UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one):
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to__________
Commission File Number: 0-22175
EMCORE Corporation
(Exact name of Registrant as specified in its charter)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-2746503
(IRS Employer Identification No.)
394 Elizabeth Avenue
Somerset, NJ 08873
(Address of principal executive offices) (zip code)
(732) 271-9090
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes:[X] No:[ ]
As of August 1, 1999 there were 13,329,952 shares of the registrant's no
par value common stock outstanding.
Part I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------------------------------------------------
1999 1998 1999 1998
(as restated) (as restated)
-------------------------------------------------------------------
Revenues................................................... $17,667 $9,074 $43,864 $35,239
Cost of sales.............................................. 9,853 5,448 25,072 19,358
-------------------------------------------------------------------
Gross profit....................................... 7,814 3,626 18,792 15,881
Operating expenses:
Selling, general and administrative..................... 3,650 4,596 10,018 10,500
Goodwill amortization................................... 1,098 1,098 3,295 2,540
Research and development:
One-time acquired in-process....................... - - - 19,516
Recurring.......................................... 4,959 5,887 15,231 11,612
-------------------------------------------------------------------
Total operating expenses................................... 9,707 11,581 28,544 44,168
-------------------------------------------------------------------
Operating loss..................................... (1,893) (7,955) (9,752) (28,287)
Other expense:
Stated interest expense, net............................. 290 211 983 348
Imputed warrant interest expense, non-cash............... 410 94 1,043 286
Equity in net loss of unconsolidated affiliates.......... 1,311 - 2,982 -
-------------------------------------------------------------------
Total other expense........................................ 2,011 305 5,008 634
-------------------------------------------------------------------
Loss before extraordinary item..................... (3,904) (8,260) (14,760) (28,921)
Extraordinary item, loss on early
retirement of debt...................................... (1,334) - (1,334) -
-------------------------------------------------------------------
Net loss........................................... ($5,238) ($8,260) ($16,094) ($28,921)
===================================================================
Per share data:
Net loss per basic and diluted share before
extraordinary item (see note 7)....................... ($0.40) ($0.88) ($1.56) ($3.37)
-------------------------------------------------------------------
Net loss per basic and diluted share (see note 7).......... ($0.53) ($0.88) ($1.70) ($3.37)
-------------------------------------------------------------------
Weighted average shares used in
per share data calculations........................... 10,175 9,349 9,665 8,576
-------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements.
EMCORE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
At June 30, At September 30,
--------------------------------------
1999 1998
--------------------------------------
ASSETS (unaudited) (as restated)
Cash and cash equivalents .......................................................... $ 14,851 $ 4,456
Restricted cash .................................................................... -- 62
Accounts receivable, net of allowance for doubtful accounts
of $594 and $611 at June 30, 1999 and
September 30, 1998,
respectively ............................................................. 10,949 7,438
Accounts receivable, related party ................................................. 2,677 500
Inventories, net ................................................................... 13,349 12,445
Other current assets ............................................................... 274 208
----------- -----------
Total current assets .............................................................. 42,100 25,109
Property, plant and equipment, net ................................................... 44,268 36,210
Goodwill, net ........................................................................ 6,224 9,519
Investments in unconsolidated affiliates ............................................. 11,433 292
Other assets, net .................................................................... 3,141 2,090
----------- -----------
Total assets ...................................................................... $ 107,166 $ 73,220
=========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Notes payable - related party .................................................... $ -- $ 7,000
Accounts payable ................................................................. 6,880 12,023
Accrued expenses ................................................................. 4,380 4,197
Advanced billings ................................................................ 3,673 3,180
Capital lease obligations - current .............................................. 736 673
Other current liabilities ........................................................ 162 53
----------- -----------
Total current liabilities ....................................................... 15,831 27,126
Bank loans ........................................................................... -- 17,950
Subordinated notes, net .............................................................. -- 7,809
Convertible subordinated debenture ................................................... 7,800 --
Capital lease obligations, net of current portion .................................... 286 755
Other liabilities .................................................................... 1,097 --
----------- -----------
Total liabilities ............................................................... 25,014 53,640
----------- -----------
Mandatorily redeemable, convertible preferred stock,
1,030,000 shares issued and outstanding at June 30,
1999 (redeemable at maturity for $14,420) ........................................ 14,110 --
Shareholders' Equity:
Preferred stock, $.0001 par value, 5,882,353 shares
authorized; no shares outstanding ............................................. -- --
Common stock, no par value, 23,529,411 shares
authorized, 13,315,821 shares issued and outstanding
June 30, 1999, 9,375,952 shares issued
and outstanding at September 30, 1998 ......................................... 152,168 87,443
Accumulated deficit .............................................................. (76,579) (60,196)
Notes receivable from warrant issuances and stock sales .......................... (7,547) (7,667)
----------- -----------
Total shareholders' equity ....................................................... 68,042 19,580
----------- -----------
Total shareholders' equity and mandatorily redeemable,
convertible preferred stock ................................................... 82,152 19,580
----------- -----------
Total liabilities, shareholders' equity and mandatorily
redeemable, convertible preferred stock ....................................... $ 107,166 $ 73,220
=========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements.
