<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR l5(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 1, 2000
Commission file number 0-19882
KOPIN CORPORATION
-----------------
(Exact name of registrant as specified in its charter)
Delaware 04-2833935
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
695 Myles Standish Blvd., Taunton, MA 02780-1042
------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 824-6696
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or l5(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of July 31, 2000
----- -------------------------------
Common Stock, par value $ .01 63,217,742
<PAGE>
KOPIN CORPORATION
INDEX
-----
<TABLE>
<CAPTION>
Page No.
-------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets at 3
July 1, 2000 and December 31, 1999
Consolidated Statements of Income and Comprehensive Income 4
for the three and six months ended July 1, 2000 and July 3, 1999
Consolidated Statements of Stockholders' Equity for the 5
six months ended July 1, 2000 and July 3, 1999
Consolidated Statements of Cash Flows for the 6
six months ended July 1, 2000 and July 3, 1999
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II - OTHER INFORMATION
Item 4 Submissions of Matters to a Vote of Security-Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE>
KOPIN CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
---------------------- ----------------------
<S> <C> <C>
Assets
Current assets:
Cash and equivalents $ 41,109,423 $ 65,981,848
Marketable securities, at fair value 54,423,951 33,117,555
Accounts receivable, net of allowance of $450,000
Billed 14,241,462 10,547,762
Unbilled 1,157,839 655,220
Inventory 4,154,116 6,157,195
Prepaid expenses and other current assets 1,166,341 1,651,905
------------ ------------
Total current assets 116,253,132 118,111,485
Equipment and improvements:
Equipment 34,670,784 32,849,431
Leasehold improvements 808,884 808,884
Furniture and fixtures 508,392 459,097
Equipment under construction 17,826,399 7,207,812
------------ ------------
53,814,459 41,325,224
Accumulated depreciation and amortization 22,757,718 20,653,963
------------ ------------
31,056,741 20,671,261
Other assets 8,551,612 4,352,793
Intangible assets 1,696,430 1,938,190
------------ ------------
Total assets $157,557,915 $145,073,729
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 6,709,578 $ 7,564,070
Accrued payroll and expenses 724,337 990,073
Other accrued liabilities 3,147,778 933,583
Current portion of long-term obligations 1,617,836 2,142,373
------------ ------------
Total current liabilities 12,199,529 11,630,099
Long-term obligations, less current portion 1,750,000 2,567,100
Minority interest 1,323,105 809,238
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share:
Authorized, 3,000 shares; none issued and outstanding - -
Common stock, par value $.01 per share: Authorized,
120,000,000 shares; issued, 63,217,742 shares
in 2000 and 60,298,724 shares in 1999 632,178 602,987
Additional paid-in capital 191,960,067 185,776,145
Deferred compensation (82,525) (110,035)
Accumulated other comprehensive income 399,174 509,725
Deficit (50,623,613) (56,711,530)
------------ ------------
Total stockholders' equity 142,285,281 130,067,292
------------ ------------
Total liabilities and stockholders' equity $157,557,915 $145,073,729
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
KOPIN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- ------------------
July 1, 2000 July 3, 1999 July 1, 2000 July 3, 1999
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Product revenues $24,332,145 $ 7,926,132 $43,642,408 $13,911,064
Research and development revenues 62,499 688,269 491,999 1,432,933
----------- ----------- ----------- -----------
24,394,644 8,614,401 44,134,407 15,343,997
Expenses:
Cost of product revenues 16,829,991 5,891,308 30,807,039 9,821,482
Research and development 1,426,068 1,347,670 4,527,935 3,346,814
Selling, general and administrative 3,354,580 1,421,067 4,981,116 2,343,997
Other 312,174 91,375 400,074 179,275
----------- ----------- ----------- -----------
21,922,813 8,751,420 40,716,164 15,691,568
----------- ----------- ----------- -----------
Income (loss) from operations 2,471,831 (137,019) 3,418,243 (347,571)
Other income and expense:
Interest and other income 1,446,506 407,120 2,885,569 941,636
Interest expense (100,160) (97,896) (186,046) (216,160)
