x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New Jersey
(State or other jurisdiction of incorporation or organization)
|
22-2746503
(I.R.S. Employer Identification No.)
|
|
|
10420 Research Road, SE, Albuquerque, New Mexico
(Address of principal executive offices)
|
87123
(Zip Code)
|
Common Stock, no par value
(Title of each class)
|
NASDAQ Stock Market
(Name of each exchange on which registered)
|
Securities registered pursuant to Section 12(g) of the Act:
|
None
|
|
|
|
PAGE
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Part I
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4
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16
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30
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31
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31
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Part II
|
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31
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||
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33
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||
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36
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||
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49
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||
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50
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50
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|||
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51
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52
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|||
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53
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55
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88
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89
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|||
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90
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90
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94
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||
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Part III
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94
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94
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||
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94
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||
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94
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||
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94
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||
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94
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Part IV
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|
|
95
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||
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|
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|
|
|
99
|
|
§
|
Telecom Optical Products – We believe that we are a leading supplier for tunable 10, 40, and 100 gigabit per second (“Gb/s”) transmission applications for dense wavelength division multiplexed (“DWDM”) transponders and transceivers for telecommunications transport systems. We are one of few suppliers who offer vertically-integrated products, including external-cavity laser modules, integrated tunable laser assemblies (“ITLAs”), 300-pin transponders, and tunable XFP (“TXFP”) transceivers. Our internally developed laser technology is highly suited for applications of 10, 40, and 100 Gb/s due to its superior narrow linewidth and low noise characteristics. Many of our DWDM products are fully Telcordia® qualified and comply with industry multi-source agreements (“MSAs”). We a
re currently shipping to customers in low volume our MSA compliant TXFP product which we believe will replace 300-pin based transponders over the next few years because the TXFP product enables a higher density transport solution required by carriers. The Company’s TXFP products leverage our proprietary external cavity laser technology to offer identical performance to currently deployed network specifications.
|
|
§
|
Enterprise Products – We believe that we provide advanced optical components and transceiver modules for data applications that enable switch-to-switch, router-to-router and server-to-server backbone connections at aggregate speeds of 10 Gb/s and above. We offer one of the broadest ranges of products with XENPAK form factor which comply with the 10 Gb/s Ethernet (“10-GE”) IEEE802.3ae standard. Our 10-GE products include short-reach (“SR”), long-reach (“LR”), extended-reach (“ER”), and coarse WDM LX4 optical transceivers to connect between the photonic physical layer and the electrical section layer as well as CX4 transceivers. In addition to the 10-GE products, we offer traditional MSA compliant small form factor (“
SFF”) and small form factor pluggable (“SFP”) optical transceivers for use in Gigabit Ethernet and Fiber Channel local-area and storage-area networks (“SAN”). These transceivers provide integrated duplex data links for bi-directional communication over both single-mode and multimode optical fibers at data rates of 1.25 and 4 Gb/s, respectively.
|
|
§
|
Laser/Photodetector Component Products - We believe that we are a leading provider of optical components including lasers, photodetectors, and various forms of packaged subassemblies. Our technology enables high speed applications for 2, 4, 8, 10, and 14 Gb/s applications for the datacom and SAN markets. Products include bare die (or chip), TO, and TOSA forms of high-speed 850nm vertical cavity surface emitting lasers (“VCSELs”), distributed feedback (“DFB”) lasers, positive-intrinsic-negative (“PIN”) and avalanche photodiode (“APD”) components for 2, 8, and 10 Gb/s Fiber Channel, 1 and 10 Gb/s Ethernet, Infiniband, FTTP, and telecom applications. We provide component products to the entire fiber optics industry, and we also leverage the benefits of our vertically-integra
ted infrastructure through low-cost manufacturing and early access to newly developed internally produced components.
|
|
§
|
Parallel Optical Transceiver and Cable Products – We have long been a technology and product leader of optical transmitter and receiver products utilizing arrays of optical emitting or detection devices, e.g., VCSELs and photodetectors (“PDs”). These optical transmitter, receiver, and transceiver products are used for back-plane interconnects, switching/routing between telecom racks, and high-performance computing clusters. Our products include 12-lane SNAP-12 MSA compliant transmitter and receivers with single and double data rates. Based on the core competency of multi-lane parallel optical transceivers, we offer optical fiber ribbon cables (ECC - EMCORE Connects Cables) with parallel-optical transceivers embedded within the connectors. These products, with aggregated bandwidths of up to 20, 40, 56, 120, and 1
50 Gb/s, are ideally suited for high-performance computing clusters and server interconnect applications. Our products provide our customers with increased network capacity, increased data transmission distance and speeds, increased bandwidth, lower power consumption, improved cable management over copper interconnects (less weight and bulk), and lower cost optical interconnections for massively parallel multi-processor installations.
|
|
§
|
Fiber Channel Transceiver Products – We offer tri-rate SFF and SFP optical transceivers for storage area networks. The MSA compliant transceiver module is designed for high-speed Fiber Channel data links supporting up to 4.25 Gb/s (4x the Fiber Channel rate). The products provide integrated duplex data links for bi-directional communication over Multimode optical fiber.
|
|
§
|
Cable Television (or CATV) Products - We are a market leader in providing radio frequency (“RF”) over fiber products for the CATV industry. Our products are used in hybrid fiber coaxial (“HFC”) networks that enable cable service operators to offer multiple advanced services to meet the expanding demand for high-speed Internet, on-demand and interactive video and other advanced services, such as high-definition television (“HDTV”) and voice over IP (“VoIP”). Our CATV products include forward and return-path analog and digital lasers, photodetectors and subassembly components, broadcast analog and digital fiber-optic transmitters, and quadrature amplitude modulation (“QAM”) transmitters and receivers. Our products provide our customers with increased
capacity to offer more cable services, increased data transmission distance, speed and bandwidth, lower noise video receive, and lower power consumption.
|
|
§
|
Fiber-To-The-Premises (or FTTP) Products - Telecommunications companies are increasingly extending their optical infrastructure to their customers’ location in order to deliver higher bandwidth services. We have developed customer qualified FTTP components and subsystem products to support plans by telephone companies to offer voice, video and data services through the deployment of new fiber optics-based access networks. Our FTTP products include passive optical network (“PON”) transceivers, analog fiber optic transmitters for video overlay and high-power erbium-doped fiber amplifiers (“EDFA”), analog and digital lasers, photodetectors and subassembly components, analog video receivers, and multi-dwelling unit (“MDU”) video receivers. Our products provide our customers with hi
gher performance for analog and digital characteristics, integrated infrastructure to support competitive costs, and additional support for multiple standards.
|
|
§
|
Satellite Communications (or Satcom) Products - We believe that we are a leading provider of optical components and systems for use in equipment that provides high-performance optical data links for the terrestrial portion of satellite communications networks. Our products include transmitters, receivers, subsystems and systems that transport wideband radio frequency and microwave signals between satellite hub equipment and antenna dishes. Our products provide our customers with increased bandwidth and lower power consumption.
|
|
§
|
Video Transport - Our video transport product line offers solutions for broadcasting, transportation, IP television (“IPTV”), mobile video, and security and surveillance applications over private and public networks. Our video, audio, data and RF transmission systems serve both analog and digital requirements, providing cost-effective, flexible solutions geared for network reconstruction and expansion.
|
|
§
|
Defense and Homeland Security - Leveraging our expertise in RF module design and high-speed parallel optics, we provide a suite of ruggedized products that meet the reliability and durability requirements of the U.S. government and defense markets. Our specialty defense products include fiber optic gyro components used in precision guided munitions, ruggedized parallel optic transmitters and receivers, high-frequency RF fiber optic link components for towed decoy systems, optical delay lines for radar systems, EDFAs, terahertz spectroscopy systems and other products. Our products provide our customers with high frequency and dynamic range; compact form-factor; and extreme temperature, shock and vibration tolerance.
|
|
§
|
Space Solar Power Generation - We believe that we are a leader in providing solar power generation solutions to the global communications and science satellite industry and the U.S. government space programs. A satellite’s operational success depends on its available power and its capacity to transmit data. We provide advanced compound semiconductor-based solar cells and solar panel products, which are more resistant to radiation levels in space and generate substantially more power from sunlight than silicon-based solutions. Space power systems using our multi-junction solar cells weigh less per unit of power than traditional silicon-based solar cells. Our products provide our customers with higher conversion efficiency for reduced solar array size and launch costs, higher radiation tolerance, and a longer expec
ted lifespan in harsh space environments.
|
|
§
|
Terrestrial Solar Power Generation - Solar power generation systems utilize photovoltaic cells to convert sunlight to electricity and have been used in space programs and, to a lesser extent, in terrestrial applications for several decades. We believe the market for terrestrial solar power generation solutions will continue to grow as solar power generation technologies improve in efficiency, as global prices for non-renewable energy sources (i.e., fossil fuels) continue to fluctuate, and as concern regarding the effect of fossil fuel-based carbon emissions on global warming continues to grow. Terrestrial solar power generation has emerged as a rapidly expanding renewable energy source because it has certain advantages when compared to other energy sources, including reduce
d environmental impact, elimination of fuel price risk, installation flexibility, scalability, distributed power generation (i.e., electric power is generated at the point of use rather than transmitted from a central station to the user), and reliability. The rapid increase in demand for solar power has created a growing demand for highly efficient, reliable, and cost-effective concentrating solar power systems.
|
|
-
|
Launch Our Terrestrial Solar Power Business through Aggressive Business Development
|
|
-
|
Accelerate Fiber Optics Business Growth through New Products and Customer Expansion
|
|
-
|
Leverage Our Infrastructure and Technology to Increase Revenue Growth
|
|
-
|
Reduce Product and Business Costs and Improve Profitability
|
|
-
|
market acceptance of our products;
|
|
-
|
market demand for the products and services provided by our customers;
|
|
-
|
disruptions or delays in our manufacturing processes or in our supply of raw materials or product components;
|
|
-
|
changes in the timing and size of orders by our customers;
|
|
-
|
cancellations or postponements of previously placed orders;
|
|
-
|
reductions in prices for our products or increases in the costs of our raw materials;
|
|
-
|
the introduction of new products and manufacturing processes;
|
|
-
|
fluctuations in manufacturing yields;
|
|
-
|
the emergence of new industry standards;
|
|
-
|
failure to anticipate changing customer product requirements;
|
|
-
|
the loss or gain of important customers;
|
|
-
|
product obsolescence;
|
|
-
|
the amount of research and development expenses associated with new product introductions;
|
|
-
|
the continuation or worsening of the current global economic slowdown;
|
|
-
|
economic conditions in various geographic areas where we or our customers do business;
|
|
-
|
acts of terrorism or violence and international conflicts or crises;
|
|
-
|
other conditions affecting the timing of customer orders;
|
|
-
|
a downturn in the markets for our customers’ products, particularly the telecommunications components markets;
|
|
-
|
significant warranty claims, including those not covered by our suppliers;
|
|
-
|
intellectual property disputes;
|
|
-
|
results of joint venture activities;
|
|
-
|
loss of key personnel or the shortage of available skilled workers; and
|
|
-
|
the effects of competitive pricing pressures, including decreases in average selling prices of our products.
|
|
-
|
Our historic lack of profitability has caused us to consume cash, through acquisitions, operations and as a result of the research and development and capital expenditures necessary to expand the markets in which we operate (particularly the terrestrial solar market), as discussed in more detail below. We may be unable to acquire the cash necessary to finance these activities from either the debt or the equity markets and as a result we may be unable to continue operating.
|
|
-
|
Our fiber optics products are sold principally to large publicly held companies which are also dependent on the public debt and equity markets. Our customers may be unable to obtain the financing necessary to continue their own operations.
|
|
-
|
The market for the products of our fiber optics customers, into which our fiber optics products are incorporated, is dependent on capital spending from telecommunications and data communications companies, which may also be adversely affected by the lack of available financing.
|
|
-
|
The market for our space solar cells may also be adversely affected by the worldwide financial crisis, because the market for commercial satellites depends on capital spending by telecommunications companies (who are dependent on the capital markets, as described above), and the market for military satellites depends on resources allocated for military intelligence spending, which may also be restricted as a result of the financial crisis.
|
|
-
|
The market for our terrestrial solar products is dependent on the availability of project financing for photovoltaic projects, which may no longer be available, and is also largely dependent on government support of various types, such as investment tax credits, which may no longer be available as governments allocate scarce resources to dealing with the financial crisis.
|
|
-
|
A reduction in our sales will adversely affect our ability to draw on our existing line of credit because that line of credit is largely dependent on the level of our accounts receivable.
|
|
-
|
Negative worldwide economic conditions and market instability make it difficult for us, our customers, and our suppliers to accurately forecast future product demand trends, which could cause us to produce excess products which could depress product prices, increase our inventory carrying costs, and result in obsolete inventory. Alternatively, this forecasting difficulty could cause a shortage of products, or materials used in our products, which could in turn result in an inability to satisfy demand for our products and a loss of market share.
|
|
-
|
Negative global economic conditions increase the risk that we could suffer unrecoverable losses on our customers’ accounts receivable, which would adversely affect our financial results. We extend credit and payment terms to some of our customers. We could suffer significant losses if customers fail to pay us, which would have a negative impact on our financial results.
