- 11 May 2006 -

Kopin first quarter 2006 confirms strong demand for HBTs

Kopin Corp. announced financial results for the first quarter ended April 1, 2006, revealing revenues of $18.7m, which is at the high end of its guidance of $17-19m.
The company's net income was $78,000 compared with net income of $1.2m for the first quarter of 2005 and net income of $3.7m, for the fourth quarter of 2005. Financial results for the first quarter of 2006 include a charge of $435,000 in stock-based compensation expense, reflecting the Company's adoption, effective January 1, 2006, of Statement of Financial Accounting Standards ("SFAS") No. 123R Share-Based Payments.

III-V revenue was $12.8m, compared with $9.4m in the first quarter of 2005 and $13.5m in the fourth quarter of 2005. This revenue for the first quarter of 2006 included $850,000 as final payment under the Company's joint-venture agreement with KoBrite.
"Growing demand for our HBT drove a 37% year-over-year increase in III-V revenue," said Dr John C.C. Fan, Kopin's chairman and CEO. "In our display business, as expected, we began a transition from the low-end camcorder viewfinder market to product categories with higher margins and strong growth potential, including military systems and video eyewear products.

"The wireless handset market is growing at about 15%, driven by demand for advanced cell phones in established markets and the rapid adoption of cell phones in developing countries. Multiple power amplifiers are needed to handle the advanced features and functions of these phones, further increasing the demand for our HBT wafers.

"Based on strong orders from our IC partners, we have begun implementing our strategy to increase HBT capacity by more than 50% over the next 24 months. We are accomplishing this increase by installing new equipment at Kopin, qualifying KTC - our licensed HBT original equipment manufacturer in Taiwan - and further improving operational efficiency. With an estimated 80% of the worldwide merchant HBT market, Kopin has the dominant capacity, performance and brand in the industry. Our HBT product line has entered a growth phase that we believe will only extend our position as the market leader."

Commenting on Kopin's business outlook, Dr Fan said, "For the second quarter of 2006, we expect total revenue to be in the range of $18.5m to $20.5m, with continuing strength from our HBT products, while in our display business we expect to see continued progress in the military and consumer electronics markets."

Web: www.kopin.com