Kopin Corporation (Nasdaq: KOPN), a leading supplier of advanced
semiconductor products and microdisplays for mobile applications
including smartphones, tablet PCs, military thermal weapons sights
and wearable computers, today announced financial results for the
second quarter ended June 25, 2011.
Financial Highlights
Total revenues increased 4 percent to $31.4 million from $30.2
million for the same quarter of last year. III-V revenue increased
to $16.0 million, compared with $15.9 million in the second quarter
of 2010. Display revenue increased to $15.4 million from $14.3
million for the same quarter last year.
Gross margin increased to $10.5 million, or 35 percent of
product revenues, compared with $7.3 million, or 25 percent of
product revenues, for the comparable period of 2010.
Operating expenses were $31.0 million in the second quarter of
2011, compared with $30.9 million in the second quarter of 2010.
R&D expenses were $7.1 million, or 23 percent of revenues,
compared with $4.9 million, or 16 percent of revenues, in the
second quarter of 2010, reflecting Kopin’s investments in its
Golden-i technology, III-V smartphone products and capacity
expansion, military display products, and the inclusion of Forth
Dimension Display’s (FDD) expenses. Selling, general and
administration (S,G&A) expenses were $4.7 million in the second
quarter of 2011, compared with $4.2 million for the same period of
last year. The increase in S,G&A expenses is attributable to
the inclusion of FDD’s expenses.
Net income was $0.8 million, or $0.01 per diluted share, for the
second quarter of 2011 compared with $1.9 million, or $0.03 per
diluted share, for the second quarter of 2010. Net income for the
second quarter of 2010 included a $1.9 million gain from the sale
of investments and a $0.7 million gain related to foreign currency
fluctuations. Kopin’s 2011 second quarter results included a net
gain of $0.4 million from the sale of investments and a net loss of
$0.3 million from foreign currency fluctuations.
Kopin’s cash and marketable securities balance at the end of the
second quarter was $99.3 million and no long-term debt.
“Our second-quarter operating results reflect a continuation of
the strategy we set forth at the beginning of the year – balancing
short-term financial performance with a focus on long-term growth,”
said Kopin President and Chief Executive Officer Dr. John C.C. Fan.
“We are in the enviable position of having strong growth
projections for our III-V products, the opportunity to add a new
military display product category, night vision systems, to our
current portfolio of thermal weapon sight products and the
development of a potentially game-changing, hands-free wireless
industrial computing product in Golden-i. Because of the current
strong growth of smart phones, the requirement for those competing
for an award of the Enhanced Night Vision program in 2012 to
provide qualification units in 2011 and our drive to be a leader in
voice activated cloud computing, these opportunities have required
significant investments this year.”
“Yet with all of our development efforts, through the first half
of fiscal 2011 we have maintained strong operating results,” Dr.
Fan said. “Overall our revenues are up 19%, with our III-V revenues
up 10 percent over the same period last year as we head into what
historically has been our strongest part of the year. Although the
current federal budget situation has impacted the timing of display
product sales, we expect another year of strong military revenues
as evidenced by our recently announced $23.2 million in follow-on
orders for the TWS Bridge (TWS-IIB) program. Our income from
operations is $2.6 million for the first half of 2011 compared with
a loss of $0.8 million through the same period last year, we have
generated $3.5 million in cash flow from operating activities and
repurchased $1.9 million of our common stock.”
Smartphones Continue to Drive III-V Business
“Our III-V technology is helping to drive the rapid adoption of
advanced 3G and 4G technologies across the major smartphone and
tablet platforms,” Dr. Fan said. “These advanced new devices not
only require more III-V transistors, but structures that are more
technologically complex and challenging to produce. As these phones
continue to become more complex, Kopin is benefitting with higher
and higher dollar content per handset. Our ability to produce these
advanced products in volume and at a competitive price is simply
unmatched in the industry.”
Display Business Excels through System Expertise
“Just as with our III-V business, our display customers also
require products that are technologically more complex to produce,”
Dr. Fan said. “The trend today is toward full system solutions,
including displays, backlights, optics, ASIC chips, hardware and
software. Once again this trend plays to our strength, as we
believe that our decades of technology expertise and display system
manufacturing experience differentiate us in the market.”
Golden-i Program on Schedule
“Together with our business partner Motorola Solutions, we
continue to make excellent progress in bringing our Golden-i®
hands-free mobile computing solution to market in 2012,” Dr. Fan
said. “Initial response to field tests of Golden-i by select
customers has been extremely positive. Golden-i was demonstrated
this month at the Microsoft® -hosted Imagine Cup 2011 in New York
and the World Future 2011 in Vancouver.”
