PRESS RELEASE
Published on December 11, 2008
EXHIBIT
99.1
PRESS
RELEASE
EMCORE
Corporation Announces Preliminary Unaudited Results for Its Fourth Quarter and
Fiscal Year Ended September 30, 2008
ALBUQUERQUE,
New Mexico, December 11, 2008 – EMCORE Corporation (NASDAQ: EMKR – News), a leading
provider of compound semiconductor–based components and subsystems for the
broadband, fiber optic, satellite, and terrestrial solar power markets, today
announced preliminary unaudited financial results for its fourth quarter and
fiscal year ended September 30, 2008.
Fiscal Year
2008:
For the fiscal year ended
September 30,
2008, consolidated revenue increased by $69.7 million, or 41%, to $239.3 million
from $169.6 million as reported in the prior year. International revenue
increased by $48.8 million, or 107%, to
$94.4 million from $45.6 million
when compared to the prior year. Both of the Company’s reporting segments
experienced an increase in annual revenue when compared to the prior
year.
Annual
revenue for the Fiber Optics segment increased by $60.9 million, or 55%, to
$171.3 million from $110.4 million as reported in the prior year. The increase
in Fiber Optics annual revenue was primarily due to incremental revenues
associated with the growth of the Company’s parallel optical transceiver
business and acquisitions completed during the year, which added approximately
$41.6 million of revenue in fiscal 2008. In February and April 2008,
EMCORE acquired the telecom, datacom, and optical cable interconnects-related
assets of Intel Corporation’s Optical Platform Division (the “Intel
Acquisitions”). On an annual basis, Fiber Optics revenue represented
72% and 65% of the Company's total consolidated revenue for fiscal 2008 and
2007, respectively.
Annual
revenue for the Photovoltaics segment increased by $8.8 million, or 15%, to
$68.0 million from $59.2 million as reported in the prior year. The increase in
Photovoltaics annual revenue was primarily due to EMCORE’s recently launched
concentrating photovoltaic (CPV) terrestrial-based components (solar cells and
receivers) and solar power systems products. U.S. government contract revenue
decreased by
$8.8 million, or
43%, to $11.6 million from $20.4 million, as reported in the prior
year, due to the
termination of engineering and manufacturing contracts. On an annual
basis, Photovoltaics revenue represented 28% and 35% of the Company's total
consolidated revenue for fiscal 2008 and 2007, respectively.
For the fiscal year ended
September 30, 2008, consolidated gross profit decreased by $0.5 million,
or 2%, to $29.9 million from $30.4 million as reported in the prior year.
Consolidated gross margins decreased from 17.9% in fiscal 2007 to 12.5% in
fiscal 2008. On a segment basis, annual Fiber Optics gross margins increased
from 18.4% to 20.7% which was primarily due to increased revenue which provided
a greater base on which to allocate certain fixed costs, benefits associated
from the use of contract manufacturers and better utilization of our China
manufacturing facility. Gross margins also increased due to the
implementation of certain cost reduction initiatives and improved efficiencies
driven by facility consolidations. Our Fiber Optics segment also
incurred approximately $5.4 million in expenses related to inventory write-downs
and product warranty accruals in fiscal 2008. Annual Photovoltaics
gross margins decreased from 17.0% in fiscal 2007 to a negative 8.3% in fiscal
2008 due to significant project losses on several initial CPV solar power
systems installation projects, which was primarily the result of higher than
expected material, freight and installation costs. Our Photovoltaics
segment also incurred approximately $13.5 million in expenses related to
inventory write-downs, contract losses, and product warranty accruals associated
with our CPV-related business in fiscal 2008.
|
·
|
On a non-GAAP basis,
consolidated gross profit was $48.8 million and consolidated gross
margins were 20.4% in fiscal 2008. On a segment basis, annual Fiber Optics
gross margins were 23.9% and annual Photovoltaics gross margins were 11.6%
in fiscal 2008. Specific non-recurring inventory write-downs,
contract losses, and product warranty accruals were excluded from gross
profit to report on a non-GAAP basis. See “Use of Non-GAAP
Measures” and reconciliations provided in this press release pursuant to
the requirements of Regulation G.
|
For the fiscal year ended
September 30, 2008, selling, general, and administrative (SG&A)
expenses decreased by $14.2 million, or 25%, to $43.6 million from $57.8 million
as reported in the prior year. As a percentage of revenue, SG&A expenses
decreased from 34.1% to 18.2%. The decrease in annual SG&A
expenses was primarily due to a reduction of non-recurring legal and
professional fees of approximately $17.4 million associated with the Company’s
review of historical stock option grants and patent litigation in fiscal
2007. In fiscal 2008, approximately $7.6 million of SG&A was
related to the Intel Acquisitions with $2.2 million related to Intel
Corporation’s transition services agreement (TSA) charges associated with the
Intel Acquisitions.
