Cambridge Display Technology Announces Financial Results for Fiscal 2006

Cambridgeshire, UNITED KINGDOM


CAMBRIDGE, United Kingdom, March 1, 2007 (PRIME NEWSWIRE) -- Cambridge Display Technology, Inc. (Nasdaq: OLED), a pioneer in the development of polymer organic light emitting diode (P-OLED) technology, today reported its financial results for the fourth quarter of 2006 and year ended December 31, 2006.

The fourth quarter was the Company's highest revenue-generating quarter of 2006, with revenues of $3.3 million, as compared with $7.3 million for same period in 2005, and $0.9 million for the third quarter of 2006. Total cash and current marketable securities increased by $3.7 million during the quarter.

Total revenues for 2006 were $7.9 million, compared with $18.1 million for 2005 when the Company recorded revenues from the sale of nine ink jet printers and from two large technology services and development contracts.

Gross Profit fell from $8.4 million in 2005 to $4.9 million in 2006 due to lower revenues being recognized, but the gross profit margin increased from 46% to 62%.

Research and Development expenses for 2006 were $13.2 million, down from $16.1 million in 2005. R&D expenses were impacted primarily by an increase of $6.5 million in reimbursement of R&D expenses due to 2006 being the first full year of R&D reimbursement by Sumation, the Company's 50%-owned joint venture with Sumitomo Chemical formed in November 2005, partially offset by an increase of $0.5 million in stock compensation expenses and $3.1 million in increased expenses related to standalone research projects.

Selling, General and Administrative expenses for 2006 decreased to $15.9 million, from $17.4 million in 2005, when the Company recorded an impairment charge of $1.6 million for promissory notes held by the Company. During 2006, the Company also reduced SG&A expenses by eliminating $0.7 million in administrative and credit line expenses and by charging $0.6 million of SG&A expense to Sumation. Offsetting these net decreases in expenses were an increase of $1.0 million in impairment charges related to marketable securities held by the Company in a licensee and an increase of $0.4 million in stock compensation and legal expenses.

Equity in loss of affiliates increased to $6.4 million in 2006, from $3.8 million in 2005. The 2005 figure includes the last period of 50% ownership in Litrex and 2006 includes the first full year of 50% ownership in Sumation.

Net loss increased to $27.5 million in 2006, from $13.8 million in 2005.

Total deferred revenues at the end of 2006 were $4.0 million higher than at the end of 2005, due to the deferral of revenue received from a major license which was sold in September 2006, because revenues from that licensee are being spread over time rather than being recognized on receipt.

Total cash and current marketable securities was $19.3 million at December 31, 2006, as compared with $31.3 million at December 31, 2005.

Chairman and CEO Dr. David Fyfe commented: "Our revenues for 2006 were impacted by a slow down in discretionary R&D spending in the display industry but also by sales that we did make being affected by revenue recognition rules regarding linked transactions. During 2006 we made highly gratifying progress in accelerating development of P-OLED lifetimes and efficiencies through our 50% joint venture, Sumation. We also successfully demonstrated a new technology -- Total Matrix Addressing(TM), or TMA(TM) -- which we are very hopeful will open up a major new revenue stream as well as enhance the attractiveness of our technology for production of passive-matrix displays. We followed up positive industry reception of this demonstration with the acquisition of the OLED driving chip development team from Next Sierra, Inc. of Mountain View, California, in a non-cash stock for assets transaction. We are pleased to report that this team is already accelerating our progress in getting TMA to the next stage of demonstration and sampling of chips to potential customers. Finally, we were pleased to achieve positive cash flow in the fourth quarter, primarily as a result of the major new license granted in Q3, which signified the establishment of an important new relationship with a 'Tier One' player in the FPD industry."

The financial statements of the Company for the year ended December 31, 2006 are included in the Company's Annual Report on Form 10-K, which can be accessed through the Internet at www.cdtltd.co.uk.

The Company draws the attention of investors to Part 1, Item 3 of its Annual Report on Form 10-K, which describes litigation of a lease dispute currently being tried in federal court and for which a verdict is expected within the next ten days.