----------- ----------- ----------- -----------
Income before minority interest 3,818,177 172,205 6,117,766 377,905
Minority interest in income of (3,002) (25,682) (29,849) (25,515)
subsidiary ----------- ----------- ----------- -----------
Net income $ 3,815,175 $ 146,523 $ 6,087,917 $ 352,390
=========== =========== =========== ===========
Net income per share:
Basic $.06 $.00 $.10 $.01
=========== =========== =========== ===========
Diluted $.06 $.00 $.09 $.01
=========== =========== =========== ===========
Weighted average number of common
shares outstanding:
Basic 63,037,210 49,745,576 62,520,160 49,647,528
=========== =========== =========== ===========
Diluted 68,154,383 52,598,432 68,068,015 52,576,408
=========== =========== =========== ===========
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- ------------------
July 1, 2000 July 3, 1999 July 1, 2000 July 3, 1999
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net income $3,815,175 $146,523 $6,087,917 $352,390
Foreign currency translation (9,796) 107,471 5,651 50,955
adjustments
Unrealized loss on marketable (17,831) (3,086) (116,202) (10,398)
securities, net ---------- -------- ---------- --------
Comprehensive income $3,787,548 $250,908 $5,977,366 $392,947
========== ======== ========== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
KOPIN CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JULY 1, 2000 AND JULY 3, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Accumulated Other
----------------- Paid-in Deferred Comprehensive
Shares Amount Capital Compensation Income Deficit Total
------ ------ ------- ------------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 49,074,244 $490,744 $108,586,721 ($165,055) $ 420,812 ($57,486,799) $ 51,846,423
Exercise of stock options 856,532 8,564 1,162,243 -- -- -- 1,170,807
Amortization of compensation
relating to grant of stock -- -- -- 27,510 -- -- 27,510
options
Net unrealized loss on
marketable
securities, net -- -- -- -- (10,398) -- (10,398)
Foreign currency translation
adjustments -- -- -- -- 50,955 -- 50,955
Net income for the six month
period ended July 3, 1999 -- -- -- -- -- 352,390 352,390
---------- -------- ------------ --------- --------- ------------ ------------
Balance, July 3, 1999 49,930,776 $499,308 $109,748,964 ($137,545) $ 461,369 ($57,134,409) $ 53,437,687
========== ======== ============ ========= ========= ============ ============
Balance, December 31, 1999 60,298,724 $602,987 $185,776,145 ($110,035) $ 509,725 ($56,711,530) $130,067,292
Exercise of stock options 2,919,018 29,191 6,183,922 -- -- -- 6,213,113
Amortization of compensation
relating to grant of stock
options -- -- -- 27,510 -- -- 27,510
Net unrealized loss on
marketable
securities, net -- -- -- -- (116,202) -- (116,202)
Foreign currency translation
adjustments -- -- -- -- 5,651 -- 5,651
Net income for the six month
period ended July 1, 2000 -- -- -- -- -- 6,087,917 6,087,917
---------- -------- ------------ --------- --------- ------------ ------------
Balance, July 1, 2000 63,217,742 $632,178 $191,960,067 ($82,525) $ 399,174 ($50,623,613) $142,285,281
========== ======== ============ ========= ========= ============ ============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
KOPIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
----------------
July 1, 2000 July 3, 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,087,917 $ 352,390
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation and amortization 3,739,698 1,916,113
Amortization of compensation relating to grant
of stock options 27,510 27,510
Minority interest in income of subsidiary 29,849 25,515
Changes in assets and liabilities:
Accounts receivable (4,183,381) (4,251,666)
Inventory 2,017,524 (1,792,579)
Prepaid expenses and other current assets 488,850 (477,584)
Intangible assets (158,313) (169,609)
Accounts payable and accrued expenses 981,805 1,514,468
------------ ------------
Net cash provided by (used in) operating activities 9,031,459 (2,855,442)
------------ ------------
Cash flows from investing activities:
Marketable securities (21,422,598) (1,728,920)
Other assets (4,198,724) (99,077)
Capital expenditures (13,688,938) (5,922,168)
------------ ------------
Net cash provided by (used in) investing activities (39,310,260) (7,750,165)
------------ ------------
Cash flows from financing activities:
Principal payment on long-term obligations (1,341,637) (1,175,337)