For the fiscal year ended
September 30, 2008, research and development (R&D) expenses increased
by $9.5 million, or 32%, to $39.5 million from $30.0 million as reported in the
prior year. As a
percentage of revenue, R&D expenses decreased from 17.7% to
16.5%. In fiscal 2008, approximately $8.1 million of the increase in
R&D expenses was related to the Intel Acquisitions with $2.6 million related
to Intel TSA charges.
Total
operating expenses for the fiscal year ended September 30, 2008 decreased by
$4.5 million, or 5%, to $83.3 million from $87.8 million as reported in the
prior year. Fiscal 2008 operating expenses included $4.8 million of
non-recurring Intel TSA charges and an increase of $0.9 million related to
stock-based compensation expense. As of September 2008, the Intel TSA
expired and no TSA expense will be incurred in fiscal 2009.
For the
fiscal year ended September 30, 2008, our operating loss decreased by $4.1
million, or 7%, to $53.4 million from $57.5 million as reported in the prior
year.
|
·
|
On
a non-GAAP basis, our operating loss was $25.3 million in fiscal
2008.
|
Non-operating
income recognized during fiscal 2008 includes a gain of $7.4 million from the
sale of preferred stock and warrants of WorldWater & Solar Technologies
Corporation. Interest income totaled $0.9 million, a decrease of $3.2
million from $4.1 million of interest income reported in the prior
year. This reduction was primarily due to lower average cash, cash
equivalents and investment balances when compared to the prior
year.
Non-operating
expenses during fiscal 2008 included a decrease in interest expense of $3.4
million, when compared to the prior year, due to the February 2008 conversion of
the Company’s convertible subordinated notes to equity. Fiscal 2008
also included a loss totaling $4.7 million related to the conversion of the
convertible subordinated notes into equity and $4.3 million in stock-based
compensation expense related to the modification of stock options held by
terminated employees in December 2007. Further impacts on
non-operating expenses included an impairment charge totaling $0.5 million
relating to the decline in the market value of the Company’s investment in
Lightron Corporation, a Korean public company and contract manufacturer, a $1.0
million charge related to the write off of the Company’s investment in Velox
Corporation, a private company, a $1.1 million charge associated with disposed
fixed assets, and $0.7 million in foreign exchange losses associated with the
Company’s operating activities in Spain, China, and the
Netherlands.
The
Company’s net loss increased by $0.3 million, or 0.5%, to $59.0 million in
fiscal 2008 from $58.7 million in fiscal 2007. This represents a
reduction in net loss per share of $0.28 from $1.15 net loss per share reported
in the prior year to a $0.87 net loss per share for the fiscal year ended
September 30, 2008.
|
·
|
On
a non-GAAP basis, the Company’s net loss was $27.1 million with a net loss
per share of $0.40 in fiscal 2008.
|
Fourth Quarter
2008:
For the fourth quarter ended
September 30, 2008, consolidated revenue increased by $13.6 million, or 29%, to
$60.6 million from $47.0 million as reported in the same period last
year.
Quarterly
Fiber Optics segment revenue increased by $14.9 million, or 48%, to $46.1
million from $31.2 million as reported in the same period last
year. The increase in Fiber Optics revenue was primarily due to
the Intel Acquisitions, which added approximately $16.3 million of revenue in
the fourth quarter of fiscal 2008. Fiber Optics revenue represented
76% and 66% of the Company's total consolidated fourth quarter revenue for
fiscal 2008 and 2007, respectively.
Quarterly
Photovoltaics revenue decreased by $1.3 million, or 8%, to $14.5 million from
$15.8 million as reported in the same period last year. The decrease
in U.S government contract revenue of approximately $5.3 million offset the
increase in Photovoltaics revenue from space and terrestrial CPV-related product
sales. Photovoltaics revenue represented 24% and 34% of the Company's total
consolidated fourth quarter revenue for fiscal 2008 and 2007,
respectively.
For the fourth quarter ended
September 30, 2008, consolidated gross profit decreased by $8.8 million,
or 106%, to a negative $0.5 million from $8.3 million as reported in the same
period last year. Compared to the prior year, consolidated gross
margins for the fourth quarter decreased from 17.4% to a negative
0.8%. On a segment basis, fourth quarter gross margins for Fiber
Optics decreased from 17.4% in the fourth quarter of fiscal 2007 to 8.9% in the
fourth quarter of fiscal 2008 which was primarily due to significant inventory
valuation write-downs in the fourth quarter. Our Fiber Optics segment
also incurred approximately $5.4 million in expenses related to inventory
write-downs and product warranty accruals in fourth quarter fiscal
2008. Fourth quarter gross margins for the Photovoltaics segment
decreased from 17.3% as reported in the same period last year to a negative
31.6% in the fourth quarter of fiscal 2008 due to approximately $6.9 million of
inventory write-downs and product warranty accruals associated with our
CPV-related business.