|
|
-
|
unexpected changes in regulatory requirements;
|
|
-
|
legal uncertainties regarding liability, tariffs, and other trade barriers;
|
|
-
|
inadequate protection of intellectual property in some countries;
|
|
-
|
greater incidence of shipping delays;
|
|
-
|
greater difficulty in overseeing manufacturing operations;
|
|
-
|
greater difficulty in hiring talent needed to oversee manufacturing operations;
|
|
-
|
potential political and economic instability;
|
|
-
|
potential adverse actions by the U.S. government pursuant to its stated intention to reduce the loss of U.S. jobs; and
|
|
-
|
the outbreak of infectious diseases such as the H1N1 influenza virus, severe acute respiratory syndrome (“SARS”), or the avian flu, which could result in travel restrictions or the closure of the facilities of our contract manufacturers.
|
|
-
|
changing product specifications and customer requirements;
|
|
-
|
unanticipated engineering complexities;
|
|
-
|
expense reduction measures we have implemented and others we may implement;
|
|
-
|
difficulties in hiring and retaining necessary technical personnel; and
|
|
-
|
difficulties in allocating engineering resources and overcoming resource limitations.
|
|
-
|
our customers can stop purchasing our products at any time without penalty;
|
|
-
|
our customers may purchase products from our competitors; and,
|
|
-
|
our customers are not required to make minimum purchases.
|
|
-
|
political and economic instability or changes in U.S. government policy with respect to these foreign countries may inhibit export of our devices and limit potential customers’ access to U.S. dollars in a country or region in which those potential customers are located;
|
|
-
|
we may experience difficulties in the timeliness of collection of foreign accounts receivable and be forced to write off these receivables;
|
|
-
|
tariffs and other barriers may make our devices less cost competitive;
|
|
-
|
the laws of certain foreign countries may not adequately protect our trade secrets and intellectual property or may be burdensome to comply with;
|
|
-
|
potentially adverse tax consequences to our customers may damage our cost competitiveness;
|
|
-
|
currency fluctuations may make our products less cost competitive, affecting overseas demand for our products or otherwise adversely affecting our business; and
|
|
-
|
language and other cultural barriers may require us to expend additional resources competing in foreign markets or hinder our ability to effectively compete.
|
|
-
|
infringement claims (or claims for indemnification resulting from infringement claims) will not be asserted against us or that such claims will not be successful;
|
|
-
|
future assertions will not result in an injunction against the sale of infringing products, which could significantly impair our business and results of operations;
|
|
-
|
any patent owned or licensed by us will not be invalidated, circumvented, or challenged; or
|
|
-
|
we will not be required to obtain licenses, the expense of which may adversely affect our results of operations and profitability.
|
|
-
|
insufficient experience with technologies and markets in which the acquired business is involved, which may be necessary to successfully operate and integrate the business;
|
|
-
|
problems integrating the acquired operations, personnel, technologies, or products with the existing business and products;
|
|
-
|
diversion of management time and attention from the core business to the acquired business or joint venture;
|
|
-
|
potential failure to retain key technical, management, sales, and other personnel of the acquired business or joint venture;
|
|
-
|
difficulties in retaining relationships with suppliers and customers of the acquired business, particularly where such customers or suppliers compete with us;
|
|
-
|
reliance upon joint ventures which we do not control;
|
|
-
|
subsequent impairment of the acquired assets, including intangible assets; and
|
|
-
|
assumption of liabilities including, but not limited to, lawsuits, tax examinations, warranty issues, etc.
|
Location
|
Function
|
Approximate
Square Footage
|
Term
(in calendar year)
|
Albuquerque,
New Mexico
|
Corporate Headquarters
Manufacturing and research and development facilities for both photovoltaic and fiber optics products
|
165,000
|
Facilities are 100% owned by the Company. Certain land is leased, which expires in 2050
|
|
|
|
|
Alhambra, California
|
Manufacturing and research and development facilities for fiber optics products
|
75,000
|
Multiple leases, which expire in 2011 (1)
|
|
|
|
|
Newark, California
|
Research and development facilities for fiber optics products
|
55,000
|
Multiple leases, which expire in 2013 (1)
|
|
|
|
|
Langfang, China
|
Manufacturing facility for fiber optics products
|
48,000
|
Multiple leases, which expire in 2012 through 2013 (1)
|
|
|
|
|
Ivyland, Pennsylvania
|
Manufacturing and research and development facility for fiber optics products
|
9,000
|
Lease expires in 2011 (1)
|
|
|
|
|
Taipei City, Taiwan
|
Research and development facility for fiber optics products
|
7,000
|
Lease expires in 2013
|
|
|
|
|
Somerset, New Jersey
|
Research and development facility
|
5,000
|
Lease expires in 2012
|
|
(1)
|
This lease has the option to be renewed by the Company, subject to inflation adjustments.
|
High and Low Price Range of
EMCORE’s common stock
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|
||||||||||
Fiscal 2010
|
|
$
|
0.83 – $1.35
|
|
|
$
|
0.95 – $1.31
|
|
|
$
|
0.81 – $1.72
|
|
|
$
|
0.71 – $1.07
|
|
Fiscal 2009
|
|
$
|
0.76 – $5.50
|
|
|
$
|
0.50 – $1.55
|
|
|
$
|
0.72 – $1.75
|
|
|
$
|
1.00 – $1.54
|
|
As of September 30,
|
|
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
|||||||||||||||
EMCORE Corporation
|
$
|
100.0
|
|
|
$
|
96.73
|
|
|
$
|
156.86
|
|
|
$
|
80.72
|
|
|
$
|
21.24
|
|
|
$
|
13.09
|
||
NASDAQ Composite
|
|
$
|
100.0
|
|
|
$
|
106.22
|
|
|
$
|
126.95
|
|
|
$
|
96.41
|
|
|
$
|
99.84
|
|
|
$
|
112.47
|
|
NASDAQ Electronic Components
|
|
$
|
100.0
|
|
|
$
|
95.01
|
|
|
$
|
114.47
|
|
|
$
|
80.09
|
|
|
$
|
86.57
|
|
|
$
|
91.20
|
|
NASDAQ Computer
|
|
$
|
100.0
|
|
|
$
|
105.70
|
|
|
$
|
129.44
|
|
|
$
|
97.32
|
|
|
$
|
112.17
|
|
|
$
|
131.47
|
|
Statements of Operations Data
(in thousands, except income (loss) per share)
|
|
For the Fiscal Years Ended September 30,
|
||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006 (1)
|
||||||||||||||||
Total revenue
|
|
$
|
191,278
|
|
$
|
176,356
|
|
$
|
239,303
|
|
|
$
|
169,606
|
|
|
$
|
143,533
|
|
||
Gross (loss) profit
|
|
|
50,661
|
|
|
(6,310
|
)
|
|
|
29,895
|
|
|
|
30,368
|
|
|
|
25,952
|
|
|
Operating loss
|
|
|
(21,426
|
)
|
|
|
(140,966
|
)
|
|
|
(75,281
|
)
|
|
|
(57,456
|
)
|
|
|
(34,150
|
)
|
(Loss) income from continuing operations
|
|
|
(23,694
|
)
|
|
|
(138,801
|
)
|
|
|
(80,860
|
)
|
|
|
(58,722
|
)
|
|
|
45,039
|
|
Income from discontinued operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
9,884
|
|
||
Net (loss) income
|
|
(23,694
|
)
|
|
(138,801
|
)
|
|
(80,860
|
)
|
|
(58,722
|
)
|
|
54,923
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) income from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Per basic share
|
|
$
|
(0.28
|
)
|
|
$
|
(1.75
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
0.91
|
|
Per diluted share
|
|
$
|
(0.28
|
)
|
|
$
|
(1.75
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
0.87
|
|
Balance Sheet Data
(in thousands)
|
|
As of September 30,
|
||||||||||||||||||
|
|
|
2010
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
2007
|
|
|
|
2006 (1)
|
|
Cash, cash equivalents, restricted cash, and
current available-for-sale securities
|
|
$
|
21,242
|
|
|
$
|
16,899
|
|
|
$
|
22,760
|
|
|
$
|
41,226
|
|
|
$
|
123,967
|
|
Working capital
|
|
|
34,891
|
|
|
|
34,725
|
|
|
|
79,234
|
|
|
|
63,204
|
|
|
|
129,683
|
|
Total assets
|
|
|
177,838
|
|
|
|
182,023
|
|
|
|
329,278
|
|
|
|
234,736
|
|
|
|
287,547
|
|
Long-term liabilities
|
|
|
562
|
|
|
|
104
|
|
|
|
-
|
|
|
|
84,981
|
|
|
|
84,516
|
|
Shareholders’ equity
|
|
|
113,432
|
|
|
|
123,931
|
|
|
|
253,722
|
|
|
|
98,157
|
|
|
|
149,399
|
|
(1)
|
In August 2006, the Company sold its Electronic Materials & Device (EMD) division to IQE plc (IQE) for $16 million. The results of operations of the EMD division have been reclassified to discontinued operations for the fiscal year ended September 30, 2006. In August 2006, the Company also sold its 49% membership interest in GELcore, LLC for $100.0 million to General Electric Corporation, which prior to the transaction owned the remaining 51% membership interest in GELcore. The Company recorded a net gain of $88.0 million, before tax, on the sale of GELcore, after netting the Company’s investment in this joint venture of $10.8 million and transaction expenses of $1.2 million.
|
|
-
|
In June 2010, the Company recorded a $2.4 million reserve on accounts receivable related to a solar power system contract that management had uncertainty with respect to its total collectability.
|
|
-
|
In June 2010, the Company incurred a one-time non-recurring $2.8 million charge associated with a termination fee on the Company’s previously announced joint venture with Tangshan Caofeidian Investment Corporation.
|
|
-
|
Throughout the year, the Company incurred $4.7 million related to legal expenses associated with certain patent and other litigation, all of which was recorded as sales, general, and administrative expense.
|
|
-
|
In December 2008, the Company recorded non-cash impairment charges totaling $33.8 million related to goodwill and intangible assets in the Fiber Optics segment.
|
|
-
|
In January 2009, the Company sold its remaining interest in Entech Solar Inc (formerly WorldWater and Solar Technologies Corporation) for a gain of $3.1 million.
|
|
-
|
In June 2009, the Company recorded a non-cash impairment charge totaling $27.0 million related to long-lived assets in the Fiber Optics segment.
|
|
-
|
Throughout the year, the Company incurred the following significant expenses within operations:
|
|
-
|
Additional inventory provisions related to excess, obsolete, and lower of cost or market valuation adjustments totaling $16.1 million;
|
|
-
|
Provisions for losses on firm purchase agreements totaling $8.5 million; and,
|
|
-
|
Additional provisions for doubtful accounts totaling $5.1 million.
|
|
-
|
The Company incurred $2.0 million related to severance and restructuring charges and $5.6 million related to legal expenses associated with certain patent and other litigation, all of which was recorded as sales, general, and administrative expense.
|
|
-
|
In February 2008, the Company redeemed all of its outstanding convertible notes. The Company recognized a loss totaling $4.7 million related to the conversion of notes to equity.
|
|
-
|
In February 2008, the Company completed the sale of $100 million of restricted common stock and warrants. The Company used the proceeds from this private placement transaction to acquire the telecom-related assets of Intel Corporation's Optical Platform Division in 2008.
|
|
-
|
In February and April 2008, the Company acquired the telecom, datacom, and optical cable interconnects-related assets of Intel Corporation’s Optical Platform Division for $112 million in cash and the Company’s common stock.
|
|
-
|
In June and July 2008, the Company sold a portion of its investment in Entech Solar for a total gain of $7.4 million.
|
|
-
|
In September 2008, the Company recorded a non-cash impairment charge totaling $22.0 million related to goodwill in the Fiber Optics segment.
|
|
-
|
In September 2008, the Company recorded a $1.5 million non-cash impairment charge related to investments.
|
|
-
|
Throughout the year, the Company incurred the following significant expenses within operations:
|
|
-
|
Additional inventory provisions related to excess, obsolete, and lower of cost or market valuation adjustments totaling $9.6 million; and,
|
|
-
|
Additional provisions for doubtful accounts totaling $2.1 million.
|
|
-
|
Operating expenses also included $4.8 million related to transition service agreement charges associated with the fiber optics businesses acquired from Intel Corporation.
|
|
-
|
The Company incurred non-cash expense totaling $4.3 million associated with the modification of stock options issued to terminated employees.
|
|
-
|
In November 2006, the Company invested $13.1 million in Entech Solar Inc. in return for convertible preferred stock and warrants.
|
|
-
|
In April 2007, the Company modified its convertible subordinated notes. The interest rate was increased from 5% to 5.5% and the conversion price was decreased from $8.06 to $7.01. The Company also repurchased $11.4 million of outstanding notes to reduce interest expense and share dilution.
|
|
-
|
In April 2007, the Company acquired privately-held Opticomm Corporation for $4.1 million in cash.
|
|
-
|
Throughout the year, the Company incurred the following significant expenses within operations:
|
|
-
|
$10.6 million related to our review of historical stock option granting practices;
|
|
-
|
$6.1 million related to non-recurring corporate legal expenses; and,
|
|
-
|
$2.8 million related to severance charges associated with facility closures and consolidation of operations.
|
|
-
|
In November 2005, the Company exchanged $14.4 million of convertible subordinated notes due in May 2007 for $16.6 million of newly issued convertible senior subordinated notes due May 15, 2011. As a result of this transaction, the Company recognized approximately $1.1 million of expense in the first quarter of fiscal 2007 related to the early extinguishment of debt.
