SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 7, 2003
EMCORE CORPORATION
(Exact name of registrant as specified in charter)
New Jersey 0-22175 22-2746503
------------------- ------------ --------------
State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation
145 Belmont Drive, Somerset, New Jersey
-------------------------------------------------
(Address of principal offices)
08873
------------
(Zip Code)
Registrant's telephone number including area code (732) 271-9090
(Former name or former address, if changed since last report) NOT APPLICABLE
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release dated May 7, 2003
99.2 Excerpt of Transcript of Second Quarter Earnings Release Conference Call
Item 9. REGULATION FD DISCLOSURE
On May 7, 2003, EMCORE Corporation (the "Registrant") issued the Press Release
annexed hereto as Exhibit 99.1. On May 8, 2003, management of the Registrant
held a conference call concerning, among other things, its financial results for
the quarter ended March 31, 2003. An excerpt of the transcript of the conference
call is annexed hereto as Exhibit 99.2
As a supplement to the consolidated financial statements set forth in Exhibit
99.1 which are presented on a generally accepted accounting principles (GAAP)
basis, the Registrant provides additional non-GAAP measures for net loss and net
loss per share. Additional non-GAAP measures for revenues, cost of revenues,
SG&A expenses, R&D expenses, net loss and net loss per share are also set forth
in Exhibit 99.2, together with a reconciliation thereof to GAAP. A non-GAAP
financial measure is a numerical measure of a company's performance that either
excludes or includes amounts that are not normally excluded or included in the
most directly comparable measure calculated and presented in accordance with
GAAP. The Registrant believes that the additional non-GAAP measures are useful
to investors for financial analysis. Management uses these measures internally
to evaluate its operating performance and the measures are used for planning and
forecasting of future periods. However, non-GAAP measures are not in accordance
with, nor are they a substitute for, GAAP measures. The disclosure in Exhibits
99.1 and 99.2 allows investors to reconcile the non-GAAP measures to GAAP.
The Registrant is making this disclosure under Item 12 of Form 8-K, but in
accordance with SEC Release 33-8216, it is set forth under Item 9. The
information in this Form 8-K, including the exhibits, shall not be deemed to be
"filed" for purposes of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities thereof, nor shall it
be deemed to be incorporated by reference in any filing under the Exchange Act
or under the Securities Act of 1933, as amended, except to the extent
specifically provided in any such filing.
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.
EMCORE CORPORATION
(Registrant)
By: /s/ Thomas G. Werthan
-----------------------------------
Thomas G. Werthan
Chief Financial Officer
Dated: May 14, 2003
EXHIBIT INDEX
Exhibit Description
99.1 Press Release dated May 7, 2003
99.2 Excerpt of Transcript of Second Quarter Earnings Release Conference
Call
EXHIBIT 99.1
EMCORE Corporation Reports Fiscal 2003 Second Quarter and Six Month Results
o Second Quarter Revenues Increase 19% Sequentially from First Quarter
to $27.7 million
o Revenues Expected to Increase 20% in the Third Quarter to $32-$34
million
SOMERSET, N.J., May 7, 2003 /PRNewswire-FirstCall/ -- EMCORE Corporation
(Nasdaq: EMKR - news), a leading provider of semiconductor technologies for
global communications applications, today reported financial results for the
fiscal 2003 second quarter ended March 31, 2003.
Revenues for the quarter ended March 31, 2003 were $27.7 million, an increase of
20% from the $23.1 million reported in the second quarter of fiscal 2002 and an
increase of 19% from the $23.2 million reported in the first quarter of fiscal
2003. Revenues for the six months ended March 31, 2003 were $50.9 million, an
increase of 21% from the $42.2 million reported in the six months ended March
31, 2002. For the six-month period, systems-related revenues of $24.6 million
have increased 68% from the prior year and materials-related revenues of $26.3
million have decreased 5% from the prior year. On a sequential basis,
systems-related revenues decreased 22% and materials-related revenues increased
80% from the prior quarter. In late January, EMCORE acquired Agere's West Coast
optoelectronics business, ORTEL Corporation, for approximately $26.2 million in
cash. Ortel contributed approximately $7.1 million of materials-related revenues
to the second quarter of fiscal 2003.
