
Interest expense -- (36) (6)
Total other income / (expense) 11,119 (980) (1,627)
Loss before benefit for income
taxes (15,648) (24,200) (23,709)
Benefit for income taxes (1,833) (1,615) (932)
Loss before cumulative effect
of accounting change (13,815) (22,585) (22,777)
Cumulative effect of
accounting change -- (12,200) --
Net loss (13,815) (34,785) (22,777)
Accretion of preferred stock -- (38,766) (6,771)
Net loss attributable to
common shareholders $(13,815) $(73,551) $(29,548)
Net loss per common share
attributable to common
shareholders before
cumulative effect of
accounting change, basic
and diluted $(0.71) $(6.17) $(3.04)
Net loss per common share
due to cumulative effect of
accounting change, basic
and diluted -- $(1.23) --
Net loss per common share
attributable to common
shareholders, basic and
diluted $(0.71) $(7.40) $(3.04)
Weighted average number of
common shares outstanding,
basic and diluted 19,543 9,944 9,705
Cambridge Display Technology, Inc.
Consolidated Statements of Cash Flows
Year ended December 31
2005 2004 2003
Operating activities (in thousands)
Net loss $(13,815) $(34,785) $(22,777)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and amortization
of property, equipment and
leasehold Improvements 5,544 6,007 6,334
(Gain) / loss on sale of
property, equipment and
leasehold improvements (21) 132 74
Gain on sale of Litrex (15,935) --
Amortization of intangible
assets 1,580 1,580 1,625
Impairment of promissory notes 1,635 -- --
Non-cash income and expense (108) -- --
Acquired in process R & D -- 12,200 --
Amortization of deferred
compensation 3,086 5,135 19
Equity in loss of affiliates 3,802 2,546 3,639
Stock options granted -- 28 158
Other -- (30) --
Changes in operating assets
and liabilities:
Accounts and tax receivable 1,131 (1,651) (2,229)
Due from affiliates 50 21 (2,302)
Inventory (32) -- (511)
Prepaid expenses and other
current assets 4,430 (3,979) 110
Accounts and tax payable
and accrued expenses (688) 2,399 (1,238)
Deferred revenue (6,446) 4,014 2,579
Other current and non-current
liabilities 24 251 383
Net cash used in operating
activities (15,763) (6,132) (14,136)
Investing activities
Acquisition of property,
equipment and leasehold
improvements (3,153) (2,410) (3,601)
Disposal of property,
equipment and leasehold
improvements 32 13 68
Acquisition of other
intangible assets -- -- (100)
Costs related to acquisition
of CDT Oxford -- (334) --
Disposal of business 9,740 12,091
Investment in affiliates (2,737) (85) (128)
Investment in marketable
securities -- (1,129) --
Cash of consolidated entity
- CDT Oxford -- 1,564 --
Net cash generated by/(used in)
investing activities 3,882 (2,381) 8,330
Financing activities
Change in restricted cash -- -- 127
Repayment of loan payable -- -- (127)
Issuance of common stock 16,252 25,005 6
Issuance of redeemable
convertible preferred stock -- -- 4,228
Net cash generated by
financing activities 16,252 25,005 4,234
Net increase/(decrease)
in cash 4,371 16,492 (1,572)
Cash and cash equivalents-
beginning of period 26,892 10,400 11,972
Cash and cash equivalents-
end of period $31,263 $26,892 $10,400
Supplemental disclosures
of cash flow information
Interest (paid)/refunded -- $(36) $6
Taxes (paid)/refunded $ (176) 18 --