EXHIBIT 99-1: FY09 Q2 EARNINGS RELEASE
Published on May 15, 2009
EXHIBIT
99.1
PRESS
RELEASE
EMCORE
Corporation Announces Unaudited Results for Its Second Quarter and Six-Month
Period Ended March 31, 2009
ALBUQUERQUE,
New Mexico, May 11, 2009 – EMCORE Corporation (NASDAQ: EMKR – News), a leading
provider of compound semiconductor–based components and subsystems for the fiber
optic and solar power markets, today announced unaudited financial results for
its fiscal second quarter and six-month period ended March 31,
2009.
Quarterly
Results:
Revenue:
Revenue for the second
quarter of fiscal 2009 was $43.3 million, a decrease of $13.0 million, or 23%,
from $56.3 million reported in the same period last year and a decrease of $10.8
million, or 20%, from $54.1 million reported in the immediately preceding
quarter.
On a
segment basis, revenue for the Fiber Optics segment for the second quarter of
fiscal 2009 was $28.4 million, a $9.2 million, or 24%, decrease from $37.6
million reported in the same period last year and a decrease of $10.8 million,
or 28%, from $39.2 million reported in the preceding quarter. The
decrease in Fiber Optics revenue was primarily due to the impact that the very
unfavorable macroeconomic environment has had on our customers. The
Fiber Optics segment represented 66% of the Company's consolidated revenue for
the second quarter compared to 67% in the same period last year.
Revenue
for the Photovoltaics segment for the second quarter of fiscal 2009 was $14.9
million, a $3.7 million, or 20%, decrease from $18.6 million reported in the
same period last year and flat when compared to the preceding
quarter. On a year-over-year basis, and when compared to the
preceding quarter, our satellite solar power product lines experienced an
increase in revenue while our concentrator photovoltaics (“CPV”) product lines
and government service contracts experienced a decrease in
revenue. The Photovoltaics segment represented 34% of the Company's
consolidated revenue for the second quarter compared to 33% in the same period
last year.
Gross Profit/(Loss):
After excluding inventory and
warranty reserve adjustments, as set forth in the attached non-GAAP tables, the
second quarter consolidated gross profit was $2.1 million and the
consolidated gross margin was 4.8%. On a GAAP basis, the consolidated
gross loss for the second quarter of fiscal 2009 was $7.0 million, a decrease of
$13.6 million from a $6.6 million gross profit reported in the same period last
year and a decrease of $8.6 million from a $1.6 million gross profit reported in
the preceding quarter. On a GAAP basis, consolidated gross margin for
the second quarter was negative 16.2% compared to a gross margin of 11.8%
reported in the same period last year and 2.9% reported in the preceding
quarter.
On a
segment basis, second quarter non-GAAP gross margin for the Fiber Optics segment
was negative 3.1% and a positive 20.0% for the Photovoltaics
segment. On a GAAP basis, Fiber Optics gross margin for the second
quarter was negative 11.7%, a decrease from a 24.0% gross margin reported in the
same period last year and from a negative 1.1% gross margin reported in the
preceding quarter. The decrease in Fiber Optics gross margin was
primarily due to unabsorbed overhead expenses due to declining revenues and
inventory valuation write-downs that totaled approximately $2.2
million. The loss was magnified by our efforts to monetize
older-generation product inventory as we transition to newer lower cost and more
competitive design platforms. Photovoltaics gross margin for the
second quarter of fiscal 2009 was negative 24.7%, a decrease from a negative
12.8% gross margin reported in the same period last year and from 13.6% gross
margin reported in the preceding quarter. The decrease in
Photovoltaics gross margin was primarily due to inventory valuation write-downs
of approximately $5.6 million associated with earlier versions of our CPV
components and systems that have become obsolete due to the introduction of new
product platforms. In addition, gross margins were adversely affected
by product warranty accruals associated with our CPV-related business that
totaled approximately $1.1 million.
Operating
Expenses:
Sales,
general, and administrative expenses for the second quarter of
fiscal 2009 totaled $12.0 million, a $1.7 million increase from $10.3
million reported in the same period last year and a slight decrease from $12.2
million reported in the preceding quarter. As a percentage of
revenue, quarterly SG&A expenses were 27.6%, an increase from 18.2% in the
same period last year and an increase from 22.5% in the preceding
quarter. The increase in SG&A expenses was primarily due to
additional amortization expense related to intangible assets acquired from Intel
Corporation and an increase in legal and professional fees.