|
|
-
|
The Company received manufacturing equipment valued at $2.0 million less tax of $0.1 million as a final earn-out payment from Veeco Instruments, Inc. (Veeco) in connection with the sale of the TurboDisc division. The results of operations of the TurboDisc division have been reclassified to discontinued operations for all periods presented.
|
|
-
|
In August 2006, the Company sold its Electronic Materials & Device (EMD) division to IQE plc (IQE) for $16.0 million. The net gain associated with the sale of the EMD business was approximately $7.6 million, net of tax of $0.5 million. The results of operations of the EMD division have been reclassified to discontinued operations for all periods presented.
|
|
-
|
In August 2006, the Company sold its 49% membership interest in GELcore, LLC for $100.0 million to General Electric Corporation, which prior to the transaction owned the remaining 51% membership interest in GELcore. The Company recorded a net gain of $88.0 million, before tax, on the sale of GELcore, after netting the Company’s investment in this joint venture of $10.8 million and transaction expenses of $1.2 million.
|
|
-
|
The Company recorded approximately $2.2 million of non-cash impairment charges on goodwill and intellectual property associated with the June 2004 acquisition of Corona Optical Systems.
|
|
-
|
Operating expense included $1.3 million related to our review of historical stock option granting practices.
|
|
-
|
Other expense included a charge of $0.5 million associated with the write-down of the Archcom investment.
|
|
-
|
The Company recognized a provision for income taxes of $1.9 million from continuing operations for the fiscal year ended September 30, 2006.
|
|
-
|
the valuation of inventory, goodwill, intangible assets, and stock based compensation;
|
|
-
|
assessment of recovery of long-lived assets;
|
|
-
|
revenue recognition associated with the percentage of completion method; and
|
|
-
|
the allowance for doubtful accounts and warranty accruals.
|
|
-
|
Distributors - The Company uses a number of distributors around the world and recognizes revenue upon shipment of product to these distributors. Title and risk of loss pass to the distributors upon shipment, and our distributors are contractually obligated to pay the Company on standard commercial terms, just like our other direct customers. The Company does not sell to its distributors on consignment and, except in the event of product discontinuance, does not give distributors a right of return.
|
|
-
|
Solar Panel and Solar Power Systems Contracts - The Company records revenues from certain solar panel and solar power systems contracts using the percentage-of-completion method. Revenue is recognized in proportion to actual costs incurred compared to total anticipated costs expected to be incurred for each contract. Such contracts require estimates to determine the appropriate cost and revenue recognition. The Company uses all available information in determining dependable estimates of the extent of progress towards completion, contract revenues, and contract costs. Estimates are revised as additional information becomes available. If estimates of costs to complete long-term contracts indicate a loss, a provision is made for the total loss anticipated.
|
|
-
|
Government Research and Development Contracts – Research and development contract revenue represents reimbursement by various U.S. government entities, or their contractors, to aid in the development of new technology. The applicable contracts generally provide that the Company may elect to retain ownership of inventions made in performing the work, subject to a non-exclusive license retained by the U.S. government to practice the inventions for governmental purposes. The research and development contract funding may be based on a cost-plus, cost reimbursement, or a firm fixed price arrangement. The amount of funding under each research and development contract is determined based on cost estimates that include both direct and indirect costs. Cost-plus funding is determined based on actual costs plus a set margin. As the Company incurs costs under cost
reimbursement type contracts, revenue is recorded. Contract costs include material, labor, special tooling and test equipment, subcontracting costs, as well as an allocation of indirect costs. A research and development contract is considered complete when all significant costs have been incurred, milestones have been reached, and any reporting obligations to the customer have been met. Government contract revenue is primarily recognized as service revenue.
|
STATEMENT OF OPERATIONS DATA
|
For the Fiscal Years
Ended September 30,
|
|||||||||||
2010
|
2009 | 2008 | ||||||||||
Revenue
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of revenue
|
|
|
73.5
|
|
|
103.6
|
|
|
87.5
|
|
||
Gross (loss) profit
|
|
|
26.5
|
|
|
(3.6
|
)
|
|
|
12.5
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative
|
|
|
22.3
|
|
|
26.4
|
|
|
18.2
|
|
||
Research and development
|
|
|
15.4
|
|
|
15.4
|
|
|
16.5
|
|
||
Impairments
|
|
|
-
|
|
|
34.5
|
|
|
9.3
|
|
||
Total operating expenses
|
|
|
37.7
|
|
|
76.3
|
|
|
44.0
|
|
||
|
|
|
|
|
|
|
|
|
||||
Operating loss
|
|
|
(11.2
|
)
|
|
|
(79.9
|
)
|
|
|
(31.5
|
)
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense:
|
|
|
|
|
|
|
|
|
||||
Interest income
|
|
|
-
|
|
|
-
|
|
|
(0.4
|
)
|
||
Interest expense
|
|
|
0.2
|
|
|
0.3
|
|
|
0.7
|
|
||
Foreign exchange loss
|
|
|
0.5
|
|
|
0.1
|
|
|
0.3
|
|||
Change in fair value of financial instruments
|
0.3
|
-
|
-
|
|||||||||
Cost of financing instruments
|
0.2
|
-
|
-
|
|||||||||
Gain from the sale of an unconsolidated affiliate
|
|
|
-
|
|
|
(1.8
|
)
|
|
|
(3.1
|
)
|
|
Impairment of investment
|
|
|
-
|
|
|
0.2
|
|
|
0.7
|
|||
Loss from conversion of subordinated notes
|
|
|
-
|
|
|
-
|
|
|
1.9
|
|||
Stock-based expense from tolled options
|
|
|
-
|
|
|
-
|
|
|
1.8
|
|||
Loss on disposal of equipment
|
|
|
-
|
|
|
-
|
|
|
0.4
|
|||
Total other (income) expense
|
|
|
1.2
|
|
|
(1.2
|
)
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss
|
|
|
(12.4
|
)%
|
|
|
(78.7
|
)%
|
|
|
(33.8
|
)%
|
(in thousands)
|
For the Fiscal Years Ended September 30,
|
|||||||||||||||||||
Total
|
2011
|
2012 to 2013
|
2014 to 2015
|
2016
and later
|
||||||||||||||||
Operating lease obligations
|
$ | 6,478 | $ | 1,821 | $ | 1,882 | $ | 152 | $ | 2,623 | ||||||||||
Line of credit
|
10,573 | 10,573 | - | - | - | |||||||||||||||
Purchase obligations
|
27,706 | 27,618 | 81 | 7 | - | |||||||||||||||
Total contractual obligations and commitments
|
$ | 44,757 | $ | 40,012 | $ | 1,963 | $ | 159 | $ | 2,623 |
2010 | 2009 | 2008 | ||||||||||
Product revenue
|
|
$
|
183,541
|
|
$
|
168,300
|
|
$
|
227,780
|
|
||
Service revenue
|
|
|
7,737
|
|
|
8,056
|
|
|
11,523
|
|
||
Total revenue
|
|
|
191,278
|
|
|
176,356
|
|
|
239,303
|
|
||
|
|
|
|
|
|
|
|
|
||||
Cost of product revenue
|
|
|
134,210
|
|
|
176,413
|
|
|
203,164
|
|
||
Cost of service revenue
|
|
|
6,407
|
|
|
6,253
|
|
|
6,244
|
|
||
Total cost of revenue
|
|
|
140,617
|
|
|
182,666
|
|
|
209,408
|
|
||
Gross profit (loss)
|
|
|
50,661
|
|
|
(6,310
|
)
|
|
|
29,895
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative
|
|
|
42,549
|
|
|
46,775
|
|
|
43,460
|
|
||
Research and development
|
|
|
29,538
|
|
|
27,100
|
|
|
39,483
|
|
||
Impairments
|
|
|
-
|
|
|
60,781
|
|
|
22,233
|
|
||
Total operating expenses
|
|
|
72,087
|
|
|
134,656
|
|
|
105,176
|
|
||
Operating loss
|
|
|
(21,426
|
)
|
|
|
(140,966
|
)
|
|
|
(75,281
|
)
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense:
|
|
|
|
|
|
|
|
|
||||
Interest income
|
|
|
(24
|
)
|
|
|
(84
|
)
|
|
|
(862
|
)
|
Interest expense
|
|
|
439
|
|
|
542
|
|
|
1,580
|
|
||
Foreign exchange loss
|
|
|
1,008
|
|
|
154
|
|
|
746
|
|
||
Change in fair value of financial instruments
|
475
|
-
|
-
|
|||||||||
Cost of financing instruments
|
370
|
-
|
-
|
|||||||||
Gain from the sale of an unconsolidated affiliate
|
|
|
-
|
|
|
(3,144
|
)
|
|
|
(7,384
|
)
|
|
Impairment of investment
|
|
|
-
|
|
|
367
|
|
|
1,461
|
|
||
Loss from conversion of subordinated notes
|
|
|
-
|
|
|
-
|
|
|
4,658
|
|||
Stock-based expense from tolled options
|
|
|
-
|
|
|
-
|
|
|
4,316
|
|||
Loss on disposal of equipment
|
|
|
-
|
|
|
-
|
|
|
1,064
|
|
||
Total other expense (income)
|
|
|
2,268
|
|
|
(2,165
|
)
|
|
|
5,579
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss
|
|
$
|
(23,694
|
)
|
|
$
|
(138,801
|
)
|
|
$
|
(80,860
|
)
|
|
|
|
|
|
|
|
|
|
||||
Per share data:
|
|
|
|
|
|
|
|
|
||||
Net loss per basic and diluted share
|
|
$
|
(0.28
|
)
|
|
$
|
(1.75
|
)
|
|
$
|
(1.20
|
)
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of basic and diluted shares outstanding
|
|
|
83,166
|
|
|
79,140
|
|
|
67,568
|
|
2010 | 2009 | |||||||
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
19,944
|
|
$
|
14,028
|
||
Restricted cash
|
|
|
1,298
|
|
|
1,521
|
||
Available-for-sale securities
|
|
|
-
|
|
|
1,350
|
||
Accounts receivable, net of allowance of $8,399 and $7,125, respectively
|
|
|
40,125
|
|
|
39,417
|
||
Inventory
|
|
|
32,056
|
|
|
31,685
|
||
Prepaid expenses and other current assets
|
|
|
5,312
|
|
|
4,712
|
||
|
|
|
|
|
||||
Total current assets
|
|
|
98,735
|
|
|
92,713
|
||
|
|
|
|
|
||||
Property, plant, and equipment, net
|
|
|
46,990
|
|
|
55,028
|
||
Goodwill
|
|
|
20,384
|
|
|
20,384
|
||
Other intangible assets, net
|
|
|
10,738
|
|
|
12,982
|
||
Long-term restricted cash
|
|
|
-
|
|
|
163
|
||
Other non-current assets, net
|
|
|
991
|
|
|
753
|
||
|
|
|
|
|
||||
Total assets
|
|
$
|
177,838
|
|
$
|
182,023
|
||
|
|
|
|
|
||||
LIABILITIES and SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Borrowings from credit facility
|
|
$
|
10,573
|
|
$
|
10,332
|
||
Short-term debt
|
-
|
842
|
||||||
Accounts payable
|
26,156
|
24,931
|
||||||
Accrued expenses and other current liabilities
|
|
|
27,115
|
|
|
21,883
|
||
|
|
|
|
|
||||
Total current liabilities
|
|
|
63,844
|
|
|
57,988
|
||
|
|
|
|
|
||||
Warrant liability
|
475
|
-
|
||||||
Other long-term liabilities
|
|
|
87
|
|
|
104
|
||
|
|
|
|
|
||||
Total liabilities
|
|
|
64,406
|
|
|
58,092
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
||||
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.0001 par, 5,882 shares authorized; no shares outstanding
|
|
|
|
|
-
|
|||
Common stock, no par value, 200,000 shares authorized;
|
|
|
|
|
||||
85,346 shares issued and 85,187 shares outstanding as of September 30, 2010
|
||||||||
80,982 shares issued and 80,823 shares outstanding as of September 30, 2009
|
701,997
|
688,844
|
||||||
Accumulated deficit
|
|
|
(587,259
|
)
|
|
|
(563,565
|
)
|
Accumulated other comprehensive income
|
|
|
777
|
|
|
735
|
||
Treasury stock, at cost; 159 shares as of September 30, 2010 and 2009
|
|
|
(2,083
|
)
|
|
|
(2,083
|
)
|
Total shareholders’ equity
|
|
|
113,432
|
|
|
123,931
|
||
|
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
|
$
|
177,838
|
|
$
|
182,023
|
Shares of Common Stock |
Value of
Common
Stock
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Income
|
Treasury
Stock
|
Total
Shareholders’
Equity
|
|||||||||||||||||||
Balance as of September 30, 2007
|
|
|
51,049
|
|
|
$
|
443,835
|
|
|
$
|
(343,578
|
)
|
|
$
|
(17
|
)
|
|
$
|
(2,083
|
)
|
|
$
|
98,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
(80,860
|
)
|
|
|
|
|
|
|
|
|
|
|
(80,860
|
)
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
566
|
|
|
|
|
|
|
|
566
|
|
Comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(80,860
|
)
|
|
|