Business Outlook
“With revenues for the first six months of 2011 at $66 million
and the third and fourth quarters traditionally our strongest, we
are on course to achieve our full-year revenue guidance of $130
million to $140 million,” Dr. Fan said. “Robust smartphone demand
should continue to fuel our III-V business, just as the TWS-IIB and
a number of military R&D programs are expected to generate
momentum for our display unit.”
Financial Results Conference Call
In conjunction with its second-quarter 2011 financial results,
Kopin will host a teleconference call for investors and analysts at
5:00 p.m. ET today. To participate, please dial (877) 407-5790
(U.S. and Canada) or (201) 689-8328 (International). The call will
also be available as a live and archived audio webcast on the
“Investors” section of the Kopin website, www.kopin.com.
About Kopin Corporation
Kopin Corporation's voice-activated, wireless, hands-free
Golden-i® mobile computing headsets, power-efficient, ultra-small
liquid crystal displays, and heterojunction bipolar transistors
(HBTs) are revolutionizing the way people around the world see,
hear and communicate. Kopin has shipped more than 30 million
displays for a range of consumer and military applications
including digital cameras, personal video eyewear, camcorders,
thermal weapon sights and night vision systems. The innovative
Golden-i computing headsets are generating strong interest in
industrial, medical, military, homeland security and utility
applications. The Company's unique HBTs help to enhance battery
life, talk time and signal clarity, and have been integrated into
billions of wireless handsets as well as into WiFi, VoIP and
high-speed Internet data transmission systems. Kopin's proprietary
display, Golden-i and III-V technologies are protected by more than
200 global patents and patents pending. For more information,
please visit Kopin's website at www.kopin.com.
Kopin, CyberDisplay, Golden-i and The NanoSemiconductor Company
are trademarks of Kopin Corporation.
Kopin – The NanoSemiconductor
Company™
Forward-Looking Statements
Statements in this news release may be considered
“forward-looking” statements under the “Safe Harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These
include, without limitation, statements relating to: the strong
growth projections for our III-V products, the opportunity to add a
new military display product category, night vision systems, and
the development of a game-changing, hands-free wireless industrial
computing product in Golden-I; the third and fourth quarters being
historically our strongest part of the year; our expectation of
another year of strong military revenues; our expectation of
bringing our Golden-i® hands-free mobile computing solution to
market in 2012; our belief that the development of Golden-i is
potentially game-changing; our belief that with revenues for the
first six months of 2011 at $66 million and the third and fourth
quarters traditionally our strongest, we are on course to achieve
our full-year revenue guidance of $130 million to $140 million; our
expectation that robust smartphone demand should continue to fuel
our III-V business; and our expectation that the TWS-IIB and a
number of military R&D programs should generate momentum for
our display unit. These statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. These risks
and uncertainties include, but are not limited to, the potential
that: the smartphone market will not grow as expected; we may not
be awarded a contract to buy our night vision system products, the
U.S. government may reduce procurement of thermal weapon sights;
the Company’s efforts to roll out Golden-i may be delayed or might
be unsuccessful; the Company may be unable to produce the night
vision systems or Golden-i in the necessary volumes; the
relationship between Kopin and its Golden-i technology partners may
not be successful, or prospective customers may be unwilling to
purchase the product; the Company’s 2011 revenue expectations will
turn out to be wrong; manufacturing, marketing or other issues may
prevent either the adoption or rapid acceptance of products; the
Company will be adversely affected by competitive products and
pricing; new product initiatives and other research and development
efforts may not be successful; the Company could experience the
loss of significant customers; costs to produce the Company’s
microdisplay and HBT products will increase significantly, or that
yields will decline; military programs or funding for military
programs involving Kopin’s products will be delayed or cancelled;
the Company’s military and commercial customers might be unable to
ramp production volumes of its products, or that the Company’s
product forecasts will turn out to be wrong; manufacturing delays,
technical issues, economic conditions or external factors may
prevent the Company from achieving its financial guidance;
potential claims or liability could arise as a result of the
Company’s restatement of its financial statements; the Company
could have additional write-downs of its equity investment or
charges related to its investments in other companies, including
FDD, KTC and Kowon; and other risk factors and cautionary
statements listed in the Company’s periodic reports and
registration statements filed with the Securities and Exchange
Commission, including the Annual Report on Form 10-K for the 12
months ended December 25, 2010, and the Company’s subsequent
filings with the Securities and Exchange Commission. You should not
place undue reliance on any forward-looking statements, which speak
only as of the date on which they are made. The Company undertakes
no responsibility to update any of these forward-looking statements
to reflect events or circumstances occurring after the date of this
report.