Research and
development expenses for the second quarter of fiscal 2009 totaled $6.9
million, a decrease of $2.4 million from $9.3 million reported in the same
period last year and a decrease of $1.2 million from $8.1 million reported in
the preceding quarter.
As a percentage of revenue, quarterly R&D expenses were 15.9%, a
decrease from 16.6% in the same period last year and an increase from 15.0% in
the preceding quarter.
After
excluding certain non-cash and other adjustments as set forth in the attached
non-GAAP tables, operating expenses for the second quarter totaled $16.2
million, a decrease of $3.9 million, or 19%, from $20.1 million incurred in the
same period last year. On a GAAP basis, second quarter operating
expenses totaled $18.9 million, a decrease of $0.7 million from $19.6 million
reported in the same period last year and a decrease of $35.1 million from $54.0
million incurred in the preceding quarter that included non-cash charges related
to impairment of goodwill and intangible assets totaling $33.8
million.
Loss:
After
excluding certain non-cash and other adjustments as set forth in the attached
non-GAAP tables, the second quarter operating loss was $14.1 million, an
increase of $5.5 million from $8.6 million incurred in the same period last
year. On a GAAP basis, the consolidated operating loss for the second quarter
was $25.9 million, an increase of $12.9 million from an operating loss of $13.0
million reported in the same period last year and a decrease of $26.6 million
from an operating loss of $52.5 million reported in the preceding
quarter.
Non-operating
expenses recognized in the second quarter of fiscal 2009 included $0.9 million
of expense related to foreign exchange losses associated with the Company’s
international operations and $3.1 million of income related to the sale of the
Company’s investment in Entech Solar, Inc. (formerly named WorldWater and
Solar Technologies Corporation).
After
excluding certain non-cash and other adjustments as set forth in the attached
non-GAAP tables, the second quarter non-GAAP net loss was $14.3 million, an
increase of $5.5 million from $8.7 million incurred in the same period last
year. The second quarter non-GAAP net loss per share was $0.18, an increase of
$0.04 per share from a $0.14 loss per share as incurred in the same period last
year. On a GAAP basis, the consolidated net loss for the second
quarter was $23.7 million, an increase of $6.2 million from $17.5 million
reported in the same period last year and a decrease of $29.7 million from $53.4
million reported in the preceding quarter. On a GAAP basis, the
second quarter net loss per share was $0.30, an increase of $0.03 per share from
a net loss of $0.27 per share reported in the same period last year and a
decrease of $0.39 per share from a net loss of $0.69 per share reported in the
preceding quarter.
Balance
Sheet Highlights:
During
the quarter, the Company made significant progress in strengthening its balance
sheet including:
|
·
|
a
$9.2 million, or 60%, reduction in the amount of bank debt
outstanding
|
|
·
|
a
$15.3 million, or 19%, reduction in consolidated gross
inventory levels that included declines in both Fiber Optic and
Photovoltaic gross inventory levels
|
|
·
|
a
$17.6 million, or 39%, reduction in the amount of accounts payable
outstanding
|
First Half
Results:
Revenue:
Revenue for the six months
ended March 31, 2009 was $97.3 million, a decrease of $5.9 million, or 6%, from
$103.2 million reported in the same
period last year.
On a
segment basis, revenue for the Fiber Optics segment for the six months ended
March 31, 2009 was $67.6 million, a $4.0 million, or 6%, decrease from $71.6
million reported in the same period last year. The decrease in Fiber
Optics revenue was primarily due to a significant drop in demand from our
customers due to the very unfavorable macroeconomic environment as well as
continued pressure on selling prices as we compete to maintain or increase our
market share positions. The Fiber Optics segment represented 69% of
the Company's consolidated revenue for both the six months ended March 31, 2009
and 2008.
Revenue
for the Photovoltaics segment for the six months ended March 31, 2009 was $29.8
million, a $1.8 million, or 6%, decrease from $31.6 million reported in the same
period last year. On a year-over-year basis, our satellite solar
power product lines experienced an increase in revenue while our CPV product
lines and government service contracts experienced a decrease in revenue. The
Photovoltaics segment represented 31% of the Company's consolidated revenue for
the six months ended March 31, 2009 and 2008.
