Kopin Corp. Reports Operating Results (10-Q)
Kopin Corp. is a manufacturer of gallium arsenide transistor products and miniature flat panel displays for wireless communications and portable consumer electronics. The company's gallium arsenide heterojunction bipolar transistors are used to produce power amplifier circuits for wireless telephone handsets and gigabit circuits for fiber-optic and Internet data transmission. Kopin's CyberDisplay family of ultra-small high density imaging devices is designed for portable products including camcorders digital cameras and wireless handsets. (PRESS RELEASE) Kopin Corp. has a market cap of $281.4 million; its shares were traded at around $4.25 with a P/E ratio of 53.1 and P/S ratio of 2.4. Highlight of Business Operations: This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including, without limitation, statements made relating to our belief that we are a leading developer and manufacturer of advanced semiconductor materials and miniature displays, our belief that our products enable our customers to develop and market an improved generation of products; our belief that the decline in demand from our customers for use in wireless handset applications was a result of both lower demand and customers reducing inventory; our belief that customers reduction in inventory levels was in reaction to their expectation of lower demand in 2009; our belief that lower demand for our eyewear products is a result of the current depressed global economy and an inability by our customers to obtain financing; our expectation that sales for our display products for military applications will increase during the remainder of 2009; our expectation that total revenues for the year ended December 26, 2009 will be between $90 million and $110 million; our expectation that military revenues will increase in fiscal year 2009 compared to fiscal year 2008; our expectation that sales of our CyberDisplay products for digital still camera and camcorder applications will decline significantly in fiscal year 2009 compared to fiscal year 2008; our expectation that the average sales price of our III-V products will decline approximately 10% for the remainder of 2009; our belief that we have opportunities to increase III-V sales with certain customers in 2009; our expectation that Kowons revenues to us and to Samsung will decline in fiscal year 2009 compared to fiscal year 2008 levels; our expectation that our largest HBT customer will migrate to six inch GaAs wafers in fiscal year 2009; our belief that our revenues could decline significantly if we are not able to get reactors qualified or can not manufacturer the required quantity on six inch GaAs wafers; our expectation that fourth quarter revenues from the sale of III-V products will be lower than the third quarter; our expectation that Kowon may have a loss from operations in 2009; our expectation that we may have to record an impairment charge on Kowons long lived assets if sales of our display products for consumer electronic applications do not increase; our belief that one of the benefits of our display technology is the ability to produce high resolution display in small form factors; our expectation that in order to generate display revenues with above average gross margins, we will need to increase sales to customers who buy our higher resolution display products; our expectation that we have enough cash resources to support our operations and capital needs for at least the next twelve months; our expectation that we will spend between $6.0 and $10.0 million on capital expenditures over the next twelve months; our expectation that our third quarter will be our strongest sales quarter for displays to customers who use them in consumer electronic products, followed by our second quarter then our fourth quarter and our first quarter; our expectation that we will sell more display products for military applications which we would not expect to have historical sales trends; our expectation that changes in near-term interest rates will not be material to our cash flows or income; our expectation that market risk associated with our international operations is unlikely to have a material adverse effect on our business, financial condition or results of operation. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate, managements beliefs, and assumptions made by management. In addition, other written or oral statements, which constitute forward-
We have two principal sources of revenues: product revenues and research and development revenues. Product revenues consist of sales of our CyberDisplay products and our III-V products, principally gallium arsenide (GaAs) HBT transistor wafers. Research and development revenues consist primarily of development contracts with agencies of the U.S. government. For the three and nine months ended September 26, 2009, research and development revenues were $1.3 million and $4.3 million respectively. This contrasted with $1.4 million and $5.2 million for the corresponding periods in 2008.
The back-end packaging manufacturing process of our displays which are sold for consumer applications is performed at Kowon. As discussed above, we expect sales of our consumer display products to decline in fiscal 2009 as compared to fiscal year 2008 levels. Kowon had net income of $3.2 million and $1.5 million before intercompany eliminations for fiscal year 2008 and fiscal year 2007, respectively. We anticipate that sales of our display products for use in consumer electronic applications may decline such that Kowon may have a loss from operations in 2009. For the nine months ended September 26, 2009 Kowon had a net loss of $713,000. If sales of our display products for consumer electronic applications do not increase or new markets are not identified, we may have to record impairment charges on Kowons long lived assets, which are recorded in our financial statements at $2.9 million at September 26, 2009.
Read the The complete ReportKOPN is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.