Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 14, 2001

Documents

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on August 14, 2001

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, 2001

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.)

145 Belmont Drive
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:[ ]

The number of shares of the registrant's Common Stock, no par value,
outstanding as of August 1, 2001 was 34,516,919.




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,
-------------------------------------------------
2001 2000 2001 2000
-------------------------------------------------

Revenues:
Systems-related.............................. $38,949 $17,561 $98,209 $42,908
Materials-related............................ 13,941 12,462 42,652 27,541
-------------------------------------------------
Total revenues.......................... 52,890 30,023 140,861 70,449
Cost of revenues:
Systems-related.............................. 21,296 9,948 53,836 25,030
Materials-related............................ 9,694 7,589 29,016 16,274
-------------------------------------------------
Total cost of revenues.................. 30,990 17,537 82,852 41,304
-------------------------------------------------

Gross profit............................ 21,900 12,486 58,009 29,145

Operating expenses:
Selling, general and administrative ......... 7,096 5,919 21,631 15,914
Goodwill amortization........................ 155 1,098 992 3,294
Research and development..................... 13,889 5,984 39,066 15,354
-------------------------------------------------
Total operating expenses ....................... 21,140 13,001 61,689 34,562
-------------------------------------------------

Operating income (loss)................. 760 (515) (3,680) (5,417)

Other (income) expense:
Interest income, net.......................... (68) (1,951) (2,354) (2,644)
Other income.................................. - - (5,890) -
Imputed warrant interest expense, non-cash.... - - - 843
Equity in net loss of unconsolidated
affiliates 2,725 2,896 10,525 8,709
-------------------------------------------------
Total other (income) expense.................... 2,657 945 2,281 6,908
-------------------------------------------------


Net loss................................ ($1,897) ($1,460) ($5,961) ($12,325)
=================================================


Net loss per basic and diluted share
(see note 5).................................. ($0.06) ($0.04) ($0.17) ($0.41)
=================================================


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

2


EMCORE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)


At June 30, At September 30,
------------------------------------
2001 2000
------------------------------------
ASSETS (unaudited)
------

Current assets:
Cash and cash equivalents................... $81,717 $50,849
Marketable securities....................... 77,914 50,896
Accounts receivable, net of allowance for
doubtful accounts of $748 and $1,065 at
June 30, 2001 and September 30, 2000,
respectively.............................. 44,097 18,240
Accounts receivable, related parties........ 3,913 2,334
Inventories, net............................ 53,232 30,724
Other current assets........................ 5,878 1,829
------------------------------------
Total current assets....................... 266,751 154,872

Property, plant and equipment, net............ 139,391 69,701
Goodwill, net................................. 2,841 734
Investments in unconsolidated affiliates...... 13,255 17,015
Other assets, net............................. 10,913 1,580
------------------------------------
Total assets............................... $433,151 $243,902
====================================

LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
Current liabilities:
Accounts payable.......................... $24,441 $16,512
Accrued expenses.......................... 12,780 6,083
Advanced billings......................... 13,677 20,278
Capital lease obligations................. 66 72
Other current liabilities................. 339 340
------------------------------------
Total current liabilities................. 51,303 43,285

Convertible subordinated notes................ 175,000 -
Capital lease obligations, net
of current portion.......................... 55 75
Other liabilities............................. 1,572 1,220
------------------------------------
Total liabilities........................ 227,930 44,580
------------------------------------

Shareholders' Equity:
Preferred stock, $.0001 par value, 5,882,352
shares authorized; no shares issued and
outstanding at June 30, 2001 and September
30, 2000...................................... - -

Common stock, no par value, 100,000,000 shared
authorized, 34,508,276 shares issued and
34,505,140 outstanding at June 30, 2001;
33,974,698 shares issued and 33,971,562
outstanding at September 30, 2000.......... 321,445 314,780
Accumulated deficit........................... (114,825) (108,864)
Notes receivable.............................. (600) (6,355)
Treasury stock, at cost; 3,136 shares......... (239) (239)
Comprehensive loss............................ (560) -
------------------------------------
Total shareholders' equity................ 205,221 199,322
------------------------------------

Total liabilities and shareholders'
equity............................... $433,151 $243,902
====================================


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

3




EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)



Nine Months Ended June
30,
------------------------
2001 2000
------------------------