On a generally accepted accounting principles (GAAP) basis, net loss for the
second quarter of fiscal 2003 was $12.5 million or $0.34 loss per share compared
to net loss of $68.7 million or $1.88 loss per share in the second quarter of
fiscal 2002 and net loss of $2.9 million or $0.08 loss per share in the first
quarter of fiscal 2003. The increase in operating expenses in the second quarter
of fiscal 2003 when compared to the first quarter of fiscal 2003 was a direct
result of the ORTEL acquisition. Excluding impairment and restructuring charges
of $50.4 million, net loss for the second quarter of fiscal 2002 was $18.3
million or $0.50 loss per share. Excluding the gain from debt extinguishment of
$6.6 million, net loss for the first quarter of fiscal 2003 was $9.5 million or
$0.26 loss per share.
Net loss for the six months ended March 31, 2003 was $15.4 million or $0.42 loss
per share compared to net loss of $99.7 million or $2.74 loss per share for the
six months ended March 31, 2002. Excluding impairment, restructuring, and other
expense from fiscal 2002 and the gain from debt extinguishment from fiscal 2003,
net loss for the six months ended March 31, 2003 was $22.1 million or $0.60 loss
per share, compared to net loss of $36.0 million or $0.99 loss per share in the
six months ended March 31, 2002.
"We continue to meet the challenges in our target markets, and we are very
excited about the recent acquisition of ORTEL and the opportunities it creates
for our Company," said Reuben F. Richards, Jr., President and CEO of EMCORE
Corporation. "ORTEL complements our current portfolio of solutions for high
speed data and telecommunications networking systems, and allows us to extend
our leadership into a new market area for CATV and Fiber to the User
applications (FTTX). We are also pleased that EMCORE's cost cutting measures
have resulted in considerable improvement to our bottom line and cash flows."
commented Richards. "The significant decline in operating expenses from prior
year and expected sequential revenue growth demonstrates EMCORE's commitment to
streamlining its operations and improving shareholder value."
As a supplement to the consolidated financial statements presented on a GAAP
basis, EMCORE provides additional non-GAAP measures for net loss and net loss
per share in this press release. A non-GAAP financial measure is a numerical
measure of a company's performance that either excludes or includes amounts that
are not normally excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. EMCORE believes that the
additional non-GAAP measures are useful to investors for financial analysis.
Management uses these measures internally to evaluate its operating performance
and the measures are used for planning and forecasting of future periods.
However, non-GAAP measures are not in accordance with, nor are they a substitute
for, GAAP measures. Please consult the table immediately following the Statement
of Operations for a reconciliation of GAAP results to non-GAAP results.
EMCORE will discuss the results further on a conference call to be held
tomorrow, Thursday, May 8, 2003 at 9:00 a.m. ET. To participate, U.S. callers
should dial (888) 896-0863 and international callers should dial (973) 582-2703.
A replay of the call will be available beginning May 8, 2003 at 11:30 a.m. ET
until May 5, 2003 at 11:59 p.m. ET. The U.S. replay call-in number is (877)
519-4471 and the access code is #3836977. The international replay number is
(973) 341-3080 and the access code is #3836977. The call will also be web cast
via the Company's web site at http://www.emcore.com. Please go to the site
beforehand to download any necessary software.
About EMCORE
EMCORE Corporation offers a versatile portfolio of compound semiconductor
products for the broadband and wireless communications and solid-state lighting
markets. The company's integrated solutions philosophy embodies state-of-the-art
technology, material science expertise, and a shared vision of our customer's
goals and objectives to be leaders and pioneers in the world of compound
semiconductors. EMCORE's solutions include: optical components for high speed
data and telecommunications; solar cells and solar panels for global satellite
communications; electronic materials for high bandwidth communications systems,
such as Internet access and wireless telephones; MOCVD tools for the growth of
GaAs, AlGaAs, InP, InGaP, InGaAlP, InGaAsP, GaN, InGaN, AlGaN, and SiC epitaxial
materials used in numerous applications, including data and telecommunications
modules, cellular telephones, solar cells and high brightness LEDs. For further
information about EMCORE, visit http://www.emcore.com.
