Kopin Reports Record Revenues for the Third Quarter of 2009

http://www.businesswire.com/news/home/20091102005645/en

* Revenues Increase to $32 Million

* Net Income of $8.5 Million

* Military Displays, III-V Products Drive Top and Bottom Line

* Cash and Marketable Securities Balance Increases to $107.5 Million

TAUNTON, Mass.--(Business Wire)--
Kopin Corporation (NASDAQ: KOPN) today reported record revenues of $32.0 million
and net income of $8.5 million for the third quarter ended September 26, 2009.

"Strong demand for our proprietary military displays and III-V products were key
catalysts that drove our outstanding performance in the third quarter," said Dr.
John C.C. Fan, Kopin`s president and chief executive officer. "The double-digit
percentage increases we reported in both military display and III-V revenues
reflected our continued ability to deliver high-value, differentiated products
that are integral to the performance of advanced mobile devices for today and
tomorrow. Despite this challenging economic period, we are delighted that we
reported our fifth consecutive profitable quarter."

Total revenues increased 4% to $32.0 million in the third quarter of 2009
compared with $30.7 million in the comparable period of 2008 and increased 13%
from $28.2 million in the second quarter of 2009. Display revenues were $17.7
million in the third quarter of 2009, down about $1.2 million from the year-ago
period and roughly flat compared with the second quarter of 2009. III-V revenues
climbed 21% to $14.3 million from $11.8 million in the third quarter of 2008 and
increased 37% from $10.4 million in the second quarter of 2009.

For the nine months ended September 26, 2009, total revenues were $81.7 million,
compared with $85.7 million for the same period of 2008. Display revenues were
$50.2 million in the nine-month period of 2009, compared with $49.6 million for
the first nine months of 2008. Revenues from III-V products were $31.5 million
for the first nine months of 2009, compared with $36.1 million for the
nine-month period of 2008.

Business Highlights

Display Products

"Military display revenues increased 26% on a year-over-year basis in the third
quarter, driven by our participation as display supplier for the U.S. Army`s
Thermal Weapons Sight programs. We are excited about our prospects and continue
to offer more system solutions to our customers at their request. For example,
to meet our customers` demanding requirements we are completing the installation
of sophisticated equipment that simulates the difficult conditions our eyepieces
and higher-level assemblies will experience in combat," Dr. Fan said. "We
believe that our high-performance, single-crystal silicon LCD technology offers
unrivaled performance advantages for military, consumer and industrial
customers. Through patented breakthroughs such as our new full-color
ultra-small-pixel displays and display modules, we are developing compelling,
advanced new technology solutions that offer brilliant resolution, high
performance and power efficiency in the world`s smallest high-definition LCD
screen. We continue to make excellent progress on our strategy of moving toward
higher margin, higher performance products with greater system integration."

Display revenues by category were as follows:

Three Months Ended Nine Months Ended

Display Revenues by Category Sept. 26, 2009 Sept. 27, 2008 Sept. 26, 2009 Sept. 27, 2008
($ in millions )
Consumer Electronic Applications $ 2.9 $ 4.8 $ 7.2 $ 14.8
Military Applications 13.2 10.5 38.2 24.5
Eyewear Applications 0.5 2.4 1.2 4.6
Research & Development 1.1 1.2 3.6 5.7

Total $ 17.7 $ 18.9 $ 50.2 $ 49.6

Golden-i

"We also are creating an entirely new platform in Golden-i, which represents the
convergence of mobile video communications and hands-free, voice-activated
computing," Dr. Fan said. "Field testing of Golden-i with potential customers is
on schedule to begin early next year. The technology has been extremely well
received at user and industry conferences, and feedback from our strategic
business partners, including Microsoft, Motorola, Nuance Communications and
Texas Instruments, has been favorable. Golden-i is being designed initially for
industrial applications, to be followed by military, communication and
entertainment applications."

III-V Products

"Smartphones and other 3G devices fueled robust demand for our III-V products,
which posted a 21% increase in revenues in the third quarter from the same
period in 2008," Dr. Fan said. "Many of these new products require complex
circuitry and triple the number of power amplifiers as a standard wireless
handset, a technology evolution that only strengthens our position as the
world`s leading III-V merchant supplier. For integrated circuit manufacturers,
GaAs-based HBTs have emerged as the clear leader for signal linearity,
temperature control and battery life. Our unique and versatile III-V
technologies enable customers to solve complex technical challenges with
solutions that reduce manufacturing costs, enhance circuit performance and
accelerate time to market. We have invested strategically to increase our 6-inch
wafer capacity and capability, and we expect to further build our 6-inch
infrastructure in the coming year."

Operating Results

Gross margin for the third quarter of 2009 was 32.6% of net product revenues
versus 33.8% for the same period in 2008 and 26% of net product revenues in the
second quarter of 2009. Differences in gross margin largely reflected variations
in sales mix between CyberDisplay and III-V products in the respective periods.