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Nine Months Ended June 30,
---------------------------------
1999 1998
(as restated)
---------------------------------
Operating activities:
Net loss ............................................................................... ($16,094) ($28,921)
Adjustments to reconcile net loss to net cash (used for) provided by operating
activities:
Acquired in-process research and development, non-cash .............................. -- 19,516
Depreciation and amortization ....................................................... 8,501 6,970
Provision for doubtful accounts ..................................................... 180 1,220
Provision for inventory valuation ................................................... -- 90
Detachable warrant accretion and debt issuance cost amortization .................... 1,042 286
Extraordinary item-loss on early retirement of debt ................................. 1,334 --
Equity in net loss of unconsolidated affiliates ..................................... 2,982 --
Deferred gain on sales to an unconsolidated affiliate ............................... 1,259 --
Compensatory stock issuances ........................................................ 320 254
Change in assets and liabilities:
Accounts receivable - trade ................................................ (3,692) (3,095)
Accounts receivable - related parties ...................................... (2,177) 2,000
Inventories ................................................................ (903) (3,588)
Other current assets ....................................................... (84) (131)
Other assets ............................................................... 281 (261)
Accounts payable ........................................................... (5,144) 1,443
Accrued expenses ........................................................... 183 (1,562)
Advanced billings .......................................................... 492 300
Other current liabilities .................................................. (53) (19)
Total adjustments ...................................................................... 4,521 23,423
------- ------
Net cash used for operating activities ............................................. (11,573) (5,498)
------- ------
Investing activities:
Purchase of property, plant, and equipment ............................................. (13,198) (11,805)
Acquisition, cash acquired ............................................................. -- 193
Investment in unconsolidated affiliates ................................................ (14,123) --
Funding of restricted cash ............................................................. 62 188
------- ------
Net cash used for investing activities ............................................. (27,259) (11,424)
------- ------
Financing activities:
Proceeds from common stock offering, net of $5,000 issue costs ......................... 52,000 --
Proceeds from preferred stock offering, net of $500 issue costs ........................ 21,200 --
Payments on short-term notes payable, related party, net ............................... (7,000) --
(Payments on) proceeds from bank loans ................................................. (17,950) 14,950
Proceeds from convertible subordinated debenture ....................................... 7,800 --
Payments on capital lease obligations .................................................. (410) (344)
Net proceeds from stock options exercise ............................................... 264 69
Dividends paid ......................................................................... (248) --
Payments on subordinated debt .......................................................... (8,563) --
Proceeds from warrant exercise ......................................................... 2,134 --
Proceeds from exercise of stock warrants ............................................... -- 23
------- ------
Net cash provided by financing activities .......................................... 49,227 14,698
------- ------
Net increase (decrease) in cash and cash equivalents ................................... 10,395 (2,224)
Cash and cash equivalents, beginning ................................................... 4,456 3,653
------- ------
Cash and cash equivalents, ending ...................................................... $ 14,851 $ 1,429
======= ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest .......................................... $ 1,571 $ 755
======= ======
The accompanying notes are an integral part of these condensed consolidated financial statements.
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
for the years ended September 30, 1997 and 1998 and the
nine months ended June 30, 1999 (unaudited) (in thousands)
Shareholders' Total
Common Stock Accumulated Notes Shareholders'
Shares Amount Deficit Receivable Equity
-------------------------------------------------------------------
Balance at September 30, 1996 2,994 $ 18,978 ($18,158) ($ 298) $ 522
Issuance of common stock purchase warrants -- 3,601 -- -- 3,601
Issuance of common stock from initial public
offering, net of issuance costs of $3,110 2,875 22,765 -- -- 22,765
Issuance of common stock on exercise
of warrants 94 384 -- -- 384
Stock option exercise 35 54 -- -- 54
Redemption of notes receivable from
shareholders -- -- -- 32 32
Forgiveness of notes receivable
from shareholder -- -- -- 57 57
Compensatory stock issuances 2 35 -- -- 35
Net loss -- -- (5,620) -- (5,620)
-------------------------------------------------------------------
Balance at September 30, 1997 6,000 $ 45,817 ($23,778) ($ 209) $ 21,830
======== ======== ======== ======== ========
Issuance of common stock purchase warrants -- 1,310 -- -- 1,310
Issuance of common stock and common stock
purchase warrants in exchange for notes
receivable 1,828 7,458 -- (7,458) --
Issuance of common stock and common stock
purchase options and warrants in
connection with the acquisition of MODE 1,462 32,329 -- -- 32,329
Stock option exercise 36 83 -- -- 83
Stock purchase warrant exercise 6 23 -- -- 23
Issuance of common stock on exercise of
warrants in exchange for subordinated
notes of sub-debt 18 72 -- -- 72
Compensatory stock issuances 26 351 -- -- 351
Net loss -- -- (36,418) -- (36,418)
-------------------------------------------------------------------
Balance at September 30, 1998 9,376 $ 87,443 ($60,196) ($ 7,667) $ 19,580
======== ======== ======== ======== ========
(as restated)
Issuance of common stock from secondary
public offering, net of issuance costs of
$5,000 3,000 52,000 -- -- 52,000
Stock purchase warrant exercise 244 2,134 -- -- 2,134
Issuance of common stock purchase warrants -- 2,596 -- -- 2,596
Redemption of notes receivable from shareholders -- -- -- 120 120
Issuance of common stock in exchange for
convertible preferred stock, net of
$155 accelerated preferred stock issue costs 520 7,125 -- -- 7,125
Issuance of common stock on exercise of
warrants in exchange for subordinated
notes of sub-debt 70 286 -- -- 286
Compensatory stock issuances 20 320 -- -- 320
Stock option exercise 86 264 -- -- 264
Preferred stock dividends -- -- (248) -- (248)
Accretion of redeemable preferred stock
issue cost -- -- (41) -- (41)
Net loss -- -- (16,094) -- (16,094)
-------------------------------------------------------------------
Balance at June 30, 1999 (unaudited) 13,316 $152,168 ($76,579) ($ 7,547) $ 68,042
====== ======== ======== ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
EMCORE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Interim Financial Information
The accompanying unaudited condensed consolidated financial statements of
EMCORE Corporation (the "Company") reflect all adjustments considered necessary
by management to present fairly the Company's consolidated financial position as
of June 30, 1999, and the consolidated results of operations and the
consolidated cash flows for the three month and nine month periods ended June
30, 1999 and June 30, 1998. All adjustments reflected in the accompanying
unaudited condensed consolidated financial statements are of a normal recurring
nature unless otherwise noted. Prior period balances have been reclassified to
conform with the current period financial statement presentation. The results of
operations for the nine month period ended June 30, 1999 are not necessarily
indicative of the results for the fiscal year ending September 30, 1999 or any
future interim period.
NOTE 2. Shareholders' Equity
On June 15, 1999, the Company completed the issuance of an additional 3.0
million common stock shares through a public offering, which resulted in
proceeds of $52.0 million, net of issuance costs. A portion of the proceeds was
used to repay all outstanding bank indebtedness and subordinated notes.