Gross Profit/(Loss):
After excluding inventory and
warranty reserve adjustments, as set forth in the attached non-GAAP tables, the
consolidated non-GAAP gross profit for the six months ended March 31,
2009 was $9.2 million and the consolidated gross margin was 9.4%. On
a GAAP basis, the consolidated gross loss for the six months ended March 31,
2009 was $5.4 million, a $22.2
million decrease from $16.8 million in gross profit reported in the same period
last year. On a GAAP basis, consolidated gross margin for the six
months ended March 31, 2009 was negative 5.6% compared to a positive 16.2% gross
margin reported in the same period last year.
On a
segment basis, for the six months ended March 31, 2009, non-GAAP gross margin
for the Fiber Optics and Photovoltaics segments was 4.9% and 19.7%,
respectively. On a GAAP basis, Fiber Optics gross margin for the six
months ended March 31, 2009 was negative 5.6%, a decrease from a 23.8% gross
margin reported in the same period last year. The decrease in Fiber
Optics gross margin was primarily due to a general decline in average selling
prices, especially for the telecom component products, unabsorbed overhead
expenses due to inventory valuation write-downs that totaled approximately $7.0
million and declining revenues. On a GAAP basis, Photovoltaics gross
margin for the six months ended March 31, 2009 was negative 5.5%, a decrease
from a negative 0.9% gross margin reported in the same period last
year. The decrease in Photovoltaics gross margin was primarily due to
inventory valuation write-downs of approximately $6.4 million associated with
CPV component and systems product transitions, product warranty accruals
associated with the CPV-related business of approximately $1.1 million, lower
CPV-related project margins, and unabsorbed overhead expenses associated with
the CPV-related business.
Operating
Expenses:
Sales,
general, and administrative expenses for the six months ended
March 31, 2009 totaled $24.1 million, a $2.0 million increase from $22.1
million reported in the same period last year. As a percentage of
revenue, SG&A expenses for the six months ended March 31, 2009 were 24.8%,
an increase from 21.4% in the same period last year. The increase in
SG&A expenses was primarily due to additional amortization expense related
to intangible assets acquired from Intel Corporation and an increase in legal
and professional fees.
Research and
development expenses for the six months ended March 31, 2009 totaled
$15.0 million, a decrease of $1.7 million from $16.7 million reported in the
same period last year.
As a percentage of revenue, R&D expenses for the six months ended
March 31, 2009 were 15.4%, a decrease from 16.2% in the same period last
year.
As
discussed last quarter, the Company performed its annual goodwill impairment
test at December 31, 2008 and, based on that analysis, determined that goodwill
related to its Fiber Optics segment was fully impaired. As a result,
the Company recorded a non-cash impairment charge of $31.8 million in the first
quarter of 2009 and the Company’s balance sheet no longer reflects any goodwill
associated with its Fiber Optics segment. During the fist
fiscal quarter, the Company also recorded a $2.0 million non-cash impairment
charge related to certain intangible assets acquired from Intel Corporation that
were subsequently abandoned.
After
excluding certain non-cash and other adjustments as set forth in the attached
non-GAAP tables, operating expenses for the six months ended March 31,
2009 totaled $34.4 million, a decrease of $2.8 million from $37.2 million
incurred in the same period last year. On a GAAP basis, operating
expenses for the six months ended March 31, 2009 totaled $72.9 million, an
increase of $34.0 million from $38.9 million reported in the same period last
year.
Loss:
After
excluding certain non-cash and other adjustments as set forth in the attached
non-GAAP tables, the non-GAAP operating loss for the six months ended March 31,
2009 was $25.2 million, an increase of $9.6 million from $15.6 million incurred
in the same period last year. On a GAAP basis, the consolidated
operating loss for the six months ended March 31, 2009 was $78.3 million, an
increase of $56.2 million from an operating loss of $22.1 million reported in
the same period last year.
Non-operating
expenses recognized in the six months ended March 31, 2009 included $1.4 million
of expense related to foreign exchange losses associated with the Company’s
international operations, an impairment charge of $0.4 million related to an
investment in Lightron Corporation, and $3.1 million of income related to the
sale of the Company’s investment in Entech Solar, Inc.