566
|
|
|
|
-
|
|
|
|
(80,294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
11,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,278
|
|
Stock option exercises
|
|
|
1,659
|
|
|
|
7,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,047
|
|
Compensatory stock issuances
|
|
|
178
|
|
|
|
1,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,282
|
|
Conversion of subordinated notes
|
|
|
12,187
|
|
|
|
85,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,429
|
|
Issuance of common stock from private placement transaction
|
|
|
8,000
|
|
|
|
93,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,647
|
|
Issuance of common stock for Intel acquisitions
|
|
|
4,422
|
|
|
|
36,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,085
|
|
Issuance of common stock for acquisition of Opticomm
|
|
|
145
|
|
|
|
707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
707
|
|
Issuance of common stock - ESPP
|
|
|
121
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
679
|
|
Proceeds from Section 16 officer
|
|
|
-
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
Cumulative adjustment related to the implementation of a new accounting standard related to income taxes (ASC 740)
|
|
|
|
|
|
|
|
|
|
|
(326
|
)
|
|
|
|
|
|
|
|
|
|
|
(326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2008
|
|
|
77,761
|
|
|
$
|
680,020
|
|
|
$
|
(424,764
|
)
|
|
$
|
549
|
|
|
$
|
(2,083
|
)
|
|
$
|
253,722
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
(138,801
|
)
|
|
|
|
|
|
|
|
|
|
|
(138,801
|
)
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
186
|
|
|
|
|
|
|
|
186
|
|
Comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(138,801
|
)
|
|
|
186
|
|
|
|
-
|
|
|
|
(138,615
|
)
|
Stock-based compensation
|
- |
7,017
|
7,017
|
|||||||||||||||||||||
Stock option exercises
|
11
|
32
|
32
|
|||||||||||||||||||||
Compensatory stock issuances
|
756
|
841
|
841
|
|||||||||||||||||||||
Issuance of common stock - ESPP
|
995
|
894
|
894
|
|||||||||||||||||||||
Issuance of common stock for acquisitions
|
1,300
|
- | - | |||||||||||||||||||||
Costs incurred related to issuance of equity line of credit facility
|
40
|
40
|
||||||||||||||||||||||
Balance as of September 30, 2009
|
|
|
80,823
|
|
|
$
|
688,844
|
|
|
$
|
(563,565
|
)
|
|
$
|
735
|
|
|
$
|
(2,083
|
)
|
|
$
|
123,931
|
|
Net loss
|
(23,694
|
)
|
(23,694
|
)
|
||||||||||||||||||||
Translation adjustment
|
42
|
42
|
||||||||||||||||||||||
Comprehensive loss
|
- | - |
(23,694
|
)
|
42
|
- |
(23,652
|
)
|
||||||||||||||||
Stock-based compensation
|
- |
8,771
|
8,771
|
|||||||||||||||||||||
Stock option exercises
|
2
|
1
|
1
|
|||||||||||||||||||||
Compensatory stock issuances
|
1,105
|
1,089
|
1,089
|
|||||||||||||||||||||
Issuance of common stock - ESPP
|
1,202
|
990
|
990
|
|||||||||||||||||||||
Issuance of common stock related toequity line of credit facility
|
2,055
|
2,302
|
2,302
|
|||||||||||||||||||||
Balance as of September 30, 2010
|
85,187
|
$
|
701,997
|
$
|
(587,259
|
)
|
$
|
777
|
$
|
(2,083
|
)
|
$
|
113,432
|
2010 | 2009 | 2008 | ||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(23,694
|
)
|
|
$
|
(138,801
|
)
|
|
$
|
(80,860
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
||||
Impairments
|
-
|
60,781
|
|
|
22,233
|
|
||||||
Depreciation and amortization expense
|
|
|
12,288
|
|
|
16,082
|
|
|
13,617
|
|
||
Stock-based compensation expense
|
|
|
8,771
|
|
|
7,017
|
|
|
11,278
|
|||
Provision for inventory reserves
|
4,260
|
16,108
|
|
|
9,597
|
|
||||||
Provision for doubtful accounts
|
|
|
2,238
|
|
|
5,065
|
|
|
2,126
|
|
||
Provision for product warranty
|
1,220
|
2,578
|
4,479
|
|||||||||
Compensatory stock issuances
|
|
|
1,089
|
|
|
1,037
|
|
|
1,282
|
|||
Change in fair value of financial instruments
|
475
|
-
|
-
|
|||||||||
Cost of financing instruments
|
322
|
-
|
-
|
|||||||||
Provision for losses on firm commitments
|
185
|
8,515
|
-
|
|||||||||
Loss on disposal of equipment
|
|
|
89
|
|
|
367
|
|
|
1,064
|
|||
Impairment of investment
|
|
|
-
|
|
|
367
|
|
|
1,461
|
|
||
Gain from the sale of an unconsolidated affiliate
|
|
|
-
|
|
|
(3,144
|
)
|
|
|
(7,384
|
)
|
|
Loss from conversion of subordinated notes
|
|
|
-
|
|
|
-
|
|
|
1,169
|
|||
Reduction of note receivable due for services received
|
|
|
-
|
|
|
-
|
|
|
520
|
|
||
Accretion of loss from convertible subordinated notes
|
|
|
-
|
|
|
-
|
|
|
41
|
|
||
Total non-cash adjustments
|
|
|
30,937
|
|
|
114,773
|
|
|
61,483
|
|
||
|
|
|
|
|
|
|
|
|
||||
Changes in operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
|
|
(3,309
|
)
|
|
|
15,967
|
|
|
(24,296
|
)
|
|
Related party receivable
|
|
|
-
|
|
|
-
|
|
|
332
|
|
||
Inventory
|
|
|
(4,621
|
)
|
|
|
16,849
|
|
|
(11,904
|
)
|
|
Other assets
|
|
|
(904
|
)
|
|
|
1,582
|
|
|
(4,542
|
)
|
|
Accounts payable
|
|
|
1,229
|
|
|
(27,428
|
)
|
|
|
29,581
|
|
|
Accrued expenses and other current liabilities
|
|
|
3,773
|
|
|
(12,504
|
)
|
|
|
(11,736
|
)
|
|
Total change in operating assets and liabilities
|
|
|
(3,832
|
)
|
|
|
(5,534
|
)
|
|
|
(22,565
|
)
|
|
|
|
|
|
|
|
|
|
||||
Net cash provided by (used in) operating activities
|
|
|
3,411
|
|
|
(29,562
|
)
|
|
|
(41,942
|
)
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
||||
Proceeds from the sale of available-for-sale securities
|
|
|
1,350
|
|
|
2,729
|
|
|
33,392
|
|
||
Release (use) of restricted cash
|
|
|
386
|
|
|
738
|
|
|
(316
|
)
|
||
Purchase of plant and equipment
|
|
|
(1,403
|
)
|
|
|
(1,323
|
)
|
|
|
(17,238
|
)
|
Investment in patents
|
(649
|
)
|
-
|
-
|
||||||||
Proceeds from the sale of an unconsolidated affiliate
|
|
|
-
|
|
|
11,017
|
|
|
13,080
|
|||
Proceeds from disposals of equipment
|
|
|
-
|
|
|
106
|
|
|
162
|
|||
Proceeds from insurance recovery on equipment
|
|
|
-
|
|
|
-
|
|
|
1,189
|
|
||
Purchase of businesses
|
|
|
-
|
|
|
-
|
|
|
(75,707
|
)
|
||
Purchase of available-for-sale securities
|
|
|
-
|
|
|
-
|
|
|
(7,000
|
)
|
||
Investments in unconsolidated affiliates
|
|
|
-
|
|
|
-
|
|
|
(1,503
|
)
|
||
Proceeds from employee notes receivable
|
|
|
-
|
|
|
-
|
|
|
-
|
|
||
Proceeds from notes receivable
|
|
|
-
|
|
|
-
|
|
|
-
|
|
||
|
|
|
|
|
|
|
|
|
||||
Net cash (used in) provided by investing activities
|
|
$
|
(316
|
)
|
|
$
|
13,267
|
|
$
|
(53,941
|
)
|
|
(Continued from previous page) | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from equity line of credit facility
|
$
|
1,980
|
$
|
-
|
$
|
-
|
||||||
Proceeds from employee stock purchase plan
|
|
|
990
|
|
|
894
|
|
|
679
|
|||
Net proceeds from borrowings from credit facility
|
241
|
|
10,332
|
|
-
|
|||||||
Proceeds from exercise of employee stock options
|
|
|
1
|
|
|
32
|
|
|
7,047
|
|||
Net (payments on) proceeds from borrowings on short-term debt
|
(842
|
)
|
842
|
-
|
||||||||
Payments on capital lease obligations
|
|
|
(5
|
)
|
|
|
-
|
|
|
(11
|
)
|
|
Proceeds from private placement, net of issuance costs
|
|
|
- |
|
|
-
|
|
|
93,647
|
|
||
Proceeds from senior management related to common stock
|
|
|
- |
|
|
-
|
|
|
31
|
|
||
|
|
|
|
|
|
|
|
|
||||
Net cash provided by financing activities
|
|
|
2,365
|
|
|
12,100
|
|
|
101,393
|
|
||
|
|
|
|
|
|
|
|
|
||||
Effect of foreign currency
|
|
|
456
|
|
|
(4
|
)
|
|
|
566
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
|
5,916
|
|
|
(4,199
|
)
|
|
|
6,076
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents at beginning of year
|
|
|
14,028
|
|
|
18,227
|
|
|
12,151
|
|
||
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents at end of year
|
|
$
|
19,944
|
|
$
|
14,028
|
|
$
|
18,227
|
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Cash paid during the period for interest
|
|
$
|
308
|
|
$
|
582
|
|
$
|
3,314
|
|
||
Cash paid during the period for income taxes
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|||
|
|
|
|
|
|
|
|
|
||||
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Issuance of common stock related to equity line of credit facility
|
|
$
|
228
|
$
|
-
|
$
|
-
|
|||||
Acquisition of equipment under capital leases
|
|
$
|
- |
|
$
|
46
|
|
$
|
-
|
|
||
Issuance of common stock for purchase of Opticomm Corporation
|
|
$
|
-
|
|
$
|
-
|
|
$
|
707
|
|
||
Issuance of common stock for purchase of assets acquired from Intel Corporation
|
|
$
|
-
|
|
$
|
1,183
|
|
$
|
36,085
|
|
||
Issuance of common stock for conversion of subordinated notes
|
|
$
|
-
|
|
$
|
-
|
|
$
|
85,429
|
|
||
|
-
|
the valuation of inventory, goodwill, intangible assets, warrants, and stock based compensation;
|
|
-
|
assessment of recovery of long-lived assets;
|
|
-
|
revenue recognition associated with the percentage of completion method; and,
|
|
-
|
the allowance for doubtful accounts and warranty accruals.
|
Estimated Useful Life
|
|||
Buildings
|
-
|
forty
|
years
|
Leasehold improvements
|
-
|
five to seven
|
years
|
Machinery and equipment
|
-
|
five
|
years
|
Furniture and fixtures
|
-
|
five
|
years
|
Computer hardware and software
|
-
|
three to seven
|
years
|
|
-
|
Distributors - The Company uses a number of distributors around the world and recognizes revenue upon shipment of product to these distributors. Title and risk of loss pass to the distributors upon shipment, and our distributors are contractually obligated to pay the Company on standard commercial terms, just like our other direct customers. The Company does not sell to its distributors on consignment and, except in the event of product discontinuance, does not give distributors a right of return.
|
|
-
|
Solar Panel and Solar Power Systems Contracts - The Company records revenues from certain solar panel and solar power systems contracts using the percentage-of-completion method. Revenue is recognized in proportion to actual costs incurred compared to total anticipated costs expected to be incurred for each contract. Such contracts require estimates to determine the appropriate cost and revenue recognition. The Company uses all available information in determining dependable estimates of the extent of progress towards completion, contract revenues, and contract costs. Estimates are revised as additional information becomes available. If estimates of costs to complete long-term contracts indicate a loss, a provision is made for the total loss anticipated.
|
|
-
|
Government Research and Development Contracts – Research and development contract revenue represents reimbursement by various U.S. government entities, or their contractors, to aid in the development of new technology. The applicable contracts generally provide that the Company may elect to retain ownership of inventions made in performing the work, subject to a non-exclusive license retained by the U.S. government to practice the inventions for governmental purposes. The research and development contract funding may be based on a cost-plus, cost reimbursement, or a firm fixed price arrangement. The amount of funding under each research and development contract is determined based on cost estimates that include both direct and indirect costs. Cost-plus funding is determined based on actual costs plus a set margin. As the Company incurs costs under cost
reimbursement type contracts, revenue is recorded. Contract costs include material, labor, special tooling and test equipment, subcontracting costs, as well as an allocation of indirect costs. A research and development contract is considered complete when all significant costs have been incurred, milestones have been reached, and any reporting obligations to the customer have been met. Government contract revenue is primarily recognized as service revenue.