The information provided herein may include forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 relating to future events that involve risks and
uncertainties. Words such as "expects," "anticipates," "intends," "plans,"
believes," and "estimates," and variations of these words and similar
expressions, identify these forward-looking statements. These forward-looking
statements include, without limitation, (a) statements regarding anticipated
results from EMCORE's recent acquisition of Ortel; (b) any statements or
implications regarding EMCORE's ability to remain competitive and a leader in
its industry, and the future growth of EMCORE, the industry and the economy in
general; (c) statements regarding the expected level and timing of benefits to
EMCORE from its restructuring and realignment efforts, including (i) expected
cost reductions and their impact on EMCORE's financial performance and (ii)
expected improvement to EMCORE's product and technology development programs;
(d) any and all guidance provided by EMCORE regarding its expected financial
performance in current or future periods, including, without limitation, with
respect to anticipated revenues for the third quarter of fiscal 2003; and (e)
EMCORE's beliefs regarding the purpose, usefulness and efficacy of non-GAAP
results and the measures and items EMCORE includes in the same, as well as any
benefits to investors EMCORE believes its non-GAAP measures provide. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected, including without
limitation, the following: (1) difficulties in integrating the Ortel's
operations into EMCORE's operations and the uncertainty as to the results to be
achieved by EMCORE in connection with this acquisition; (2) EMCORE's
restructuring and realignment efforts may not be successful in achieving their
expected benefits, may be insufficient to align EMCORE's operations with
customer demand and the changes affecting our industry, or may be more costly
than currently anticipated; (3) due to the current economic slowdown, in
general, and setbacks in our customers' businesses, in particular, our ability
to predict EMCORE's financial performance for future periods is far more
difficult than in the past; and (4) other risks and uncertainties described in
EMCORE's filings with the Securities and Exchange Commission such as
cancellations, rescheduling or delays in product shipments; manufacturing
capacity constraints; lengthy sales and qualification cycles; difficulties in
the production process; changes in semiconductor industry growth; increased
competition; delays in developing and commercializing new products; and other
factors. The forward-looking statements contained in this news release are made
as of the date hereof and EMCORE does not assume any obligation to update the
reasons why actual results could differ materially from those projected in the
forward-looking statements.
EMCORE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------------
Revenues:
Systems-related................................... $10,777 $ 4,341 $24,619 $14,636
Materials-related................................. 16,897 18,737 26,301 27,579
------------------------------------------------------------
Total revenues.............................. 27,674 23,078 50,920 42,215
Cost of revenues............................ 24,923 32,208 45,943 48,800
------------------------------------------------------------
Gross profit (loss)................ 2,751 (9,130) 4,977 (6,585)
Operating expenses:
Selling, general and administrative............... 7,392 9,483 13,171 16,481
Research and development.......................... 5,428 11,625 9,034 23,572
Gain from debt extinguishment..................... - - (6,614) -
Impairment and restructuring...................... - 35,939 - 35,939
------------------------------------------------------------
Total operating expenses.................... 12,820 57,047 15,591 75,992
------------------------------------------------------------
Operating loss..................... (10,069) (66,177) (10,614) (82,577)
Other expenses:
Interest expense, net............................. 1,741 1,682 3,522 2,610
Other expense..................................... - - - 13,262
Equity in net loss of unconsolidated affiliate.... 731 851 1,302 1,228
------------------------------------------------------------
Total other expenses........................ 2,472 2,533 4,824 17,100
------------------------------------------------------------
Net loss..................... ($12,541) ($68,710) ($15,438) ($99,677)
============================================================
Per share data:
Net loss per basic and diluted shares................ ($0.34) ($1.88) ($0.42) ($2.74)
============================================================
Weighted average basic shares outstanding used in
per share data calculations..................... 36,936 36,567 36,857 36,399
============================================================
Reconciliation of non-GAAP net loss
and net loss per share:
GAAP net loss................ ($12,541) ($68,710) ($15,438) ($99,677)
============================================================
Adjustments:
Inventory obsolescence charge..................... - 11,900 - 11,900
Accounts receivable loss provision................ - 2,603 - 2,603
Gain from debt extinguishment..................... - - (6,614) -
Impairment and restructuring...................... - 35,939 - 35,939
Other expense: investment write-down.............. - - - 13,262
------------------------------------------------------------
Non-GAAP net loss............ ($12,541) ($18,268) ($22,052) ($35,973)
============================================================
Non-GAAP net loss per basic and diluted shares....... ($0.34) ($0.50) ($0.60) ($0.99)
============================================================
EMCORE CORPORATION
CONSOLIDATED BALANCE SHEETS
As of March 31, 2003 and September 30, 2002
(in thousands)
As of As of
March 31, September 30,
ASSETS 2003 2002
(unaudited)
Current assets:
Cash and cash equivalents....................................................... $37,845 $42,716
Marketable securities........................................................... 5,876 41,465
Accounts receivable, net........................................................ 20,831 23,817
Accounts receivable, related party.............................................. 481 518
Inventories..................................................................... 29,907 31,027
Other current assets............................................................ 2,237 1,188
-----------------------------------
Total current assets....................................................... 97,177 140,731
Property, plant and equipment, net................................................ 102,185 101,302
Goodwill.......................................................................... 30,366 20,384
Investments in unconsolidated affiliate........................................... 9,140 8,482
Other assets, net................................................................. 17,111 15,044
-----------------------------------
Total assets............................................................... $255,979 $285,943
===================================
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................ $10,191 $10,346
Accrued expenses................................................................ 13,809 12,875
Advanced billings............................................................... 3,081 5,604
Capitalized lease obligation - current.......................................... 79 81
-----------------------------------
Total current liabilities.................................................. 27,160 28,906
Convertible subordinated notes.................................................... 161,750 175,000
Capitalized lease obligation, net of current portion.............................. 59 87
------------------------------------
Total liabilities.......................................................... 188,969 203,993
Commitments and contingencies.....................................................
