Form: 8-K

Current report filing

August 24, 2006

Documents


 
EXHIBIT 99.2 

EMCORE CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
(in thousands)
(unaudited)
 

     
Year Ended September 30, 2005
  
 
 
 
As reported
 
 
 
Pro forma adjustments
 
 
Pro forma as adjusted
 
           
(a)
        
Revenue
 
$
127,603
  
$
(12,236
)
$
115,367
  
Cost of revenue
 
 
106,746
    
(10,721
)
  
96,025
  
Gross profit
 
 
20,857
    
(1,515
)
  
19,342
  
 
 
 
                
Operating expenses:
 
 
                
Selling, general and administrative
 
 
25,136
    
(2,570
)
  
22,566
  
Research and development
 
 
17,429
    
(2,738
)
  
14,691
  
Total operating expenses
 
 
42,565
    
(5,308
)
  
37,257
  
Operating loss
 
 
(21,708
)
  
3,793
    
(17,915
)
 
 
 
                
Other (income) expenses:
 
 
                
Interest income
 
 
(1,081
)
  
-
    
(1,081
)
Interest expense
 
 
4,844
    
-
    
4,844
  
Equity in net loss of GELcore investment
 
 
112
    
-
    
112
  
Total other expenses
 
 
3,875
    
-
    
3,875
  
Loss from continuing operations
 
$
(25,583
)
$
3,793
  
$
(21,790
)
 
 
 
                
Per share data:
 
 
                
Basic and diluted per share data:
 
 
                
Loss from continuing operations
 
$
(0.54
)
$
0.08
  
$
(0.46
)
 
 
 
                
Weighted average number of shares outstanding
used in basic and diluted per share calculations
 
 
47,387
    
47,387
    
47,387
  

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.



 
 
 



EMCORE CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
(in thousands)
(unaudited)


     
Nine Months Ended June 30, 2006
  
 
 
 
As reported
 
 
 
Pro forma adjustments
 
 
Pro forma as adjusted
 
           
(a)
        
Revenue
 
$
123,007
  
$
(14,840
)
$
108,167
  
Cost of revenue
 
 
98,864
    
(12,623
)
  
86,241
  
Gross profit
 
 
24,143
    
(2,217
)
  
21,926
  
 
 
 
                
Operating expenses:
 
 
                
Selling, general and administrative
 
 
26,445
    
(2,549
)
  
23,896
  
Research and development
 
 
14,550
    
(869
)
  
13,681
  
Total operating expenses
 
 
40,995
    
(3,418
)
  
37,577
  
Operating loss
 
 
(16,852
)
  
1,201
    
(15,651
)
 
 
 
                
Other (income) expenses:
 
 
                
Interest income
 
 
(838
)
  
-
    
(838
)
Interest expense
 
 
3,987
    
-
    
3,987
  
Loss from convertible subordinated notes exchange offer
    
1,078
    
-
    
1,078
  
Equity in net loss of Velox investment
    
332
    
-
    
332
  
Equity in net income of GELcore investment
 
 
(21
)
  
-
    
(21
)
Total other expenses
 
 
4,538
    
-
    
4,538
  
Loss from continuing operations
 
$
(21,390
)
$
1,201
  
$
(20,189
)
 
 
 
                
Per share data:
 
 
                
Basic and diluted per share data:
 
 
                
Loss from continuing operations
 
$
(0.43
)
$
0.02
  
$
(0.41
)
 
 
 
                
Weighted average number of shares outstanding
used in basic and diluted per share calculations
 
 
49,336
    
49,336
    
49,336
  

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.



 
 
 



EMCORE CORPORATION
Pro Forma Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)

     
As of June 30, 2006
  
 
 
 
As reported
 
 
 
Pro forma adjustments
  
 
 
Pro forma
as adjusted
  
ASSETS
 
 
 
 
 
 
  
 
      
Current assets:
 
 
 
 
 
 
  
 
      
Cash and cash equivalents
 
$
16,138
 
$
13,000
  
 (b)
$
29,138
  
Restricted cash
 
 
1,303
 
 
-
  
 
  
1,303
  
Marketable securities
 
 
7,900
 
 
-
  
 
  
7,900
  
Accounts receivable, net
 
 
27,388
 
 
-
  
 
  
27,388
  
Receivables, related parties
 
 
482
 
 
-
  
 
  
482
  
Inventory, net
 
 
24,940
 
 
(2,988
)
 (d)
  
21,952
  
Prepaid expenses and other current assets
 
 
3,224
 
 
2,973
  
 (c,d)
  
6,197
  
Total current assets
 
 
81,375
 
 
12,985
  
 
  
94,360
  
 
 
 
  
 
 
    
 
      
Property, plant and equipment, net
 
 
56,997
 
 
(3,394
)
(d)
  
53,603
  
Goodwill
 
 
40,476
 
 
-
  
 
  
40,476
  
Intangible assets, net
 
 
6,624
 
 
(178
)
(d) 
  
6,446
  
Investments in unconsolidated affiliates
 
 
12,388
 
 
-
  
 
  
12,388
  
Receivables, related parties
 
 
169
 
 
-
  
 
  