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 today, March 1, 2007 at 5:00PM EST/2:00PM PST (10:00PM GMT). This call, as well as a copy of the Company's Annual Report on Form 10-K, 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) and other related technologies, 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 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, which would affect its ability to continue the research, development and commercialization of its P-OLED technology and other related technologies and as a going concern. 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.



 Consolidated Balance Sheets
 (in thousands, except for share information)

                                                    December 31,
                                              ----------------------
                                                 2006         2005
                                              ---------    ---------
 ASSETS
 Current assets:
  Cash and cash equivalents                   $  12,015    $  31,263
  Marketable securities                           7,252           --
  Inventory                                          30           32
  Accounts receivable, net                          187        2,266
  Taxes receivable                                1,861        2,045
  Prepaid expenses and other current assets       1,680        2,473
                                              ---------    ---------
   Total current assets                          23,025       38,079
 Property, equipment and leasehold
  improvements, net                               9,579       13,593
 Investments in affiliates                        3,951        1,899
 Marketable securities                              298          633
 Goodwill                                        65,612       65,612
 Other intangible assets, net                     1,484        2,897
 Other non-current assets                            20           --
                                              ---------    ---------
   Total assets                               $ 103,969    $ 122,713
                                              =========    =========

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
  Accounts payable and accrued expenses       $   6,597    $   7,910
  Deferred revenue                                5,143        1,290
  Due to affiliate                                   95           52
  Taxes payable                                      --            6
  Other current liabilities                       2,109           --
                                              ---------    ---------
   Total current liabilities                     13,944        9,258

 Deferred revenue, non-current                      193           --

 Other liabilities                                  596          567

 Commitments and contingencies (Note 13)             --           --

 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 out-
   standing at December 31, 2005,
   21,874,998 issued and 21,602,062 out-
   standing at December 31, 2006                    216          215
  Additional paid-in capital                    284,531      287,514
  Deferred compensation                              --       (6,082)
  Accumulated other comprehensive loss             (271)      (1,052)
  Accumulated deficit                          (195,240)    (167,707)
                                              ---------    ---------
   Total common shareholders' equity             89,236      112,888
                                              ---------    ---------
 Total liabilities and shareholders' equity   $ 103,969    $ 122,713
                                              =========    =========

 Consolidated Statements of Operations
 (in thousands, except per share amounts)

                                          Year ended December 31
                                    ----------------------------------
                                      2006         2005         2004
                                    --------     --------     --------

 Operating revenues:
  License fees and royalties        $  3,176     $  3,285     $  6,791
  Other license related                   --           --          900
  Technology services and
   development                         2,943        7,478        4,982
  Equipment and supplies               1,817        7,330          613
                                    --------     --------     --------
 Total operating revenues              7,936       18,093       13,286
 Cost of sales:
  License fees and royalties              42           47          186
  Other license related                   --           --            9
  Technology services and
   development                         1,617        3,798        1,481
  Equipment and supplies               1,375        5,880          318
                                    --------     --------     --------
 Total cost of sales                   3,034        9,725        1,994
                                    --------     --------     --------
 Gross profit                          4,902        8,368       11,292
                                    --------     --------     --------
 Operating expenses:
  Research and development expenses   13,188       16,129       14,181
  Selling, general and
   administrative expenses            15,907       17,426       18,751
  Amortization of intangibles
   acquired                            1,413        1,580        1,580
                                    --------     --------     --------
 Total operating expenses             30,508       35,135       34,512
                                    --------     --------     --------
 Loss from operations                (25,606)     (26,767)     (23,220)
 Other (expense)/income:
  Equity in loss of affiliates        (6,378)      (3,802)      (2,546)
  Foreign currency transaction
   gain/(loss)                         1,136         (790)       1,045
  Gain on sale of Litrex                 969       15,935           --
  Other income/(expense)                 514         (721)         210
  Interest income                        988          497          347
  Interest expense                        --           --          (36)
                                    --------     --------     --------
 Total other expense                  (2,771)      11,119         (980)
                                    --------     --------     --------
 Loss before benefit for
  income taxes                       (28,377)     (15,648)     (24,200)
 Benefit for income taxes               (844)      (1,833)      (1,615)
                                    --------     --------     --------
 Net loss                            (27,533)     (13,815)     (22,585)
 Cumulative effect of
  accounting change                       --           --      (12,200)
                                    --------     --------     --------
 Net loss                            (27,533)     (13,815)     (34,785)
 Accretion of preferred stock             --           --      (38,766)
                                    --------     --------     --------
 Net loss attributable to
  common shareholders               $(27,533)    $(13,815)    $(73,551)
                                    ========     ========     ========
 Net loss per common share
  attributable to common
  shareholders, before
  cumulative effect of
  accounting change, basic
  and diluted                       $  (1.28)    $  (0.71)    $  (6.17)
 Net loss per common share
  attributable to common
  shareholders due to
  cumulative effect of
  accounting change, basic
  and diluted                             --           --        (1.23)
                                    --------     --------     --------
 Net loss per common share
  attributable to common
  shareholders, basic and
  diluted                           $  (1.28)    $  (0.71)    $  (7.40)
                                    ========     ========     ========
 Weighted average number of
  common shares outstanding,
  basic and diluted                   21,486       19,543        9,944
                                    ========     ========     ========