|
·
|
On a non-GAAP basis,
consolidated gross profit was $11.7 million and consolidated gross
margins were 19.4% in the fourth quarter of fiscal 2008. On a segment
basis, Fiber Optics gross margins for the fourth quarter were 20.5% and
Photovoltaics gross margins were 15.8% in fourth
quarter.
|
For the fourth quarter ended
September 30, 2008, SG&A expenses decreased by $9.0 million, or 55%,
to $7.6 million from $16.6 million as reported in the same period last year. As
a percentage of revenue, quarterly SG&A expenses decreased from 35.4% to
12.5%. The decrease in quarterly SG&A expenses was primarily due
to a reduction of non-recurring legal and professional fees of approximately
$3.3 million, a reduction in severance and restructuring expenses of
approximately $1.1 million, and the reversal of certain incentive compensation
and tax accruals of approximately $5.2 million. During the fourth
quarter of fiscal 2008, SG&A expenses included $3.0 million related to the
Intel Acquisitions of which $0.6 million was related to non-recurring Intel TSA
charges.
For the fourth quarter ended
September 30, 2008, R&D expenses increased by $3.2 million, or 39%,
to $11.4 million from $8.2 million as reported in the same period last
year. As a
percentage of revenue, R&D expenses increased from 17.4% to 18.7% primarily
due to approximately $3.8 million of R&D expenses related to the Intel
Acquisitions, of which $0.4 million was related to non-recurring Intel TSA
charges.
Operating
expenses for the fourth quarter ended September 30, 2008 decreased by $5.7
million, or 23%, to $19.1 million from $24.8 million as reported in the same
period last year. The decrease in year-over-year fourth quarter
operating expenses was due to a reduction of non-recurring legal and
professional fees, a reduction in severance and restructuring expense, and the
reversal of certain incentive compensation and tax accruals. Fiscal
2008 operating expenses included $1.0 million of non-recurring Intel TSA charges
and an increase of $1.1 million related to stock-based compensation
expense.
For the
fourth quarter ended September 30, 2008, our operating loss increased by $3.1
million, or 19%, to $19.7 million from $16.6 million as reported in the same
period last year.
|
·
|
On
a non-GAAP basis, our operating loss was $8.1 million in the fourth
quarter of 2008.
|
Non-operating
income recognized in the fourth quarter includes the sale of preferred stock and
warrants of WorldWater & Solar Technologies Corporation which resulted in a
gain on the sale totaling $3.7 million. Non-operating expenses
incurred in the fourth quarter included a $1.5 million impairment charge related
to certain investments in Velox Corporation, a private company, and Lightron
Corporation, a Korean public company and contract manufacturer, a $1.0 million
charge associated with disposed fixed assets, and a $1.0 million in foreign
exchange losses associated with the Company’s activities in Spain, China, and
the Netherlands.
The
Company’s net loss increased by $1.9 million, or 10.9%, to $19.4 million in the
fourth quarter of fiscal 2008 compared with $17.5 million as reported in the
same period last year. This represents a reduction in net loss per
share of $0.09 from $0.34 net loss per share reported in the same period last
year to a $0.25 net loss per share for the fourth quarter ended September 30,
2008.
|
·
|
On
a non-GAAP basis, the Company’s net loss was $9.0 million in the fourth
quarter of fiscal 2008 with a net loss per share of $0.12 in the period
ended September 30, 2008.
|
Order
Backlog:
As of
September 30, 2008, we had an order backlog of approximately $56.3
million. Our order backlog is defined as purchase orders or supply
agreements accepted by the Company with expected product delivery and / or
services to be performed within the next twelve months. The September
30, 2008 order backlog is comprised of $35.2 million related to our
Photovoltaics segment and $21.1 million related to our Fiber Optics
segment.
Liquidity:
At
September 30, 2008, cash, cash equivalents, available-for-sale securities and
restricted cash totaled approximately $24.7 million, working capital totaled
$70.5 million, and the Company had no outstanding long-term debt. As previously
announced, the Company closed a $25 million secured line of credit in September
2008 with Bank of America. Subsequent to September 30, 2008, the
Company sold $1.7 million in auction rate securities that were previously
restricted and entered into a settlement agreement with an investment broker to
sell its remaining $1.4 million in auction rate securities by June
2010. In addition, the Company has negotiated terms to sell its
non-core equity interests for $11.4 million and is currently in negotiations to
sell a minority equity position in its Photovoltaics business as an initial
step towards a potential spin off of the business.
In
addition, the Company has undertaken several cost cutting initiatives intended
to conserve cash including a recent reduction in force of approximately 100
employees and contractors, a significant reduction in fiscal 2008 employee
bonuses, the elimination of fiscal 2009 merit increases, a significant reduction
in capital expenditures and a greater emphasis on improving its working capital
management.