Cash flows from operating activities:
Net loss.......................................................... ($5,961) ($12,325)
------------------------
Adjustments to reconcile net loss to net cash
(used for) provided by operating activities:
Depreciation and amortization.................................. 12,333 11,574
Provision for doubtful accounts................................ 342 240
Non-cash charges on warrant issuances.......................... - 843
Deferred gain on sales to an unconsolidated affiliate.......... 351 364
Equity in net loss of unconsolidated affiliates................. 10,525 8,346
Compensatory stock issuances................................... 671 392
Decrease (increase) in assets:
Accounts receivable - trade........................... (26,199) (6,596)
Accounts receivable - related parties................. (1,579) 571
Inventories........................................... (22,508) (18,466)
Other current assets.................................. (4,049) (2,814)
Other assets.......................................... (10,803) (221)
Increase (decrease) in liabilities
Accounts payable...................................... 7,929 7,480
Accrued expenses...................................... 6,679 903
Advanced billings..................................... (6,601) 10,472
------------------------
Total adjustments.......................... (32,909) 13,088
------------------------
Net cash (used for) provided by operating activities.......... (38,870) 763
------------------------
Cash flows from investing activities:
Purchase of property, plant, and equipment......................... (80,818) (19,088)
Investments in unconsolidated affiliates........................... (6,302) (9,496)
Investment in marketable securities, net........................... (27,370) -
------------------------
Net cash used for investing activities......................... (114,490) (28,584)
------------------------
Cash flows from financing activities:

Proceeds from convertible subordinated notes....................... 175,000 -
Payments on capital lease obligations.............................. (11) (611)
Proceeds from public stock offering, net of $8,250 issue costs..... - 127,750
Proceeds from exercise of stock options and employee stock
purchase plan.................................................... 3,644 1,636
Dividends paid on preferred stock.................................. - (133)
Proceeds from exercise of stock purchase warrants.................. 48 10,875
Proceeds from shareholders' notes receivable....................... 5,755 1,187
------------------------
Net cash provided by financing activities...................... 184,436 140,704
------------------------
Effect of exchange rate changes.................................... (208) -
------------------------

Net increase in cash and cash equivalents.......................... 30,868 112,883
------------------------

Cash and cash equivalents, beginning of period..................... 50,849 7,165
------------------------
Cash and cash equivalents, end of period........................... $81,717 $120,048
========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest...................... $26 $4
========================


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

4



EMCORE CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended September 30, 1999 and 2000
and the nine months ended June 30, 2001 (unaudited)
(in thousands)


Common Stock Shareholders' Total
----------------- Accumulated Notes Shareholders'
Shares Amount Deficit Receivable Other Equity
------ ---------- ------------ ----------- ----------- ------------

Balance at September 30, 1998............. 18,752 $87,443 ($60,196) ($7,667) - $19,580

Preferred stock dividends....................... (319) (319)

Accretion of redeemable preferred stock to
redemption value.............................. (52) (52)

Issuance of common stock purchase warrants...... 2,596 2,596

Issuance of common stock from public offering,
net of issuance cost of $5,000................ 6,000 52,000 52,000

Stock option exercise........................... 220 376 376

Stock purchase warrant exercise................. 643 2,450 2,450

Conversion of mandatorily redeemable convertible
preferred stock into common stock............. 1,040 7,125 7,125

Redemptions of shareholders' notes
receivable.................................... 120 120

Compensatory stock issuance..................... 53 436 436

Net loss........................................ (22,689) (22,689)
------ ---------- ---------- --------- ---------- ----------

Balance at September 30, 1999............. 26,708 $152,426 ($83,256) ($7,547) - $61,623

Preferred stock dividends....................... (83) (83)

Accretion of redeemable preferred stock to
redemption value.............................. (40) (40)

Issuance of common stock purchase warrants...... 689 689

Issuance of non-qualified stock options to
equity investee............................... 835 835

Issuance of common stock from public offering,
net of issuance cost of $8,500................ 2,000 127,500 127,500

Stock option exercise........................... 506 2,197 2,197

Stock purchase warrant exercise................. 1,996 10,874 10,874

Conversion of mandatorily redeemable convertible
preferred stock into common stock............. 2,060 14,193 14,193

Purchase of treasury stock...................... (3) (239) (239)

Redemptions of shareholders' notes
receivable..................................... 1,192 1,192

Compensatory stock issuance...................... 23 566 566

Conversion of convertible subordinated notes
into common stock.............................. 682 5,500 5,500

Net loss......................................... (25,485) (25,485)
------ ---------- ---------- --------- ---------- ----------

Balance at September 30, 2000.............. 33,972 $314,780 ($108,864) ($6,355) ($239) $199,322

Stock option exercise............................ 413 2,967 2,967

Stock purchase warrants exercised................ 43 48 48

Compensatory stock issuances..................... 20 671 671

Issuance of common stock under employee stock
purchase plan.................................. 16 677 677

Issuance of common stock in connection with
acquisition.................................... 41 1,840 1,840

Accretion of non-qualified stock options to
equity investee................................ 462 462

Comprehensive loss............................... (208) (208)

Repayments of shareholders' notes receivable..... 5,755 5,755

Unrealized loss on marketable securities......... (352) (352)

Net loss......................................... (5,961) (5,961)
------ -------- ---------- -------- -------- ---------

Balance at June 30, 2001................... 34,505 $321,445 ($114,825) ($600) ($799) $205,221
====== ======== ========== ======== ====== ========


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




EMCORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1. Interim Financial Information and Description of Business

The accompanying unaudited condensed consolidated financial statements of
EMCORE Corporation ("EMCORE" or the "Company") reflect all adjustments
considered necessary by management to present fairly EMCORE's consolidated
financial position as of June 30, 2001, the consolidated results of operations
for the three and nine-month periods ended June 30, 2001 and 2000 and the
consolidated cash flows for the nine-month periods ended June 30, 2001 and 2000.
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 three and
nine-month periods ended June 30, 2001 are not necessarily indicative of the
results for the fiscal year ending September 30, 2001 or any future interim
period.

