Release Details

MIDDLETOWN, R.I.--(BUSINESS WIRE)--Feb. 8, 2001--KVH Industries, Inc. (Nasdaq: KVHI) today reported that revenue for the fourth quarter ended December 31, 2000, grew 60% to $8.8 million from $5.5 million in the fourth quarter of 1999.

The Company also reported fully diluted earnings per share for the fourth quarter of $0.01 compared to a loss of $0.17 per share for the same quarter of 1999. Operating income for the period was $0.2 million and net income was approximately $0.1 million compared to a loss of $1.5 million and $1.2 million, respectively, for the same period in 1999.

"In 2000 we set out to return KVH to profitability," said Martin Kits van Heyningen, President and CEO. "We clearly accomplished this goal by achieving earnings on an EBITDA basis during the second quarter of 2000, followed by increasing net earnings in the third and fourth quarters of the year. Robust revenue growth in each of our three target markets: Fiber Optics, Mobile Satellite Communications, and Tactical Navigation are driving our business. KVH's reputation for high-quality products, superior technology, and reliability are gaining increased recognition and acceptance in these rapidly growing markets. Our strong revenue growth allowed us to achieve profitability while aggressively investing in new technology development."

For the year ended December 31, 2000, KVH stated that revenue increased 32% to approximately $30.0 million for 2000, compared to $22.8 million for 1999. The company reported net loss per share of $0.12, compared to a loss of $0.37 per share in the comparable year-ago period. Operating loss was $1.1 million and net loss was $0.9 million compared to an operating loss of $4.0 million and a net loss of $2.7 million, for fiscal 2000 and 1999, respectively.

Richard Forsyth, Chief Financial Officer, commented, "Throughout fiscal 2000, we have been highly successful in decreasing quarterly operating expenses as a percentage of revenue in every cost category, leading to significant improvements in operating profitability. This quarter we drove our operating efficiencies to the bottom line. Looking ahead to 2001 we anticipate that the positive trends we experienced during 2000 in our core business will continue. However, the pace of investment in our photonic fiber and mobile broadband/TV research initiatives will determine the company's overall profitability."

Mr. Kits van Heyningen commented, "During the past year, we made an initial investment in two technologies that, if successfully developed, could accelerate the growth of KVH Industries. Our goal is to bring the initial products using these technologies to market within 18 months. We believe these products will address customer requirements in very large markets."

"To fully capitalize on the potential both of these projects have demonstrated during the initial phases of development, we have decided to invest heavily in these programs. As part of that decision, the company recently completed a private placement of Common Stock for $5 million. As 2001 progresses and we gain a better understanding of the commercial potential for both technologies, we may accelerate the development efforts. Such acceleration would require our seeking additional outside capital. In addition, acceleration in the programs' schedules would involve increased R&D spending, which, as a result, may cause us to operate at a net loss during the year. By pursuing these development programs, we believe we are setting KVH on a long-term course to compete in two multi-billion dollar markets that we currently don't address."

Fourth-quarter highlights:

• On December 12, 2000, KVH Industries announced a two-year, $4.7 million contract to equip the new armored vehicles of an undisclosed southeast Asian country with KVH's TACNAV(TM) tactical navigation systems.

• On December 6, 2000, KVH Industries introduced the TracVision(R) L3 mobile satellite television antenna in North America. The TracVision L3 has a gyro-stabilized antenna and receives programming from DIRECTV(R), the DISH Network(TM), and other high-powered, DVB-compatible satellite systems worldwide.

• On November 6, 2000, KVH Industries announced a $1.5 million contract award for the production of E-Core(TM) Fiber Optic Gyros, which will be deployed in the Javelin Basic Skills Trainer produced by Orlando-based ECC International Corporation.

• On October 18, 2000, KVH Industries introduced the latest in its line of marine satellite television antennas - the TracVision G6 and TracVision 6. These systems have a 24-inch antenna enabling them to receive satellite television signals throughout a wider coverage area than smaller 18-inch antennas.

