Kopin Corporation Announces Fourth-Quarter and Year-End 1999 Financial Results

Combination of strong growth in GaAs and CyberDisplay businesses propels fourth-quarter revenue to record $13.6 million

Taunton, MA. Kopin Corporation (NASDAQ: KOPN), a leading developer and manufacturer of gallium arsenide (GaAs) heterojunction bipolar transistor (HBT) products and miniature flat panel displays, today reported results for the fourth quarter ended December 31, 1999.

Revenue for the fourth quarter of 1999 increased 96 percent to a record $13,581,732 compared to $6,918,606 for the same period one year earlier. Kopin s net income for the 1999 fourth quarter was $776,666, or $0.02 per fully diluted share, compared to a net loss of $2,636,210, or $0.22 per share, one year ago. Fourth-quarter product revenue increased 119 percent to $13,023,570 from $5,940,674 for the same period in 1998. Revenue from GaAs products was approximately $11,070,000 in the fourth quarter of 1999, 99 percent higher than $5,572,000 for the fourth quarter of 1998.

For the year ended December 31, 1999, revenue was $38,662,010 compared with $26,904,997 for the same period last year, an increase of 43 percent. Net income for the period was $775,271, or $0.03 per fully diluted share, compared with a net loss of $2,967,887, or $0.25 per share in 1998. Product revenue increased 56 percent in 1999 to a record $36,125,822 from $23,225,415 in 1998. Revenue from GaAs products grew 71 percent to approximately $31,481,000 in 1999 from $18,388,000 in 1998.

The Company ended the year with cash and marketable securities of $95 million, which reflects the completion of a successful 2.3 million-share public offering in October 1999 that raised approximately $73 million of net proceeds for Kopin.

"Kopin s highly successful 1999 finished with an excellent fourth quarter, highlighted by strong growth in both our HBT and display businesses," stated Dr. John C.C. Fan, Kopin s president and chief executive officer. "Kopin s revenue growth reflects the continued expansion of our HBT operation and an increasing contribution from our CyberDisplay business. Despite our large investments in expanding our manufacturing capacity at both our HBT and CyberDisplay facilities, we are gratified that we are reporting a modest profit."

HBT Highlights

In the fourth quarter, Kopin experienced continued sales growth for its HBT transistors, which are used to produce power amplifier circuits for CDMA, TDMA and GSM digital cellular and PCS handsets, as well as circuits for broadband OC-48 and OC-192 SONET systems. In November 1999, Kopin announced that Mitsubishi Electric Corp. was using Kopin s HBT transistor wafers for power amplifiers in Mitsubishi s GSM (Global System for Mobile) digital phones.

Dr. Fan continued, "During the quarter, we commenced volume shipments to Mitsubishi Electric Corp., which is now using Kopin s HBT transistors for its new GSM power amplifiers. This is an important win, demonstrating that our HBT transistors are well suited for the GSM standard, as well as the CDMA standard."

During the fourth quarter, Kopin continued to expand its GaAs HBT capacity. The expansion involves the installation of six new production systems by the end of March 2000 that will quadruple the company s capacity to produce heterojunction bipolar transistors. In December, the Company began shipping sample 6-inch InGaP and AlGaAs HBT transistor wafers from its new, high volume production systems. This new production platform provides high volume support for 6-inch telecom circuit production programs that will begin in 2000. Two such new systems are presently in place at Kopin. In January 2000, Kopin ordered eight additional HBT production systems, which will be delivered in calendar year 2000.

"Demand for our HBT transistors is surging," Dr. Fan added. "As a result, it is critical that we invest aggressively to expand our capacity. In addition to acquiring and installing new systems and transitioning to six-inch wafer platforms, we are evaluating additional manufacturing locations that will enable us to handle our expected requirements beyond next year. By the end of 2000, we anticipate our HBT wafer output potential will be more than 300,000 4-inch wafers."

CyberDisplay Highlights

Sales of Kopin s CyberDisplay grew substantially in the fourth quarter, driven primarily by orders from JVC, which is using the Company s CyberDisplay as the viewfinder in its CyberCam camcorder. In January 2000, Kopin announced that it had begun volume shipment of its CyberDisplay to Matsushita Electric Industrial Co. for use in Panasonic camcorders that Matsushita launched in Europe. As a result of this win, Kopin now has captured business with two of the world s top camcorder manufacturers. In a related announcement today (see separate news release), Kopin announced that it is planning to double its CyberDisplay production capacity.

"We have made tremendous strides in our plan to accelerate the growth of our CyberDisplay as we achieved every major goal we set for this business in 1999," continued Dr. Fan. "Interest in our CyberDisplay is strong as a result of our wins with JVC and Matsushita, as well as with Mustek for its newest digital still camera. In light of the increased demand, we are expanding our CyberDisplay manufacturing capacity and continuing to automate the production process."

Outlook

Dr. Fan concluded, "Kopin is poised to accelerate its growth as we move into 2000. Given the increasing sophistication of communications products that handle voice, data and video, our gallium arsenide HBT and CyberDisplay products represent a powerful strategic combination for Kopin. To keep pace with expected demand, our priorities include the continued addition of capacity for our HBT and CyberDisplay manufacturing operations, the installation of new HBT production systems and the automation of our CyberDisplay production. We plan to continue capitalizing on the explosive demand in the wireless sector by expanding our customer base and identifying new applications for our products. And we are focused on continuing to win sockets for our CyberDisplay in both consumer applications and next generation 3-G wireless phones.

About Kopin

Kopin Corporation is a leading manufacturer of gallium arsenide (GaAs) transistor products and miniature flat panel displays for wireless communications and digital imaging applications. The Company s GaAs heterojunction bipolar transistors are used to produce power amplifier circuits for wireless telephone handsets and gigabit circuits for fiberoptic and Internet data transmission. Kopin s CyberDisplay family of ultra-small, high density imaging devices is designed for products including camcorders and digital cameras. Kopin s Web site is located at www.kopin.com.

Forward-looking statements in this news release about Kopin Corporation s fourth quarter and 1999 financial results and the Company s expectations for future growth are made under the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties that could materially affect future results. Among these risk factors are general economic and business conditions and growth in the flat panel display and gallium arsenide integrated circuit and materials industries, the impact of competitive products and pricing, availability of third-party components, availability of integrated circuit fabrication facilities, cost and yields associated with production of the Company s CyberDisplay imaging devices and HBT transistor wafers, loss of significant customers, acceptance of the Company s products, continuation of strategic relationships, Year 2000 matters, and the other risk factors and cautionary statements listed from time to time in the Company s periodic reports and registration statements filed with the Securities and Exchange Commission, including but not limited to, the Company s prospectus dated October 22, 1999 and its Annual Report on Form 10-K for the fiscal year ended December 31, 1998.

CyberDisplay is a trademark of Kopin Corporation.

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