CLRK Color Kinetics Incorporated (MM)

Net income increases nearly seven-fold year over year to $1.5 million BOSTON, April 26 /PRNewswire-FirstCall/ -- Color Kinetics Incorporated (NASDAQ:CLRK), a leading innovator of LED lighting systems and technologies, today announced its results of operations for the first quarter of 2007. Revenues were a record $18.8 million, an increase of 28% from the $14.7 million reported in the first quarter of 2006. GAAP net income was $1.5 million or $0.07 per fully diluted share, up 697% over net income of $188,000 or $0.01 per fully diluted share in the first quarter of 2006. Non-GAAP net income for the first quarter was $2.3 million or $0.10 per fully diluted share prior to non-cash FAS 123R stock-based compensation charges of $814,000. "We're very pleased to mark the start of our 10th year in business with another strong operational performance, reflecting continued revenue growth across multiple regions, strong margins, substantial momentum in licensing, and a rate of new intelligent LED lighting installations that we believe outpaces any other player," said Bill Sims, President and CEO, Color Kinetics. "The public's attention to lighting has perhaps never been greater, particularly with recent headlines and efforts to curb its contribution to energy strain. While LED technology has the potential to ultimately leapfrog conventional sources as the energy-efficient choice of the future, our success in the market points to the many other advantages that LED systems already deliver today; from reduced maintenance and longer lifespan to advanced digital control for both existing and entirely new lighting applications," said Sims. "As LEDs continue their progression towards the mainstream, we believe that our head-start in the field and accumulation of knowledge, experience, technology and IP put Color Kinetics in an excellent position to remain a category leader." First quarter highlights include: * 30% growth in Lighting Systems revenues year over year * Strong gross margins at 55% * A quarterly record of 12 new licensing agreements signed, including Ford Motor Company, and 88% increase in licensing revenues year over year * A quarterly record of 7 new patents issued * Inclusion among Forbes' Top 25 Technology Growth Companies for the second consecutive year For the second quarter of 2007, the company currently targets revenues within the range of $20.2 million to $21.2 million, with GAAP net income of $0.05 to $0.07 per fully diluted share. Non-GAAP net income, excluding FAS 123R stock compensation, is expected to be between $0.09 and $0.11 per fully diluted share. Color Kinetics will host a conference call to review its first quarter results after the close of market today. The conference call may be accessed by dial-in number or via the Internet as follows: 4:30 pm ET Domestic dial-in number: 800-299-0148 International dial-in number: 617-801-9711 Passcode: 66518986 Webcast: http://phx.corporate-ir.net/phoenix.zhtml?c=178448&p=irol-irhome A dial-in replay of the conference call will be available from 6:30 pm ET today through May 3 at 888-286-8010 (domestic), 617-801-6888 (international), passcode: 56100710. The webcast will be archived and available for one year via the Investor Relations section of Color Kinetics' website. About Color Kinetics Celebrating its 10th anniversary this year, Color Kinetics Incorporated (NASDAQ:CLRK) transforms environments through new, dynamic uses of light. Its award-winning lighting systems and technologies apply the benefits of LEDs as a highly efficient, long lasting, environmentally friendly, and inherently digital source of illumination - reinventing light itself as a highly controllable medium. Color Kinetics also enables widespread adoption of LED lighting through OEM and licensing partnerships in diverse markets. The company is headquartered in Boston, MA with offices in the UK and China. More information is available at http://www.colorkinetics.com/. Color Kinetics is a registered trademark and the Color Kinetics logo is a trademark of Color Kinetics Incorporated. All other trademarks mentioned are the property of their respective owners. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Color Kinetics Incorporated's business that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that these statements involve risks and uncertainties, are only predictions and may differ materially from actual future events and results. For a discussion of such risks and uncertainties, see "Risk Factors" in the Company's Annual Report on Form 10-K for the Twelve Months Ended December 31, 2006, File Number 000-50798, and most recent 10-Q, each as filed with the Securities and Exchange Commission. Color Kinetics Incorporated and Subsidiaries Consolidated Balance Sheets (In thousands, except per share data) March 31, December 31, 2007 2006 ASSETS CURRENT ASSETS: Cash and equivalents $44,522 $60,997 Investments 56,882 38,985 Restricted cash 500 500 Accounts receivable, net 12,755 11,480 Accounts receivable from related party - 82 Inventory 8,963 6,805 Prepaid expenses and other current assets 2,003 3,159 Total current assets 125,625 122,008 PROPERTY AND EQUIPMENT-net 2,592 2,199 INTANGIBLE ASSETS-net 278 282 RESTRICTED CASH-Non-current portion 464 - TOTAL ASSETS $ 128,959 $ 124,489 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $5,354 $3,690 Accrued expenses 2,347 2,238 Accrued compensation 1,999 3,073 Accrued warranty 986 1,007 Accrued restructuring 152 243 Deferred revenue 1,464 195 Total current liabilities 12,302 10,446 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $0.001 par value 21 21 Additional paid-in capital 141,609 140,498 Accumulated other comprehensive loss (107) (112) Accumulated deficit (24,866) (26,364) Total stockholders' equity 116,657 114,043 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $128,959 $124,489 Color Kinetics Incorporated Consolidated Statements of Income (In thousands, except per share data) Three Months Ended March 31, 2007 GAAP SFAS 123R Non-GAAP REVENUES: Lighting systems $16,966 $16,966 OEM and licensing 1,818 1,818 Total revenues 18,784 18,784 COST OF REVENUES: Lighting systems 7,885 $(30) 7,855 OEM and licensing 553 - 553 Total cost of revenues 8,438 (30) 8,408 GROSS PROFIT 10,346 30 10,376 OPERATING EXPENSES: Selling and marketing 4,561 (207) 4,354 Research and development 2,286 (149) 2,137 General and administrative 3,264 (428) 2,836 Total operating expenses 10,111 (784) 9,327 INCOME FROM OPERATIONS 235 814 1,049 INTEREST INCOME 1,263 - 1,263 EQUITY IN EARNINGS OF JOINT - VENTURE - - NET INCOME $1,498 $814 $2,312 EARNINGS PER SHARE: Basic $0.07 $0.04 $0.11 Diluted $0.07 $0.04 $0.10 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 21,312 21,312 21,312 Diluted 22,209 22,209 22,209 Three Months Ended March 31, 2006 GAAP SFAS 123R Non-GAAP REVENUES: Lighting systems $13,098 $13,098 OEM and licensing 1,560 1,560 Total revenues 14,658 14,658 COST OF REVENUES: Lighting systems 6,099 $(19) 6,080 OEM and licensing 540 - 540 Total cost of revenues 6,639 (19) 6,620 GROSS PROFIT 8,019 19 8,038 OPERATING EXPENSES: Selling and marketing 3,755 (116) 3,639 Research and development 1,604 (124) 1,480 General and administrative 3,091 (282) 2,809 Total operating expenses 8,450 (522) 7,928 INCOME FROM OPERATIONS (431) 541 110 INTEREST INCOME 562 - 562 EQUITY IN EARNINGS OF JOINT VENTURE 57 - 57 NET INCOME $188 $541 $729 EARNINGS PER SHARE: Basic $0.01 $0.03 $0.04 Diluted $0.01 $0.03 $0.04 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 18,410 18,410 18,410 Diluted 19,946 19,946 19,946 Color Kinetics Incorporated and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Three Months Ended March 31, 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,498 $188 Adjustments to reconcile net income to cash from operating activities: Depreciation and amortization 354 247 Stock-based compensation 821 547 Equity in earnings of joint venture - (57) Common stock issued for services 13 23 Changes in assets and liabilities: Accounts receivable (1,193) (761) Inventory (2,158) 380 Prepaid expenses and other current assets 1,156 (1,233) Accounts payable 1,664 688 Accrued expenses (986) (787) Deferred revenue 1,269 24 Accrued restructuring (91) (95) Cash flows from operating activities 2,347 (836) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (35,057) (6,768) Maturities of investments 17,164 - Purchases of property and equipment (742) (444) Purchase of patent - (300) Restricted cash (464) 500 Cash flows from investing activities (19,099) (7,012) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the exercise of stock options 139 179 Proceeds from issuance of common stock under the employee stock purchase plan 137 132 Cash flows from financing activities 276 311 EFFECT OF EXCHANGE RATE CHANGES ON CASH 1 (2) DECREASE IN CASH AND EQUIVALENTS (16,475) (7,539) CASH AND EQUIVALENTS-Beginning of period 60,997 43,032 CASH AND EQUIVALENTS-End of period $44,522 $35,493 DATASOURCE: Color Kinetics Incorporated CONTACT: Felicia Spagnoli, Media Relations, +1-617-701-2292, , or Justine Alonzo, Investor Relations, +1-617-701-2272, , both of Color Kinetics Incorporated Web site: http://www.colorkinetics.com/

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