EMCORE has two reportable operating segments: the systems-related business
unit and the materials-related business unit. The systems-related business unit
designs, develops and manufactures tools and manufacturing processes used to
fabricate compound semiconductor wafer and devices. This business unit assists
our customers with device design, process development and optimal configuration
of TurboDisc(R) production systems. Revenues for the systems-related business
unit consist of sales of EMCORE's TurboDisc production systems as well as spare
parts and services related to these systems. The materials-related business unit
designs, develops and manufactures compound semiconductor materials. Revenues
for the materials-related business unit include sales of semiconductor wafers,
devices and process development technology. EMCORE's vertically-integrated
product offering allows it to provide a complete compound semiconductor solution
to its customers. The segments reported are the segments of the Company for
which separate financial information is available and for which gross profit
amounts are evaluated regularly by executive management in deciding how to
allocate resources and in assessing performance. The Company does not allocate
assets or operating expenses to the individual operating segments. Services are
performed for each other however there are no intercompany sales transactions
between the two operating segments. Available segment information has been
presented in the Statements of Operations.


NOTE 2. Joint Ventures

In May 1999, General Electric Lighting and EMCORE formed GELcore, a joint
venture to develop and market High Brightness Light-Emitting Diode ("HB LED")
lighting products. General Electric Lighting and EMCORE have agreed that this
joint venture will be the exclusive vehicle for each party's participation in
solid state lighting. Under the terms of the joint venture agreement, EMCORE has
a 49% non-controlling interest in the GELcore venture and accounts for its
investment under the equity method of accounting. In fiscal year 2000, EMCORE
issued non-qualified stock options to employees of the joint venture at a cost
determined by Black-Scholes of $835,000. In fiscal year 2001, EMCORE recorded an
additional $462,000 which represents an additional charge related to the vesting
of these non-qualified stock options. In April 2001, EMCORE invested an
additional $3.9 million into this joint venture. For the three and nine-month
periods ended June 30, 2001, EMCORE recognized a loss of $1.4 million and $3.6
million, respectively, related to this joint venture which has been recorded as
a component of other income and expense. As of June 30, 2001, EMCORE's net
investment in this joint venture amounted to $10.3 million.

In March 1997, EMCORE and a subsidiary of Uniroyal Technology Corporation
("UTCI") formed Uniroyal Optoelectronics LLC (UOE), a joint venture, to
manufacture, sell and distribute HB LED wafers and package-ready devices. Under
the terms of the joint venture agreement, EMCORE had a 49% non-controlling
interest in this joint venture and accounts for its investment under the equity
method of accounting. For the three and nine-month periods ended June 30, 2001,
EMCORE recognized a loss of $1.3 million and $6.9 million, respectively, related
to this joint venture, which has been recorded as a component of other income
and expense. As of June 30, 2001, EMCORE's net investment in this joint venture
amounted to $3.0 million, and its ownership interest in the joint venture
dropped to 36% because of capital contributions solely funded by UTCI. On August
2, 2001, EMCORE sold its interest in UOE to UTCI for approximately 2.0 million
shares of UTCI common stock (see Note 10).



EMCORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. Debt Facilities

On May 7, 2001, EMCORE completed the private placement of $175 million
aggregate principal amount of 5% convertible subordinated notes due in 2006. The
notes are convertible into EMCORE common stock at a conversion price of $48.76
per share. EMCORE is using the proceeds of this offering for general corporate
purposes, including capital expenditures, working capital, funding its joint
venture and for research and development. In addition, EMCORE may use a portion
of the proceeds of the offering to strategically acquire or invest in
complementary businesses, products or technology, either directly or through its
joint venture.


NOTE 4. Commitments and Contingencies

On April 25, 2001, EMCORE entered into a settlement agreement with Rockwell
Technologies, LLC which released EMCORE from any liability relating to our
manufacture and past sales of epitaxial wafers, chips and devices under
Rockwell's US Patent No. 4,368,098.