After
excluding certain non-cash and other adjustments as set forth in the attached
non-GAAP tables, the non-GAAP net loss for the six months ended March 31, 2009
was $25.5 million, an increase of $8.9 million from $16.6 million incurred in
the same period last year. The non-GAAP net loss per share for the
six months ended March 31, 2009 was $0.33, an increase of $0.04 per share from a
$0.29 loss per share incurred in the same period last year. On a GAAP
basis, the consolidated net loss for the six months ended March 31, 2009 was
$77.2 million, an increase of $45.3 million from $31.9 million reported in the
same period last year. The GAAP net loss per share for the six months
ended March 31, 2009 was $0.99, an increase of $0.44 per share, from a net loss
of $0.55 per share reported in the same period last year.
Order
Backlog:
As of
March 31, 2009, the Company had a consolidated order backlog of approximately
$30.7 million comprised of $19.8 million in order backlog related to our
Photovoltaics segment and $10.9 million in order backlog related to our Fiber
Optics segment. 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.
Liquidity:
As of
March 31, 2009, cash, cash equivalents, and restricted cash totaled
approximately $11.6 million, working capital totaled $57.5 million and loans
outstanding under the Company’s Loan and Security Agreement with Bank of America
totaled $6.2 million.
Recently,
the Company amended the terms of its Loan and Security Agreement with Bank of
America that waived the default of certain financial covenants, adjusted
certain covenants for future periods, increased the amount of eligible accounts
receivable available under the borrowing base formula, increased certain
interest rates and fees on loans and letters of credit, and decreased the
maximum total loan availability to $14 million. The adjustments to the borrowing
base formula and the calculation of eligible accounts receivable are intended to
provide the Company with additional borrowing capacity.
As a
result of the continuation of very unfavorable macroeconomic conditions, in
combination with adverse credit market conditions, the Company has continued to
take steps to lower costs and conserve and generate cash. Over the last two
fiscal quarters, we have implemented a series of measures intended to align our
cost structure with lower revenues including several reductions in the
workforce, the temporary furloughing of employees, salary reductions, the
elimination of executive and employee merit increases, and the elimination or
reduction in certain discretionary expenses.
With
respect to measures taken to conserve and generate cash, we have sold our
minority ownership positions in Entech Solar, Inc. and Lightron Corp., have
significantly lowered our quarterly capital expenditures and improved the
management of our working capital. During the second fiscal quarter,
on a consolidated basis, we generated $7.8 million in cash from improved working
capital management and, for the quarter, our satellite business generated
positive cash flow from operations. In addition, the Company’s Fiber Optics
segment generated positive cash flow from operations for the last two months the
second quarter.
In
addition, the Company continues to pursue and evaluate a number of capital
raising alternatives including debt or equity financing, product joint-venture
opportunities and the potential sale of certain assets.
Management Discussion and
Outlook:
Commenting
on the Company’s operating results, EMCORE’s Chief Executive Officer Hong Q.
Hou, Ph.D. stated, “The decline in demand that we experienced in our Fiber
Optics segment over the last several quarters continued into the second quarter.
However, order activity began to pick up towards the end of the quarter
indicating that industry conditions may be stabilizing and the Fiber Optics
segment generated positive cash flow from operations during the last two months
of the quarter. Despite the recent soft demand in the fiber optics sector, we
have continued to invest in developing new leading-edge products. During the
quarter, we announced the introduction of the industry’s first full-band tunable
XFP optical transceiver product at the Optical Fiber Communications conference
where it was extremely well received. In our Photovoltaics segment, we continue
to see very favorable trends in our satellite business and are making solid
progress in the development of our Gen-III CPV terrestrial solar power system.
During the quarter, our satellite business generated positive cash flow from
operations and, over the last several months, we signed several new contracts
and expect to sign a significant multi-year supply agreement with a major
aerospace company in the next month. On the terrestrial side, we successfully
deployed a new 50kW system in China, received three additional purchase orders,
are continuing to meet our internal Gen-III cost and performance targets. For
the fiscal 3rd
quarter, management will continue to focus on cost and liquidity management and
we expect our Fiber Optics revenues to decline moderately on a sequential basis
and our Photovoltaics revenues to improve by a minimum of 10% from the second
quarter. In addition, we expect the satellite business to be profitable on a
go-forward basis due to increased revenues, improved product pricing and lower
costs derived through engineering projects and more effective supply chain
management.”