Issuance of stock by subsidiary 507,101 -
Proceeds from exercise of stock options 6,213,113 1,170,807
------------ ------------
Net cash provided by (used in) financing activities 5,378,577 (4,530)
------------ ------------
Effect of exchange rate changes on cash 27,799 21,660
------------ ------------
Net decrease in cash and equivalents (24,872,425) (10,588,477)
Cash and equivalents, beginning of period 65,981,848 30,807,335
------------ ------------
Cash and equivalents, end of period $ 41,109,423 $ 20,218,858
============ ============
Supplementary information -Interest paid in cash $ 195,330 $ 235,547
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
KOPIN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
---------------------
The consolidated financial statements for the six month periods ended July 1,
2000 and July 3, 1999 are unaudited and include all adjustments which, in the
opinion of management, are necessary to present fairly the results of operations
for the periods then ended. All such adjustments are of a normal recurring
nature. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission (File No. 0-19882) for the year ended December 31, 1999.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.
The consolidated financial statements include the accounts of the Company, its
wholly owned subsidiary and Kowon Technology Co., Ltd. ("Kowon"), a majority
owned subsidiary located in Korea. During the quarter, the Company has made an
additional investment in Kowon increasing in its equity position from 65% to
67%. All intercompany transactions and balances have been eliminated.
All share data, income per share, and related information for 1999 and 2000 give
retroactive effect to the 2 for 1 stock split effected in the form of a stock
dividend for shareholders of record as of June 30, 2000, which was effected on
July 12, 2000. All share data, income per share, and related information for
1999 also give retroactive effect to the 2 for 1 stock split effected in the
form of a stock dividend for shareholders of record as of December 20, 1999,
which was effected on December 29, 1999.
2. FOREIGN CURRENCY TRANSLATION
----------------------------
Assets and liabilities of non-U.S. operations are translated into U.S. dollars
at period end exchange rates, and revenues and expenses at rates prevailing
during the quarter. Resulting translation adjustments are accumulated as part of
other comprehensive income and aggregate $518,735 of unrealized gain at July 1,
2000. Transaction gains or losses are recognized in income or loss currently.
3. NET INCOME PER SHARE
--------------------
Basic net income per share is computed using the weighted average number of
shares of common stock outstanding during the period. Diluted net income per
share is computed using the weighted average number of common shares and
potential common shares outstanding during the period using the treasury method.
Potential common shares consist of outstanding options issued under the
Company's stock option plans.
4. STOCKHOLDERS' EQUITY
--------------------
In October 1999, the Company completed a public offering of 4,600,000 shares of
common stock at a price of $16.97 per share. Net proceeds to the Company totaled
approximately $73,154,000.
5. RECENT PRONOUNCEMENTS
---------------------
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for fiscal years
commencing after June 15, 2000. SFAS No. 133 requires fair value accounting for
all stand-alone derivatives and many derivatives embedded in other financial
instruments and contracts. The impact of SFAS No. 133 on us has not yet been
determined.
The Securities and Exchange Commission ("SEC") has released staff accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements", which sets
forth their views regarding revenue recognition. The Company believes its
revenue recognition practices are substantially in compliance with this
bulletin.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
Kopin is a leading developer and manufacturer of advanced semiconductor
materials and miniature flat panel displays. We use our proprietary technology
to design, manufacture and market products used in highly demanding commercial
wireless communications and high resolution portable applications. Our products
enable our customers to develop and market an improved generation of products
for these target applications.