NOTE 5. Earnings Per Share

EMCORE calculates earnings per share under the provision of Statement of
Financial Accounting Standards No. 128, "Earnings per share". Basic earnings per
common share were calculated by dividing net loss by the weighted average number
of common stock shares outstanding during the period. Diluted earnings per
common share were calculated by dividing net loss by the weighted average number
of shares and dilutive potential shares outstanding during the year, assuming
conversion of the potential shares at the beginning of the period presented.
Shares issuable upon conversion of stock options and other performance awards
have been included in the diluted calculation of weighted-average shares to the
extent that the assumed issuance of such shares would have been dilutive, as
illustrated below. The following table reconciles the number of shares utilized
in the earnings per share calculations for the three and nine-month periods
ending June 30, 2001 and 2000, respectively.



Three Months Three Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- ---------

Net loss............................. ($1,897) ($1,460) ($5,961) ($12,325)

Preferred stock dividends....... - - - (82)

Periodic accretion of redeemable
preferred stock to redemption value. - - - (41)
-------- ------- ------- --------
Net loss attributable to common
shareholders......................... ($1,897) ($1,460) ($5,961) ($12,448)
========= ======== ======== =========
Net loss per basic share............. ($0.06) ($0.04) ($0.17) ($0.41)
========= ======== ======== =========

Net loss per diluted share........... ($0.06) ($0.04) ($0.17) ($0.41)
========= ======== ======== =========

Weighted average of outstanding common
shares - basic....................... 34,452 33,058 34,256 30,164

Effect of dilutive securities:
Stock option and warrants.... - - - -
Weighted average of outstanding common
shares - diluted..................... 34,452 33,058 34,256 30,164
========= ======== ======== =========



7


EMCORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6. Comprehensive Loss

Comprehensive loss includes foreign currency translation adjustments and
unrealized losses on marketable securities.



Three Months Nine Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
---- ---- ---- ----

Net loss ..................................... ($1,897) ($1,460) ($5,961) ($12,325)
Unrealized losses on marketable securities... (288) - (352) -
Foreign currency translation adjustments..... (144) - (208) -
---------- ------------- ------------ -------------
Total comprehensive loss ................... ($2,329) ($1,460) ($6,521) ($12,325)
========== ============= ============ =============



NOTE 7. Inventories

The components of inventories consisted of the following:

As of As of
(Amounts in thousands) June 30, 2001 September 30, 2000
------------- ------------------


Raw materials.................. $35,841 $19,594
Work-in-process................ 11,569 8,831
Finished goods................. 5,822 2,299
---------- ---------

Total $53,232 $30,724
======= =======


NOTE 8. Related Parties

In March 1997, EMCORE and a subsidiary of Uniroyal Technology Corporation
formed UOE, a joint venture, to manufacture, sell and distribute HB LED wafers
and package-ready devices (see Note 2). During the three and nine-month periods
ended June 30, 2001, sales made to UOE amounted to approximately $2.5 million
and $3.4 million respectively. During the three and nine-month periods ended
June 30, 2000, sales made to UOE amounted to approximately $0.4 million and $3.6
million respectively. As of June 30, 2001, EMCORE had an outstanding
related-party receivable of $3.0 million and deferred gross profit of
approximately $1.9 million on such sales to the extent of its ownership
interest. On August 2, 2001, EMCORE made a $5.0 million aggregate principal
amount bridge loan to UTCI, the proceeds of which were to be used by UTCI for
working capital and other corporate purposes (see Note 10).

The President of Hakuto Co. Ltd. ("Hakuto"), the Company's Asian
distributor, is a member of EMCORE's Board of Directors and Hakuto is a minority
shareholder of EMCORE. During the three and nine-month periods ended June 30,
2001, sales made through Hakuto amounted to approximately $0.3 million and $8.1
million, respectively. During the three and nine-month periods ended June 30,
2000, sales made through Hakuto amounted to approximately $3.2 million and $10.5
million respectively.


8




EMCORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9. Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101. ("SAB 101") "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. During the
period, EMCORE recognized revenue from system sales upon shipment, when title
passed to the customer. Subsequent to product shipment, EMCORE incurs certain
installation costs at the customer's facility that are estimated and accrued at
the time the sale is recognized. SAB 101 requires EMCORE to defer revenue and
costs related to this installation portion until the service is completed. Had
EMCORE adopted SAB 101 during the three-month period ended June 30, 2001,
management has determined the impact of such adoption would have resulted in a
deferral of approximately $4.8 million of system revenue and an increase in net
loss of approximately $3.1 million. Generally, system installation takes 2-4
weeks, therefore, revenue deferral would be predominantly recognized in the
ensuing quarter and the adoption of SAB 101 would be considered only a timing
difference predominately on systems shipped during the last month of a quarter.
Management does not anticipate that SAB 101 will have an effect on the Company's
material and device revenues. As required, EMCORE plans to adopt SAB 101 during
the fourth quarter of fiscal year 2001 with an effective date of October 1,
2000. EMCORE expects the cumulative adjustment as a result of this accounting
change to be approximately $4.0 million.