                  KVH INDUSTRIES, INC. AND SUBSIDIARY
                      Consolidated Balance Sheets
                      December 31, 2000 and 1999

                                         2000            1999
                                      (Unaudited)      (Audited)
Assets:
Current assets:
   Cash and cash equivalents        $  5,411,460       2,047,838
   Accounts receivable, net            6,553,976       3,362,390
Costs and estimated earnings
 in excess of billings
 on uncompleted contracts                419,145         444,492
   Inventories                         3,600,660       3,672,269
   Prepaid expenses and
    other deposits                       346,518         292,793
   Deferred income taxes                 637,799         376,628
  Total current assets                16,969,558      10,196,410
   Property and equipment, net         6,580,375       7,227,778
   Other assets, less
    accumulated amortization             706,473         839,113
   Deferred income taxes               2,238,430       1,571,409
           Total assets             $ 26,494,836      19,834,710

Liabilities and stockholders' equity:
Current liabilities:
   Current portion long-term debt   $     81,111          75,643
   Borrowings against bank line
    of credit                            598,865            --
   Accounts payable                    1,478,198       1,599,770
   Accrued expenses                    1,164,790         792,086
   Customer deposits                   1,195,091            --
  Total current liabilities            4,518,055       2,467,499
Long-Term Debt                         2,784,121       2,865,232
     Total liabilities                 7,302,176       5,332,731
Stockholders' equity:
   Common stock                           86,191          72,969
   Additional paid-in capital         21,186,459      15,567,880
   Accumulated deficit                (2,079,990)     (1,138,870)
  Total stockholders' equity          19,192,660      14,501,979
            Total liabilities and
             stockholders' equity   $ 26,494,836      19,834,710



                  KVH INDUSTRIES, INC. AND SUBSIDIARY
                 Consolidated Statements of Operations
                              (Unaudited)

                    Three months ended          Twelve months ended
                        December 31,                December 31,
                     2000         1999          2000          1999

Net sales        $ 8,844,466    5,542,226    29,953,727    22,822,429
Cost of
 goods
 sold              5,296,992    3,685,062    18,620,438    15,034,250
  Gross
   profit          3,547,474    1,857,164    11,333,289     7,788,179

Operating
 expenses:
  Research
   & development     929,521    1,131,267     3,902,154     4,199,370
  Sales &
   marketing       1,848,133    1,687,741     6,322,181     5,471,231
  Administration     523,057      535,569     2,220,471     2,111,868

Operating
 profit (loss)       246,763   (1,497,413)   (1,111,517)   (3,994,290)

Other income
 (expense):
  Interest
   expense, net      (72,387)      (9,155)     (192,437)      (40,236)
  Other
   (expense)
   income            (21,805)      10,499      (133,723)       19,805
  (Loss) gain
   on foreign
   currency
   translation       (45,463)       9,116       (63,080)       63,644

Income (loss)
 before income
 tax expense
 (benefit)           107,108   (1,507,873)   (1,500,757)   (3,951,077)

Income tax
 expense
 (benefit)            30,577     (304,939)     (559,637)   (1,253,822)

Net income
 (loss)          $    76,531  $(1,202,934)     (941,120)   (2,697,255)

Per share
 information:
Net income
 (loss) per
 common share
 - basic         $      0.01        (0.17)        (0.12)        (0.37)
Net income
 (loss) per
 common share
 - diluted       $      0.01        (0.17)        (0.12)        (0.37)

Weight average
 number of
 shares
 outstanding:
Basic              7,778,364    7,264,460     7,628,166     7,234,961
Diluted            8,197,506    7,264,460     7,628,166     7,234,961

KVH is webcasting its fourth quarter 2000 conference call live at 11:30 a.m. Eastern Time today through the company's web site at http://www.kvh.com/company. The audio also will be archived at the company web site within three hours after the call is completed.

KVH Industries, Inc., is a leading provider of innovative high-bandwidth communications products, navigation systems, and fiber optic products. Using proprietary fiber optic and satellite antenna technology, the company is developing next-generation systems with greater precision, durability, and versatility for communications, navigation, and industrial applications. An ISO 9001-registered company, KVH has headquarters in Middletown, Rhode Island, with a fiber optic manufacturing facility in Illinois, and a European sales, marketing, and support office in Hoersholm, Denmark.

This press release may contain certain forward-looking statements that involve risks and uncertainties. The actual results realized by the company could differ materially from the statements made herein. Factors that might cause such differences include, but are not limited to: failure to develop and market fiber optic products; lack of reliable vendors, service providers and outside products; continued poor military sales cycles; unforeseen changes in competing technologies and products; worldwide economic variances; and poor or delayed research and development results. Additional factors are discussed in the company's Annual Report on Form 10K filed with the Securities and Exchange Commission on March 27, 2000, and in the company's Form 10Q filed with the Securities and Exchange Commission on October 19, 2000. Copies are available through the company's Investor Relations Department or web site.

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