We have two principal components of revenues: product revenues and research
and development revenues. Historically, product revenues have consisted of sales
of our Heterojunction Bipolar Transistor ("HBT") transistor wafers. For the six
month period ended July 1, 2000, we had product revenues of $43.6 million, or
98.9% of total revenues compared to $13.9 million, or 90.7% of total revenues
for the same period in 1999. We began shipping our CyberDisplay product in 1998.
This product line represented 17.7% of our product revenues for the six months
ended July 1, 2000 compared to 10.2% for the same period in 1999.
Research and development revenues consist primarily of development
contracts with agencies of the U.S. government. Management has intensified its
efforts on the marketing and sales of its commercial products over the past few
years resulting in the decline of research and development revenues as a
percentage of total revenues. For the six months ended July 1, 2000, research
and development revenues declined to $.5 million, or 1.1% of total revenues
compared to $1.4 million, or 9.3% of total revenues for the same period in 1999.
We believe that research and development revenues will continue to decline on an
annual basis as a percentage of total revenues for the near future.
RESULTS OF OPERATIONS
REVENUES. Our total revenues for the three and six months ended July 1,
2000 were $24.4 million and $44.1 million, respectively, compared to $8.6
million and $15.3 million during the corresponding periods in 1999. This
represented increases of approximately $15.8 million or 183.7% and $28.8 million
or 188.2% for the three and six months ended July 1, 2000, respectively. Our
product revenues were $24.3 million and $43.6 million for the three and six
months ended July 1, 2000, respectively, compared to $7.9 million and $13.9
million for the same periods in 1999, increases of approximately $16.4 million
or 207.6% and $29.7 million or 213.7%, respectively. Product revenue growth was
attributable to an increase in sales of our gallium arsenide products as well as
our CyberDisplay products in the three and six months ended July 1, 2000
compared to the same periods in 1999. For the six months ended July 1, 2000,
gallium arsenide product sales and CyberDisplay product sales were $35.9 million
and $7.7 million, respectively, as compared to $12.5 million and $1.4 million,
respectively, for the six months ended July 3, 1999. Research and development
revenues for the three and six months ended July 1, 2000 were $.1 million and
$.5 million compared to $.7 million and $1.4 million for the same period in
1999, decreases of $.6 million or 85.7% and $.9 million or 64.3%, respectively.
Research and development revenues declined primarily due to the expirations of
multi-year contracts with the U.S. government.
COST OF PRODUCT REVENUES. Cost of product revenues, which is comprised of
materials, labor and manufacturing overhead related to our products, was $16.8
million and $30.8 million for the three and six months ended July 1, 2000
compared to $5.9 million and $9.8 million during the corresponding periods in
1999. This represented an increase of $10.9 million, or 184.8% for the three
months ended July 1, 2000, and an increase of $21.0 million or 214.3% for the
six months ended July 1, 2000. For the six months ended July 1, 2000 and
July 3, 1999, cost of product revenues as a percentage of sales was 70.5% and
70.6%, respectively.
RESEARCH AND DEVELOPMENT. Research and development expenses (R&D) are
incurred under development programs for gallium arsenide and display products in
support of internal development programs or programs funded by agencies of the
U.S. government. R&D costs include staffing, purchases of materials and
laboratory supplies, circuit design costs, fabrication and packaging of display
products, and overhead. Funded R&D was $.2 million and $.6 million for the three
and six months ended July 1, 2000 compared to $.8 million and $1.7 million for
the same periods in the prior year, decreases of $.6 million and $1.1 million,
respectively, due to reduced expenses caused by the expiration of multi-year
contracts with agencies of the U.S. government. Internal R&D was $1.2 million
and $3.9 million for the three and six months ended July 1, 2000 compared to $.5
million and $1.6 million during the corresponding periods in 1999. The increase
in internal R&D was primarily the result of development activities related
primarily to higher resolution displays.