In July 2001, the Financial Accounting Standards Board ("FASB"), issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible Assets". Statement No.
141 requires that all business combinations initiated after June 30, 2001, be
accounted for using the purchase method of accounting. In addition, it further
clarifies the criteria for recognition of intangible assets separately from
goodwill. Statement No. 142 establishes new standards for goodwill acquired in a
business combination and eliminates the amortization of goodwill over its
estimated useful life. Rather, goodwill will now be tested for impairment
annually, or more frequently if circumstances indicate potential impairment, by
applying a fair value based test. EMCORE expects to adopt this statement during
the first quarter of fiscal 2002. As of June 30, 2001, EMCORE had $2.8 of
unamortized goodwill resulting from prior acquisitions. EMCORE will record
approximately $155,000 of additional goodwill amortization through the remainder
of fiscal year 2001.


NOTE 10. Subsequent Events - Joint Venture

On August 2, 2001, EMCORE sold its minority ownership position in the UOE
joint venture to Uniroyal Technology Corporation ("UTCI") in exchange for
approximately 2 million shares of UTCI common stock. The Company will record a
gain on the disposition of its interest in UOE of approximately $10.4 million in
its fourth quarter of fiscal year 2001.

The Company's reported net loss for the year ended September 30, 2000 and
the nine months ended June 30, 2001 would have been reduced by $9.3 million and
$8.8 million, respectively, if the disposition had occurred on the first day of
each respective period. For the year ended September 30, 2000, the reduction in
net loss is comprised of a reduction in equity in losses of unconsolidated
affiliates of $7.8 million and the recognition of $1.5 million in deferred gross
profit on sales of equipment to UOE. For the nine months ended June 30, 2001,
the reduction in net loss is comprised of a reduction in equity in losses of
unconsolidated affiliates of $6.9 million and the recognition of $1.9 million in
deferred gross profit on sales of equipment to UOE. The pro forma statement of
operations figures above do not include the approximate gain on sale of $10.4
million. Had the disposition of the Company's interest in UOE occurred on June
30, 2001, the impact of the disposition on the Company's balance sheet would
have been to increase marketable securities by approximately $13.4 million,
reduce investments in unconsolidated affiliates by approximately $3 million,
reduce deferred gains on sales to UOE by $1.9 million, and a reduction in
accumulated deficit of approximately $12.3 million, which is inclusive of the
approximate $10.4 million gain on disposition of UOE.

The unaudited pro forma financial information in the paragraph above is
based upon available information and certain assumptions that management
believes are reasonable. The unaudited pro forma consolidated financial data
above does not purport to represent what EMCORE's financial position or results
of operations would have been had the UOE disposition in fact occurred as of the
date or at the beginning of the periods presented, or to project EMCORE's
financial position or results of operations for any future date or period.

On August 2, 2001, EMCORE made a $5.0 million aggregate principal amount
bridge loan (the "Bridge Loan") to UTCI, the proceeds of which were to be used
by UTCI for working capital and other corporate purposes. The Bridge Loan bears
interest at the prime rate and matures on the earlier to occur of the second
anniversary of the date of the Bridge Loan and the closing of the sale of the
adhesives and sealants business of Uniroyal Engineered Products L.L.C., a
subsidiary of UTCI, which sale is expected to close by September 20, 2001. The
Bridge Loan is guaranteed by UOE and several other subsidiaries of UTCI, and it
is fully secured by a lien on, among other things, UOE's cash, accounts
receivable and a portion of UOE's equipment. The Bridge Loan is also convertible
under certain circumstances into UTCI common stock at the Company's option.

9
EMCORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


OVERVIEW:

EMCORE Corporation designs, develops and manufactures compound
semiconductor wafers and devices and is a leading developer and manufacturer of
the tools and manufacturing processes used to fabricate compound semiconductor
wafers and devices. Compound semiconductors are composed of two or more elements
and usually consist of a metal, such as gallium, aluminum or indium, and a
non-metal such as arsenic, phosphorus or nitrogen. Many compound semiconductors
have unique physical properties that enable electrons to move through them at
least four times faster than through silicon-based devices and are therefore
well suited to serve the growing need for efficient, high performance electronic
systems.

EMCORE offers a comprehensive portfolio of products and systems for the
rapidly expanding broadband, wireless communications and solid state lighting
markets. We have developed extensive materials science expertise and process
technology to address our customers' needs. Customers can take advantage of our
vertically integrated solutions approach by purchasing custom-designed wafers
and devices from us, or by manufacturing their own devices in-house using one of
our metal organic chemical vapor deposition ("MOCVD") production systems
configured to their specific needs. Our products and systems enable our
customers to cost effectively introduce new and improved high performance
products to the market faster in high volumes.