Quarterly
Highlights:
WorldWater & Solar
Technologies Corporation
In
January 2009, the Company announced that it completed the closing of a two step
transaction involving the sale of its remaining interests in the company
formerly named WorldWater & Solar Technologies Corporation, now named Entech
Solar, Inc. The Company sold its remaining shares of WorldWater Series D
Convertible Preferred Stock and warrants to a significant shareholder of both
the Company and WorldWater, for approximately $11.6 million, which included
additional consideration of $0.2 million as a result of the termination of
certain operating agreements between the Company and
WorldWater. During the three months ended March 31, 2009, the Company
recognized a gain on the sale of this investment of approximately $3.1
million.
Patent
Award
On March
18, 2009, the Company announced that it has received a patent award for its
Active Optical Cable technology. The new patent (US Patent No. 7,494,287 B2)
with broad claims covers all fiber optic active cable applications and is
believed to be fundamental to current and future market segments and platforms
related to data communications links between information systems.
New Product
Introductions
On March
20, 2009, the Company announced plans to release a new full-band tunable XFP
product line. The EMCORE tunable XFP (TXFP) product line is capable
of replacing fixed-wavelength dense wavelength division multiplexing (DWDM) XFPs
as well as high-performance tunable 300-pin multi-source agreed (MSA)
transponders. Empowered by EMCORE's field proven tunable
External Cavity Laser (ECL) technology, the TXFP provides excellent optical
performance while tuning across more than 90 channels on the 50GHz ITU grid. The
TXFP can be optimized for low power consumption to comply with existing XFP
designs or for high optical performance to meet the requirements of existing
300-pin designs.
On March
24, 2009, the Company announced plans to release a new full-band tunable TOSA
(transmit optical sub-assembly) product line. The Tunable TOSA
product line combines EMCORE's field proven tunable External Cavity Laser
technology with a co-packaged Mach-Zehnder modulator, empowering the next
generation of ultra-high-density 10 Gb/s tunable interfaces. The Tunable TOSA
provides excellent optical performance while tuning across more than 90 channels
on the 50GHz ITU grid. With its low power consumption, the EMCORE Tunable TOSA
is compatible with existing XFP module and line-card requirements. The Tunable
TOSA also boasts optical performance similar to existing solutions using
discrete tunable laser and external lithium-niobate modulator.
***
EMCORE
will discuss its unaudited results for its fiscal second quarter and six-month
period ended March 31, 2009 on a conference call to be held on Monday, May 11,
2009 at 5:00 pm ET. To participate in the conference call, U.S.
callers should dial (toll free) 866-409-1556 and international callers should
dial 913-312-0847. The access code for the call is
6493803. A replay of the call will be available beginning May 11,
2009 at 8:00p.m. ET until May 18, 2009 at 11:59 p.m. ET. The replay
call-in number for U.S. callers is 888-203-1112, for international callers it is
719-457-0820 and the access code is 6493803. 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 fiber optic 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
multi-junction 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 multi-junction 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 our ability to
remain competitive and a leader in its industry, and the future growth of the