These
initiatives are intended to conserve or generate cash in response to the
uncertainties associated with the recent deterioration in the global
economy.
Annual
Report:
In
conjunction with the deterioration in the macroeconomic environment and the
material reduction in the market value of the Company’s publicly traded common
stock, the Company is evaluating its goodwill for impairment in accordance with
the Financial Accounting Standards Board’s Statement of Financial Accounting
Standard No. 142, “Goodwill and Intangible Assets”. The determination
as to whether a write-down of goodwill is necessary involves significant
judgment based on the short-term and long-term projections of the future
performance of the reporting unit to which the goodwill is
attributed. To the extent that the Company incurs such impairment
charge, it will be non-cash in nature. The Company expects to
complete the impairment evaluation of its goodwill and intangible assets by
December 30, 2008.
As a
result of the time necessary to complete this evaluation, the Company is
planning to file a Form 12b-25 requesting an extension to file its Annual Report
on Form 10-K for the fiscal year ended September 30, 2008 with the Securities
and Exchange Commission.
Management Discussion and
Outlook:
“Fiscal
2008 was a productive year for EMCORE. During the year, we launched our new CPV
terrestrial systems business and achieved significant market penetration in both
CPV components and systems in the first full year of operation. As with most new
technologies, we incurred significant start-up costs associated with
establishing new product lines and building the required
infrastructure. However, we have now established a leading position
in this emerging market and have positioned EMCORE for future growth within this
segment. We also successfully completed the acquisition and integration of Intel
Corporation’s Telecom, Enterprise, and Connects Cable businesses. These
acquisitions have served to significantly enhance our product portfolio and
expand our customer base providing increased leverage and scale within our Fiber
Optics segment. Although we remain quite cautious about the current economic
downturn, we believe that the Company is now well positioned in its markets and
our Company remains very focused on continuing to lower our cost structure,
managing our working capital and achieving profitability. We expect
the December quarter revenue to be relatively flat on a sequential quarterly
basis with a significantly improved bottom line. Fiscal 2009 revenue
is expected to increase by 10% compared to fiscal 2008.” stated Hong Q. Hou,
Chief Executive Officer.
Company & Quarterly
Highlights:
July 25,
2008 – The Company announced that its world record Inverted Metamorphic (IMM)
solar cell technology has been chosen by R&D Magazine for an R&D 100
award. This prestigious award recognizes the IMM solar cell as one of the most
innovative technologies of 2008. Developed in conjunction with the
National Renewable Energy Laboratory (NREL) and the Vehicle Systems Directorate
of the US Air Force Research Laboratory (AFRL), this revolutionary solar cell
technology provides a platform for EMCORE’s next generation photovoltaic
products for space and terrestrial solar power applications. Solar cells built
using IMM technology recently achieved world record conversion efficiency of 33%
used in space, and it is anticipated that efficiency levels in the 42%-45% range
will be achieved when adapted for use under the 500-1500X concentrated
illumination, typical in terrestrial CPV systems. Once commercialized, the CPV
systems that are powered with EMCORE’s IMM based products will realize an
approximately 10% to 20% reduction in the cost of power generated. EMCORE
expects to begin commercializing this technology in 2009.
August 5,
2008 – The Company announced that it entered into two new supply agreements for
solar cells and receivers with a total value of over $40 million. The larger of
the two purchase contracts is a multi-year supply agreement for solar cells to
be delivered over four years. The product to be delivered will be incorporated
into CPV solar power systems developed for commercial rooftop installations as
well as utility-scale solar farms. The customers placing these orders are
targeting CPV deployments in the United States with a particular focus on the
California market.
October
3, 2008 – The Company announced the closing of a $25 million revolving credit
facility with Bank of America. The asset-backed credit facility provides for
borrowings up to $25 million and can be used for working capital, letters of
credit and other general corporate purposes. The credit facility, which
incorporates both LIBOR and Prime-based borrowing alternatives, is subject to
certain financial covenants and a borrowing base formula. The agreement matures
in September 2011 and is secured by certain assets of the Company.
November
21, 2008 – The Company announced its first deployment of a CPV solar power
system in China with the XinAo Group, one of China’s largest energy companies.
As part of an earlier agreement, the 50 kilowatt (kW) test and evaluation system
is fully installed and operational, and is producing power in accordance with
specifications. EMCORE and XinAo continue to have discussions regarding the
possible construction of a joint-owned plant in China to manufacture CPV systems
designed and certified by EMCORE for XinAo’s innovative coal gasification
project and the Chinese market.
***
EMCORE
will discuss its quarterly and annual results on a conference call to be held on
Thursday, December 11, 2008 at 9:00 am ET. To participate in the
conference call, U.S. callers should dial (toll free) 866-710-0179 and
international callers should dial 334-323-9871. The access code for the call is
59629. A replay of the call will be available beginning December 11, 2008 at
12:00 p.m. ET until December 18, 2008 at 11:59 p.m. ET. The replay call-in
number for U.S. callers is 877-656-8905, for international callers it is
334-323-9859 and the access code is 11475443. The call also will be web cast via
the Company's web site at http://www.emcore.com. Please go to the site
beforehand to download any necessary software.