NOTE 3. Joint Ventures
On January 21, 1999, General Electric Lighting and the Company agreed to
form a new joint venture to develop and market "white light" light-emitting
diodes ("LEDs"). The new company, GELcore, LLC (the "GELcore venture"), will
develop and market LEDs as replacements for miniature automotive, compact
fluorescent, halogen and traditional incandescent lighting. Under terms of the
joint venture agreement, the Company has a 49% non-controlling interest in the
GELcore venture.
On May 27, 1999, in connection with the GELcore venture, General Electric
funded the Company's initial capital contribution of $7.8 million into GELcore.
The funding was in the form of a subordinated debenture (the "Debenture") with
an interest rate of 4.75%. The Debenture will mature in 2006 and is convertible
into common stock of the Company at a conversion price of $22.875 or 340,984
shares. The Debenture is convertible at any time at the option of General
Electric and may be called by the Company after three years, if the price of the
Company's common stock has traded at or above $34 for at least thirty days. In
addition, General Electric also received 282,010 warrants to purchase common
stock at $22.875 per share. These warrants are exercisable at any time and will
expire in 2006. These warrants were valued using the Black Scholes model,
resulting in a valuation of $2.6 million, which has been included in other
assets. Such asset is being amortized over seven years. On a fully diluted
basis, General Electric would own approximately 5% of the common stock of the
Company.
For the nine month period ended June 30, 1999, the Company recognized a
loss of $1.6 million related to this venture which has been recorded as a
component of other income and expense. As of June 30, 1999, the Company's
investment in this venture amounted to $6.2 million.
In February 1998, the Company and a subsidiary of Uniroyal Technology
Corporation formed Uniroyal Optoelectronics LLC, a joint venture, to
manufacture, sell and distribute High Brightness (HB) LED wafers and
package-ready devices. During the quarters ended March 31, 1999 and December 31,
1998, the Company sold one and two compound semiconductor production systems to
the venture totaling $2.3 million and $3.0 million in revenues, respectively.
The Company eliminated gross profit of approximately $549,000 and $711,000 for
the quarters ended March 31, 1999 and December 31, 1998, respectively, on such
sales to the extent of its minority interest. Such deferred gross profit will be
recognized ratably over the assigned life of the production systems purchased by
the joint venture. On April 27, 1999, the Company contributed an additional
$500,000 as a capital investment. For the nine months ended June 30, 1999, the
Company recognized a loss of $1.2 million related to this venture, which has
been recorded as a component of other income and expense. As of June 30, 1999,
the Company's investment in this venture amounted to $4.6 million.
NOTE 4. Debt Facilities
On April 29, 1999, the Company borrowed $2.5 million from its Chairman at
an interest rate of Prime plus two percent per annum or 9.75%. On May 7, 1999,
the loan was repaid from borrowings under the Company's $19.0 million short-term
note, discussed below.
On May 7, 1999, the Company entered into a $19.0 million short-term loan
agreement (the "1999 Agreement") with First Union National Bank. The 1999
Agreement represented a consolidation of the $8.0 million and $5.0 million
short-term loan agreements dated June 22, 1998 and February 1, 1999,
respectively, and an additional borrowing capacity of $6.0 million, of which a
total of $5.0 million was borrowed. The 1999 Agreement is due and payable on
October 1, 1999 and bears interest at a rate equal to one-month LIBOR plus
three-quarters of one percent per annum. A portion of the proceeds from the
additional $6.0 million note were used to repay the $2.5 million short-term note
from the Company's Chairman.
On June 15, 1999, the Company repaid its outstanding $10.0 million (1997
Agreement) and the $18.0 million (1999 Agreement) bank loans using a portion of
the proceeds from the secondary public offering. The Company also used a portion
of the net proceeds to repurchase its outstanding 6.0% subordinated notes due
2001. The early extinguishment of debt resulted in an extraordinary charge of
$1.3 million or $0.13 per share that consisted of the following:
(Amounts in thousands)
Extraordinary items:
Discount on prepayment of 6% subordinated notes due 2001..................$ 867
Write-off of related deferred financing costs............................. 467
------
Net extraordinary loss.............................................. $1,334
NOTE 5. Inventories
The components of inventories, net of reserves, consisted of the following:
As of As of
(Amounts in thousands) June 30, 1999 September 30, 1998
------------- ------------------
Raw materials............................ $11,174 $11,346
Work-in-process.......................... 2,162 1,092
Finished goods............................ 13 7
------- -------
Total $13,349 $12,445
======= =======
NOTE 6. Related Party Transactions
On November 30, 1998, the Company sold an aggregate of 1,550,000 shares of
Series I Redeemable Convertible Preferred Stock ("the Series I Preferred Stock")
for aggregate consideration of $21.7 million before deducting costs and
expenses, which amounted to approximately $500,000. The Series I Preferred Stock
was recorded net of issuance costs. The excess of the preference amount over the
carrying value is being accreted by periodic charges to accumulated deficit. The
shares of Series I Preferred Stock are convertible, at any time, at the option
of the holders thereof, unless previously redeemed, into shares of common stock
at an initial conversion price of $14.00 per share of common stock, subject to
adjustment in certain cases. The market price of the Company's common stock was
$12.875 on the date the Series I Preferred Stock was issued. The Series I
Preferred Stock is redeemable, in whole or in part, at the option of the Company
at any time the Company's stock has traded at or above $28.00 per share for 30
consecutive trading days, at a price of $14.00 per share, plus accrued and
unpaid dividends, if any, to the redemption date. The Series I Preferred Stock
carries a dividend of 2% per annum. Dividends are being charged to accumulated
deficit. In addition, the Series I Preferred Stock is subject to mandatory
redemption by the Company at $14.00 per share plus accumulated and unpaid
dividends, if any, on November 17, 2003. On June 15, 1999, 520,000 shares of
Series I Redeemable Convertible Preferred Stock were converted to common stock.
The President of Hakuto Co. Ltd. ("Hakuto"), the Company's Asian
distributor, is a member of the Company's Board of Directors and Hakuto is a
minority shareholder of the Company. During the quarter and nine months ended
June 30, 1999, sales made through Hakuto amounted to approximately $2.2 million
and $7.3 million, respectively.