|
Number of Shares | Weighted Average Exercise Price | Weighted Average
Remaining Contractual Life
(in years)
|
||||||||||
Outstanding as of September 30, 2007
|
5,697,766
|
$ |
5.46
|
|||||||||
Granted
|
4,695,250
|
7.40
|
||||||||||
Tolled
|
658,989
|
5.19
|
||||||||||
Exercised
|
(1,658,723
|
)
|
4.25
|
|||||||||
Forfeited
|
(406,898
|
)
|
6.94
|
|||||||||
Cancelled
|
(56,931
|
)
|
14.01
|
|||||||||
Outstanding as of September 30, 2008
|
8,929,453
|
$ |
6.57
|
|||||||||
Granted
|
3,700,439
|
1.25
|
||||||||||
Exercised
|
(10,675
|
)
|
3.02
|
|||||||||
Forfeited
|
(1,243,825
|
)
|
6.98
|
|||||||||
Cancelled
|
(587,218
|
)
|
4.64
|
|||||||||
Outstanding as of September 30, 2009
|
10,788,174
|
$
|
4.85
|
|||||||||
Granted
|
76,500
|
1.07
|
||||||||||
Exercised
|
(1,500
|
)
|
0.54
|
|||||||||
Forfeited
|
(856,265
|
)
|
3.36
|
|||||||||
Cancelled
|
(1,284,784
|
)
|
6.51
|
|||||||||
Outstanding as of September 30, 2010
|
8,722,125
|
$ |
4.70
|
7.02
|
||||||||
Exercisable as of September 30, 2010
|
4,938,767
|
$
|
5.35
|
6.08
|
||||||||
Vested and expected to vest as of September 30, 2010
|
6,039,669
|
$
|
5.00
|
6.49
|
Number of Stock Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
Exercise Price
of Stock Options
|
Number Outstanding
|
Weighted- Average Remaining Contractual Life (years)
|
Weighted- Average Exercise Price
|
Number Exercisable
|
Weighted- Average Exercise Price
|
||||||||||||||||
$<5.00 | 4,490,208 | 7.18 | $ | 1.94 | 2,168,387 | $ | 2.48 | ||||||||||||||
>=$5.00 to <$10.00
|
4,199,217 | 6.84 | 7.61 | 2,753,980 | 7.58 | ||||||||||||||||
=>$10.00
|
32,700 | 6.81 | 11.28 | 16,400 | 11.24 | ||||||||||||||||
Total
|
8,722,125 | 7.02 | $ | 4.70 | 4,938,767 | $ | 5.35 |
(in thousands, except per share data)
|
For The Fiscal Years
Ended September 30,
|
|||||||||||
2010
|
2009
|
2008
|
||||||||||
Stock-based compensation expense by award type:
|
||||||||||||
Employee stock options
|
$ | 8,220 | $ | 6,309 | $ | 6,455 | ||||||
Employee stock purchase plan
|
551 | 708 | 507 | |||||||||
Former employee stock options tolled
|
- | - | 4,316 | |||||||||
Total stock-based compensation expense
|
$ | 8,771 | $ | 7,017 | $ | 11,278 | ||||||
Net effect on net loss per basic and diluted share
|
$ | (0.11 | ) | $ | (0.09 | ) | $ | (0.17 | ) |
Black-Scholes Weighted-Average Assumptions
Stock Options
|
For The Fiscal Years
Ended September 30,
|
|||||||||||
2010
|
2009
|
2008
|
||||||||||
Expected dividend yield
|
- | % | - | % | - | % | ||||||
Expected stock price volatility
|
97.1 | % | 97.9 | % | 71.0 | % | ||||||
Risk-free interest rate
|
2.4 | % | 2.4 | % | 3.1 | % | ||||||
Expected term (in years)
|
4.6 | 4.5 | 5.0 | |||||||||
Estimated pre-vesting forfeitures
|
32.5 | % | 32.5 | % | 17.4 | % |
|
Number of Common Stock Shares
|
Purchase Price
per Share of
Common Stock
|
||||||
Amount of shares reserved for the ESPP
|
4,500,000
|
|
||||||
|
|
|
||||||
Number of shares issued for calendar years 2000 through 2007
|
(1,123,857
|
)
|
$ |
1.87 - $40.93
|
||||
Number of shares issued for calendar year 2008
|
(592,589
|
)
|
$ |
0.88 - $ 5.62
|
||||
Number of shares issued for calendar year 2009
|
(1,073,405
|
)
|
$ |
0.92
|
||||
Number of shares issued for calendar year 2010 (6-month period only)
|
(651,700
|
)
|
$ |
0.74
|
||||
|
|
|
||||||
Remaining shares reserved for the ESPP
|
1,058,449
|
|
|
Number of Common Stock Shares Available for Future Issuances
|
|||
For exercise of outstanding common stock options
|
8,722,125
|
|||
For future issuances to employees under the ESPP
|
1,058,449
|
|||
For future common stock option or restricted stock awards under the 2010 Equity Incentive Plan
|
4,000,000
|
|||
For future exercise of warrants
|
3,000,003
|
|||
|
||||
Total reserved
|
16,780,577
|
|
-
|
a warrant, pursuant to which Commerce Court may purchase up to 666,667 shares of the Company’s common stock at an exercise price of $1.69, which is equal to 125% of the average of the volume weighted average price of common stock for the three trading days immediately preceding the execution date of the Purchase Agreement,
|
|
-
|
a warrant, pursuant to which Commerce Court may purchase from up to 666,667 shares of the Company’s common stock at an exercise price of $2.02, which is equal to 150% of the average of the volume weighted average price of common stock for the three trading days immediately preceding the execution date of the Purchase Agreement, and
|
|
-
|
a warrant, pursuant to which Commerce Court may purchase up to 266,666 shares of the Company’s common stock at an exercise price of $2.36, which is equal to 175% of the average of the volume weighted average price of common stock for the three trading days immediately preceding the execution date of the Purchase Agreement.
|
Assumptions used in the
Option Pricing Model
|
As of
September 30,
2010
|
|||
Expected dividend yield
|
- | |||
Expected stock price volatility
|
100.0 | % | ||
Risk-free interest rate
|
1.3 | % | ||
Expected term (in years)
|
4.5 |
|
-
|
The time that would be required to dispose of the inventory;
|
|
-
|
The expenses that would be expected to be incurred in the disposition and sale of the inventory; and,
|
|
-
|
A profit commensurate with the amount of investment in the assets and the degree of risk.
|
|
-
|
Estimation of the current replacement cost of the assets by indexing historical capitalized costs based on asset type and acquisition date; and,
|
|
-
|
Physical depreciation and certain obsolescence adjustments.
|
(in thousands)
Intel Corporation’s Optical Platform Division
|
||||
|
||||
Net purchase price
|
|
$
|
111,792
|
|
Net assets acquired
|
|
(79,444
|
)
|
|
|
|
|
|
|
Excess purchase price allocated to goodwill
|
|
$
|
32,348
|
|
(in thousands)
Intel Corporation’s Optical Platform Division
|
||||
Inventory
|
|
$
|
33,287
|
|
Fixed assets
|
|
|
19,878
|
|
Intangible assets
|
|
|
26,279
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
79,444
|
|
(in thousands)
|
As of September 30, 2010
|
As of September 30, 2009
|
||||||
|
||||||||
Accounts receivable
|
$ | 37,574 | $ | 40,474 | ||||
Accounts receivable – unbilled
|
10,950 | 6,068 | ||||||
Accounts receivable, gross
|
48,524 | 46,542 | ||||||
Allowance for doubtful accounts
|
(8,399 | ) | (7,125 | ) | ||||
Accounts receivable, net
|
$ | 40,125 | $ | 39,417 |
For the Fiscal Years
Ended September 30,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Balance at beginning of year
|
|
$
|
7,125
|
|
$
|
2,377
|
|
|
$
|
802
|
||
Expense - charge to provision, net of recoveries
|
2,238
|
5,065
|
2,126
|
|||||||||
Write-offs - deductions against receivables
|
|
|
(964
|
)
|
|
|
(317
|
)
|
|
|
(551
|
)
|
|
|
|
|
|
|
|
||||||
Balance at end of year
|
|
$
|
8,399
|
|
$
|
7,125
|
|
|
$
|
2,377
|
(in thousands)
|
As of September 30, 2010
|
As of September 30, 2009
|
||||||
|
||||||||
Raw materials
|
$ | 22,965 | $ | 27,607 | ||||
Work in-process
|
7,843 | 6,496 | ||||||
Finished goods
|
13,435 | 9,998 | ||||||
Inventory, gross
|
44,243 | 44,101 | ||||||
Valuation reserve
|
(12,187 | ) | (12,416 | ) | ||||
Inventory, net
|
$ | 32,056 | $ | 31,685 |
For the Fiscal Years
Ended September 30,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Balance at beginning of year
|
|
$
|
12,416
|
|
$
|
12,625
|
|
|
$
|
8,225
|
||
Expense - charge to provision
|
4,260
|
16,108
|
9,597
|
|||||||||
Write-offs - deductions against inventory
|
|
|
(4,489
|
)
|
|
|
(16,317
|
)
|
|
|
(5,197
|
)
|
|
|
|
|
|
|
|
|
|||||
Balance at end of year
|
|
$
|
12,187
|
|
$
|
12,416
|
|
|
$
|
12,625
|
(in thousands)
|
As of September 30, 2010
|
As of September 30, 2009
|
||||||
|
||||||||
Land
|
$ | 1,502 | $ | 1,502 | ||||
Building and improvements
|
34,854 | 34,922 | ||||||
Equipment
|
101,310 | 98,693 | ||||||
Furniture and fixtures
|
3,065 | 3,065 | ||||||
Computer hardware and software
|
3,616 | 2,660 | ||||||
Leasehold improvements
|
854 | 1,094 | ||||||
Construction in progress
|
992 | 3,031 | ||||||
Property, plant, and equipment, gross
|
146,193 | 144,967 | ||||||
Accumulated depreciation and amortization
|
(99,203 | ) | (89,939 | ) | ||||
Property, plant, and equipment, net
|
$ | 46,990 | $ | 55,028 |
(in thousands)
|
As of September 30, 2010
|
As of September 30, 2009
|
||||||||||||||||||||||
|
Gross
Assets
|
Accumulated
Amortization
|
Net
Assets
|
Gross Assets
|
Accumulated
Amortization
|
Net
Assets
|
||||||||||||||||||
|
||||||||||||||||||||||||
Fiber Optics
|
$ | 24,661 | $ | (14,940 | ) | $ | 9,721 | $ | 24,494 | $ | (12,341 | ) | $ | 12,153 | ||||||||||
Photovoltaics
|
1,941 | (924 | ) | 1,017 | 1,459 | (630 | ) | 829 | ||||||||||||||||
Total
|
$ | 26,602 | $ | (15,864 | ) | $ | 10,738 | $ | 25,953 | $ | (12,971 | ) | $ | 12,982 |
(in thousands)
|
Estimated Future Amortization Expense
|
|||
Fiscal year ended September 30, 2011
|
$
|
2,562
|
||
Fiscal year ended September 30, 2012
|
2,238
|
|||
Fiscal year ended September 30, 2013
|
1,902
|
|||
Fiscal year ended September 30, 2014
|
1,367
|
|||
Fiscal year ended September 30, 2015
|
941
|
|||
Thereafter
|
1,728
|
|||
Total future amortization expense
|
$
|
10,738
|
(in thousands)
|
As of September 30,
2010
|
As of September 30, 2009
|
||||||
|
||||||||
Advanced payments
|
$ | 7,437 | $ | 886 | ||||
Warranty
|
4,851 | 4,287 | ||||||
Compensation-related
|
4,181 | 6,057 | ||||||
Tangshan termination fee
|
2,775 | - | ||||||
Professional fees
|
2,530 | 1,839 | ||||||
Royalty
|
1,772 | 1,937 | ||||||
Self insurance
|
957 | 1,272 | ||||||
Income and other taxes
|
747 | 625 | ||||||
Restructuring accrual
|
600 | 395 | ||||||
Loss on sale commitments
|
561 | 51 | ||||||
Loss on purchase commitments
|
86 | 3,821 | ||||||
Other
|
618 | 713 | ||||||
Accrued expenses and other current liabilities
|
$ | 27,115 | $ | 21,883 |
For the Fiscal Years
Ended September 30,
|
||||||||||||
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Balance at beginning of year
|
|
$
|
4,287
|
|
$
|
4,640
|
|
|
$
|
1,310
|
||
Expense - charge to provision
|
1,220
|
2,578
|
4,479
|
|||||||||
Utilization of warranty accrual
|
|
|
(656
|
)
|
|
|
(2,931
|
)
|
|
|
(1,149
|
)
|
|
|
|
|
|
|
|
||||||
Balance at end of year
|
|
$
|
4,851
|
|
$
|
4,287
|
|
|
$
|
4,640
|
(in thousands)
|
Estimated Future Minimum Lease Payments
|
|||
Fiscal year ended September 30, 2011
|
$
|
1,821
|
||
Fiscal year ended September 30, 2012
|
1,078
|
|||
Fiscal year ended September 30, 2013
|
804
|
|||
Fiscal year ended September 30, 2014
|
76
|
|||
Fiscal year ended September 30, 2015
|
76
|
|||
Thereafter
|
2,623
|
|||
Total minimum lease payments
|
$
|
6,478
|
(in millions)
|
For the Fiscal Years
Ended September 30,
|
|||||||||||
2010
|
2009
|
2008
|
||||||||||
Income tax benefit computed at U.S. federal statutory rate
|
|
$
|
(8.1
|
)
|
$
|
(46.3
|
)
|
$
|
(27.5
|
)
|
||
State tax benefits, net of U.S. federal effect