Kopin Corporation Condensed Consolidated
Statements of Operations (Unaudited)
Three Months Ended Six Months Ended
June 25, 2011 June 26,
2010 June 25, 2011 June 26,
2010 Revenues: Product revenues $ 29,597,668 $
29,129,931 $ 62,518,659 $ 53,006,291 Research and development
revenues 1,833,289 1,059,226
3,846,790 2,636,851 31,430,957 30,189,157
66,365,449 55,643,142 Expenses: Cost of product revenues 19,115,190
21,854,777 41,061,802 39,392,724 Research and development 7,139,559
4,858,868 13,524,308 9,154,775 Selling, general and administrative
4,697,648 4,215,001 9,142,794
7,857,535 30,952,397
30,928,646 63,728,904 56,405,034
Income (loss) from operations 478,560 (739,489 ) 2,636,545 (761,892
) Other income and (expense), net 420,491
3,096,760 515,325 4,098,264
Income before provision for income taxes, equity loss
in 899,051 2,357,271 3,151,870 3,336,372 unconsolidated affiliate
and net loss (income) from noncontrolling interest Provision
for income taxes (97,500 ) (180,000 ) (195,500
) (93,000 ) Income before equity loss in
unconsolidated affiliate and net 801,551 2,177,271 2,956,370
3,243,372 loss (income) from noncontrolling interest Equity
loss in unconsolidated affiliate (43,599 ) (89,858 )
(154,238 ) (182,586 ) Income before net loss
(income) of noncontrolling interest 757,952 2,087,413 2,802,132
3,060,786 Net loss (income) attributable to noncontrolling
interest 43,872 (226,636 ) 65,399
(163,018 ) Net income
$
801,824 $ 1,860,777
$ 2,867,531 $
2,897,768 Net income per share: Basic
$ 0.01 $
0.03 $ 0.04
$ 0.04 Diluted
$
0.01 $ 0.03
$ 0.04 $
0.04 Weighted average number of common
shares outstanding: Basic
64,528,623
66,625,637
64,632,732 66,606,789
Diluted
65,774,967
67,357,297 65,715,021
67,333,967 Kopin
Corporation Condensed Consolidated Balance Sheets
(Unaudited) June 25, 2011 December
25, 2010 ASSETS Current assets: Cash and marketable securities
$ 99,327,344 $ 110,947,390 Accounts receivable, net 20,224,725
17,489,348 Inventory 19,114,320 21,462,871 Prepaid and other
current assets 2,781,233 2,725,153
Total current assets 141,447,622 152,624,762 Equipment and
improvements, net 35,810,203 32,613,961 Other assets
14,757,134 6,857,675 Total assets $
192,014,959 $ 192,096,398 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
8,092,099 $ 11,317,865 Accrued expenses 6,813,412 5,997,646
Billings in excess of revenue earned 2,604,774
3,210,895 Total current liabilities 17,510,285 20,526,406
Lease commitments 1,284,354 944,617 Total Kopin
Corporation stockholders' equity 168,352,945 165,835,919
Noncontrolling interest 4,867,375 4,789,456
Total stockholders' equity 173,220,320
170,625,375 Total liabilities and stockholders' equity $
192,014,959 $ 192,096,398
Kopin Corporation
Supplemental Information (Unaudited)
Three Months Ended Six Months Ended
June 25, 2011 June 26,
2010 June 25, 2011 June 26,
2010 Display Revenues by Category (in millions)
Military Application $ 9.2 $ 10.1 $ 20.2 $ 16.4 Consumer
Electronics Applications 4.5 3.3 9.0 6.5 Research and Development
1.7 0.9
3.6 2.3 Total $ 15.4 $ 14.3 $ 32.8
$ 25.2
Stock-Based Compensation Expense Cost
of product revenues $ 173,000 $ 174,000 $ 297,000 $ 292,000
Research and development 175,000 111,000 289,000 184,000 Selling,
general and administrative
563,000
385,000 885,000
698,000 Total $ 911,000 $ 670,000 $ 1,471,000 $
1,174,000
Other Financial Information Depreciation
and amortization $ 1,886,000 1,847,000 $ 3,813,000 $ 3,697,000
Capital expenditures $ 3,865,000 $ 4,317,000 Treasury stock
purchases $ 1,907,000 $ -
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