NOTE 7. Earnings Per Share
The Company accounts for earnings per share under the provision of
Statement of Financial Accounting Standards No. 128 "Earnings per share" ("SFAS
No. 128"). Basic and diluted earnings per common share was calculated by
dividing net loss by the weighted average number of common shares outstanding
during the period. The following table reconciles the number of shares utilized
in the earnings per share calculations for the three month and nine month
periods ending June 30, 1999 and 1998, respectively.
Three Months Nine Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
----------------------------------------------
Loss before extraordinary item... ($ 3,904) ($8,260) ($14,760) ($28,921)
Extraordinary item, loss on
early retirement of debt..... ( 1,334) - ( 1,334) -
----------------------------------------------
Net loss......................... ($ 5,238) ($8,260) ($16,094) ($28,921)
Preferred stock dividends...... ( 102) - ( 248) -
Periodic accretion of
preferred stock to
redemption value............. ( 17) - ( 41) -
----------------------------------------------
Net loss available to common
shareholders................... ($ 5,357) ($8,260) ($16,383) ($28,921)
==============================================
Net loss per basic and
diluted share before
extraordinary item............. ($ 0.40) ($ 0.88) ($ 1.56) ($ 3.37)
==============================================
Net loss per basic and
diluted share.................. ($ 0.53) ($ 0.88) ($ 1.70) ($ 3.37)
==============================================
Common shares - basic............ 10,175 9,349 9,665 8,576
Effect of dilutive securities:
Stock option and warrants...... - - - -
Preferred stocks............... - - - -
----------------------------------------------
Common shares - diluted.......... 10,175 9,349 9,665 8,576
==============================================
The effect of outstanding common stock purchase options and warrants and
the number of shares available to be issued upon the conversion of the Company's
Series I Preferred Stock have been excluded from the earnings per share
calculation since the effect of such securities are anti-dilutive.
NOTE 8. Goodwill Restatement:
Subsequent to the issuance of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998, the Company revised the amount of the
purchase price which was allocated to in-process research and development in
accounting for the acquisition of MicroOptical Devices, Inc. ("MODE") on
December 5, 1997. The revised allocation is based upon methods prescribed in a
letter from the Securities and Exchange Commission ("SEC") sent to the American
Institute of Certified Public Accountants. The letter sets forth the SEC's views
regarding the valuation methodology to be used in allocating a portion of the
purchase price to acquired in-process research and development at the date of
acquisition.
The revised valuation is based on management's estimates of the net cash
flows associated with expected operations of MODE and gives explicit
consideration to the SEC's views on acquired in-process research and development
as set forth in its letter to the American Institute of Certified Public
Accountants.
As a result of the revised allocation, the amount of the purchase price
allocated to acquired in-process research and development at the date of
acquisition decreased from $29.3 million to $19.5 million, and the amount
ascribed to goodwill increased by $9.8 million which includes approximately $0.5
million related to the value of MODE's workforce. The Company's financial
statements for the three month and nine month periods ended June 30, 1998, have
been restated from amounts previously reported. This change had no impact on net
cash flows used for operations.
A summary of the significant effect of the restatement is as follows:
For the three months ended
June 30, 1998
------------------------------
As previously
(Amounts in thousands) Reported As Restated
STATEMENTS OF OPERATIONS DATA:
Goodwill amortization $ 284 $ 1,098
Operating loss $ (7,141) $ (7,955)
Net loss $ (7,446) $ (8,260)
========= =========
Net loss per common share - basic and diluted $ ( 0.80) $ (0.88)
========= =========
For the nine months ended
June 30, 1998
------------------------------
As previously
(Amounts in thousands) Reported As Restated
STATEMENTS OF OPERATIONS DATA:
Goodwill amortization $ 639 $ 2,540
Operating loss $(36,164) $(28,287)
Net loss $(36,798) $(28,921)
========= =========
Net loss per common share - basic and diluted $ (4.29) $ (3.37)
========= =========
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Identifying Important
Factors That Could Cause the Company's Actual
Results to Differ From Those Projected in
Forward Looking Statements:
In connection with the safe harbor provisions of the Private Securities
Litigation Performance Act of 1995, readers of this document are advised that it
contains both statements of historical facts and forward looking statements.
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes forward-looking statements that reflect current expectations
or beliefs of EMCORE Corporation concerning future results and events. The words
"expects," "intends," "believes," "anticipates," "likely," "will", and similar
expressions identify forward-looking statements. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results and events to differ materially from those anticipated in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, statements about future financial performance of the
Company and the effect of the acquisition of MicroOptical Devices, Inc. ("MODE")
on the Company's business; the uncertainty of additional funding; continued
acceptance of the Company's MOCVD technologies, as well as the market success of
optical VCSEL technologies; operations and performance of the Company's joint
ventures; the Company's ability to achieve and implement the planned
enhancements of products and services on a timely and cost effective basis and
customer acceptance of those product introductions; product obsolescence due to
advances in technology and shifts in market demand; competition and resulting
price pressures; business conditions; economic and stock market conditions,
particularly in the U.S., Europe and Asia, and their impact on sales of the
Company's products and services; risks associated with foreign operations,
including currency and political risks; and such other risk factors as may have
been or may be included from time to time in the Company's reports filed with
the Securities and Exchange Commission.
RESTATEMENT
The Company has restated its previously filed condensed consolidated
financial statements for the three month and nine month periods ended June 30,
1998 to adjust the allocation of the purchase price related to the acquisition
of MicroOptical Devices, Inc. ("MODE") in December 1997 and the resulting
amortization of goodwill.
The Securities and Exchange Commission ("SEC") issued new guidance on its
views regarding the valuation methodologies used to determine the allocation of
purchase price to acquire in-process research and development ("IPR&D") and
intangible assets in a purchase business combination. Generally accepted
accounting principles require that amounts allocated to IPR&D be expensed upon
consummation of an acquisition. Following discussions between the Company and
the staff of the SEC regarding the application of this guidance, the Company has
modified the methods used to value IPR&D and other intangible assets acquired in
connection with the acquisition of MODE. The revised valuation is based on
management's best estimates at the date of acquisition of the net cash flows
expected to be generated by MODE on a going-forward basis and gives explicit
consideration to the SEC's views on IPR&D as set forth in its letter to the
American Institute of Certified Public Accountants. As a result of this revised
valuation, the amount of the purchase price allocated to IPR&D at the date of
acquisition decreased from $29.3 to $19.5 million. Therefore, the amount
ascribed to goodwill increased by $9.8 million which includes approximately $0.5
million related to the value of MODE's workforce.