Shareholders' equity:
Preferred stock, $0.0001 par, 5,882 shares authorized, no shares outstanding... - -
Common stock, no par value, 100,000 shares authorized, 37,017 shares issued
and 36,998 outstanding at March 31, 2003; 36,772 shares issued and 36,752
outstanding at September 30, 2002............................................. 334,567 334,051
Accumulated deficit............................................................ (266,351) (250,913)
Accumulated other comprehensive loss........................................... (240) (222)
Shareholders' notes receivable................................................. (34) (34)
Treasury stock, at cost; 19 shares............................................. (932) (932)
-----------------------------------
Total shareholders' equity................................................. 67,010 81,950
------------------------------------
Total liabilities and shareholders' equity................................. $255,979 $285,943
===================================
CONTACT:
EMCORE Corporation TTC Group
Tom Werthan - Chief Financial Officer or Victor Allgeier
(732) 271-9090 (212) 227-0997
info@emcore.com info@ttcominc.com
EXHIBIT 99.2
EMCORE Corporation
Excerpt of Second Quarter 2003 Earnings Conference Call
May 8, 2003
Operator: Good morning ladies and gentlemen and welcome to the EMCORE
second quarter 2003 earnings teleconference. At this time all participants have
been placed on a listen-only mode and the floor will be open for questions
following the presentation. If at any point during the presentation you wish to
register a question you may do so by pressing the numbers one followed by four
on your touch-tone phone. It is now my pleasure to introduce your host Mr.
Victor Allgeier. Please go ahead sir.
Victor Allgeier: Thank you and good morning everyone. Yesterday after the
close of markets, EMCORE released its fiscal 2003 second quarter and six-month
results. By now your should have received a copy of the press release. If you
have not received a release, please call our office at (212) 227-0997.
With us today from EMCORE, Reuben F. Richards, Jr.,
President and Chief Executive Officer, and Tom Werthan, Vice President and Chief
Financial Officer. Tom will review the financial results and Reuben will discuss
business highlights before we open the call up to your questions.
Before we begin we would like to remind you that some of
the comments made during the conference call and some of the responses to your
questions by management may contain forward-looking statements that are subject
to risks and uncertainties as described in EMCORE's earnings press release and
filings with the SEC. I will now turn the call over to Tom.
Tom Werthan: Thanks, Vic, and good morning to everybody and thanks for
joining us today as we review our second quarter. Revenues for the quarter came
in at just under $28 million and this is up 19% from our first quarter and 20%
year over year. And let me review the revenue performance by product.
First on systems, revenues came in just under $11 million.
That's down 22% sequentially but up 148% year-over-year. Despite the fact that
we were down sequentially we will experience a pretty healthy increase in Q3 as
our backlog is increased pretty dramatically. I'll review that in a little more
detail later on in the presentation when I discuss backlog.
On RF materials and sensors, revenues were $2 million. That
is down 2% sequentially and 63% year-over-year. On fiber optics, which now
includes Ortel, but to keep it apples to apples our previous fiber optic
products came in at $2.6 million. That is up 12% sequentially and Ortel as we
indicated in the press release contributed about $7.1 million in revenues which
was in line with our expectations. Finally on PhotoVoltaics, revenues were $5.2
million. That's up 3% sequentially and down 52% year-over-year primarily because
last year at this time we had a large Boeing contract that fell in the quarter.
So revenues on the whole were just under $28 million, again a 19% increase
sequentially and 20% year-over-year.
(inaudible) gross margins for the quarter then were 10%,
that was up a couple of basis points from last quarter. Again the fact that
we're operating at a 20% capacity remains the biggest impact on gross margins.