About
EMCORE:
EMCORE
Corporation is a leading provider of compound semiconductor–based components and
subsystems for the broadband, fiber optic, satellite and solar power markets.
EMCORE's Fiber Optics segment offers optical components, subsystems and systems
that enable the transmission of video, voice and data over high–capacity fiber
optic cables for high–speed data and telecommunications, cable television (CATV)
and fiber–to–the–premises (FTTP) networks. EMCORE's Solar Power segment provides
solar products for satellite and terrestrial applications. For satellite
applications, EMCORE offers high–efficiency compound semiconductor–based gallium
arsenide (GaAs) solar cells, covered interconnect cells and fully integrated
solar panels. For terrestrial applications, EMCORE offers concentrating
photovoltaic (CPV) systems for utility scale solar applications as well as
offering its high–efficiency GaAs solar cells and CPV components for use in
solar power concentrator systems. For specific information about our company,
our products or the markets we serve, please visit our website at http://www.emcore.com.
Forward–looking
statements:
The
information provided herein may include forward–looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 relating to future events that involve risks and
uncertainties. Such forward–looking statements include but are not limited to
words such as "expects," "anticipates," "intends," "plans," believes," and
"estimates," and variations of these words and similar expressions, identify
these forward–looking statements. These forward–looking statements also include,
without limitation, (a) any statements or implications regarding EMCORE's
ability to remain competitive and a leader in its industry, and the future
growth of EMCORE, or the industry and the economy in general; (b) statements
regarding the expected level and timing of benefits to EMCORE from its current
cost reduction efforts, including (i) expected cost reductions and their impact
on EMCORE's financial performance, (ii) EMCORE's ability to reduce operating
expenses associated with its recent acquisitions (iii) EMCORE's continued
leadership in technology and manufacturing in its markets, and (iv) the belief
that the cost reduction efforts will not impact product development or
manufacturing execution; (c) any statement or implication that the products
described in this press release (i) will be successfully introduced or marketed,
(ii) will be qualified and purchased by our customers, or (iii) will perform to
any particular specifications or performance or reliability standards; (d) any
and all guidance provided by EMCORE regarding its expected financial performance
in future periods, including, without limitation, with respect to anticipated
revenues for the first quarter of fiscal 2009 or expected revenues from recent
and anticipated acquisitions. These forward–looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
projected, including without limitation, the following: (a) the impact on
EMCORE, its customers and its suppliers of the current worldwide economic
crisis; (b) EMCORE's cost reduction efforts may not be successful in achieving
their expected benefits, (including, among other things, cost structure, gross
margin and other profitability improvements), due to, among other things, shifts
in product mix, selling price pressures, costs and delays related to product
transfers to lower cost manufacturing locations and associated facility
closures, integration difficulties, and execution concerns; (c) EMCORE may
encounter difficulties in integrating its recent acquisitions and as a result
may sustain increased operating expenses, delays in commercializing new
products, production difficulties associated with transferring products to
EMCORE's manufacturing facilities and disruption of customer relationships (d)
the failure of the products (i) to perform as expected without material defects,
(ii) to be manufactured at acceptable volumes, yields, and cost, (iii) to be
qualified and accepted by our customers, and, iv) to successfully compete with
products offered by our competitors (e) the fact that EMCORE’s audit has not yet
been completed and may, when completed, result in material adverse changes in
the Company’s results for its 2008 fiscal year not mentioned in this release;
(f) EMCORE may not be successful in undertaking the steps it currently plans in
order to increase its liquidity; and (g) other risks and uncertainties described
in EMCORE's filings with the Securities and Exchange Commission such as
cancellations, rescheduling or delays in product shipments; manufacturing
capacity constraints; lengthy sales and qualification cycles; difficulties in
the production process; changes in semiconductor industry growth; increased
competition; delays in developing and commercializing new products; and other
factors. The forward–looking statements contained in this news release are made
as of the date hereof and EMCORE does not assume any obligation to update the
reasons why actual results could differ materially from those projected in the
forward–looking statements.