 Consolidated Statements of Cash Flows
 (in thousands)
                                           Year ended December 31
                                      --------------------------------
                                        2006        2005        2004
                                      --------    --------    --------
 Operating activities
 Net loss                             $(27,533)   $(13,815)   $(34,785)
 Adjustments to reconcile net loss to
  net cash used in operating activities:
 Depreciation and amortization of
  property, equipment and leasehold
  improvements                           5,397       5,544       6,007
 (Gain)/Loss on sale of property,
  equipment and leasehold improvements     (4)        (21)        132
 Gain on sale of Litrex                  (969)    (15,935)         --
 Effect of exchange rate changes on
  cash and cash equivalents             (1,109)        111        (254)
 Impairment of marketable securities     1,009          --          --
 Amortization of other intangible
  assets                                 1,413       1,580       1,580
 Impairment of promissory notes             --       1,635          --
 Non-cash income                          (581)       (108)        (30)
 Acquired in process R & D                  --          --      12,200
 Stock compensation expense              3,680       3,086       5,163
 Equity in loss affiliates               6,378       3,802       2,546
 Changes in operating assets and
  liabilities:                              --          --          --
   Accounts and tax receivable           2,263       1,131      (1,651)
   Due from affiliates                      --          50          21
   Inventories and demo machines             2         (32)         --
   Prepaid expenses and other assets       773       4,430      (3,979)
   Accounts and tax payable and
    accrued expenses                    (1,319)       (688)      2,399
   Due to affiliates                        43          --          --
   Deferred revenue                      4,046      (6,446)      4,014
   Other current and non-current
    liabilities                          2,138          24         251
                                      --------    --------    --------
 Net cash used in operating activities  (4,373)    (15,652)     (6,386)
 Investing activities
 Acquisition of property, equipment
  and leasehold improvements            (1,381)     (3,153)     (2,410)
 Disposal of property, equipment and
  leasehold improvements                     2          32          13
 Costs related to acquisition of
  CDT Oxford                                --          --        (334)
 Disposal of business                      969       9,740          --
 Investment in affiliates               (8,322)     (2,737)        (85)
 Investment in marketable securities    (7,252)         --      (1,129)
 Cash of consolidated entity
  - CDT Oxford                              --          --       1,564
                                      --------    --------    --------
 Net cash (used in)/generated by
  investing activities                 (15,984)      3,882      (2,381)
 Financing activities
 Issuance of common stock                   --      16,252      25,005
                                      --------    --------    --------
 Net cash generated by financing
  activities                                --      16,252      25,005
                                      --------    --------    --------
 Effect of exchange rate changes on
  cash and cash equivalents              1,109        (111)        254
 Net (decrease)/increase in cash       (19,248)      4,371      16,492
 Cash and cash equivalents
  -- beginning of period                31,263      26,892      10,400
                                      --------    --------    --------
 Cash and cash equivalents
  -- end of period                    $ 12,015    $ 31,263    $ 26,892
                                      ========    ========    ========
 Supplemental disclosures of cash
  flow information
 Interest paid                        $     --    $     --    $     36
 Taxes (paid)/refunded                $   (166)   $   (176)   $     18


        

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