Since the systems margins are in the mid thirties while materials overall are
slightly negative, but on a non GAAP basis, meaning a cash basis if you
eliminate the depreciation charges found in our cost of good sold gross margins
for systems and materials would be 37% and 15% respectively. We did have some
poor yields in our PhotoVoltaics product line in this quarter that also impacted
some gross margins.
SG&A expenses increased from $5.8 million in Q1 to $7.4
million the current quarter the increase of the $1.6 million is entirely related
to the acquisition of Ortel in January. Year-over-year SG&A decreased $2.1
million or 22% and again giving apples to apples comparison with non GAAP
disclosure elimination Ortel from SG&A the decrease year-over-year was $3.7
million or about 39%.
R&D expenses increased from $3.6 million in the first
quarter to $5.4 million in the current quarter, or and increase of $1.8 million.
Again, Ortel's R&D amounted to about 1.1 million or 60% of this increase. The
remaining increase of about $700,000 links to acquisition of Alvesta earlier in
the year and the fiber optic projects they're working on as well as some
PhotoVoltaic projects. Year-over-year R&D decreased $6.2 million or 53% and,
again for non-GAAP disclosure just making it apples to apples by not including
Ortel, R&D did decrease by $7.3 million or about 63%.
Below the line net interest expense was flat sequentially
and year-over-year at about $1.7 million. The loss in GELcore, our joint venture
with GE Lighting was $731,000. That's an increase sequentially of about 160
thousand but a decrease of $120,000 year-over-year. The increase in the loss is
attributable to lower revenues in GELcore's first quarter, however their backlog
has increased and those revenues should increase nicely in the coming quarters.
The net loss is 12.5 million, or ($.0.34) per share. Ortel
contribution in the quarter as previously mentioned was 7.1 million in revenues
and that contributed to our loss of about four cents. Again from a non-GAAP
disclosure not including Ortel to give apples to apples our loss per share would
have been about ($.30) cents. . . .
- --------------------------------------------------------------------------------
NON GAAP RECONCILIATIONS:
- --------------------------------------------------------------------------------
(in thousands)
A) Reconciliation of Non-GAAP cost of revenues, gross profit and gross margins
for the three months ended March 31, 2003
-----------------------------------------------
Systems-related Materials-related
segment segment Total
---------------- ------------------ ---------
Revenues..................... $ 10,777 $ 16,897 $ 27,674
Cost of revenues............. 7,186 17,737 24,923
Add back:
Depreciation expense...... (450) (3,459) (3,909)
Non-GAAP cost of revenues.... 6,736 14,278 21,014
Non-GAAP gross profit........ $ 4,041 $ 2,619 $ 6,660
============ ============ ============
Non-GAAP gross margins....... 37% 15% 24%
============ ============ ============
B) Reconciliation of certain non-GAAP operating expenses
for the three months ended March 31, 2003
-----------------------------------------------
GAAP excluding ORTEL Non-GAAP
---------------- ------------------ ---------
SG&A......................... $ 7,392 $ 1,614 $ 5,778
R&D.......................... $ 5,428 $ 1,091 $ 4,337
for the three months ended March 31, 2002
-----------------------------------------------
GAAP GAAP
---------------- ---------
SG&A......................... $ 9,483 $ 9,483
R&D.......................... $ 11,625 $ 11,625
Comparison of the three months ended
March 31, 2003 and 2002
-----------------------------------------------
GAAP Non-GAAP
---------------- ---------
SG&A......................... $ (2,091) $ (3,705)
R&D.......................... $ (6,197) $ (7,288)
SG&A......................... -22% -39%
R&D.......................... -53% -63%
for the three months ended December 31, 2002
-----------------------------------------------
GAAP GAAP
---------------- ---------
SG&A......................... $ 5,779 $ 5,779
R&D.......................... $ 3,606 $ 3,606
Comparison of the three months ended
March 31, 2003 and December 31, 2002
-----------------------------------------------
GAAP Non-GAAP
---------------- ---------
SG&A......................... $ 1,613 $ (1)
R&D.......................... $ 1,822 $ 731
SG&A......................... 28% 0%
R&D.......................... 51% 20%
C) Reconciliation of certain non-GAAP net loss and loss per share
for the three months ended March 31, 2003
-----------------------------------------------
GAAP excluding ORTEL Non-GAAP
---------------- ------------------ ---------
Net loss..................... $ (12,541) $ (1,568) $ (10,973)
================ ============== ==========
Loss per share............... $ (0.34) $ (0.30)
================ ============== ==========
Shares outstanding 36,936 36,936