EMCORE
CORPORATION
Condensed
Consolidated Statements of Operations
For
the fourth quarter and fiscal year ended September 30, 2008 and
2007
(in
thousands, except per share data)
(unaudited)
|
Fourth
Quarter
Ended
September 30,
|
Fiscal
Year
Ended
September 30,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Revenue
|
$ | 60,635 | $ | 46,984 | $ | 239,303 | $ | 169,606 | ||||||||
|
Cost
of revenue
|
61,137 | 38,786 | 209,408 | 139,238 | ||||||||||||
|
Gross
(loss) profit
|
(502 | ) | 8,198 | 29,895 | 30,368 | |||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling,
general, and administrative
|
7,565 | 16,646 | 43,597 | 57,844 | ||||||||||||
|
Research and
development
|
11,351 | 8,173 | 39,483 | 29,980 | ||||||||||||
|
Impairment of
intellectual property
|
233 | - | 233 | - | ||||||||||||
|
Total
operating expenses
|
19,149 | 24,819 | 83,313 | 87,824 | ||||||||||||
|
Operating
loss
|
(19,651 | ) | (16,621 | ) | (53,418 | ) | (57,456 | ) | ||||||||
|
Other
expense (income):
|
||||||||||||||||
|
Interest
income
|
(84 | ) | (577 | ) | (862 | ) | (4,120 | ) | ||||||||
|
Interest
expense
|
- | 1,209 | 1,580 | 4,985 | ||||||||||||
|
Loss
from conversion of subordinated notes
|
- | - | 4,658 | - | ||||||||||||
|
Loss
from early redemption of convertible subordinated
notes
|
- | - | - | 561 | ||||||||||||
|
Stock-based
compensation expense from tolled options
|
- | - | 4,316 | - | ||||||||||||
|
Gain
from insurance proceeds
|
- | - | - | (357 | ) | |||||||||||
|
Gain
from sale of WWAT investment
|
(3,692 | ) | - | (7,384 | ) | - | ||||||||||
|
Impairment of
investments
|
1,461 | - | 1,461 | - | ||||||||||||
|
Loss on
disposal of equipment
|
978 | 210 | 1,064 | 210 | ||||||||||||
|
Foreign
exchange loss (gain)
|
1,048 | (1 | ) | 746 | (13 | ) | ||||||||||
|
Total
other expense (income)
|
(289 | ) | 841 | 5,579 | 1,266 | |||||||||||
|
Net
loss
|
$ | (19,362 | ) | $ | (17,462 | ) | $ | (58,997 | ) | $ | (58,722 | ) | ||||
|
Per
share data:
|
||||||||||||||||
|
Basic
and diluted per share data:
|
||||||||||||||||
|
Net
loss
|
$ | (0.25 | ) | $ | (0.34 | ) | $ | (0.87 | ) | $ | (1.15 | ) | ||||
|
Weighted-average
number of basic and diluted shares
outstanding
|
77,734 | 51,081 | 67,568 | 51,001 | ||||||||||||
EMCORE
CORPORATION
Condensed
Consolidated Balance Sheets
As
of September 30, 2008 and September 30, 2007
(in
thousands)
(unaudited)
|
As
of
September
30,
2008
|
As
of
September
30, 2007
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 18,227 | $ | 12,151 | ||||
|
Restricted
cash
|
1,854 | 1,538 | ||||||
|
Available-for-sale
securities
|
2,679 | 29,075 | ||||||
|
Accounts
receivable, net
|
60,313 | 38,151 | ||||||
|
Receivable,
related party
|
- | 332 | ||||||
|
Income
tax receivable
|
130 | - | ||||||
|
Inventory,
net
|
64,617 | 29,205 | ||||||
|
Prepaid
expenses and other current assets
|
6,970 | 4,350 | ||||||
|
Total
current assets
|
154,790 | 114,802 | ||||||
|
Property,
plant, and equipment, net
|
83,278 | 57,257 | ||||||
|
Goodwill
|
76,071 | 40,990 | ||||||
|
Other
intangible assets, net
|
34,747 | 5,275 | ||||||
|
Investments
in unconsolidated affiliates
|
8,240 | 14,872 | ||||||
|
Available-for-sale
securities, non-current
|
1,400 | - | ||||||
|
Long-term
restricted cash
|
569 | - | ||||||
|
Other
non-current assets, net
|
740 | 1,540 | ||||||
|
Total
assets
|
$ | 359,835 | $ | 234,736 | ||||
|
LIABILITIES
and SHAREHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 52,266 | $ | 22,685 | ||||
|
Accrued
expenses and other current liabilities
|
31,390 | 28,776 | ||||||
|
Income
tax payable
|
594 | 137 | ||||||
|
Total
current liabilities
|
84,250 | 51,598 | ||||||
|
Convertible
subordinated notes
|
- | 84,981 | ||||||
|
Total
liabilities
|
84,250 | 136,579 | ||||||
|
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, 77,920 shares issued
and 77,761 outstanding at September 30, 2008; 51,208 shares
issued and 51,049 shares outstanding at September 30, 2007
|
680,020 | 443,835 | ||||||
|
Accumulated
deficit
|
(402,901 | ) | (343,578 | ) | ||||
|
Accumulated
other comprehensive loss
|
549 | (17 | ) | |||||
|
Treasury
stock, at cost; 159 shares
|
(2,083 | ) | (2,083 | ) | ||||
|
Total
shareholders’ equity
|
275,585 | 98,157 | ||||||
|
Total
liabilities and shareholders’ equity
|
$ | 359,835 | $ | 234,736 | ||||
Use
of Non-GAAP Measures
EMCORE
provides non–GAAP gross profit, non-GAAP operating expenses, non–GAAP operating
loss, and non–GAAP net loss as supplemental measures to GAAP regarding our
operational performance. These financial measures exclude the impact of certain
items and, therefore, have not been calculated in accordance with GAAP. A
detailed explanation of each of the adjustments to such financial measures is
described below. This press release also contains a reconciliation of each of
these non–GAAP financial measures to its most comparable GAAP financial
measure.
