Irvine Sensors Releases Fiscal 2011 First Half Results

COSTA MESA, Calif., May 18, 2011 /PRNewswire/ -- Irvine Sensors Corporation (OTCBB: IRSN) today reported operating results for its second quarter and first half of fiscal 2011, the 13 and 26 weeks ended April 3, 2011.  

Total revenues for the 13 weeks ended April 3, 2011 were $3,370,400, an approximate 24% increase from $2,721,400 in the 13 weeks ended March 28, 2010.  Total revenues in the fiscal 2011 26-week period were $7,671,300, up 29% from $5,931,600 in the first half of fiscal 2010.  The revenue increase in the current periods was primarily due to increased sales of Irvine Sensors' thermal imaging cores.  

Net loss attributable to the Company increased in the current fiscal year periods, from $3,419,600 in the 13-week period ended March 28, 2010 to $7,550,600 in the 13-week period ended April 3, 2011, and from $5,136,300 in the 26-week period ended March 28, 2010 to $18,382,800 in the 26-week period ended April 3, 2011, largely as a result of non-cash expenses recorded in connection with financings in the periods that included convertible debt instruments deemed to include embedded derivatives.  The resulting accrued derivative liability is subject to elimination if the convertible debt instruments are ultimately converted to common stock pursuant to their terms.  There can be no assurance, however, that the convertible debt instruments will be converted to common stock or that the resulting accrued derivative liability will be eliminated.

Working capital, which improved substantially in the first quarter of fiscal 2011 as a result of equity and debt financings, continued to improve in the second quarter of fiscal 2011 as Irvine Sensors issued an additional $5.2 million of long-term debt instruments to its institutional investors.   These proceeds facilitated the payment in full of short-term debt of approximately $2.7 million in March 2011.

Excluding non-cash charges for changes in fair value of derivative instruments, non-cash interest expense, stock-based compensation and depreciation and amortization, non-GAAP net loss was $2,715,800 in the 13-week period ended April 3, 2011 compared to non-GAAP net loss of $3,023,600 in the 13-week period ended March 28, 2010.  Similarly, non-GAAP net loss was $5,417,800 in the 26-week period ended April 3, 2011 compared to non-GAAP net loss of $4,785,800 in the 26-week period ended March 28, 2010.  See "Use of Non-GAAP Financial Information" below for important information regarding the Company's use of non-GAAP financial measures.

Use of Non-GAAP Financial Information – Irvine Sensors reports net income (loss) in accordance with accounting principles generally accepted in the United States ("GAAP") and, commencing with this press release, supplementally on a non-GAAP basis.  The Company's presentation of non-GAAP net income (loss) attributable to the Company in this press release excludes the impact of changes in fair value of derivative instruments, non-cash interest expense, stock-based compensation and depreciation and amortization expense.  Stock-based compensation expense primarily includes the impact of stock options issued by the Company.  A reconciliation of these GAAP and non-GAAP financial measures for all periods presented is found in the attached "Unaudited Reconciliation of Non-GAAP Adjustments."

Irvine Sensors believes that the presentation of non-GAAP net income (loss) provides useful supplemental information to management and investors regarding financial and business trends related to the Company's financial condition and results of operations.  The Company also believes that examination of non-GAAP net income (loss) can facilitate consistency and comparability among and between prior periods, as well as comparison with other companies that present similar non-GAAP financial measures.  However, the Company's presentation of non-GAAP information is not necessarily equivalent to non-GAAP measures presented by other reporting companies and should be considered in that context. The Company's management generally uses non-GAAP income (loss) to evaluate the Company's operating performance because management believes that the exclusion of the non-cash items described above, including the changes in the fair value of derivative instruments, provides insight into the Company's core ongoing operating results, particularly from a cash generation or use perspective, and underlying business trends affecting the Company's performance.  Irvine Sensors has chosen to provide this non-GAAP information to investors to enable them to perform additional analyses of past, present and future operating performance and as a supplemental means to evaluate the Company's ongoing core operations.  The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.  

Irvine Sensors Corporation (www.irvine-sensors.com), headquartered in Costa Mesa, California, is a technology company engaged in the design, development, manufacture and sale of security, software, vision systems and miniaturized electronic products and higher level systems incorporating such products for defense, information technology and physical security for government and commercial applications.  Irvine Sensors also conducts research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low-power analog and mixed-signal integrated circuits for diverse systems applications.  

IRVINE SENSORS CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS

The following non-GAAP adjustments are based upon the Company's unaudited consolidated statements of operations for the periods shown.  These adjustments are not in accordance with or an alternative for GAAP.  The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.  Irvine Sensors intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance, and may change its reporting of such non-GAAP results in the future as a result of such assessment.

SOURCE Irvine Sensors Corporation