Kopin Corporation Reports Second-Quarter 2013 Operating Results

Kopin Corporation Reports Second-Quarter 2013 Operating Results

WESTBOROUGH, Mass.--(BUSINESS WIRE)-- Kopin Corporation (NAS: KOPN) , a leading developer of innovative wearable computing technologies and solutions, today reported financial results for the second quarter ended June 29, 2013, and provided an update on its business initiatives.

Comments on the Second Quarter


"Interest in our wearable computing technology solutions among current and prospective customers continues to grow," said Dr. John C.C. Fan, Kopin's President and Chief Executive Officer. "During the second quarter we advanced our ongoing discussions with customers and prospects in areas such as product definition and design, while on the technology front we continued development of our display, optical and noise cancellation technologies.

"A stream of consumer electronics and mobile communications companies are exploring the wearable computing technology market, further strengthening our belief in the significance of the market opportunity. Based on conversations with current and prospective customers, our expertise in critical disciplines, including display, optics, noise cancellation and ergonomics, is what distinguishes us as a leading partner to help these companies build the coming wave of wearable products," Dr. Fan said.

"We also made significant strides during the quarter in developing an Android version of our software, which we anticipate will be available by year end to complement our Windows version," Dr. Fan said.

Second Quarter Results

Total revenues for the second quarter ended June 29, 2013, were $6.1 million, compared with $7.0 million for the second quarter of 2012, primarily reflecting a decline in sales of display products for military applications. Cost of goods sold was 110.6% of revenues for the second quarter of 2013 compared with 81.5% of revenues in the same period of 2012, reflecting a lower percentage of display sales from our higher margin military products, an accrual of approximately $0.8 million for the repayment of a state jobs grant, the write-down of approximately $0.6 million for excess inventory associated with military products and manufacturing inefficiencies resulting from reduced volumes.

Research and development expenses for the second quarter were $3.7 million, or approximately 60% of revenues, compared with $2.9 million, or about 42% of revenues for 2012, reflecting an increase in costs to develop our wearable and military technologies.

Selling, general and administrative expenses were $4.7 million, or approximately 78% of revenues, in the second quarter of 2013, compared with approximately $4.1 million, or about 59% of revenues in the same period of 2012.

Net loss for the second quarter of 2013 was $7.8 million, or $0.12 per share, compared with net loss of $5.2 million, or $0.08, for the same period of 2012.

Including the proceeds from the sale of its III-V assets, Kopin's cash, equivalents and marketable securities at June 29, 2013, increased to $130.4 million at June 29, 2013 from $92.5 million at year-end 2012.

Cash flow used in operating activities for the six month ended June 29, 2013, was $6.7 million.

Outlook

"Kopin is in the process of transforming its business model from one that has been primarily commodity-based to one powered by providing innovative solutions for wearable devices with the opportunity to generate substantially higher gross margins," Dr. Fan said. "We continue to make the strategic investments necessary to establish Kopin as the preeminent developer of components and solutions in the wearable technology market."

Based on its performance through the first six months of 2013 and its anticipated investments for the remainder of the year, Kopin now expects a net loss in the range of $28 million to $33 million for the 12 months ending December 28, 2013. This guidance excludes the impact of the Company's sale of its III-V assets and its investment in Kopin Taiwan Corporation, and includes its acquisition of a majority interest in e-MDT America.

Financial Results Conference Call

In conjunction with its second-quarter 2013 financial results, Kopin will host a teleconference call for investors and analysts at 9:00 a.m. ET today. To participate, please dial (877) 709-8155 (U.S. and Canada) or (201) 689-8881 (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

Kopin is a leading developer and provider of innovative wearable technologies and solutions. Kopin's technology portfolio includes ultra-small displays, optics, speech enhancement technology, software, low-power ASICs, and ergonomically designed headset computing systems. Kopin's proprietary components and technology 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 and Golden-i are trademarks of Kopin Corporation.