|
(0.4
|
)
|
(4.5
|
)
|
(4.1
|
)
|
||||||
Debt conversion
|
-
|
-
|
1.6
|
|
||||||||
Other
|
2.3
|
4.5
|
0.8
|
|
||||||||
Valuation allowance
|
|
|
6.3
|
46.3
|
29.2
|
|
||||||
|
|
|||||||||||
Income tax expense - current
|
|
$
|
0.1
|
$
|
0.0
|
$
|
0.0
|
|||||
Effective tax rate
|
0
|
%
|
0
|
%
|
0
|
%
|
(in thousands)
|
September 30, 2010
|
September 30, 2009
|
||||||
Deferred tax assets (liabilities):
|
||||||||
Federal net operating loss carryforwards
|
$
|
139,539
|
$
|
134,388
|
||||
Foreign net operating loss carryforwards
|
3,637
|
2,536
|
||||||
State Research credit carryforwards
|
1,185
|
2,338
|
||||||
Inventory reserves
|
4,493
|
4,607
|
||||||
Accounts receivable reserves
|
1,254
|
1,728
|
||||||
Accrued warranty reserve
|
1,529
|
1,626
|
||||||
State net operating loss carryforwards
|
13,013
|
13,217
|
||||||
Investment write-down
|
5,285
|
5,317
|
||||||
Legal reserves
|
-
|
476
|
||||||
Stock compensation
|
1,226
|
-
|
||||||
Deferred compensation
|
893
|
1,484
|
||||||
Tax reserves
|
-
|
50
|
||||||
Other
|
2,904
|
3,458
|
||||||
Fixed assets and intangibles
|
20,156
|
19,964
|
||||||
Total deferred tax assets
|
195,114
|
191,189
|
||||||
Valuation allowance
|
(195,114
|
)
|
(191,189
|
)
|
||||
Net deferred tax assets
|
$
|
-
|
$
|
-
|
(in thousands)
|
|
|||
Balance as of September 30, 2008
|
$
|
338
|
||
Additions based on tax positions related to the current year
|
19
|
|||
Additions for tax positions of prior years
|
17
|
|||
Balance as of September 30, 2009
|
$ |
374
|
||
Adjustments based on tax positions related to the current year
|
(17
|
)
|
||
Adjustments based on tax positions of prior years
|
(19
|
)
|
||
Balance as of September 30, 2010
|
$
|
338
|
Segment Revenue
(in thousands)
|
For the Fiscal Years Ended September 30,
|
|||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Revenue
|
% of Revenue
|
Revenue
|
% of Revenue
|
Revenue
|
% of Revenue
|
|||||||||||||||||||
Fiber Optics
|
|
$
|
121,724
|
64
|
%
|
|
$
|
114,134
|
65
|
%
|
|
$
|
171,276
|
|
|
|
72
|
%
|
||||||
Photovoltaics
|
|
|
69,554
|
36
|
|
|
62,222
|
35
|
|
|
68,027
|
|
|
|
28
|
|
||||||||
Total revenue
|
|
$
|
191,278
|
100
|
%
|
|
$
|
176,356
|
100
|
%
|
|
$
|
239,303
|
|
|
|
100
|
%
|
Geographic Revenue
(in thousands)
|
For the Fiscal Years Ended September 30,
|
|||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Revenue
|
% of Revenue
|
Revenue
|
% of Revenue
|
Revenue
|
% of Revenue
|
|||||||||||||||||||
United States
|
|
$
|
115,304
|
60
|
%
|
|
$
|
108,563
|
62
|
%
|
|
$
|
134,796
|
|
|
|
56
|
%
|
||||||
Asia
|
|
|
43,064
|
22
|
|
|
50,973
|
29
|
|
|
73,311
|
|
|
|
31
|
|
||||||||
Europe
|
|
|
12,712
|
7
|
|
|
8,878
|
5
|
|
|
20,420
|
|
|
|
8
|
|
||||||||
Other
|
|
|
20,198
|
11
|
|
|
7,942
|
4
|
|
|
10,776
|
|
|
|
5
|
|
||||||||
Total revenue
|
|
$
|
191,278
|
100
|
%
|
|
$
|
176,356
|
100
|
%
|
|
$
|
239,303
|
|
|
|
100
|
%
|
Significant Customers
As a percentage of total consolidated revenue
|
For the Fiscal Years
Ended September 30,
|
|||||||||||
2010
|
2009
|
2008
|
||||||||||
Fiber Optics – related customer:
|
||||||||||||
Cisco
|
13
|
%
|
15
|
%
|
18
|
%
|
||||||
Photovoltaics – related customer:
|
||||||||||||
Loral Space & Communications
|
11
|
%
|
14
|
%
|
10
|
%
|
Statement of Operations Data
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
Operating loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Optics segment
|
|
$
|
(19,888
|
)
|
|
$
|
(126,830
|
)
|
|
$
|
(49,903
|
)
|
Photovoltaics segment
|
|
|
(1,538
|
)
|
|
|
(14,136
|
)
|
|
|
(25,238
|
)
|
Corporate division
|
|
|
-
|
|
|
-
|
|
|
(140
|
)
|
||
Operating loss
|
|
$
|
(21,426
|
)
|
|
$
|
(140,966
|
)
|
|
$
|
(75,281
|
)
|
Segment Depreciation and Amortization
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Optics segment
|
|
$
|
6,974
|
|
|
$
|
10,314
|
|
|
$
|
9,067
|
|
Photovoltaics segment
|
|
|
5,314
|
|
|
|
5,768
|
|
|
|
4,472
|
|
Corporate division
|
|
|
-
|
|
|
|
-
|
|
|
|
78
|
|
Total depreciation and amortization
|
|
$
|
12,288
|
|
|
$
|
16,082
|
|
|
$
|
13,617
|
Long-lived Assets
(in thousands)
|
2010
|
2009
|
2008
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Optics segment
|
|
$
|
31,175
|
|
|
$
|
37,399
|
|
|
$
|
107,684
|
|
Photovoltaics segment
|
|
|
45,935
|
|
|
|
50,169
|
|
|
|
55,232
|
|
Corporate division
|
|
|
1,002
|
|
|
|
826
|
|
|
|
622
|
|
Total long-lived assets
|
|
$
|
78,112
|
|
|
$
|
88,394
|
|
|
$
|
163,538
|
|
-
|
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. The Company classifies investments within Level 1 if quoted prices are available in active markets. Level 1 assets include instruments valued based on quoted market prices in active markets which generally could include money market funds, corporate publicly traded equity securities on major exchanges and U.S. Treasury notes with quoted prices on active markets.
|
|
-
|
Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. The Company classifies items in Level 2 if the investments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. These investments could include: government agencies, corporate bonds, commercial paper, and auction rate securities.
|
|
-
|
Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company did not hold financial assets or liabilities within Level 3.
|
(in thousands)
|
As of September 30, 2010
|
||||||||||||||
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Remaining Inputs
|
Significant Unobservable Inputs
|
Total
|
||||||||||||
[Level 1]
|
[Level 2]
|
[Level 3]
|
|||||||||||||
Assets
|
|||||||||||||||
Money market fund deposits
|
$
|
19,944
|
$
|
-
|
$
|
-
|
$
|
19,944
|
|||||||
Restricted fund deposits
|
1,298
|
-
|
-
|
1,298
|
|||||||||||
Total assets measured at fair value
|
$
|
21,242
|
$
|
-
|
$
|
-
|
$
|
21,242
|
|||||||
Liabilities
|
|||||||||||||||
Warrants
|
$
|
-
|
$
|
475
|
$
|
-
|
$
|
475
|
(in thousands)
|
As of September 30, 2009
|
||||||||||||||
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Remaining Inputs
|
Significant Unobservable Inputs
|
Total
|
||||||||||||
[Level 1]
|
[Level 2]
|
[Level 3]
|
|||||||||||||
Assets
|
|||||||||||||||
Money market fund deposits
|
$
|
14,028
|
$
|
-
|
$
|
-
|
$
|
14,028
|
|||||||
Restricted fund deposits
|
1,684
|
-
|
-
|
1,684
|
|||||||||||
Asset-backed auction rate securities
|
-
|
1,350
|
-
|
1,350
|
|||||||||||
Total assets measured at fair value
|
$
|
15,712
|
$
|
1,350
|
$
|
-
|
$
|
17,062
|
Consolidated Statements of Operations
|
Quarter 1
|
Quarter 2
|
Quarter 3
|
Quarter 4
|
||||||||||||
Fiscal 2010
|
||||||||||||||||
(in thousands, except loss per share)
|
December 31,
2009
|
March 31,
2010
|
June 30,
2010
|
September 30,
2010
|
||||||||||||
Revenue
|
$
|
42,402
|
$
|
48,194
|
$
|
46,606
|
$
|
54,076
|
||||||||
Cost of revenue
|
33,089
|
32,436
|
33,797
|
41,295
|
||||||||||||
Gross profit (loss)
|
9,313
|
15,758
|
12,809
|
12,781
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general, and administrative
|
12,227
|
9,023
|
14,004
|
7,295
|
||||||||||||
Research and development
|
7,513
|
7,596
|
7,147
|
7,282
|
||||||||||||
Total operating expenses
|
19,740
|
16,619
|
21,151
|
14,577
|
||||||||||||
Operating loss
|
(10,427
|
)
|
(861
|
)
|
(8,342
|
)
|
(1,796
|
)
|
||||||||
Other expense (income):
|
||||||||||||||||
Interest income
|
(2
|
)
|
(17
|
)
|
(3
|
)
|
(2
|
)
|
||||||||
Interest expense
|
116
|
103
|
111
|
109
|
||||||||||||
Foreign exchange loss (gain)
|
232
|
729
|
928
|
(881
|
)
|
|||||||||||
Change in fair value of financial instruments
|
1,132
|
(322
|
)
|
(176
|
)
|
(159
|
)
|
|||||||||
Cost of financing instruments
|
228
|
108
|
12
|
22
|
||||||||||||
Total other expense (income)
|
1,706
|
601
|
872
|
(911
|
)
|
|||||||||||
Net loss
|
$
|
(12,133
|
)
|
$
|
(1,462
|
)
|
$
|
(9,214
|
)
|
$
|
(885
|
)
|
||||
Per share data:
|
||||||||||||||||
Net loss per basic and diluted share
|
$
|
(0.15
|
)
|
$
|
(0.02
|
)
|
$
|
(0.11
|
)
|
$
|
(0.01
|
)
|
||||
Weighted-average number of basic and diluted shares outstanding
|
81,113
|
82,459
|
84,117
|
85,009
|
|
-
|
In June 2010, the Company recorded a $2.4 million reserve on accounts receivable related to a solar power system contract that management had uncertainty with respect to its total collectability.
|
|
-
|
In June 2010, the Company incurred a one-time non-recurring $2.8 million charge associated with a termination fee on the Company’s previously announced joint venture with Tangshan Caofeidian Investment Corporation.
|
|
-
|
Throughout the year, the Company incurred $4.7 million related to legal expenses associated with certain patent and other litigation, all of which was recorded as a sales, general, and administrative expense.
|
Consolidated Statements of Operations
|
Quarter 1
|
Quarter 2
|
Quarter 3
|
Quarter 4
|
||||||||||||
Fiscal 2009
|
||||||||||||||||
(in thousands, except loss per share)
|
December 31,
2008
|
March 31,
2009
|
June 30,
2009
|
September 30,
2009
|
||||||||||||
Revenue
|
$
|
54,056
|
$
|
43,284
|
$
|
38,489
|
$
|
40,527
|
||||||||
Cost of revenue
|
52,467
|
50,289
|
40,917
|
38,993
|
||||||||||||
Gross profit (loss)
|
1,589
|
(7,005
|
)
|
(2,428
|
)
|
1,534
|
||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general, and administrative
|
12,159
|
11,966
|
10,914
|
11,736
|
||||||||||||
Research and development
|
8,110
|
6,891
|
5,654
|
6,445
|
||||||||||||
Impairments
|
33,781
|
-
|
27,000
|
-
|
||||||||||||
Total operating expenses
|
54,050
|
18,857
|
43,568
|
18,181
|
||||||||||||
Operating loss
|
(52,461
|
)
|
(25,862
|
)
|
(45,996
|
)
|
(16,647
|
)
|
||||||||
Other expense (income):
|
||||||||||||||||
Interest income
|
(50
|
)
|
(30
|
)
|
(3
|
)
|
(1
|
)
|
||||||||
Interest expense
|
195
|
143
|
105
|
99
|
||||||||||||
Foreign exchange loss (gain)
|
472
|
908
|
(745
|
)
|
(481
|
)
|
||||||||||
Gain from the sale of an unconsolidated affiliate
|
-
|
(3,144
|
)
|
-
|
-
|
|||||||||||
Impairment of investment
|
367
|
-
|
-
|
-
|
||||||||||||
Total other expense (income)
|
984
|
(2,123
|
)
|
(643
|
)
|
(383
|
)
|
|||||||||
Net loss
|
$
|
(53,445
|
)
|
$
|
(23,739
|
)
|
$
|
(45,353
|
)
|
$
|
(16,264
|
)
|
||||
Per share data:
|
||||||||||||||||
Net loss per basic and diluted share
|
$
|
(0.69
|
)
|
$
|
(0.30
|
)
|
$
|
(0.57
|
)
|
$
|
(0.20
|
)
|
||||
Weighted-average number of basic and diluted shares outstanding
|
77,816
|
78,384
|
79,700
|
80,647
|
|
-
|
In December 2008, the Company recorded non-cash impairment charges totaling $33.8 million related to goodwill and intangible assets in the Fiber Optics segment.
|
|
-
|
In January 2009, the Company sold its remaining interest in Entech Solar Inc (formerly WorldWater and Solar Technologies Corporation) for a gain of $3.1 million.
|
|
-
|
In June 2009, the Company recorded a non-cash impairment charge totaling $27.0 million related to long-lived assets in the Fiber Optics segment.