OVERVIEW:
EMCORE designs, develops and manufactures compound semiconductor materials
and is a leading developer and manufacturer of the tools and manufacturing
processes used to fabricate compound semiconductor wafers and devices. EMCORE's
vertically-integrated product offering allows it to provide a complete compound
semiconductor solution to its customers. EMCORE assists its customers with
device design, process development and optimal configuration of TurboDisc
production systems.
EMCORE recognizes revenue upon shipment. Systems-related revenues include
sales of EMCORE's TurboDisc production systems as well as spare parts and
services. The book-to-ship time period on systems is approximately four to six
months, and the average selling price is in excess of $1.0 million. For systems,
EMCORE incurs certain installation and warranty costs subsequent to shipment
which are estimated and accrued at the time the sale is recognized. EMCORE
reserves for estimated returns and allowances at the time of shipment. Materials
related revenues include wafers, devices and process development technology. The
materials sales cycle is generally shorter than for systems and average selling
prices vary significantly based on the products and services provided.
Generally, EMCORE achieves a higher gross profit on its materials related
revenues.
EMCORE has recently established a number of strategic relationships through
joint ventures, long-term supply agreements and an acquisition as summarized
below.
- In May 1999, EMCORE signed a long term agreement with Sumitomo Electric
Industries, Ltd. (SEI) (Hyogo, Japan) to jointly develop and produce Indium
Gallium Phosphide (InGaP) epitaxial wafers for use as Heterojunction Bipolar
Transistor (HBT) devices used in digital wireless and cellular applications.
These advanced compound semiconductor HBT wafers will be produced at EMCORE's
Epitaxial Materials (E2M) wafer foundry in Somerset, New Jersey, and shipments
are expected to begin in November 1999.
- In January 1999, EMCORE signed an agreement with General Electric
Lighting to form GELcore, a joint venture to develop and market white light and
colored HB LEDs lighting products. GELcore's long-term goal is to develop HB LED
products to replace traditional lighting. Under the terms of the joint venture,
General Electric Lighting holds a 51% interest in GELcore and EMCORE holds a 49%
interest. In May 1999, General Electric through GE Capital, purchased a $7.8
million subordinated convertible debenture with a 4.75% interest rate where the
proceeds were used to fund EMCORE's investment in GELcore. The debenture will
mature in 2006 and is convertible into EMCORE common stock at a conversion price
of $22.875 or 340,984 shares. In addition, General Electric also received
282,010 warrants to purchase common stock at $22.875 per share. These warrants
are exercisable at any time and will expire in 2006. These warrants were valued
using the Black Scholes model, resulting in a valuation of $2.6 million, which
has been included in other assets. Such asset is being amortized over seven
years. We have also seconded various personnel to the joint venture to assist in
the development and marketing of its products. These personnel and the related
costs are charged to the joint venture. In addition, GELcore has hired its own
administrative, technical and management personnel. As such, the impact on
EMCORE's operations will be limited to the seconded employees who will continue
to be managed by EMCORE personnel.
- In November 1998, EMCORE signed a long term supply agreement with Space
Systems/Loral, a wholly owned subsidiary of Loral Space & Communications. Under
this agreement, which is contingent upon EMCORE's compliance with Loral's
product specification requirements, EMCORE will supply compound semiconductor
high-efficiency gallium arsenide solar cells for Loral's satellites. EMCORE
completed this qualification in July 1999. EMCORE received an initial purchase
order for $5.25 million of solar cells. EMCORE expects to service this agreement
through our newly completed facility in Albuquerque, New Mexico. This facility
presently employs approximately 40 people, including sales, marketing,
administrative and manufacturing personnel.
- In November 1998, EMCORE formed UMCore, a joint venture with Union
Miniere Inc., a mining and materials company, to explore and develop alternate
uses for germanium using EMCORE's materials science and production platform
expertise and Union Miniere's access to and experience with germanium. EMCORE
has invested $600,000 in UMCore which, together with an equal amount funded by
Union Miniere, is expected to fund the operations of UMCore through fiscal 1999.
EMCORE has seconded various personnel to the joint venture to assist in the
development of products. Thereafter, any additional funding will be contributed
equally.
- In October 1998, EMCORE formed Emtech, a joint venture with Optek
Technology, Inc., a packager and distributor of optoelectronic devices, to
market an expanded line of magneto resistive sensors to the automotive and
related industries. This joint venture combines EMCORE's expertise in the
manufacture of magneto resistive die and Optek's expertise in packaging these
die. This combination will allow us to offer customers off-the-shelf products.
No funding is anticipated to meet the obligations to the joint venture.
- In September 1998, EMCORE entered into an agreement with Lockheed Martin
to provide technical management and support for the commercialization of a new
high-efficiency solar cell. It is anticipated that we will provide high
efficiency solar cells to Lockheed Martin upon completion of the research and
development agreement. EMCORE's new facility in Albuquerque, New Mexico, will
provide the support necessary to meet our obligations under this agreement.
- EMCORE also signed a four-year purchase agreement with AMP Incorporated
to provide high speed VCSELs for use in transceivers for high speed networks
that link computers. The contract requires AMP to purchase a minimum of 80% of
their VCSEL needs from EMCORE. EMCORE's MODE facility in Albuquerque, New
Mexico, will produce the devices under this contract.
- In February 1998, EMCORE and Uniroyal Technology Corporation formed
Uniroyal Optoelectronics, a joint venture to manufacture, sell and distribute HB
LED wafers and package-ready devices. This joint venture commenced operations in
July 1998. EMCORE has invested $6.0 million in Uniroyal Optoelectronics. EMCORE
has seconded various personnel to the joint venture to assist in the development
of products. Uniroyal Optoelectronics is hiring its own administrative and
management personnel. The impact on EMCORE's operations will be limited to a few
seconded employees who will continue to be managed by EMCORE personnel.