Company, or the industry and the economy in general; (b) statements regarding
the expected level and timing of benefits from our current cost reduction
efforts, including (i) expected cost reductions and their impact on our
financial performance, (ii) our ability to reduce operating expenses associated
with recent acquisitions (iii) our continued leadership in technology and
manufacturing in our 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 us regarding its expected financial performance in future periods,
including, without limitation, with respect to anticipated revenues for the
third quarter of fiscal 2009. 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 the
Company, our customers and our suppliers from the current worldwide economic
crisis; (b) our 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) we may encounter
difficulties in integrating recent acquisitions and as a result may sustain
increased operating expenses, delays in commercializing new products, production
difficulties associated with transferring products to our 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) we may not be successful in undertaking the
steps currently planned in order to increase our liquidity; and (f) other risks
and uncertainties described in our 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
press release are made as of the date hereof and we do 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 three and six months ended March 31, 2009 and 2008
(in
thousands, except loss per share)
(unaudited)
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||
|
Revenue
|
$
|
43,284
|
$
|
56,279
|
$
|
97,340
|
$
|
103,166
|
|||||
|
Cost
of revenue
|
50,289
|
49,631
|
102,756
|
86,415
|
|||||||||
|
Gross
(loss) profit
|
(7,005
|
)
|
6,648
|
(5,416
|
)
|
16,751
|
|||||||
|
Operating
expenses:
|
|||||||||||||
|
Selling,
general, and administrative
|
11,966
|
10,263
|
24,124
|
22,126
|
|||||||||
|
Research
and development
|
6,891
|
9,330
|
15,001
|
16,750
|
|||||||||
|
Impairment
of goodwill and intangible assets
|
-
|
-
|
33,781
|
-
|
|||||||||
|
Total
operating expenses
|
18,857
|
19,593
|
72,906
|
38,876
|
|||||||||
|
Operating
loss
|
(25,862
|
)
|
(12,945
|
)
|
(78,322
|
)
|
(22,125
|
)
|
|||||
|
Other
(income) expense:
|
|||||||||||||
|
Interest
income
|
(30
|
)
|
(227
|
)
|
(80
|
)
|
(654
|
)
|
|||||
|
Interest
expense
|
143
|
375
|
338
|
1,580
|
|||||||||
|
Impairment
of investment
|
-
|
-
|
367
|
-
|
|||||||||
|
Loss
from conversion of subordinated notes
|
-
|
4,658
|
-
|
4,658
|
|||||||||
|
Stock–based
expense from tolled options
|
-
|
(58
|
)
|
-
|
4,316
|
||||||||
|
Gain
from sale of investments
|
(3,144
|
)
|
-
|
(3,144
|
)
|
-
|
|||||||
|
Loss
on disposal of equipment
|
-
|
-
|
-
|
86
|
|||||||||
|
Foreign
exchange loss (gain)
|
908
|
(186
|
)
|
1,380
|
(198
|
)
|
|||||||
|
Total
other (income) expense
|
(2,123
|
)
|
4,562
|
(1,139
|
)
|
9,788
|
|||||||
|
Net
loss
|
$
|
(23,739
|
)
|
$
|
(17,507
|
)
|
$
|
(77,183
|
)
|
$
|
(31,913
|
)
|
|
|
Per
share data:
|
|||||||||||||
|
Basic
and diluted per share data:
|
|||||||||||||
|
Net
loss
|
$
|
(0.30
|
)
|
$
|
(0.27
|
)
|
$
|
(0.99
|
)
|
$
|
(0.55
|
)
|
|
|
Weighted-average
number of basic and diluted shares outstanding
|
78,384
|
64,560
|
78,097
|
57,975
|
|||||||||
EMCORE
CORPORATION
Condensed
Consolidated Balance Sheets
As
of March 31, 2009 and September 30, 2008
(In
thousands)
(unaudited)
|
March
31, 2009
|
September
30, 2008
|
||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
10,614
|
$
|
18,227
|
|||
|
Restricted
cash
|
773
|
1,854
|
|||||
|
Available-for-sale
securities
|
-