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 Company's efforts to derive revenue from royalty and licensing fees and increase gross margins; the Company's plans to make strategic investments in its establish itself as the preeminent developer of components and solutions in the wearable technology market; and the Company's expectation that its net loss for full-year 2013 will be in the range of $28 million to $33 million. 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 following: the Company's 2013 financial expectations may turn out to be wrong; there may be issues that prevent the adoption or further development of the Company's wearable computing technologies; manufacturing, marketing or other issues may prevent either the adoption or rapid acceptance of products; the Company might be adversely affected by competitive products and pricing; new product initiatives and other research and development efforts may be unsuccessful; the Company could experience the loss of significant customers; costs to produce the Company's products might increase significantly, or yields coulddecline; the Company's customers might be unable to ramp production volumes of its products, or the Company's product forecasts could turn out to be wrong; manufacturing delays, technical issues, economic conditions or external factors may prevent the Company from achieving its financial guidance; 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 29, 2012, 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

Supplemental Information

(Unaudited)

Three Months Ended

Six Months Ended

June 29, 2013

June 30, 2012

June 29, 2013

June 30, 2012

Display Revenues by Category (in millions)

Military Applications

$

3.1

$

3.1

$

5.7

$

10.7

Consumer Electronics Applications

2.5

3.0

5.5

5.8

Research and Development

0.5

0.9

1.2

1.4

Total

$

6.1

$

7.0

$

12.4

$

17.9

Stock-Based Compensation Expense

Continuing Operations

Cost of product revenues

$

65,000

$

91,000

$

118,000

$

178,000

Research and development

73,000

68,000

127,000

133,000

Selling, general and administrative

776,000

915,000

2,175,000

1,783,000

$

914,000

$

1,074,000

$

2,420,000

$

2,094,000

Other Financial Information

Depreciation and amortization

$

906,000

$

2,527,000

$

2,002,000

$

5,133,000

Continuing operations

$

906,000

$

1,025,000

$

2,002,000

$

2,225,000

Non-continuing operations

$

-

$

1,502,000

$

-

$

2,908,000

Capital expenditures

$

206,000

$

3,972,000

$

514,000

$

5,748,000

Treasury stock purchases

$

2,231,000

$

-

$

2,231,000

$

3,456,000

Kopin Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended

Six Months Ended

June 29, 2013

June 30, 2012

June 29, 2013

June 30, 2012

Revenues:

Product revenues

$

5,608,778

$

6,087,547

$

11,176,802

$

16,490,773

Research and development revenues

469,867

924,031

1,220,928

1,386,835

6,078,645

7,011,578

12,397,730

17,877,608

Expenses:

Cost of product revenues

6,203,960

4,960,588

12,168,366

12,109,096

Research and development

3,657,952

2,927,695

7,905,508

5,929,910

Selling, general and administrative

4,719,566

4,118,056

10,468,679

8,327,685

Impairment of investments

-

1,704,770

-

1,704,770

14,581,478

13,711,109

30,542,553

28,071,461

Loss from operations

(8,502,833

)

(6,699,531

)

(18,144,823

)

(10,193,853

)

Other income (expense), net

851,515

394,183

(1,279,905

)

1,429,314

Loss before (provision) benefit for income taxes, equity losses in

(7,651,318

)

(6,305,348

)

(19,424,728

)

(8,764,539

)

unconsolidated affiliates and net loss (income) from noncontrolling interest

(Provision) benefit for income taxes

(194,000

)

85,500

12,846,000

(12,800

)

Loss before equity loss in unconsolidated affiliate and net

(7,845,318

)

(6,219,848

)

(6,578,728

)

(8,777,339

)

loss (income) from noncontrolling interest

Equity losses in unconsolidated affiliates

(83,697

)

(233,907

)

(182,785

)

(390,202

)

Loss from continuing operations

(7,929,015

)

(6,453,755

)

(6,761,513

)

(9,167,541

)

(Loss) income from discontinued operations, net of tax

(49,356

)

1,328,961

20,147,532

1,574,661

Net (loss) income

(7,978,371

)

(5,124,794

)

13,386,019

(7,592,880

)

Net loss (income) attributable to noncontrolling interest

165,183

(72,738

)

436,900

(183,975

)

Net (loss) income

$

(7,813,188

)

$

(5,197,532

)

$

13,822,919

$

(7,776,855

)