|
|
-
|
Throughout the year, the Company incurred the following significant expenses within operations:
|
|
-
|
Additional inventory provisions related to excess, obsolete, and lower of cost or market valuation adjustments totaling $16.1 million;
|
|
-
|
Provisions for losses on firm purchase agreements totaling $8.5 million; and,
|
|
-
|
Additional provisions for doubtful accounts totaling $5.1 million.
|
|
-
|
The Company incurred $2.0 million related to severance and restructuring charges and $5.6 million related to legal expenses associated with certain patent and other litigation, all of which was recorded as a sales, general, and administrative expense.
|
a.
|
Evaluation of Disclosure Controls and Procedures
|
b.
|
Changes in Internal Control over Financial Reporting
|
c.
|
Management’s Annual Report on Internal Control over Financial Reporting
|
|
1)
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
|
2)
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Company’s consolidated financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and,
|
|
3)
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.
|
d.
|
Completed and In Process Remediation Actions to Address the Internal Control Weaknesses
|
(a)(1)
|
Financial Statements
|
|
-
|
Consolidated Statements of Operations for the fiscal years ended September 30, 2010, 2009, and 2008
|
|
-
|
Consolidated Balance Sheets as of September 30, 2010 and 2009
|
|
-
|
Consolidated Statements of Shareholders’ Equity and Comprehensive Loss for the fiscal years ended September 30, 2010, 2009, and 2008
|
|
-
|
Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2010, 2009, and 2008
|
|
-
|
Notes to Consolidated Financial Statements
|
|
-
|
Reports of Independent Registered Public Accounting Firms
|
(a)(2)
|
Financial Statement Schedules
|
(a)(3)
|
Exhibits
|
2.1
|
Stock Purchase Agreement, dated as of April 13, 2007, by and among the Company, Opticomm Corporation, and the persons named on Exhibit 1 thereto (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on April 19, 2007).
|
|
|
||
2.2
|
Asset Purchase Agreement, dated December 17, 2007, between the Company and Intel Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed on February 11, 2008)
|
|
|
||
2.3
|
Securities Purchase Agreement, dated February 15, 2008, between the Company and each investor identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 20, 2008).
|
|
2.4
|
Registration Rights Agreement, dated February 15, 2008, between the Company and the investors identified on the signature pages thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 20, 2008).
|
|
2.5
|
Warrant to Purchase Common Stock, dated February 19, 2008, between the Company and the investors identified on the signature pages thereto (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 20, 2008).
|
|
2.6
|
Asset Purchase Agreement, dated April 9, 2008, between the Company and Intel Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed on May 12, 2008)
|
|
2.7
|
Common Stock Purchase Agreement, dated October 1, 2009, between the Company and Commerce Court Small Cap Value Fund, Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 2, 2009).
|
|
|
||
2.8
|
Warrant to Purchase Common Stock, dated October 1, 2009, between the Company and Commerce Court Small Cap Value Fund, Ltd. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 2, 2009).
|
|
2.9
|
Amendment to Common Stock Purchase Agreement, dated November 24, 2009, between the Company and Commerce Court Small Cap Value Fund, Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 25, 2009).
|
|
3.1
|
Restated Certificate of Incorporation, dated April 4, 2008 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 4, 2008).
|
3.2
|
Amended By-Laws, as amended through August 7, 2008 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 13, 2008).
|
|
|
||
4.1
|
Specimen Certificate for Shares of Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Registration Statement on Form S-1 filed on February 24, 1997).
|
|
|
||
10.1†
|
1995 Incentive and Non-Statutory Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Amendment No. 1 to the Registration Statement on Form S-1 filed on February 6, 1997).
|
|
10.2†
|
1996 Amendment to Option Plan (incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Registration Statement on Form S-1 filed on February 6, 1997).
|
|
|
||
10.3†
|
MicroOptical Devices, Inc. 1996 Stock Option Plan (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 filed on February 6, 1998).
|
|
|
||
10.4†
|
Outside Directors Cash Compensation Plan, effective October 20, 2005, as amended and restated (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 17, 2006).
|
|
|
||
10.5
|
Exchange Agreement, dated as of November 10, 2005, by and between Alexandra Global Master Fund Ltd. and the Company (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed on December 14, 2005).
|
|
|
||
10.6
|
Investment Agreement, dated November 29, 2006, between WorldWater and Power Corporation and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 5, 2006).
|
|
|
||
10.7
|
Registration Rights Agreement, dated November 29, 2006, between WorldWater and Power Corporation and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 5, 2006).
|
|
10.8
|
Letter Agreement, dated November 29, 2006, between WorldWater and Power Corporation and the Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 5, 2006). Confidential treatment has been requested by the Company with respect to portions of this document. Such portions are indicated by “*****”.
|
|
10.9†
|
Dr. Hong Hou Offer Letter, dated December 14, 2006 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2006).
|
|
10.10
|
Consents to Amendment and Waiver, dated as of April 9, 2007, by and among the Company and certain holders of the Company’s convertible subordinated notes thereto (incorporated by reference to Exhibit 10.1 and 10.2 to the Company’s Current Report on Form 8-K filed on April 10, 2007).
|
|
10.11†
|
Executive Severance Policy, effective May 1, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 19, 2007).
|
|
10.12
|
Memorandum of Understanding, dated as of September 26, 2007, between Lewis Edelstein and the Company regarding shareholder derivative litigation (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed on November 1, 2007).
|
|
|
||
10.13
|
Stipulation of Compromise and Settlement, dated as of November 28, 2007, executed by the Company and the other defendants and the plaintiffs in the Federal Court Action and the State Court Actions (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed on December 31, 2007).
|
|
|
||
10.14†
|
2007 Directors’ Stock Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 11, 2008).
|
|
|
||
10.15†
|
Fiscal 2008 Executive Bonus Plan, adopted March 31, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 12, 2008).
|
|
10.16†
|
Mr. John M. Markovich Offer Letter, dated August 7, 2008 (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed December 30, 2008).
|
10.17
|
Loan and Security Agreement, dated as of September 29, 2008, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 2.5 to the Company’s Annual Report on Form 10-K filed December 30, 2008).
|
|
10.18
|
First Amendment to Loan and Security Agreement, dated February 16, 2009, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.21 to the Company’s Quarterly Report on Form 10-Q filed on February 17, 2009).
|
|
10.19
|
Third Amendment to Loan and Security Agreement, dated April 30, 2009, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 6, 2009).
|
|
10.20
|
Fourth Amendment to Loan and Security Agreement, dated May 8, 2009, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 17, 2009).
|
|
10.21
|
Fifth Amendment to Loan and Security Agreement, dated November 30, 2009, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 3, 2009).
|
|
10.22
|
Sixth Amendment to Loan and Security Agreement, dated February 8, 2010, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on February 9, 2010).
|
|
10.23
|
Seventh Amendment to Loan and Security Agreement, dated May 6, 2010, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2010).
|
|
10.24
|
Eighth Amendment to Loan and Security Agreement, dated August 11, 2010, between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 17, 2010).
|
|
10.25†
|
EMCORE Corporation 2000 Stock Option Plan, as amended and restated on April 30, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 6, 2009).
|
|
|
||
10.26†
|
EMCORE Corporation 2000 Employee Stock Purchase Plan, as amended and restated on April 30, 2009 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 6, 2009).
|
|
|
||
10.27†
|
Directors’ Stock Award Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s Registration Statement of Form S-8 filed on November 5, 1997, as amended and incorporated herein by reference to Exhibit 99.1 by the Registration Statement on Form S-8 filed on June 5, 2009).
|
|
10.28
|
Share Purchase Agreement, dated February 3, 2010, by and among Tangshan Caofeidian Investment Corporation, Ltd. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 9, 2010).
|
|
10.29
|
Shareholders Agreement, dated February 3, 2010, by and among Tangshan Caofeidian Investment Corporation, Ltd. and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on February 9, 2010).
|
|
10.30
|
Supplemental Agreement, dated February 3, 2010, by and among Tangshan Caofeidian Investment Corporation, Ltd. and the Company (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on February 9, 2010).
|
|
10.31
|
Credit and Security Agreement, dated November 11, 2010, between Wells Fargo Bank National Association and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 17, 2010).
|
|
Joint Venture Contract, dated July 30, 2010, by and between San’An Optoelectronics, Co., Ltd. and the Company.
|
||
Cooperation Agreement, dated July 30, 2010, by and between Fujian San’An Group Corporation and the Company.
|
Mr. Mark Weinswig Offer Letter, dated September 10, 2010.
|
||
Investment Cooperation Agreement on the Project of Terrestrial Application of High Concentration Photovoltaic Systems and Components, dated December 4, 2010, by and among Huainan Municipal Government, San’an Optoelectronics Co., Ltd., and the Company.
|
||
|
||
14.1
|
Code of Ethics for Financial Professionals (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed on December 24, 2003).
|
|
|
||
Subsidiaries of the Registrant.
|
||
|
||
Consent of KPMG LLP.
|
||
Consent of Deloitte & Touche LLP.
|
||
|
||
Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated January 10, 2011.
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Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated January 10, 2011.
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Certificate of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated January 10, 2011.
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Certificate of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated January 10, 2011.
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EMCORE CORPORATION
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Date: January 10, 2011
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By:
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/s/ Hong Q. Hou, Ph.D.
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Hong Q. Hou, Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
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Signature
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Title
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/s/ Thomas Russell
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Thomas J. Russell, Ph.D
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Chairman Emeritus
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/s/ Reuben Richards
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Reuben F. Richards, Jr.
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Executive Chairman & Chairman of the Board
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/s/ Hong Hou
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Hong Q. Hou, Ph.D
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Chief Executive Officer and Director (Principal Executive Officer)
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/s/ Mark Weinswig
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Mark Weinswig
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Chief Financial Officer (Principal Financial and Accounting Officer)
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/s/ Charles Scott
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Charles T. Scott
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Director
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/s/ John Gillen
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John Gillen
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Director
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/s/ Robert Bogomolny
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Robert Bogomolny
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Lead Director
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/s/ Sherman McCorkle
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Sherman McCorkle
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Director
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1.
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Solar power is a type of renewable energy which is clean and efficient. High concentration photovoltaics (“HCPV”) represent one of the most innovative solar power technologies that have significant potential for economic development in the 21st century. The People’s Republic of China (“PRC” or “China”, for purposes of this Contract, shall exclude Hong Kong, Macao and Taiwan) has abundant solar energy resources and is actively promoting the development and deployment of solar power, which it believes will bring a huge development opportunity for the PRC economy.
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2.
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San’An Optoelectronics, Co., Ltd. (hereinafter referred to as “San’An Optoelectronics” or “Party A”), a company organized under the laws of the PRC and headquartered in Xiamen, Fujian Province, PRC, is the largest producer of LED epitaxial wafers and chips in China.
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3.
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EMCORE Corporation (hereinafter referred to as “EMCORE” or “Party B”), a company organized under the laws of the State of New Jersey and headquartered in the State of New Mexico, USA, is a leading provider of compound semiconductor-based components, subsystems, and systems for the global fiber optics communication and solar power markets.
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4.
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San’An Optoelectronics and EMCORE intend to use their respective advantages in technology, supply chain, mass production and marketing to establish a joint venture company (the “JV Company”) in China to design, develop, and manufacture HCPV components and systems for terrestrial solar power applications, promote the application of HCPV systems throughout the world, and thereby contribute to global energy preservation, carbon emission reduction, and environmental protection.
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(a)
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Party A is a company duly organized and validly existing under the laws of the PRC and is in compliance with all conditions required to maintain its status as an enterprise legal person under the laws of the PRC;
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(b)
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Party A has submitted to Party B a valid, true and complete copy of its latest business license bearing the latest annual inspection seal from the relevant administration for industry and commerce;
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(c)
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Party A has taken all appropriate and necessary corporate actions to
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(i)
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empower its legal representative to sign this Contract,
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(ii)
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authorize the execution and delivery of this Contract and all of the contracts contemplated herein to which it is a party, and
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(iii)
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authorize the performance and observance of the terms and conditions hereof and thereof;
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(d)
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Party A has obtained all consents, approvals and authorizations necessary for the valid execution and delivery of this Contract and all of the contracts contemplated herein to which it is a Party and to observe and perform its obligations hereunder and thereunder;
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(e)
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This Contract shall constitute the legal, valid and binding obligation of Party A enforceable against Party A in accordance with its terms; and
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(f)
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To the best knowledge of Party A, Party A’s execution, delivery and performance of this Contract or any of the other contracts contemplated herein will not violate any of its constitutive documents, any other agreement or obligation of Party A or its relevant Affiliates, or currently effective law, regulation or decree of China that may be applicable to any aspect of the transactions contemplated hereunder.
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(a)
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Party B is a company duly organized, validly existing and in good standing under the laws of the state of New Jersey, U.S.A.;
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(b)
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Party B has submitted to Party A a valid, true and complete copy of its certificate of incorporation;
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(c)
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Party B has taken all appropriate and necessary corporate actions
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(i)
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to empower its duly authorized representative whose signature is affixed hereto to sign this Contract and all of the contracts contemplated herein to which it is a party,
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(ii)
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authorize the execution and delivery of this Contract and all of the contracts contemplated herein to which it is a party,
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(iii)
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to authorize the performance and observance of the terms and conditions hereof and thereof;
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(d)
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Party B has obtained all consents, approvals and authorizations necessary for the valid execution and delivery of this Contract and all of the contracts referred to herein to which it is a party;
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(e)
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This Contract shall constitute the legal, valid and binding obligation of Party B enforceable against Party B in accordance with its terms; and
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(f)
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To the best knowledge of Party B, Party B’s execution, delivery and performance of this Contract or any of the other contracts contemplated herein will not violate any of its constitutive documents, any other agreement or obligation of Party B or its relevant Affiliates, or currently effective law, regulation or decree of USA that may be applicable to any aspect of the transactions contemplated hereunder.