The growth in our business is driven by the widespread deployment of fiber
optic networks, introduction of new wireless networks and services, rapid
build-out of satellite communication systems, increasing use of more power
efficient lighting sources, increasing use of electronics in automobiles and
emergence of advanced consumer electronic applications. Also, the growing
demands for higher volumes of a broad range of higher performance devices has
resulted in manufacturers increasingly outsourcing their needs for compound
semiconductor wafers and devices. Our expertise in materials science and process
technology provides us with a competitive advantage to manufacture compound
semiconductor wafers and devices in high volumes. We have increased revenues at
a compound annual growth rate ("CAGR") of 30% over the three fiscal years ended
September 30, 2000, from $47.8 million in fiscal 1997 to $104.5 million in
fiscal 2000.

10



Wafers and Devices

EMCORE offers a broad array of compound semiconductor wafers and devices,
including optical components and components for use in high-speed data
communications and telecommunications networks, radio frequency materials ("RF
materials") used in mobile communications products such as wireless modems and
handsets, solar cells that power commercial and military satellites, high
brightness light-emitting diodes ("HB LEDs") for several lighting markets, and
magneto resistive sensors ("MR sensors") for various automotive applications.

o Optical Components and Modules. Our family of vertical cavity surface
emitting lasers ("VCSELs") and VCSEL array transceiver and transponder
products, as well as our photodiode array components, serve the
rapidly growing high-speed data communications network markets,
including the Gigabit Ethernet, FibreChannel, Infiniband, and Very
Short Reach OC-192, the emerging Very Short Reach OC-768 and related
markets. Our strategy is to manufacture high cost optical components
and subassemblies in-house, using our proprietary technologies, to
reduce the overall cost of our transceiver and transponder modules.

o RF Materials. We currently produce 4-inch and 6-inch InGaP HBT and
pHEMT materials that are used by our wireless customers for power
amplifiers for GSM, TDMA, CDMA and the emerging 3G multiband wireless
handsets.

o Solar Cells. Solar cells are typically the largest single cost
component of a satellite. Our compound semiconductor solar cells,
which are used to power commercial and military satellites, have
achieved industry-leading efficiencies. Solar cell efficiency dictates
the electrical power of the satellite and bears upon the weight and
launch costs of the satellite. We began shipping our triple junction
solar cells in December 2000.


o HB LEDs. Through our joint venture with General Electric Lighting, we
provide advanced HB LED technology used in devices and in such
applications as traffic lights, miniature lamps, automotive lighting,
and flat panel displays.


Production Systems

EMCORE is a leading provider of compound semiconductor technology processes
and MOCVD production tools. We believe that our proprietary TurboDisc deposition
technology makes possible one of the most cost-effective production processes
for the commercial volume manufacture of high-performance compound semiconductor
wafers and devices, which are integral to broadband communication applications.


Customers

Our customers include Agilent Technologies Ltd., Anadigics Inc.,
Boeing-Spectrolab, Corning, Inc., General Motors Corp., Hewlett Packard Co.,
Honeywell International Inc., IBM, JDS Uniphase Corp., Loral Space &
Communications Ltd., Lucent Technologies, Inc., Motorola, Inc., Nortel Networks
Corp., Siemens AG's Osram GmbH subsidiary, TriQuint Semiconductor, Inc. and more
than a dozen of the largest electronics manufacturers in Japan.


11



Benefits of Compound Semiconductors

Recent advances in information technologies have created a growing need for
efficient, high-performance electronic systems that operate at very high
frequencies, have increased storage capacity and computational and display
capabilities and can be produced cost-effectively in commercial volumes. In the
past, electronic systems manufacturers have relied on advances in silicon
semiconductor technology to meet many of these demands. However, the newest
generation of high-performance electronic and optoelectronic applications
require certain functions that are generally not achievable using silicon-based
components.

Compound semiconductors have emerged as an enabling technology to meet the
complex requirements of today's advanced information systems. Many compound
semiconductor materials have unique physical properties that allow electrons to
move at least four times faster than through silicon-based devices. Advantages
of compound semiconductor devices over silicon devices include:

o operation at higher speeds;

o lower power consumption;

o less noise and distortion; and

o optoelectronic properties that enable these devices to emit and detect
light.

Although compound semiconductors are more expensive to manufacture than the
more traditional silicon-based semiconductors, electronics manufacturers are
increasingly integrating compound semiconductors into their products in order to
achieve the higher performance demands of today's electronic products and
systems.


Strategy

Our objective is to capitalize on our position as a leading developer and
manufacturer of compound semiconductor tools and manufacturing processes to
become the leading supplier of compound semiconductor wafers and devices. The
key elements of our strategy are to:

o apply our core materials and manufacturing expertise across multiple
product applications;

o target high growth market opportunities;

o continue to recognize greater value for our core technology;

o partner with key industry participants; and

o continue our investment in research and development to maintain
technology leadership.


