III-V revenues were affected by a shift in wireless handset sales as various OEMs are adjusting their product offering dates from a pattern which focused on the U.S. holiday season to more year- round introductions of handsets and tablets.

Kopin Corporation a supplier of advanced semiconductor products has announced financial results for the third quarter and nine months ended September 24, 2011.

Total revenues for the third quarter were down 6 percent to $29.6 million compared with $31.6 million for the same quarter of 2010. Through the nine months ended September 24, 2011, revenues increased to $95.9 million from $87.2 million for the comparable period of 2010.

“Despite the uncertain economic environment, our performance through the first nine months of 2011 has been quite strong,” said John C.C. Fan, Kopin’s President and Chief Executive Officer. “Revenues are 10 percent ahead of the same period in 2010, and we have generated $10.6 million in cash from operating activities.”

“This has enabled us to maintain a strong balance sheet – $103 million in cash and marketable securities and no debt – while at the same time aggressively investing to grow our business organically and through acquisitions. Income from operations has more than doubled to $2.4 million for the first nine months of 2011, even as we have invested $6.0 million more in research and development this year over last year,” he continued.

III-V revenues for the third quarter were $15.5 million compared with $16.6 million for the year-ago quarter. For the nine-month period of 2011, III-V revenues were $49.1 million, up 4 percent from $47.1 million through the same period of last year. Display revenues were $14.1 million for the third quarter of 2011 versus $15.0 million for the same period a year ago. Through the nine months ended September 24, 2011 display revenues increased 17 percent to $46.8 million from $40.1 million in the year-ago period.

“III-V third-quarter revenues were down sequentially, but our current forecast indicates that the fourth-quarter revenues will be up over the third quarter,” Fan said. “We believe our III-V revenues were affected by a shift in wireless handset sales as various OEMs are adjusting their product offering dates from a pattern which focused on the U.S. holiday season to more year- round introductions of handsets and tablets.”

Gross margin for the third quarter of 2011 was $9.5 million, or 33.2 percent of product revenues, compared with $10.1 million, or 32.3 percent of product revenues, for the comparable period of 2010. Through the first nine months of 2011, gross margin was $30.9 million, or 34.0 percent of product revenues compared with $23.7 million, or 28.1 percent of product revenues, for the same period of 2010.

Research and development (R&D) expenses were $6.4 million, or 22 percent of revenues, compared with $4.8 million, or 15 percent of revenues, in the third quarter of 2010, reflecting Kopin’s investments in its Golden-i technology, III-V smartphone products and capacity expansion, military display products and the addition of Forth Dimension Displays (FDD), which the Company acquired in January 2011. R&D expenses totaled $19.9 million through the first nine months of 2011 compared with $13.9 million for the same period of 2010.

Selling, general and administrative (SG&A) expenses were $4.4 million in the third quarter of 2011 compared with $3.9 million for the same period of last year. SG&A expenses were $13.5 million for the nine months ended September 24, 2011 compared with $11.7 million for the same period in 2010. The increase in SG&A expenses for 2011 as compared to 2010 is a result of the inclusion of FDD.

Net income was $0.8 million, or $0.01 per diluted share, for the third quarter of 2011 compared with $1.4 million, or $0.02 per diluted share, for the third quarter of 2010. Results for the 2011 and 2010 three-month periods included a $1.0 million gain and a $0.6 million loss, respectively, related to foreign currency fluctuations.

Net income through the first nine months of 2011 was $3.7 million, or $0.06 per diluted share, compared with $4.3 million, or $0.06 per diluted share, in 2010. Results for the 2011 nine-month period included a $0.4 million gain on the sale of equity investments, while results for the 2010 period included a gain on the sale of equity investments of $2.6 million.

Business Outlook

Based on current trends in its business, the Company expects 2011 revenues in the range of $128 million to $132 million. In the fourth quarter of 2011 Kopin believes that revenues will increase from the third quarter of the year as a result of increased demand for its III-V BiHEMT products and display sales driven by new design wins for digital still cameras and increased military product shipments.

“During periods of economic volatility as we are experiencing, we understand that there is one school of thought to scale back on investment and R&D and wait for the market to bounce back. Our philosophy is to use opportunities like this to invest in our business – including BiHEMT structures, the TWS program, night vision technology and Golden-i – to extend our leadership position while still maintaining our financial strength,” Fan said.

“Our BiHEMT activities are having the most immediate impact, as demand for this product is up six-fold from 2010 and we expect it to continue to ramp through 2012. During the summer our night vision products went through the first round of testing and the feedback was good.”

“During the third quarter we produced another round of qualification units that were shipped to the government in October. These will be tested through first quarter of 2012 after which it is anticipated the government will award production contracts. Furthermore, during the third quarter we had installed a wireless camera into the game-changing Golden-i system. While it will continue to undergo modifications and testing we are on schedule for its formal product introduction next year,” concluded Fan.

Kopin hosted a conference call discussing its third-quarter 2011 financial results. The call is available as an archived audio webcast on the “Investors” section of the Kopin website.