EMCORE
believes that the additional non–GAAP measures are useful to investors for
financial analysis. In particular, management believes it is appropriate in
evaluating EMCORE's operations to exclude gains or losses from one–time items
such as specific non-recurring inventory write-downs, contract losses, and
warranty accruals, patent litigation–related charges, charges associated with
our review of historical stock option grants, specific non-recurring
acquisition-related expenses, impairment charges and severance and
restructuring–related expenses because these items would make results less
comparable between periods. Management believes adjusting for stock–based
compensation expense is appropriate, as it is a non–cash expense, and adjusting
is consistent with the practice of most of our competitors. Management also uses
these measures internally to evaluate the company's operating performance, and
the measures are used for planning and forecasting of future periods. In
addition, many financial analysts that follow our Company focus on and publish
both historical results and future projections based on non–GAAP financial
measures. We believe that it is in the best interest of our investors to provide
this information to analysts so that they accurately report the non–GAAP
financial information. However, non–GAAP measures are not in accordance with,
nor are they a substitute for, GAAP measures.
While
management believes that these non–GAAP financial measures provide useful
supplemental information to investors, there are limitations associated with the
use of these non–GAAP financial measures. These non–GAAP financial measures are
not prepared in accordance with GAAP, may not be reported by all of the
Company's competitors and may not be directly comparable to similarly titled
measures of the Company's competitors due to potential differences in the exact
method of calculation. The Company compensates for these limitations by using
these non–GAAP financial measures as supplements to GAAP financial measures and
by reviewing the reconciliations of the non–GAAP financial measures to their
most comparable GAAP financial measures.
Non–GAAP
financial measures are not in accordance with, or an alternative for, generally
accepted accounting principles in the United States. The Company's non–GAAP
financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures, and should be read only in
conjunction with the Company's consolidated financial statements prepared in
accordance with GAAP.
Pursuant
to the requirements of Regulation G, the Company has provided a reconciliation
of the non–GAAP financial measures to the most directly comparable GAAP
financial measures as indicated in the tables listed below:
|
EMCORE
CORPORATION
Non-GAAP
Table
Non-recurring
Expenses in Gross Profit
Unaudited
(in
thousands)
|
Fourth
Quarter
Ended
September 30, 2008
|
|||||||||||
|
Fiber
Optics
|
Photovoltaics
|
Total
|
||||||||||
|
Specific
Non-recurring Expenses:
|
||||||||||||
|
Non-cash
inventory valuation write-downs
|
$ | 5,155 | $ | 4,498 | $ | 9,653 | ||||||
|
Non-cash
product warranty accruals
|
205 | 2,387 | 2,592 | |||||||||
|
Total
|
$ | 5,360 | $ | 6,885 | $ | 12,245 | ||||||
|
EMCORE
CORPORATION
Non-GAAP
Table
Non-recurring
Expenses in Gross Profit
Unaudited
(in
thousands)
|
Fiscal
Year
Ended
September 30, 2008
|
|||||||||||
|
Fiber
Optics
|
Photovoltaics
|
Total
|
||||||||||
|
Specific
Non-recurring Expenses:
|
||||||||||||
|
Non-cash
inventory valuation write-downs
|
$ | 5,155 | $ | 6,998 | $ | 12,153 | ||||||
|
Non-cash
product warranty accruals
|
205 | 2,387 | 2,592 | |||||||||
|
CPV
system-related project losses
|
- | 4,119 | 4,119 | |||||||||
|
Total
|
$ | 5,360 | $ | 13,504 | $ | 18,864 | ||||||
|
EMCORE
CORPORATION
Non-GAAP
Table
Operating
Expenses from recurring operations
Unaudited
(in
thousands)