Recent Developments and Highlights of the Quarter:

On August 6, 2001, EMCORE announced the commercial production of its new 15
Gbps parallel optical interconnect for high-speed data links, very short reach
OC-192 optical links, and board-to-board and shelf-to-shelf high-speed
interconnects for optical backplanes. The modules perform logic-to-light and
light-to-logic conversions for data transmission over multimode fiber ribbon
cable, at a wavelength of 850nm and a power consumption of typically just 2
watts for the pair. EMCORE also announced the development of a VSR transponder
that is pluggable and compliant with the industry-wide 300 pin multi-source
agreement and with the Optical Internetworking Forum's Implementation Agreements
for SERDES-framer interface (SFI-4) and VSR OC-192 interfaces. The transponder
is anticipated to be in commercial production in September 2001.


12



On August 2, 2001, EMCORE sold its minority ownership position in the
Uniroyal Optoelectronics, LLC joint venture to Uniroyal Technology Corporation,
(NMS: UTCI) and received approximately 2.0 million shares of UTCI common stock
as consideration for the transaction. EMCORE expects to continue to be an
important vendor of MOCVD equipment to Uniroyal Optoelectronics, LLC. EMCORE
will report a gain on the transaction in the fourth quarter of fiscal 2001.

On May 7, 2001, EMCORE completed the private placement of $175 million
aggregate principal amount of 5% convertible subordinated notes due in 2006. The
notes are convertible into EMCORE common stock at a conversion price of $48.76
per share. EMCORE is using the proceeds of this offering for general corporate
purposes, including capital expenditures, working capital, funding its joint
venture and for research and development. In addition, EMCORE may use a portion
of the proceeds of the offering to strategically acquire or invest in
complementary businesses, products or technology, either directly or through its
joint venture.

Blaze Network Products and Cognet MicroSystems, a division of Intel,
selected EMCORE's Coarse Wavelength Division Multiplexing (CWDM) VCSELs for
high-speed data communications. With these VCSELs, Blaze plans to be the first
to market with the smallest pluggable 10 Gigabit transceiver in the industry.
Cognet will use the short wavelength VCSELs for extending the reach of multimode
fibers.

EMCORE expanded its production technology offerings with the addition of
the Enterprise 300LDM for datacom and telecom applications and the Enterprise
450 series for wireless communications and solid state lighting applications.
These new tools serve as the enabling technology for EMCORE's electronic
materials and optical device product offerings and will enhance EMCORE's ability
to significantly improve device-manufacturing economics. The tools decrease the
cost of ownership by maximizing the efficiency of material usage, reducing cycle
times and achieving materials quality that enables next generation devices.

EMCORE's Electronic Materials Division achieved two significant milestones
as a high volume supplier of HBT and pHEMT transistor materials for high-speed
wireless communications. EMCORE reported the shipment of a record 15,000 6-inch
HBT and pHEMT transistor wafers in a 12-month period. The Electronic Materials
Division also earned the prestigious QS-9000 certification for its wafer
manufacturing activities based on its commitment to quality products and
services.

Results of Operations

The following table sets forth the condensed consolidated Statement of
Operations data of EMCORE expressed as a percentage of total revenues for the
three and nine-month periods ended June 30, 2001 and 2000:

Statement of Operations Data:




Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----


Revenues ................................. 100.0% 100.0% 100.0% 100.0%
Cost of revenues ......................... 58.6% 58.4% 58.8% 58.6%
--------- ---------- ---------- ---------
Gross profit ........................... 41.4% 41.6% 41.2% 41.4%
Operating expenses:
Selling, general and administrative .... 13.4% 19.7% 15.4% 22.6%
Goodwill amortization .................. 0.3% 3.7% 0.7% 4.7%
Research and development ............... 26.3% 19.9% 27.7% 21.8%
--------- ---------- ---------- ---------
Total operating expenses ........ 40.0% 43.3% 43.8% 49.1%

Operating income (loss) ....... 1.4% (1.7%) (2.6%) (7.7%)

Other (income) expense:
Interest income, net ................... (0.1%) (6.5%) (1.7%) (3.7%)
Other income ........................... - - (4.2%) -
Imputed warrant interest expense ....... - - - 1.2%
Equity in net loss of unconsolidated
affiliates .......................... 5.1% 9.7% 7.5% 12.3%

--------- ---------- ---------- ---------
Total other (income) expenses ... 5.0% 3.1% 1.6% 9.8%

Net loss ................................. (3.6%) (4.9%) (4.2%) (17.5%)
========= ========== ========== =========


13


EMCORE has generated a significant portion of its sales to customers
outside the United States. EMCORE anticipates that international sales will
continue to account for a significant portion of revenues. Historically, EMCORE
has received substantially all payments for products and services in U.S.
dollars and therefore EMCORE does not currently anticipate that fluctuations in
any currency will have a material effect on its financial condition or results
of operations.