|
2,679
|
|||||
|
Accounts
receivable, net of allowance of $5,039 and $2,377,
respectively
|
49,066
|
60,313
|
|||||
|
Inventory,
net
|
47,359
|
64,617
|
|||||
|
Prepaid
expenses and other current assets
|
3,620
|
7,100
|
|||||
|
Total
current assets
|
111,432
|
154,790
|
|||||
|
Property,
plant, and equipment, net
|
77,932
|
83,278
|
|||||
|
Goodwill
|
20,384
|
52,227
|
|||||
|
Other
intangible assets, net
|
24,290
|
28,033
|
|||||
|
Investments
in unconsolidated affiliates
|
-
|
8,240
|
|||||
|
Available-for-sale
securities, non-current
|
1,400
|
1,400
|
|||||
|
Long-term
restricted cash
|
163
|
569
|
|||||
|
Other
non-current assets, net
|
804
|
741
|
|||||
|
Total
assets
|
$
|
236,405
|
$
|
329,278
|
|||
|
LIABILITIES
and SHAREHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Line
of credit
|
$
|
6,202
|
$
|
-
|
|||
|
Accounts
payable
|
27,860
|
52,266
|
|||||
|
Accrued
expenses and other current liabilities
|
19,839
|
23,290
|
|||||
|
Total
current liabilities
|
53,901
|
75,556
|
|||||
|
Long-term
debt
|
888
|
-
|
|||||
|
Total
liabilities
|
54,789
|
75,556
|
|||||
|
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, 78,697 shares
issued and 78,538 outstanding at March 31, 2009; 77,920 shares issued and
77,761 shares outstanding at September 30, 2008
|
684,613
|
680,020
|
|||||
|
Accumulated deficit
|
(501,947
|
)
|
(424,764
|
)
|
|||
|
Accumulated other comprehensive loss
|
1,033
|
549
|
|||||
|
Treasury stock, at cost; 159 shares as of March 31, 2009 and September 30,
2008
|
(2,083
|
)
|
(2,083
|
)
|
|||
|
Total
shareholders’ equity
|
181,616
|
253,722
|
|||||
|
Total
liabilities and shareholders’ equity
|
$
|
236,405
|
$
|
329,278
|
Use
of Non-GAAP Measures
EMCORE
provides non–GAAP gross profit and gross margin, non-GAAP operating expenses,
non–GAAP operating loss, and non–GAAP net loss and net loss per share 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 in
assessing the Company’s financial condition and performance. In particular,
management believes it is appropriate in evaluating EMCORE's operations to
exclude gains or losses from specific accounts receivable and inventory
write-downs, patent litigation and other corporate legal–related charges;
charges associated with our review of historical stock option grants; impairment
charges; and warranty, severance and restructuring–related expenses because
these items would make results less comparable between periods. 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.
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:
|
Non-GAAP
Table
Gross
profit (loss) and margin
Unaudited
(in
thousands, except percentages)
|
Three
Months Ended
March 31,
2009
|
Six
Months Ended
March
31, 2009
|
|||||||||||||||||
|
Fiber
Optics
|
Photovoltaics
|
Total
|
Fiber
Optics
|
Photovoltaics
|
Total
|
||||||||||||||
|
Gross
(loss) profit – GAAP
|
$
|
(3,330
|
)
|
$
|
(3,675
|
)
|
$
|
(7,005
|
)
|
$
|
(3,773
|
)
|
$
|
(1,643
|
)
|
$
|
(5,416
|
)
|
|
|
Specific
adjustments:
|
|||||||||||||||||||
|
Inventory
valuation
|
2,212
|
5,588
|
7,800
|
7,031
|
6,356
|
13,387
|
|||||||||||||
|
Product
warranty
|
248
|
1,056
|
1,304
|
43
|
1,156
|
1,199
|
|||||||||||||
|
Gross
(loss) profit – Non-GAAP
|
$
|
(870
|
)
|
$
|
2,969
|
$
|
2,099
|
$
|
3,301
|
$
|
5,869
|
$
|
9,170
|
||||||
|
Gross
margin – GAAP
|
(11.7%
|
)
|
(24.7%
|
)
|
(16.2%
|
)
|
(5.6%
|
)
|
(5.5%
|
)
|
(5.6%
|
)
|
|||||||
|
Gross
margin – Non-GAAP
|
(3.1%
|
)
|
20.0%
|
4.8%
|
4.9%
|
19.7%
|
9.4%
|
||||||||||||
|
Non-GAAP
Table
Operating
expenses
Unaudited
(in
thousands)
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
|||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||