8
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses (S,G&A) consist of the expenses incurred by our sales and marketing
personnel and related expenses, and administrative and general corporate
expenses. S,G&A was $3.4 million for the three months ended July 1, 2000
compared to $1.4 million during the corresponding period in 1999, an increase of
$2.0 million, or 142.9%. S,G&A was $5.0 million for the six months ended July 1,
2000 compared to $2.3 million during the corresponding period in 1999, an
increase of $2.7 million, or 117.4%. The increase in S,G&A was primarily due to
increases in sales and marketing travel expenses, headcount in procurement,
management information and accounting staffs. In addition, S,G&A expenses
include non-cash charges for compensation expense of $27,510 for both six month
periods in 2000 and 1999, relating to the issuance of certain stock options.
OTHER. Other expenses, primarily amortization of patents and licenses, were
$.3 million and $.4 million for the three and six month periods ended July 1,
2000 compared to $.1 million and $.2 million during the corresponding periods in
1999.
OTHER INCOME, NET. Other income, net was $1.3 million and $2.7 million for
the three and six months ended July 1, 2000 compared to $.3 million and $.7
million during the corresponding period in 1999. Interest income earned during
the three and six months ended July 1, 2000 increased $1.0 million and $1.9
million, respectively, due to higher cash balances resulting from the October
1999 equity placement and higher interest rates.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations primarily through public and private
placements of our equity securities, research and development contract revenues,
and sales of our gallium arsenide and display products. We believe our available
cash resources will support our operations and capital needs for at least the
next twelve months.
As of July 1, 2000, we had cash and equivalents and marketable securities
of $95.5 million and working capital of $104.1 million compared to $99.1 million
and $106.5 million, respectively, as of December 31, 1999. The decrease in cash
and equivalents and marketable securities was primarily due to capital and
investment expenditures of $17.9 million and principal payments on long-term
obligations of $1.3 million, partially offset by cash provided by operations of
$9.5 million and proceeds from the exercise of stock options of $6.2 million.
The increase in capital expenditures is primarily for our expansion programs to
increase manufacturing capacity for our gallium arsenide and display products.
Our subsidiary, Kowon, issued additional shares of common stock to its
existing shareholders which resulted in an increase in cash and equivalents of
$.5 million.
We periodically enter into long-term debt arrangements to finance equipment
purchases and other activities. As of July 1, 2000, debt obligations totaled
$3.4 million, of which $1.6 million is payable in the next twelve months.
Our CyberDisplay products are targeted at large sales volume consumer
electronic and wireless communication applications. We believe that in order to
obtain customers in these markets, it has been necessary to make significant
investments in equipment and infrastructure. We believe that it will be
necessary to continue to make significant investments in equipment and
development in order to produce current and future CyberDisplay products. As a
result of the current cost structure of our CyberDisplay product line, our
ability to achieve profitability in that product line depends upon achieving
significant sales volumes and higher gross profit margins. We have not yet
produced our CyberDisplay products at volumes necessary to achieve
profitability. Accordingly, we may not be able to obtain sufficient sales
volumes, or if sufficient sales volumes are achieved, we may not be able to
produce our CyberDisplay products at a gross margin which will allow the product
line to generate a profit.
We lease equipment and our facilities located in Taunton and Westborough,
Massachusetts, and Los Gatos, California, under non-cancelable operating leases.
The Taunton leases expire through May 2010. The Westborough lease expires in
October 2002, with renewable options for up to two additional years at our
election. The Los Gatos lease covers a five year period terminating in 2002. We
will make lease payments of approximately $1.4 million per year over the
remaining terms of these leases.