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1.
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to amend the Articles of Association of the JV Company;
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2.
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increase, reduction or assignment of registered capital and/or the adjustment of each Party’s share of interest in the registered capital of the JV Company;
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3.
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to issue company bonds or indebtedness for borrowed money;
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4.
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to suspend or terminate JV Company operations, or merge, split, dissolve, or change the form of, or formulate and/or change liquidation procedures for, the JV Company;
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5.
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matters involving a third party investment that meets or exceeds thirty percent (30%) of the value of the net assets of the JV Company;
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6.
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matters involving a single transaction, or series of related transactions, of a purchase or disposition of assets in an amount that meets or exceeds ten percent (10%) of the net assets of the JV Company;
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7.
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matters concerning the issuance of any security interests in any JV Company assets to any third party or the pledge or encumbrance of the assets of the JV Company (i.e., the granting of security interest of the JV Company);
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8.
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to deliberate and determine plans for profit distributions and making up losses of the JV Company;
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9.
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to adjust the contribution period of the shareholders of the JV Company;
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10.
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to appoint and remove the General Manager and/or the Chief Finance Officer of the JV Company;
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11.
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to extend the Operation Period of the JV Company;
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12.
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to approve the Annual Financial Budget (as defined in Article 30) and final accounting plan of the JV Company;
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13.
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to approve or implement capital expenditures which are not provided for in the Annual Financial Budget or exceed by fifteen percent (15%) of the capital expenditure set forth for it in the Annual Financial Budget of the JV Company;
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14.
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to determine the appointment or the dismissal of the accounting firm conducting the audit of the JV Company;
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15.
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to determine the provisions of and individual grants under the Shareholding Incentive Plan for the employees of the JV Company;
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16.
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to change or adjust the scope of the business of the JV Company; and
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17.
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to decide the pricing of any products sold by the JV Company to the Parties and their Affiliates, and pricing for any products or services sold by the Parties and/or their Affiliates to the JV Company.
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1)
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The equity ownership interest Party B owns in the JV Company (including the equity ownership interest Party B holds in the JV Company subsequent to any increase of the registered capital of the JV Company) shall not be less than ten percent (10%) (“Minimum Shareholding”). If any changes of the JV Company (including but not limited to the change of the registered capital) may cause the shareholding Party B holds in the JV Company to be less than ten percent (10%), then any such situation relating to this shall require the approval of one hundred percent (100%) of the directors of the Board, otherwise, such matters shall not be conducted unless such situation is the result of Party B voluntarily transferring its share ownership.
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2)
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Within every 18 months after the establishment of the JV Company, if the relevant intellectual property and know-how provided by Party B fails to result in the manufacturing cost of the Products decreasing by ten percent (10%) or more compared to the costs 18 months previously, provided that product quality remains the same or better, then the Minimum Shareholding by Party B in the JV Company (including the shareholding Party B holds in the JV Company after the capital increase of the JV Company) shall be adjusted from ten percent (10%) to five percent (5%). If any changes of the JV Company (including but not limited to the change of the registered capital) may cause the shareholding Party B holds in the JV Company to be less than five percent (5%), then any such matters shall obtain the approval of one hundred percent (100%) of the directors of the Board; otherwise, such matters shall not be conducted unless such
situation is the result of Party B voluntarily transferring its share ownership;
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3)
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Within 6 months after the expiration of the first 18 month period set forth in the above paragraph, if it is still not realized that the relevant intellectual property and know-how provided by Party B results in the manufacturing cost of the Products decreasing by ten percent (10%) or more compared with the costs 18 months previously, provided that product quality remains the same or better, the Minimum Shareholding by Party B in the JV Company shall be adjusted from five percent (5%) to 0.
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4)
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Party B shall grant or cause its relevant Affiliate to grant to the JV Company a non-assignable right and license to use and exploit certain technology and know-how for the manufacture, use and sale of the Products pursuant to the terms and conditions of the Technology License Agreement.
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1.
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to examine the financial affairs of the JV Company;
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2.
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to supervise the acts of the directors and the employees for any violation of the laws, administrative regulations or the Articles of Association of the JV Company;
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3.
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to demand that directors and employees make rectification as appropriate of their acts that are found by the Supervisory Board to have impaired the best interests of the JV Company;
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4.
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to propose the convening of interim Board meetings.
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(a)
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Within sixty (60) days after the last day of each fiscal year, the balance sheet of the JV Company as of the end of such fiscal year and the related profit and loss statement and statement of cash flows for the fiscal year then ended, in each case audited as provided below.
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(b)
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Within thirty (30) days after the last day of each financial quarter, the unaudited balance sheet, statement of cash flows of the JV Company as of the end of such quarter and the related profit and loss statement (for such quarter and for the year-to-date).
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(c)
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Within thirty (30) days after the last day of each month, (i) a profit and loss statement for such month; and (ii) statement of cash flows and balance sheet; (iii) a forecast/outlook for the remainder of the current fiscal quarter, which shall include without limitation the number of personnel, revenue, cash balance and expenses.
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(a)
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to provide the JV Company with necessary technical experts; and to provide appropriate technical training for employees of the JV Company at no cost to the JV Company.
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(b)
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to provide assistance in preparing the incorporation documents of JV Company, accomplishing the approval and registration and other procedures for the establishment of the JV Company, and coordinating with governmental authorities, so as to enable the JV Company to start its establishment and operations as soon as reasonably practicable.
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(c)
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to organize and coordinate in order to help the JV Company obtain any necessary product qualification and certification as soon as possible.
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(d)
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to assist the JV Company in handling customs declaration for production equipments to be imported to the JV Company.
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(e)
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to assist the JV Company in recruiting management personnel, technical staff, workers and other staff as required.
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(f)
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to assist the JV Company in dealing with the entry visas, work permits and other procedures associated with attracting and retaining the necessary employees and consultants.
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(g)
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to assist the JV Company in securing water, electricity, transportation, and other services that are necessary for the efficient operation of the JV Company.
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(h)
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to choose the other Party of this Contract as its sole cooperation partner for the cooperation in the development, design and manufacturing project relating to the HCPV components and systems for terrestrial solar power applications in the PRC, Hong Kong, Macau and Taiwan.
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(i)
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the JV Company shall be both Parties’ sole supplier for HCPV terrestrial solar power components and system products as long as the JV Company meets such Party’s strict price (including CIF (Incoterms 2000) shipping costs), quality, warranty, performance, and delivery specifications (collectively, the “Purchase Criteria”). If the JV Company cannot make products which meet the Purchase Criteria, then, both Parties shall negotiate firstly on a friendly basis; if within 3 months, both Parties fail to solve this issue, then either Party may purchase from a third party such HCPV terrestrial solar power components and system products.
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(j)
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to take charge of other matters as entrusted by the JV Company.
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(a)
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to be in charge of searching and identifying construction land, production plant and office area for the JV Company, as well as assisting the JV Company to secure relevant approvals.
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(b)
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to assist the JV Company in the design, renovation and conversion of production plant and construction facilities, as well as in handling relevant approval process.
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(c)
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to utilize its resources in all respects including personnel in the PRC market, in order to help the JV Company in market development, customer service, technology development, project installation as well as procuring various incentives offered by the government, etc.
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(d)
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Party A (including its Affiliates) will not, directly or indirectly, engage in any same or competing business with those conducted by the JV Company in the PRC, Hong Kong, Macau and Taiwan.
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(1)
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solicit, with respect to HCPV components for terrestrial solar power applications, for itself or any entity, other than the JV Company, a customer or client of the JV Company;
|
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(2)
|
persuade or attempt to persuade any employee of the JV Company to leave the JV Company’s employment; or
|
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(3)
|
not directly or indirectly, engage in any same or competing business with those conducted by the JV Company in the PRC, Hong Kong, Macau and Taiwan during the term of this Contract and within two years of the termination of this Contract, including any of its exhibits. However, in case of any termination of this Contract, including any of its exhibits, by reason of the breach of one Party, the non-breaching Party will not be subject to this clause; or each of the Parties fails to reach agreement on the extension of the operating period of the JV Company when the operating period of the JV Company expires, each of the Parties will not be subject to this clause.
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(4)
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with respect to HCPV components for terrestrial solar power applications (the “Business”), solicit for itself or its Affiliates any customer or prospective Business client of the other Party, which such Party can reasonably show is a current, past or prospective Business customer of that Party (the “Party Customers”), and following the business operation of the JV Company, both Parties shall provide/update their checklist of such Business clients to the other Party and the JV Company on a quarterly basis. For prospective clients, the Party must be able to show reasonable evidence that it conducted discussions regarding the purchase and sale of HCPV components for terrestrial solar power applications with such prospective client. However, if otherwise approved by both Parties, this clause shall not apply. For the avoidance of doubt, solicitation by either Party of its own customers shall not
be deemed as a violation of this Article 47. Notwithstanding the foregoing, Party A and the JV Company shall not sell to any customers located or incorporated in the USA, other than through Party B.
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1.
|
the expiration of the operation term of the JV Company or occurrence of other dissolution matters provided by the Articles of Association;
|
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2.
|
the dissolution of the JV Company by a Board resolution;
|
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3.
|
the dissolution required by merger or split of the JV Company;
|
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4.
|
the JV Company is legally ordered to be closed due to the violation of any law or regulation;
|
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5.
|
the JV Company cannot continue its operation due to a force majeure event;
|
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6.
|
the declaration of bankruptcy by the JV Company;
|
|
7.
|
either Party fails to make its contributions to the registered capital of the JV Company as set forth herein, and such failure continues for a period of more than one hundred and twenty (120) days and such failure is not waived by the other Party. In such case, the non-breaching Party may terminate.
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8.
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there occurs a material breach of any obligations under this Contract or any other contract referred to herein and such breach is not cured by the breaching Party within ninety (90) days after receipt of written notice of the breach from the non-breaching Party. In such case, the non-breaching Party may terminate.
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9.
|
the JV Company sustains serious losses for three (3) consecutive years and the JV Company is unable to attain its business goals and, after constructive attempts by both Parties, the Parties are unable to agree on a business plan to improve the financial situation of the JV Company. In such case, either Party may terminate, however, either Party may still engage in the business of the JV Company and it will not be subject to Clause 3 under Article 47.
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10.
|
in the event the government of the PRC or of the U.S.A. requires any material alteration, modification or other actions of the rights and obligations of either Party under this Contract, which prevents either Party from achieving its business objectives; or in the event the government of the PRC or of the U.S.A disapproves this Contract or the transactions herein. In the event of such a governmental notice, the Party receiving such notice will promptly provide the other Party with a written notice outlining the nature of the governmental development. The occurrence of the situation in this clause shall not constitute the breach of either Party, and in this case, both Parties may still engage in the business of the JV Company and it will not be subject to Clause 3 under Article 47.
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(a)
|
Notices given by personal delivery shall be deemed effectively given on the date of personal delivery to the other Party.
|
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(b)
|
Notices given by registered airmail (postage prepaid) shall be deemed effectively given on the tenth (10th) day after the date on which they were mailed (as indicated by the postmark).
|
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(c)
|
Notices given by air courier shall be deemed effectively given on the date of delivery (as indicated by the airway bill) to the other Party.
|
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(d)
|
Notices given by email shall be deemed effectively given on the first (1st) business day following the date of email.
|
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(e)
|
Notices given by facsimile transmission shall be deemed effectively given on the first (1st) business day following the date of transmission.
|
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i)
|
ten percent (10%) in the event that Party B has complied with the 10% Cost Reduction Target within eighteen (18) months of the previous HCPV Release, or
|
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ii)
|
five percent (5%) in the event that Party B has complied with the Cost Reduction Target within twenty four (24) months of the previous HCPV Release but after the initial 18 months following the previous HCPV Release, or
|
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iii)
|
zero (0) in the event that Party B has not complied with the Cost Reduction Target within twenty four (24) months of the previous HCPV Release.
|
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iv)
|
As an example, and for the avoidance of doubt, in the event that Party B has complied with the 10% Cost Reduction Target within 18 months of the Effective Date or the previous HCPV Release, and in the event that the JV Company raises an additional USD ten million ($10,000,000) in capital beyond the initial USD thirty million ($30,000,000) in registered capital of the JV Company (the “Second Funding”), then Party B shall receive from Party A as a follow-on consultation fee at least 15 days prior to the expiration of the Second Funding, an additional USD one million ($1,000,000).
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Article 1
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Project Contents and Scale
|
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Article 2
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Project Land Use
|
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Article 3
|
Incentive Policies Rendered to the JV Company by Party A
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of EMCORE Corporation ("Report");
|
|
2.
|
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
|
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4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
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a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
|
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b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
|
|
d.
|
Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
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5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: January 10, 2011
|
By: /s/ Hong Q. Hou
|
|
Hong Q. Hou, Ph.D.
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of EMCORE Corporation ("Report");
|
|
2.
|
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
|
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
|
|
d.
|
Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: January 10, 2011
|
By: /s/ Mark Weinswig
|
|
Mark Weinswig
|
||
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
Date: January 10, 2011
|
By: /s/ Hong Q. Hou
|
||
Hong Q. Hou, Ph.D.
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
Date: January 10, 2011
|
By: /s/ Mark Weinswig
|
||
Mark Weinswig
|
|||
Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|