169
  
Other assets, net
 
 
5,526
 
 
(998
)
(d)
  
4,528
  
 
 
 
  
 
 
    
 
      
Total assets
 
$
203,555
 
$
8,415
  
 
$
211,970
  
 
 
 
  
 
 
    
 
      
LIABILITIES and SHAREHOLDERS’ EQUITY
 
 
  
 
 
    
 
      
Current liabilities:
 
 
  
 
 
    
 
      
Accounts payable
 
$
20,692
  
$
-
  
 
$
20,692
  
Accrued expenses and other current liabilities
 
 
13,540
  
 
(606
)
 (e)
  
12,934
  
Notes payable, current portion
 
 
430
  
 
-
  
 
  
430
  
Total current liabilities
 
 
34,662
  
 
(606
)
 
  
34,056
  
 
 
 
    
 
    
 
      
Notes payable, long-term
 
 
277
  
 
-
  
 
  
277
  
Convertible subordinated notes, long-term
 
 
95,895
  
 
-
  
 
  
95,895
  
Total liabilities
 
 
130,834
  
 
(606
)
 
  
130,228
  
 
 
 
    
 
    
 
      
Commitments and contingencies
 
 
    
 
    
 
      
 
 
 
    
 
    
 
      
Shareholders’ equity:
 
 
    
 
    
 
      
Preferred stock, $0.0001 par, 5,882 shares authorized, no shares outstanding
 
 
-
  
 
-
  
 
  
-
  
Common stock, no par value, 100,000 shares authorized, 50,805 shares issued and 50,646 shares outstanding
 
 
410,153
  
 
-
  
 
  
410,153
  
Accumulated deficit
 
 
(335,349
)
 
9,021
      
(326,328
)
Treasury stock, at cost, 159 shares
 
 
(2,083
)
 
-
      
(2,083
)
Total shareholders’ equity
 
 
72,721
  
 
9,021
  
 
  
81,742
  
 
 
 
 
 
 
    
 
      
Total liabilities and shareholders’ equity
 
$
203,555
 
$
8,415
  
 
$
211,970
  

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.



 
 
 




EMCORE Corporation
Notes to Unaudited Condensed Consolidated Pro Forma Financial Statements

 
NOTE 1.  Business Divesture.

On August 18, 2006, EMCORE completed the sale of assets of its Electronic Materials & Device division (the "EMD Business"), including inventory, fixed assets, and intellectual property, pursuant to an Asset Purchase Agreement, dated July 19, 2006 (the “Purchase Agreement”), between EMCORE, IQE, plc, a public limited company organized under the laws of the United Kingdom ("IQE"), and IQE RF, LLC, a New Jersey limited liability company and a wholly owned subsidiary of IQE ("Purchaser").
 
Under the terms of the Purchase Agreement, EMCORE sold the EMD Business to Purchaser for $16.0 million, consisting of a $0.2 million deposit previously delivered to EMCORE, $12.8 million delivered via wire transfer on August 18, 2006, and $3.0 million in the form of a secured promissory note of IQE and Purchaser (the "Note"), guaranteed by IQE's affiliates. The Note is to be repaid in four quarterly installments and bears interest at an annual rate of 7.5%.
 

NOTE 2.  Basis of Presentation.

The preceding unaudited pro forma condensed consolidated financial information presented for the statements of operations for the year ended September 30, 2005 and the nine-month period ended June 30, 2006 is based upon the Company’s historical results of operations, adjusted to reflect the pro forma effect of excluding operations derived from the Company’s EMD Business as of October 1, 2004. The preceding unaudited pro forma condensed consolidated financial information presented for the balance sheet as of June 30, 2006, is based upon the Company’s historical results, adjusted to reflect the pro forma effect of the sale of assets of the EMD Business as if it had occurred on June 30, 2006.

The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of any future results of operations or the results that might have occurred had the disposition actually been completed on the indicated dates.

The historical consolidated financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended September 30, 2005, and the unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the nine months ended June 30, 2006.

The Company anticipates a gain on the disposition that has not been reflected in the pro forma statements of operations as the gain is considered to be non-recurring. Pro-forma adjustments included in the pro forma condensed consolidated financial statements are as follows:

a)  
The adjustments reflected in the condensed consolidated statements of operations eliminate the results of operations of the EMD Business that was sold to IQE.

b)  
This adjustment in the balance sheet reflects the net cash proceeds from the sale of the EMD Business.

c)  
This adjustment in the balance sheet includes the $3.0 million promissory note due EMCORE as a result of the sale of the EMD Business.

d)  
These adjustments in the balance sheet reflect changes to inventory, prepaid expenses, fixed assets, intellectual property, and other assets being sold or otherwise disposed of as a result of the sale of the EMD Business. Using the carrying value as of the June 30, 2006 consolidated balance sheet, total assets to be disposed of approximate $7.6 million.

e)  
This adjustment in the balance sheet reflects the elimination of various accrued liabilities being assumed by IQE. Using the carrying value as of the June 30, 2006 consolidated balance sheet, total liabilities to be disposed of approximate $0.6 million.