- To expand our technology base in the data communications and
telecommunications markets, on December 5, 1997, EMCORE acquired MicroOptical
Devices, Inc. ("MODE") in a stock transaction accounted for under the purchase
method of accounting for a purchase price of $32.8 million. EMCORE's acquisition
of MODE, a development stage company, constituted a significant and strategic
investment for EMCORE to acquire and gain access to MODE's in-process research
and development of micro-optical technology. As part of this acquisition, EMCORE
incurred a one-time in-process research and development write-off of $19.5
million. EMCORE also recorded goodwill of approximately $13.3 million. This is
being charged against operations over a three-year period, and will therefore
impact financial results through December 2000. The goodwill of $13.3 million
represents an increase of approximately $9.8 million from the original amount
recorded when the Company purchased MODE in December 1997. This is a result of
an adjustment related to the SEC's new industry wide guidelines for the
determination of writeoffs of acquired in-process research and development
implemented subsequent to the acquisition date.
Because we do not have a controlling economic and voting interest in the
Uniroyal, Union Miniere, Optek and General Electric Lighting joint ventures,
EMCORE accounts for these joint ventures under the equity method of accounting
and, as such, our share of profits and losses will be included below the
operating income line in our statement of operations.
EMCORE has generated a significant portion of its sales to customers
outside the United States. In fiscal 1996, 1997, 1998 and the first nine months
of fiscal 1999, international sales constituted 42.5%, 42.0%, 39.1% and 54.1%,
respectively, of revenues. In fiscal 1998, the majority of EMCORE's
international sales were made to customers in Asia, particularly in Japan. In
fiscal 1999, the majority of EMCORE's international sales were made to customers
in Taiwan. EMCORE's sales revenues from Europe have fluctuated because most of
our sales of TurboDisc systems are to a limited number of customers, who do not
purchase these systems regularly. EMCORE anticipates that international sales
will continue to account for a significant portion of revenues. Historically, we
have received all payments for products and services in U.S. dollars. We do not
anticipate that Europe's Euro-currency conversion will have a material effect on
our financial condition or results of operations.
The information below summarizes EMCORE's export sales by geographic area.
YEAR ENDED SEPTEMBER 30, ASIA EUROPE TOTAL
- --------------------------------- --------------- ------------- ----------------
1996 $ 8,209,309 $3,588,066 $11,797,375
1997 14,583,981 5,478,186 20,062,167
1998 15,527,169 1,584,851 17,112,020
1999 (9 months) 21,425,460 2,289,323 23,716,693
As of June 30, 1999, EMCORE had an order backlog of $49 million scheduled
to be shipped through June 30, 2000. This represented an increase of 117% since
September 30, 1998 which primarily relates to increased systems bookings in Asia
and an initial order for solar cells from Loral. EMCORE includes in backlog only
customer purchase orders that have been accepted by EMCORE and for which
shipment dates have been assigned within the 12 months to follow and research
contracts that are in process or awarded. Wafer and device agreements extending
longer than one year in duration are included in backlog only for the ensuing 12
months. EMCORE receives partial advance payments or irrevocable letters of
credit on most production system orders.
RESULTS OF OPERATIONS:
REVENUES The Company's revenues increased 94.7% from $9.1 million for the
three months ended June 30, 1998, to $17.7 million for the three months ended
June 30, 1999. For the nine month period ended June 30, 1999, revenues increased
$8.6 million or 24.4% from $35.2 million in 1998 to $43.9 million in 1999. The
revenue increase in the three and nine month periods was attributable to
increased revenues in the systems-related product lines. Revenues from
systems-related sales and materials-related sales were $5.6 million and $3.5
million, respectively, for the three month period ended June 30, 1998 and $12.9
million and $4.8 million, respectively, for the three month period ended June
30, 1999. As a percentage of revenues, production systems and wafers and devices
accounted for 57.0% and 43.0%, respectively, for the nine months ended June 30,
1998 and 77.6% and 22.4%, respectively, for the nine months ended June 30, 1999.
The Company expects these percentages to approach 50% as the Company's new
products such as solar cells, VCSELS and HBT's are introduced and production
ramps. International sales accounted for 44.3% of revenues for the nine months
ended June 30, 1998 and 54.1% of revenues for the nine months ended June 30,
1999.
COST OF SALES/GROSS PROFIT Cost of sales includes direct material and labor
costs, allocated manufacturing and service overhead, and installation and
warranty costs. The Company's gross profit increased 115.5% from $3.6 million
for the three months ended June 30, 1998, to $7.8 million for the three months
ended June 30, 1999. For the nine month period ended June 30, 1999, gross profit
decreased from 45.1% of revenue for the nine months ended June 30, 1998, to
42.8% of revenue for the nine months ended June 30, 1999. During the six months
ended March 31, 1999, the Company sold three compound semiconductor production
systems for approximately $5.3 million to a joint venture in which it has a 49%
minority interest. The Company eliminated $1.3 million of gross profit on such
sales. Such deferred gross profit will be recognized ratably over the assigned
life of the production systems purchased by the joint venture.
SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative
expenses decreased by 20.6% from $4.6 million for the three months ended June
30, 1998, to $3.7 million in the three months ended June 30, 1999. During the
quarter ended June 30, 1998, the Company reserved certain Asian account
receivables that totaled $1.2 million. As a percentage of revenue, selling,
general and administrative expenses decreased from 29.8% for the nine months
ended June 30, 1998 to 22.8% for the nine months ended June 30, 1999.
GOODWILL AMORTIZATION The Company recognized approximately $1.1 million of
goodwill amortization for the three months ended June 30, 1999 in connection
with the acquisition of MODE on December 5, 1997. As of June 30, 1999, the
Company has approximately $6.2 million of goodwill remaining, which will be
fully amortized by December 2000.
RESEARCH AND DEVELOPMENT Research and development expenses decreased 15.8%
from $5.9 million in the three months ended June 30, 1998, to $5.0 million in
the three months ended June 30, 1999. As a percentage of revenue, recurring
research and development expenses increased from 33.0% for the nine months ended
June 30, 1998 to 34.7% for the nine months ended June 30, 1999. The increase was
primarily attributable to EMCORE's acquisition of MODE, the startup of our new
Albuquerque, New Mexico facility and increased staffing and equipment costs
necessary to enhance current products and develop new product offerings.
