InFocus Announces Fourth Quarter and Full Year 2007 Financial Results

InFocus® Corporation (NASDAQ:INFS) today announced its fourth quarter and full year 2007 financial results. The company reported fourth quarter revenue of $81.1 million and a net loss of $1.9 million, or $0.05 per share, compared to a net loss of $2.8 million, or $0.07 per share in the third quarter of 2007 and a net loss of $13.3 million, or $0.34 per share in the fourth quarter of 2006. For the year, the Company reported revenues of $308.2 million and a net loss of $25.6 million, or $0.64 per share compared to revenues of $374.8 million and a net loss of $61.9 million, or $1.56 per share for calendar year 2006. Included in the Fourth Quarter results are restructuring charges of $3.7 million, which accounted for $0.09 of the net loss per share. The restructuring charge consisted primarily of estimated lease losses of vacated and unutilized facilities. Excluding these charges, proforma Operating Income for the fourth quarter was $1.1 million. The Company reported total cash, restricted cash, and marketable securities as of December 31, 2007 of $84.1 million with no outstanding borrowings, an increase of $11.4 million from the third quarter of 2007 and an increase of $7.9 million from the end of 2006. Commenting on the fourth quarter results, Bob O’Malley, President and CEO stated, "I am pleased with the continued improvements in our performance in the fourth quarter. Revenue increased from $75.8 million to $81.1 million, gross margin improved from 18.2 percent to 20.4 percent and, excluding restructuring charges, Operating Expenses reduced from $17.1 million to $15.4 million. I am proud of the effort put forth by the management team and our employees and for the accomplishments made throughout 2007 to position InFocus to return to profitability in the future.” Continuing, O’Malley noted, "Q4 marked significant progress in a number of key areas. We launched six new product platforms targeted at the key segments of our commercial markets. With these introductions, 80% of our product portfolio has been refreshed over the past two quarters, providing our customers with the most robust product offering in our recent history. Additionally, the investments made in our international sales and marketing activities resulted in increased revenues and the continued improvements in our supply chain management yielded improved margins.” Quarterly Revenue, Unit, ASP and Gross Margin Comparisons Fourth quarter revenues of $81.1 million were up 7.0 percent compared to third quarter revenues, and down 3.3 percent from revenues in the fourth quarter of 2006. Projector unit shipments totaled approximately 94,000 units in the fourth quarter, an increase of approximately 10 percent from the prior quarter and approximately 18 percent compared to the fourth quarter of 2006. Average Selling Prices decreased by approximately 3 percent from the third quarter. Gross margin increased by 2.2 percentage points from the third quarter to 20.4%. Revenue in the Americas decreased by 15 percent while units shipped decreased by 14 percent compared to the third quarter. Revenue and unit shipments in Europe, in comparison to the prior quarter, increased by 78 percent and 90 percent, respectively, reflecting a seasonally strong European fourth quarter. Asian revenues increased 5 percent and units increased by 2 percent compared to the third quarter of 2007. The change in the geographical composition of revenue is similar to prior year’s activity. Operating Expenses Comparison Excluding Charges Operating expenses, exclusive of charges, were $15.4 million in the fourth quarter, a reduction of $1.7 million from the third quarter and down $3.8 million from fourth quarter of 2006. The reductions were experienced across all functional areas and are the result of the Company’s continued efforts to align its cost structure in order to return to profitability. Other income for the fourth quarter was $0.4 million compared to other income of $0.8 million in the third quarter and other income of $0.8 million in the fourth quarter of 2006. Balance Sheet Total cash, restricted cash, and marketable securities as of December 31, 2007 were $84.1 million, with an increase of $11.4 million from September 30, 2007 and an increase of $7.9 million from the end of 2006. Day’s sales outstanding for the fourth quarter were 51 days, a decrease of 8 days from the prior quarter. Inventory levels increased $2.5 million during the quarter to $31 million, due in large part to the timing of inventory receipts for future period sales. Mr. O’Malley concluded, "InFocus created the digital projection category over 20 years ago and led the industry with our innovation, projector application expertise and understanding the needs of our customers. The accomplishments made in the fourth quarter represent another important milestone for InFocus, and one that we will build upon. We will continue to refresh our product lineup to meet our customers needs, while simultaneously focusing on improving our overall operating performance.” Reconciliation of GAAP and Pro Forma Information The Company has recorded charges that are excluded from operating expenses and earnings for comparative purposes. In accordance with SEC FR-59, attached is 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 888-680-0894 (U.S. participants) or 617-213-4860 (outside U.S. participants) and Pin # 56451864, 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 February 21, 2008 by dialing 888-286-8010 (U.S.) or 617-801-6888 (outside U.S.) and Pin # 21920215. Forward-Looking Statements This press release includes forward-looking statements, including statements related to anticipated revenues, gross profits, expenses, earnings, availability of components and projectors 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 profits, 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, 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, uncertainties associated with working with contract