|
Fourth
Quarter
Ended
September 30, 2008
|
Fiscal
Year
Ended
September 30, 2008
|
||||||
|
Operating
expenses – as reported
|
$ | 19,149 | $ | 83,313 | ||||
|
Adjusted
Expenses:
|
||||||||
|
Non-cash
stock-based compensation expense
|
(1,796 | ) | (5,443 | ) | ||||
|
Intel
TSA non-recurring expense
|
(982 | ) | (4,816 | ) | ||||
|
Reversal of
certain incentive compensation accruals
|
2,250 | 2,250 | ||||||
|
Reversal of
certain tax accruals
|
2,940 | 2,940 | ||||||
|
Severance and
restructuring-related expense
|
(274 | ) | (689 | ) | ||||
|
Non-cash
impairment charge
|
(233 | ) | (233 | ) | ||||
|
Non-recurring
legal (expense) benefit
|
1,442 | 234 | ||||||
|
Stock
option restatement-related (expense) benefit
|
214 | 380 | ||||||
|
Non-cash
reserve for doubtful accounts
|
(2,118 | ) | (2,322 | ) | ||||
|
Operating
expenses – Non-GAAP
|
$ | 20,592 | $ | 75,614 | ||||
|
EMCORE
CORPORATION
Non-GAAP
Table
Operating
Loss from recurring operations
Unaudited
(in
thousands)
|
Fourth
Quarter
Ended
September 30, 2008
|
Fiscal
Year
Ended
September 30, 2008
|
||||||
|
Operating
loss – as reported
|
$ | (19,651 | ) | $ | (53,418 | ) | ||
|
Adjusted
Expenses:
|
||||||||
|
Non-cash
stock-based compensation expense
|
2,572 | 6,962 | ||||||
|
Intel
TSA non-recurring expense
|
982 | 4,816 | ||||||
|
Reversal of
certain incentive compensation accruals
|
(2,250 | ) | (2,250 | ) | ||||
|
Reversal of
certain tax accruals
|
(2,940 | ) | (2,940 | ) | ||||
|
Severance and
restructuring-related expense
|
274 | 689 | ||||||
|
Non-cash
impairment charge
|
233 | 233 | ||||||
|
Non-recurring
legal expense (benefit)
|
(1,442 | ) | (234 | ) | ||||
|
Stock
option restatement-related expense (benefit)
|
(214 | ) | (380 | ) | ||||
|
Non-cash
reserve for doubtful accounts
|
2,118 | 2,322 | ||||||
|
Non-cash
inventory valuation write-downs
|
9,653 | 12,153 | ||||||
|
Non-cash
product warranty accruals
|
2,592 | 2,592 | ||||||
|
CPV
system-related project losses
|
- | 4,119 | ||||||
|
Operating
loss – Non-GAAP
|
$ | (8,073 | ) | $ | (25,336 | ) | ||
|
Operating
loss per basic and diluted share – Non-GAAP
|
$ | (0.10 | ) | $ | (0.37 | ) | ||
|
EMCORE
CORPORATION
Non-GAAP
Table
Net
Loss from recurring operations
Unaudited
(in
thousands)
|
Fourth
Quarter
Ended
September 30, 2008
|
Fiscal
Year
Ended
September 30, 2008
|
||||||
|
Net
loss – as reported
|
$ | (19,362 | ) | $ | (58,997 | ) | ||
|
Adjusted
Expenses:
|
||||||||
|
Non-cash
stock-based compensation expense
|
2,572 | 6,962 | ||||||
|
Intel
TSA non-recurring expense
|
982 | 4,816 | ||||||
|
Reversal of
certain incentive compensation accruals
|
(2,250 | ) | (2,250 | ) | ||||
|
Reversal of
certain tax accruals
|
(2,940 | ) | (2,940 | ) | ||||
|
Severance and
restructuring-related expense
|
274 | 689 | ||||||
|
Non-cash
impairment charge
|
233 | 233 | ||||||
|
Non-recurring
legal expense (benefit)
|
(1,442 | ) | (234 | ) | ||||
|
Stock
option restatement-related expense (benefit)
|
(214 | ) | (380 | ) | ||||
|
Losses
related to convertible subordinated notes
|
- | 4,658 | ||||||
|
Gain on
sale of WWAT investment
|
(3,692 | ) | (7,384 | ) | ||||
|
Impairment of
investments
|
1,461 | 1,461 | ||||||
|
Foreign
exchange loss (gain)
|
1,048 | 746 | ||||||
|
Stock-based
compensation expense from tolled options
|
- | 4,316 | ||||||
|
Non-cash reserve for doubtful accounts
|
2,118 | 2,322 | ||||||
|
Non-cash inventory valuation write-downs
|
9,653 | 12,153 | ||||||
|
Non-cash product warranty accruals
|
2,592 | 2,592 | ||||||
|
CPV system-related project losses
|
- | 4,119 | ||||||
|
Net
loss – Non-GAAP
|
$ | (8,967 | ) | $ | (27,118 | ) | ||
|
Net
loss per basic and diluted share – Non-GAAP
|
$ | (0.12 | ) | $ | (0.40 | ) | ||
Contacts:
EMCORE
Corporation
Silvia M.
Gentile
Executive
Offices
(505)
323-3417
info@emcore.com
TTC
Group
Victor
Allgeier
(646)
290-6400
info@ttcominc.com