Products introduced or under development include HB LEDs, high efficiency solar
cells, new generation TurboDisc production systems, VCSELs, RF Materials and
other optoelectronic devices. During the three-months ended December 31, 1997,
the Company recognized a $19.5 million one-time charge for acquired in-process
research and development relating to the purchase of MODE. To maintain growth
and to continue to pursue market leadership in materials science technology, the
Company expects to continue to invest a significant amount of its resources in
research and development.
OPERATING LOSS The Company reported an operating loss of $1.9 million for
the three months ended June 30, 1999, as compared to operating loss of $8.0
million for the three months ended June 30, 1998. For the nine month periods,
the operating loss decreased $18.5 million or 65.5% from $28.3 million for the
nine months ended June 30, 1998 to $9.8 million for the nine months ended June
30, 1999. The change in operating income is due to the $19.5 million one-time
charge for acquired in-process research and development relating to the purchase
of MODE. In addition, the Company's operating loss was impacted by increased
research and development spending; the loss generated from the operations of
MODE and the startup expenses associated with the opening of the Company's new
Albuquerque, New Mexico facility.
OTHER EXPENSE During fiscal 1996, the Company issued detachable warrants
along with subordinated notes to certain of its existing shareholders. The
Company subsequently assigned a value to these detachable warrants issued using
the Black-Scholes Option Pricing Model. The Company recorded the subordinated
notes at a carrying value that is subject to periodic accretions, using the
interest method. In June 1998, the Company issued 284,684 warrants to its
Chairman and its Chief Executive Officer for providing a guarantee in connection
with the 1998 Agreement, an 18 month credit facility with First Union National
Bank. The Company assigned a value to these warrants using the Black-Scholes
Option Pricing Model. The consequent expense of these warrant accretion amounts
is charged to "Imputed warrant interest, non-cash" and amount to approximately
$286,000 and $1,043,000 for the nine months ended June 30, 1998 and 1999,
respectively.
For the three months ended, June 30, 1999, stated interest expense, net
increased by $109,000 to $290,000 due to additional borrowing.
Because the Company does not have a controlling economic and voting
interest in the Uniroyal, Union Miniere, and General Electric Lighting joint
ventures, EMCORE accounts for such joint ventures under the equity method of
accounting. For the nine months ended June 30, 1999, the Company incurred a net
loss of $1.2 million related to the Uniroyal joint venture, a $1.6 million net
loss related to the GELCore joint venture and a $184,000 net loss related to the
UMCore joint venture.
EXTRAORDINARY LOSS On June 15, 1999, the Company repaid its outstanding
$10.0 million (1997 Agreement) and the $18.0 million (1999 Agreement) bank loans
using a portion of the proceeds from the additional public offering. The Company
also used a portion of the net proceeds to repurchase its outstanding 6.0%
subordinated notes due 2001. The early extinguishment of debt resulted in an
extraordinary charge of $1.3 million or $0.13 per share.
NET LOSS The Company reported a net loss of $5.2 million for the three
months ended June 30, 1999, as compared to net loss of $8.3 million for the
three months ended June 30, 1998. For the nine month period ended June 30, 1999,
the Company reported a decrease of 44.4% from a $28.9 million net loss for the
nine months ended June 30, 1998, to $16.1 million net loss for the nine months
ended June 30, 1999. The decrease in the year-to-date loss was attributable to
the $19.5 million write-off of acquired in-process research and development in
connection with the acquisition of MODE on December 5, 1997 offset by the
increase in research and development expenses, imputed warrant interest expense
and the net loss from unconsolidated affiliates.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and cash equivalents increased by $10.4 million from $4.5 million at
September 30, 1998, to $14.9 million at June 30, 1999. For the nine months ended
June 30, 1999, net cash used for operations amounted to $11.6 million, primarily
due to the Company's net losses, an increase in accounts receivable and decrease
in accounts payable; which was partially offset by the Company's non-cash
depreciation and amortization charges and an increase in equity in net loss of
unconsolidated affiliates.
For the nine months ended June 30, 1999, net cash used for investment
activities amounted to $27.3 million, primarily due to the purchase and
manufacture of new equipment for the facilitation of the Company's wafer and
device product lines, and clean room modifications and enhancements of
approximately $13.2 million, as well as investments in unconsolidated affiliates
of approximately $14.1 million.
Net cash provided by financing activities for the nine months ended June
30, 1999 amounted to approximately $49.2 million, primarily due to the $52.0
million of net proceeds from the secondary offering, the $21.2 million of net
proceeds from the private placement of preferred stock and the $7.8 million
proceeds from the convertible subordinated debenture. This was offset by net
payments of $18.0 million on bank loans, $8.5 million on subordinated debt and
$7.0 million on short-term related party debt.
The Company's Chairman committed to provide up to $30.0 million of
long-term financing to EMCORE through July 1, 2000. This commitment terminated
upon completion of the Company's secondary offering.
On April 29, 1999, the Company borrowed $2.5 million from its Chairman. The
loan bears interest at prime rate plus two percent per annum. On May 7, 1999,
the loan was repaid from borrowings under the Company's $19.0 million short-term
note, as discussed below.
On April 29, 1999, the Company entered into a $19.0 million short-term loan
agreement (the "1999 Agreement") with First Union National Bank. The 1999
Agreement represented a consolidation of the $8.0 million and $5.0 million
short-term loan agreements dated June 22, 1998 and February 1, 1999,
respectively, and an additional note of $6.0 million. The 1999 Agreement is due
and payable on October 1, 1999 and bears interest at a rate equal to one-month
LIBOR plus three-quarters of one percent per annum or 5.75%. On May 7, 1999, the
Company used borrowings under the 1999 Agreement to repay the $2.5 million
short-term note from the Company's Chairman.
On June 15, 1999, the Company completed the issuance of an additional 3.0
million common stock shares through a public offering, which resulted in
proceeds of $52.0 million, net of issuance costs. A portion of the proceeds was
used to repay outstanding bank indebtedness and subordinated notes.