manufacturing partners, availability of critical components, and dependence on third party suppliers; 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 reliance on off-shore contract manufacturing, dependence on third party suppliers and intellectual property rights; and 4) in regard to the Company’s further restructuring actions, uncertainties associated with the timing and impact of further cost reductions and ability to grow revenues and gross profits. Investors are directed to the Company’s filings with the Securities and Exchange Commission, including the Company’s 2006 Form 10-K and 2007 Form 10-Q’s, 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. The forward-looking statements contained in this press release speak only as of the date on which they are made and the Company does not undertake any obligation to update any forward looking statements to reflect events or circumstances after the date of this press release. About InFocus Corporation InFocus® Corporation (NASDAQ:INFS) is the industry pioneer and a global leader in the digital projection market. More than twenty years of experience and engineering breakthroughs ensure continuous improvements in the marketplace, and an immersive audio visual impact in business, education and home environments. InFocus elevates the presentation of ideas, information, and entertainment to a vivid, unforgettable experience. With over 1.5 million projectors sold, InFocus sets the industry standard for product innovation and the big picture experience. For more information on InFocus please visit: www.infocus.com. InFocus, In Focus, INFOCUS (stylized), IN, ASK, Proxima, LiteShow, LP, ScreenPlay, Play Big, Work Big, Learn Big and The Big Picture are either registered trademarks or trademarks of InFocus Corporation in the U.S. and abroad. All other trademarks are used for identification purposes only and are the property of their respective owners in this and other countries. All rights reserved. InFocus Corporation Reconciliation of GAAP Earnings (In thousands, except per share amounts) (Unaudited)                     Fourth Quarter 2007 Third Quarter 2007 Net Income (Loss) Net Income (Loss) Per Share Operating Expenses Income (Loss) from Operations Net Loss Net Loss Per Share Operating Expenses Loss from Operations                 GAAP $ (1,927 ) $ (0.05 ) $ 19,094   $ (2,567 ) $ (2,820 ) $ (0.07 ) $ 17,321   $ (3,557 )   Adjustments:   Restructuring charges $ 3,700 $ 0.09 $ (3,700 ) $ 3,700 $ 225 $ - $ (225 ) $ 225                 Proforma excluding adjustments $ 1,773   $ 0.04   $ 15,394   $ 1,133   $ (2,595 ) $ (0.07 ) $ 17,096   $ (3,332 )       Fourth Quarter 2007 Fourth Quarter 2006 Net Income (Loss) Net Income (Loss) Per Share Operating Expenses Income (Loss) from Operations Net Loss Net Loss Per Share Operating Expenses Loss from Operations                 GAAP $ (1,927 ) $ (0.05 ) $ 19,094   $ (2,567 ) $ (13,326 ) $ (0.34 ) $ 26,187   $ (14,056 )   Adjustments:   Restructuring charges $ 3,700 $ 0.09 $ (3,700 ) $ 3,700 $ 2,650 $ 0.07 $ (2,650 ) $ 2,650   Regulatory assessments $ - $ - $ - $ - $ 4,306 $ 0.11 $ (4,306 ) $ 4,306                 Proforma excluding adjustments $ 1,773   $ 0.04   $ 15,394   $ 1,133   $ (6,370 ) $ (0.16 ) $ 19,231   $ (7,100 )       Full Year 2007 Full Year 2006 Net Loss Net Loss Per Share   Operating Expenses Loss from Operations Net Loss Net Loss Per Share   Operating Expenses Loss from Operations                 GAAP $ (25,582 ) $ (0.64 ) $ 78,225   $ (27,470 ) $ (61,920 ) $ (1.56 ) $ 103,651   $ (49,765 )   Adjustments:   Restructuring charges $ 8,375 $ 0.21 $ (8,375 ) $ 8,375 $ 5,425 $ 0.14 $ (5,425 ) $ 5,425   Regulatory assessments $ - $ - $ - $ - $ 9,392 $ 0.24 $ (9,392 ) $ 9,392                 Proforma excluding adjustments $ (17,207 ) $ (0.43 ) $ 69,850   $ (19,095 ) $ (47,103 ) $ (1.19 ) $ 88,834   $ (34,948 ) InFocus Corporation Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)           Three months ended   Year ended   December 31,   December 31, 2007 2006 2007 2006   Revenues $ 81,103 $ 83,860 $ 308,181 $ 374,752 Cost of revenues 64,576   71,729   257,426   320,866   Gross margin $ 16,527 $ 12,131 $ 50,755 $ 53,886   Operating expenses: Marketing and sales $ 8,267 $ 9,555 $ 35,777 $ 49,107 Research and development 2,802 4,847 14,135 17,997 General and administrative 4,325 4,829 19,938 21,730 Regulatory assessments - 4,306 - 9,392 Restructuring costs 3,700   2,650   8,375   5,425   $ 19,094 $ 26,187 $ 78,225 $ 103,651   Loss from operations $ (2,567 ) $ (14,056 ) $ (27,470 ) $ (49,765 )   Other income (expense), net 437   755   1,859   (11,406 ) Loss before income taxes (2,130 ) (13,301 ) (25,611 ) (61,171 ) Provision for income taxes (203 ) 25   (29 ) 749   Net Loss $ (1,927 ) $ (13,326 ) $ (25,582 ) $ (61,920 )     Basic and fully diluted loss per share $ (0.05 ) $ (0.34 ) $ (0.64 ) $ (1.56 )   Basic and fully diluted shares outstanding 39,775 39,694 39,741 39,696 InFocus Corporation Consolidated Balance Sheets (In thousands) (Unaudited)     December 31, December 31, 2007 2006   Assets Current Assets: Cash and cash equivalents $ 61,187 $ 53,716 Marketable securities - 104 Restricted cash, cash equivalents, and marketable securities 22,923 22,413 Accounts receivable, net of allowances 46,315 50,060 Inventories 30,984 40,107 Other current assets 7,548   10,706   Total Current Assets 168,957 177,106   Property and equipment, net 2,973 3,961 Other assets, net 1,061   1,189   Total Assets $ 172,991   $ 182,256     Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 65,764 $ 52,046 Other current liabilities 19,906   26,800   Total Current Liabilities 85,670   78,846   Other Long-Term Liabilities 3,623 3,147   Shareholders' Equity: Common stock and additional paid-in capital 168,878 167,465 Other comprehensive income: Foreign currency translation 38,246 30,662 Unrealized loss on equity securities - (20 ) Accumulated deficit (123,426 ) (97,844 )   Total Shareholders' Equity 83,698   100,263     Total Liabilities and Shareholders' Equity $ 172,991   $ 182,256