We expect to expend approximately $30.0 million on capital expenditures
over the next twelve months, primarily for the acquisition of equipment relating
to the production of our HBT transistors and the manufacturing, packaging and
testing
9
<PAGE>
of CyberDisplay products, including the establishment of a second manufacturing
product facility for our HBT transistor wafers.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for fiscal years
commencing after June 15, 2000. SFAS No. 133 requires fair value accounting for
all stand-alone derivatives and many derivatives embedded in other financial
instruments and contracts. The impact of SFAS No. 133 on us has not yet been
determined.
The Securities and Exchange Commission ("SEC") has released staff
accounting Bulletin No. 101, "Revenue Recognition in Financial Statements",
which sets forth their views regarding revenue recognition. The Company believes
its revenue recognition practices are substantially in compliance with this
bulletin.
Certain of the statements contained in this Form 10-Q, including
Management's Discussion and Analysis of Financial Condition and Results of
Operations, are forward-looking statements that involve a number of risks and
uncertainties. In addition to the risks and uncertainties set forth in this Form
10-Q, other factors that could cause actual results to differ materially include
the following: general economic and business conditions and growth in the flat
panel display and the gallium arsenide integrated circuit and materials
industries, the impact of competitive products and pricing, availability of
third party components and wafer substrates, 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, changes in foreign currency exchange rates, and the
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 Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
We invest our excess cash in high quality government and corporate
financial instruments which bear minimal risk. We believe that the effect, if
any, of reasonably possible near-term changes in interest rates on our financial
position, results of operations, and cash flows should not be material. We sell
our products to customers worldwide. We maintain a reserve for potential credit
losses and such losses have been minimal. We are exposed to changes in foreign
currency exchange primarily through our translation of our foreign subsidiary's
financial position, results of operations, and cash flows and the sale of
CyberDisplay products to customers in Asia.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On May 25, 2000, the Company held an Annual Meeting of Stockholders to consider
and vote upon the following four proposals:
(1) A proposal to elect six directors of the Company to their successors are
duly elected and qualified. serve until the next Annual Meeting of
Stockholders and until
(2) A proposal to amend the Company's certificate of incorporation to
increase the number of authorized shares from 60,000,000 to 120,000,000.
(3) A proposal to ratify the amendment to the Company's 1992 Stock Option Plan
increasing the number of shares authorized for issuance under the Plan.
(4) A proposal to ratify the appointment of Deloitte & Touche LLP as
independent accountants of the Company for the current fiscal year.
10
<PAGE>
Results with respect to the voting on each of the proposals were as follows:
For Withheld Authority
---------- ------------------
Proposal 1: John C.C. Fan 27,384,676 367,917
David E. Brook 27,356,431 396,162
Andrew H. Chapman 27,499,184 253,409
Morton Collins 27,498,873 253,720
Chi Chia Hsieh 27,148,687 603,906
Michael A. Wall 27,384,076 368,517
Proposal 2: 26,061,274 votes for; 1,638,637 votes against; 52,682
abstentions; and 0 broker non-votes.
Proposal 3: 19,425,752 votes for; 8,229,905 votes against; 96,936
abstentions; and 0 broker non-votes.
Proposal 4: 27,626,246 votes for; 82,537 votes against; 43,810 abstentions;
and 0 broker non-votes.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.2(a) Amendment to Certificate of Incorporation
3.2(b) Amendment to Certificate of Incorporation
10.3 Amendment to 1992 Stock Option Agreement
10.26 Amended and Restated Employment Agreement between the Company and Dr.
John C.C. Fan, dated as of February 20, 2000
27 Financial Data Schedule
(b) Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KOPIN CORPORATION
(Registrant)
Date: August 11, 2000 By: /s/ John C.C. Fan
-----------------
John C.C. Fan
President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
Date: August 11, 2000 By: /s/ Richard A. Schneider
------------------------
Richard A. Sneider
Treasurer and Chief Financial Officer
(Principal Financial and Accounting
Officer)
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