LIQUIDITY AND CAPITAL RESOURCES (continued):
On June 15, 1999, the Company repaid its outstanding $10.0 million and
$18.0 million bank loans and repurchased its outstanding 6% subordinated notes
due 2001 using a portion of the net proceeds from the secondary public offering.
The early extinguishment of debt resulted in an extraordinary charge of $1.3
million or $0.13 per share.
EMCORE believes that its current liquidity, together with available credit,
should be sufficient to meet its cash needs for working capital through July
2000. However, if the available credit facilities, cash generated from
operations and cash on hand are not sufficient to satisfy EMCORE's liquidity
requirements, EMCORE will seek to obtain additional equity or debt financing.
Additional funding may not be available when needed or on terms acceptable to
EMCORE. If EMCORE is required to raise additional financing and if adequate
funds are not available or not available on acceptable terms, the ability to
continue to fund expansion, develop and enhance products and services, or
otherwise respond to competitive pressures would be severely limited. Such a
limitation could have a material adverse effect on EMCORE's business, financial
condition or operations.
At June 30, 1999, the Company employed 352 full-time employees. None of the
Company's employees are covered by a collective bargaining agreement. The
Company considers its relationship with its employees to be good.
YEAR 2000:
Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by many companies and governmental agencies may
need to be upgraded to comply with such Year 2000 requirements or risk system
failure or miscalculations causing disruptions of normal business activities.
STATE OF READINESS. The Company has made a preliminary assessment of the
Year 2000 readiness of its operating financial and administrative systems,
including the hardware and software that support such systems. The Company's
assessment plan consists of (1) quality assurance testing of its internally
developed proprietary software; (2) contacting third-party vendors and licensors
of material hardware, software and services that are both directly and
indirectly related to the Company's business; (3) contacting vendors of
third-party systems; (4) assessing repair or replacement requirements; (5)
implementing repair or replacement; and (6) creating contingency plans in the
event of Year 2000 failures.
Our compound semiconductor wafers and devices are date insensitive and,
therefore, do not have any Year 2000 issues associated with them. Our TurboDisc
production systems have several components that could give rise to Year 2000
compliance concerns. We have preliminarily assessed the Year 2000 issues
associated with these components and have found that they have either been
certified by the vendor to be compliant or are date insensitive. Our principal
concern has been the status of our operating, financial and administrative
systems. These systems include accounting and production control software at our
New Jersey and the two New Mexico facilities. All software has been certified as
Year 2000 compliant by the vendors.
There are other information technology systems and non-information
technology systems that could give rise to Year 2000 concerns. These include
scientific and engineering applications, desktop applications (such as Microsoft
Word and Excel) and facilities controls such as HVAC and security. A review of
these systems leads us to believe that the systems are Year 2000 compliant, are
not critical to business operations, are used on a limited basis or are date
insensitive.
We are continuing the evaluation of Year 2000 compliance of all our systems
and have developed and implemented an enterprise-wide database that we use to
document Year 2000 issues. The Company plans to complete its evaluation by
September 30, 1999 including Year 2000 simulation on its systems during the
third and fourth quarter of calendar 1999 to test systems readiness.
COSTS. To date, the Company has not incurred any material expenditures in
connection with identifying, evaluating or addressing Year 2000 compliance
issues. Most of the Company's expenses have related to, and are expected to
continue to relate to, the operating costs associated with time spent by
employees in the evaluation process and Year 2000 compliance matters generally.
At this time, the Company does not possess the information necessary to estimate
the potential costs of revisions to its systems should such revisions be
required or the replacement of third-party software, hardware or services that
are determined not to be Year 2000 compliant. Although the Company anticipates
that such expenses will be immaterial, such expenses, if higher than
anticipated, could have a material adverse effect on the Company's business,
financial condition and results of operations.
RISKS. The Company is not currently aware of any Year 2000 compliance
problems relating to its systems that would have a material adverse effect on
the Company's business, results of operations and financial condition, without
taking into account the Company's efforts to avoid or fix such problems. There
can be no assurance that the Company will not discover Year 2000 compliance
problems in its systems that will require substantial revision. In addition,
there can be no assurance that third-party software, hardware or services
incorporated into the Company material systems will not need to be revised or
replaced, all of which could be time-consuming and expensive. The failure of the
Company to fix or replace its internally developed proprietary software or
third-party software, hardware or services on a timely basis could result in
lost revenues, increased operating costs, the loss of customers and other
business interruptions, any of which could have a material adverse effect on the
Company's business, result of operations and financial condition. Moreover, the
failure to adequately address Year 2000 compliance issues in its internally
developed proprietary software could result in claims of mismanagement,
misrepresentation or breach of contract and related litigation, which could be
costly and time-consuming to defend. In addition, the failure of governmental
agencies, utility companies, third-party service providers and others outside of
the Company control to be Year 2000 compliant could result in systemic failure
beyond the Company's control, such as a telecommunications or electrical
failure, which could have a material adverse effect on the Company's business,
results of operations and financial condition.
CONTINGENCY PLAN. As discussed above, the Company is engaged in an ongoing
Year 2000 assessment and has not yet developed any contingency plans. The
results of the Company's Year 2000 simulation testing and the responses received
from third-party vendors and service providers will be taken into account in
determining need, nature and extent of any contingency plans.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
27 - Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K dated May 17, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EMCORE CORPORATION
Date: August 13, 1999 By: /s/ Reuben F. Richards, Jr.
---------------------------------------------
Reuben F. Richards, Jr.
President and Chief Executive Officer
Date: August 13, 1999 By: /s/ Thomas G. Werthan
---------------------------------------------
Thomas G. Werthan
Vice President, Finance and Administration
5
1,000
9-MOS
SEP-30-1999
JUN-30-1999
14,851
0
14,220
(594)
13,349
274
65,287
(21,019)
107,166
15,831
0
14,110
0
152,168
(84,126)
107,166
43,864
43,864
(25,072)
(25,072)
(32,569)
0
(983)
(14,760)
0
0
0
(1,334)
0
(16,094)
(1.56)
(1.70)
