eMagin Reports Results for the Third Quarter of 2008

eMagin Corporation generated revenue of $5.2 million for the third quarter of 2008. Gross margin was 46% of revenue or $2.4 million for the quarter compared to 40% or $2.0 million for the same period in 2007. The Company has achieved significant improvement in gross margins over prior years due to higher production volumes with better yields.

Operating expenses in the period declined to $1.6 million, down 20% from the third quarter of 2007 and 31% sequentially from the second quarter of 2008. Lower operating expenses were due to cost reductions implemented by management and some R&D personnel being redeployed to contract services and their expenses charged to cost of goods sold rather than operating expenses. Operating income totaled $786,000 compared to $14,000 in the same quarter last year and up 170% from the previous quarter. Net income for the third quarter of 2008 was $0.3 million or $0.02 per diluted share versus a net loss of $12.6 million or $1.06 per diluted share in the same period last year.

"The growth in our customer base and steady stream of contracts to develop displays has enabled us to increase our production and improve our manufacturing processes. In addition, we have substantially reduced our costs and have now posted our second consecutive quarter of improved profitability and have generated $1.2 million in cash flow," noted Andrew G. Sculley, chief executive officer and president, eMagin Corporation. "While we recognize that there is still much to be done, this is an important milestone for eMagin and we believe that we have taken some significant steps forward on our path to profitable growth for the Company."