Net income for the third quarter of 2009 was $8.5 million, or $0.13 per diluted
share, compared with net income of $1.5 million, or $0.02 per diluted share, for
the third quarter of 2008. For the nine months ended September 26, 2009, Kopin
reported net income of $14.1 million, or $0.21 per diluted share, compared with
net income of $0.8 million, or $0.01 per diluted share, for the nine months
ended September 27, 2008.

During the three months ended September 26, 2009 the Company purchased an
additional 19.7 million shares of Kopin Taiwan Corporation (KTC) common stock
for approximately $6.3 million. The Company now owns approximately 87% of the
outstanding equity of KTC. The Company`s financial results for the three and
nine months ended September 26, 2009 include the following items:

Three months ended Nine months ended
September 26, 2009
Gain on remeasurement of investment in KTC (A) $ 599,000 $ 599,000
Repayment of loan by KTC which was previously written-off (B) 2,012,000 2,012,000
Reduction in bad debt allowance (C) 291,000 507,000
Impairment on marketable debt securities (D) - (927,000 )
Gain on sale of patents (E) 2,119,000 6,232,000
Total $ 5,021,000 $ 8,423,000

(A) The Company previously recorded its investment in KTC under the equity method and had written down the investment to $0. Under the new accounting guidance the Company remeasured and wrote-up its investment in KTC by approximately $599,000, which represented the fair market value of the investment immediately prior to the purchase of the additional shares by the Company.

(B) In the year ended December 27, 2008 (fiscal 2008) the Company recorded equity losses of approximately $824,000 and a loan loss reserve of approximately $1,188,000 in connection with $2,012,000 it loaned KTC earlier in fiscal 2008. As a result of the Company`s purchase of additional shares of KTC common stock, KTC was able to repay the loan and the Company recorded a gain on the loan repayment of approximately $1,188,000 and equity in earnings of unconsolidated affiliates of $824,000.

(C) In fiscal 2008, due to KTC`s liquidity problems the Company recorded allowances for possible bad debts for the excess of what KTC owed the Company over what the Company owed KTC. At December 27, 2008, the allowance for possible bad debts was approximately $507,000. During the nine months ended September 26, 2009 the Company reduced the $507,000 allowance to $0, of which $291,000 of the allowance was reversed in the three months ended September 26, 2009.

(D) Other income and expense, net for the nine months ended September 26, 2009 includes an expense of $0.9 million from an impairment write-down of certain marketable debt securities which were deemed other-than-temporarily impaired.

(E) The Company sold certain patents it was no longer using to a party which sub-licenses patents. Under the terms of the sales agreement the amount the Company receives for the sale of the patents is a percentage of any license fees, after expenses, from the sublicense.

Financial results for the comparable quarter of 2008 included an impairment
charge of approximately $0.5 million on corporate debt securities and a loss of
approximately $2 million associated with the sale of Kenet, a company in which
Kopin owned an equity investment.

As of September 26, 2009, Kopin had cash and marketable securities of $107.5
million, an increase of approximately $7.5 million from December 27, 2008. The
Company has no long-term debt.

Business Outlook

"While the fourth quarter historically has been our seasonally weak quarter,
based on discussions with our customers and the expected continued strong
momentum of our military display program and III-V products we expect to achieve
the top end of the full-year 2009 revenue guidance of $90 million to $110
million that we issued in April of this year," Dr. Fan said.

"With our good financial and operational results through the first nine months
of the year, we are poised to complete a strong 2009 performance despite the
challenges created by the economic recession," Dr. Fan said. "Although
visibility into 2010 is still somewhat limited by the economic climate, we plan
to continue to aggressively leverage our Wafer Engineering and AMLCD
technologies to develop transformative applications for high-growth markets.
Kopin is anchored by a strong balance sheet, which has enabled us to invest
strategically in advanced research and production equipment and processes in the
past few years. Exciting new products and technology platforms such as Golden-i
are coming on line, and we are continuing our active patent filing of new
technologies and products. We are well positioned for a bright future."

Third-Quarter Conference Call

In conjunction with its third-quarter 2009 financial results, Kopin will host a
teleconference call for investors and analysts at 9:00 a.m. ET today. To hear
the conference call, please dial (877) 407-5790 (U.S. and Canada) or (201)
689-8328 (International). The call also will be available as a live and archived
audio webcast on the "Investors" section of the Kopin website, www.kopin.com.

About Kopin

Kopin Corporation produces lightweight, power-efficient, ultra-small liquid
crystal displays and III-V products, including heterojunction bipolar
transistors (HBTs), that 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
Company's HBTs, which help to enhance battery life, talk time and signal
clarity, 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 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.

CyberDisplay and The NanoSemiconductor Company are trademarks of Kopin
Corporation.