|
Operating
expenses – GAAP
|
$
|
18,857
|
$
|
19,593
|
$
|
72,906
|
$
|
38,876
|
|||||
|
Specific
adjustments:
|
|||||||||||||
|
Impairment
of goodwill and intangible assets
|
-
|
-
|
(33,781
|
)
|
-
|
||||||||
|
Provision
for doubtful accounts
|
(1,717
|
)
|
-
|
(2,557
|
)
|
-
|
|||||||
|
Corporate
legal expense
|
(611
|
)
|
(186
|
)
|
(1,241
|
)
|
(1,151
|
)
|
|||||
|
Intel
TSA charges
|
-
|
(409
|
)
|
-
|
(409
|
)
|
|||||||
|
Stock
option restatement-related expense
|
-
|
1,038
|
-
|
256
|
|||||||||
|
Severance
and restructuring-related expense
|
(293
|
)
|
52
|
(910
|
)
|
(403
|
)
|
||||||
|
Operating
expenses – Non-GAAP
|
$
|
16,236
|
$
|
20,088
|
$
|
34,417
|
$
|
37,169
|
|||||
|
Non-GAAP
Table
Operating
Loss
Unaudited
(in
thousands)
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
|||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||
|
Operating
loss – GAAP
|
$
|
(25,862
|
)
|
$
|
(12,945
|
)
|
$
|
(78,322
|
)
|
$
|
(22,125
|
)
|
|
|
Specific
adjustments:
|
|||||||||||||
|
Impairment
of goodwill and intangible assets
|
-
|
-
|
33,781
|
-
|
|||||||||
|
Provision
for doubtful accounts
|
1,717
|
-
|
2,557
|
-
|
|||||||||
|
Corporate
legal expense
|
611
|
186
|
1,241
|
1,151
|
|||||||||
|
Intel
TSA charges
|
-
|
409
|
-
|
409
|
|||||||||
|
Stock
option restatement-related expense
|
-
|
(1,038
|
)
|
-
|
(256
|
)
|
|||||||
|
Severance
and restructuring-related expense
|
293
|
(52
|
)
|
910
|
403
|
||||||||
|
CPV
system-related project losses
|
-
|
2,354
|
-
|
2,354
|
|||||||||
|
Inventory
valuation adjustments
|
7,800
|
2,500
|
13,387
|
2,500
|
|||||||||
|
Product
warranty adjustments
|
1,304
|
-
|
1,199
|
-
|
|||||||||
|
Operating
loss – Non-GAAP
|
$
|
(14,137
|
)
|
$
|
(8,586
|
)
|
$
|
(25,247
|
)
|
$
|
(15,564
|
)
|
|
|
Non-GAAP
Table
Net
Loss
Unaudited
(in
thousands, except per share amounts)
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
|||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||
|
Net
loss – GAAP
|
$
|
(23,739
|
)
|
$
|
(17,507
|
)
|
$
|
(77,183
|
)
|
$
|
(31,913
|
)
|
|
|
Specific
adjustments:
|
|||||||||||||
|
Impairment
of goodwill and intangible assets
|
-
|
-
|
33,781
|
-
|
|||||||||
|
Provision
for doubtful accounts
|
1,717
|
-
|
2,557
|
-
|
|||||||||
|
Corporate
legal expense
|
611
|
186
|
1,241
|
1,151
|
|||||||||
|
Intel
TSA charges
|
-
|
409
|
-
|
409
|
|||||||||
|
Stock
option restatement-related expense
|
-
|
(1,038
|
)
|
-
|
(256
|
)
|
|||||||
|
Severance
and restructuring-related expense
|
293
|
(52
|
)
|
910
|
403
|
||||||||
|
CPV
system-related project losses
|
-
|
2,354
|
-
|
2,354
|
|||||||||
|
Inventory
valuation adjustments
|
7,800
|
2,500
|
13,387
|
2,500
|
|||||||||
|
Product
warranty adjustments
|
1,304
|
-
|
1,199
|
-
|
|||||||||
|
Impairment
of investment
|
-
|
-
|
367
|
-
|
|||||||||
|
Loss
from the conversion of subordinated notes
|
-
|
4,658
|
-
|
4,658
|
|||||||||
|
Stock-based
expense from tolled options
|
-
|
(58
|
)
|
-
|
4,316
|
||||||||
|
Gain
from sale of investments
|
(3,144
|
)
|
-
|
(3,144
|
)
|
-
|
|||||||
|
Foreign
exchange loss (gain)
|
908
|
(186
|
)
|
1,380
|
(198
|
)
|
|||||||
|
Net
loss – Non-GAAP
|
$
|
(14,250
|
)
|
$
|
(8,734
|
)
|
$
|
(25,505
|
)
|
$
|
(16,576
|
)
|
|
|
Net
loss per basic and diluted share – GAAP
|
$
|
(0.30
|
)
|
$
|
(0.27
|
)
|
$
|
(0.99
|
)
|
$
|
(0.55
|
)
|
|
|
Net
loss per basic and diluted share – Non-GAAP
|
$
|
(0.18
|
)
|
$
|
(0.14
|
)
|
$
|
(0.33
|
)
|
$
|
(0.29
|
)
|
|
Contacts:
EMCORE
Corporation
Silvia M.
Gentile
Executive
Offices
(505)
323-3417
info@emcore.com
TTC
Group
Victor
Allgeier
(646)
290-6400
info@ttcominc.com