Kopin - The NanoSemiconductor Company

Safe Harbor Statement

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
Company`s belief that: its high-performance, single-crystal silicon LCD
technology offers unrivaled performance advantages for military, consumer and
industrial customers and thedevelopment of related advance technology solutions;
field testing of Golden-i with potential customers is on schedule to begin early
next year; Golden-i is being designed initially for industrial applications, to
be followed by military, communication and entertainment applications;
GaAs-based HBTs have emerged as the clear leader for signal linearity,
temperature control and battery life; its III-V technologies will enable
customers to solve complex technical challenges with solutions that reduce
manufacturing costs and accelerate time to market;the Company will further build
its 6-inch wafer infrastructure capacity in the coming year; based on the
continued momentum of the Company`smilitary display program and III-V products
the Company expects to achieve the top end of its full-year 2009 revenue
guidance of $90 million to $110 million; the Company is poised for strong 2009
performance; the Company willdevelop transformative applications for high-growth
markets; and that the Company is well positioned for the future based on its
strong balance sheet, a pipeline of new products, active patent filings and the
launch of technology platforms such as Golden-i.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 U.S.
Army`s Thermal Weapon Sight programs will not continue to ramp production in
2009 or if they do the Company will be unable to produce the product for these
programs; field tests of Kopin`s Golden-i product may prove unsuccessful; the
Company may be unable to produce Golden-i in commercial 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 2009 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 orcharges related to its
investments in other companies, including KTC; 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 27, 2008, 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 Nine Months Ended

September 26, 2009 September 27, 2008 September 26, 2009 September 27, 2008

Revenues:
Product revenues $ 30,638,292 $ 29,340,077 $ 77,377,650 $ 80,507,309
Research and development revenues 1,340,699 1,368,455 4,306,331 5,205,865
31,978,991 30,708,532 81,683,981 85,713,174
Expenses:
Cost of product revenues 20,652,628 19,415,672 54,696,123 58,423,275
Research and development 3,556,440 4,067,830 10,493,880 12,854,308
Selling, general and administrative 3,495,619 4,006,345 10,506,052 12,904,325
27,704,687 27,489,847 75,696,055 84,181,908
Income from operations 4,274,304 3,218,685 5,987,926 1,531,266
Other income and (expense):
Interest and other income 4,511,602 1,884,147 10,120,569 4,512,236
Other expense (978,223 ) (2,539,638 ) (1,793,460 ) (3,257,780 )
3,533,379 (655,491 ) 8,327,109 1,254,456

Income before benefit (provision) for income taxes, equity gains (losses) in 7,807,683 2,563,194 14,315,035 2,785,722
unconsolidated affiliates and net loss (income) from noncontrolling interest

Provision for income taxes (162,000 ) (390,000 ) (798,000 ) (809,000 )

Income before equity gains (losses) in unconsolidated affiliates and 7,645,683 2,173,194 13,517,035 1,976,722
net loss (income) of noncontrolling interest

Equity gains (losses) in unconsolidated affiliates 772,424 (439,736 ) 481,766 (605,637 )

Income before net loss (income) of noncontrolling interest 8,418,107 1,733,458 13,998,801 1,371,085

Net loss (income) attributable to noncontrolling interest 100,779 (235,154 ) 116,492 (596,799 )

Net income $ 8,518,886 $ 1,498,304 $ 14,115,293 $ 774,286

Net income per share:
Basic $ 0.13 $ 0.02 $ 0.21 $ 0.01
Diluted $ 0.13 $ 0.02 $ 0.21 $ 0.01

Weighted average number of common shares outstanding:
Basic 66,218,420 67,774,347 67,032,920 67,749,273
Diluted 67,025,153 68,528,182 67,568,716 68,002,211

Kopin Corporation
Condensed Consolidated Balance Sheets
(Unaudited)

September 26, 2009 December 27, 2008
ASSETS
Current assets:
Cash and marketable securities $ 107,518,978 $ 100,015,991
Accounts receivable, net 22,921,760 19,604,716
Inventory 15,537,285 13,269,486
Prepaid and other current assets 3,460,760 1,366,968

Total current assets 149,438,783 134,257,161

Equipment and improvements, net 20,803,370 19,359,874
Other assets 8,418,941 6,060,460

Total assets $ 178,661,094 $ 159,677,495

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,788,836 $ 8,736,996
Accrued expenses 7,519,214 5,551,156
Billings in excess of revenue earned 2,994,776 3,127,923

Total current liabilities 20,302,826 17,416,075

Lease commitments 894,091 866,965

Total Kopin Corporation stockholders' equity 153,386,397 138,481,936
Noncontrolling interest 4,077,780 2,912,519
Total stockholders' equity 157,464,177 141,394,455
Total Liabilities and stockholders' equity $ 178,661,094 $ 159,677,495

Kopin Corporation
Richard Sneider, 508-824-6696
Chief Financial Officer
Richard_Sneider@kopin.com
or
Sharon Merrill Associates, Inc.
Scott Solomon, 617-542-5300
Vice President
ssolomon@investorrelations.com

Copyright Business Wire 2009