The following chart contains a breakdown of EMCORE's worldwide revenues by
geographic region.




For the fiscal years ended September 30,
- -----------------------------------------------------------------------------------
2000 1999 1998
- -----------------------------------------------------------------------------------
(in thousands) Revenue % of revenue Revenue % of revenue Revenue % of revenue
--------------------------------------------------------------------


Region:
North America $64,174 62% $27,698 48% $26,648 61%
Asia 34,656 33% 28,211 48% 15,527 35%
Europe 5,676 5% 2,432 4% 1,585 4%
- -----------------------------------------------------------------------------------
TOTAL $104,506 100% $58,341 100% $43,760 100%
======== ==== ======= ==== ======= ====




For the nine months ended June 30,
---------------------------------------------------------------------------
2001 2000
---------------------------------------------------------------------------
(in thousands) Revenue % of revenue Revenue % of revenue
--------------------------------------------------------


Region
North America $77,014 55% $43,910 62%
Asia 51,507 36% 21,603 31%
Europe 12,340 9% 4,936 7%
--------------------------------------------------------------------------
TOTAL $140,861 100% $70,449 100%
======== ==== ======= ====


As of June 30, 2001, EMCORE had an order backlog of $140.0 million
scheduled to be shipped through June 30, 2002. This represents an increase of
12% or $15.0 million since September 30, 2000. EMCORE receives partial advance
payments or irrevocable letters of credit on most production system orders.

EMCORE has two reportable operating segments: the systems-related business
unit and the materials-related business unit. The systems-related business unit
designs, develops and manufactures tools and manufacturing processes used to
fabricate compound semiconductor wafer and devices. This business unit assists
our customers with device design, process development and optimal configuration
of TurboDisc production systems. Revenues for the systems-related business unit
consist of sales of EMCORE's TurboDisc production systems as well as spare parts
and services related to these ystems. The materials-related business unit
designs, develops and manufactures compound semiconductor materials. Revenues
for the materials-related business unit include sales of semiconductor wafers,
devices, packaged devices, modules and process development technology. EMCORE's
vertically-integrated product offering allows it to provide a complete compound
semiconductor solution to its customers. The segments reported are the segments
of EMCORE for which separate financial information is available and for which
gross profit amounts are evaluated regularly by executive management in deciding
how to allocate resources and in assessing performance. EMCORE does not allocate
assets or operating expenses to the individual operating segments. Services are
performed for each other however there are no intercompany sales transactions
between the two operating segments.

14


Comparison of three and nine-month periods ended June 30, 2001 and 2000

Revenues. EMCORE's revenues increased 76% or $22.9 million from $30.0
million for the three- month period ended June 30, 2000 to $52.9 million for the
three-month period ended June 30, 2001. For the nine-month period ended June 30,
2001, revenues increased 100% or $70.4 million from $70.4 million in 2000 to
$140.9 million in 2001. On a sequential basis, revenues reached record levels
for the sixth consecutive quarter and increased 10% or $5.0 million from $47.9
million reported in the prior quarter. This increase in revenues is a direct
result of new material technologies being introduced that enable next generation
devices. For the nine-month period, systems-related revenues increased 129% or
$55.3 million from $42.9 million to $98.2 million. On a sequential basis,
systems-related revenues increased 20% or $6.5 million from $32.5 million
reported in the prior quarter. The number of MOCVD production systems shipped
during the nine-month period increased 116% from 31 in 2000 to 67 systems in
2001. Management expects fiscal year 2001 system shipments will total 90 which
represents a 90% increase over fiscal year 2000 shipments. Materials-related
revenues for the nine-month period increased 55% or $15.1 million from $27.5
million to $42.7 million. On a sequential basis, materials-related revenues
decreased 10% or $1.5 million from $15.4 million reported in the prior quarter.
This revenue decrease was primarily related to lower sales of pHEMT and HBT
epitaxial wafers as it relates to our wireless technology business. On an annual
basis, sales of solar cells, pHEMT and HBT epitaxial wafers and VCSELs have
increased 12%, 30% and 323%, respectively, from the prior year. As a percentage
of revenues, systems and materials-related revenues accounted for 61% and 39%,
respectively, for the nine-month period ended June 30, 2000 and 70% and 30%,
respectively, for the nine-month period ended June 30, 2001. International sales
accounted for 38% of revenues for the nine-month period ended June 30, 2000 and
45% of revenues for the nine-month period ended June 30, 2001.

Gross Profit. EMCORE's gross profit increased 75% or $9.4 million from
$12.5 million for the three- month period ended June 30, 2000 to $21.9 million
for the three-month period ended June 30, 2001. For the nine-month period ended
June 30, 2001, gross profit increased 99% or $28.9 million from $29.1 million in
2000 to $58.0 million in 2001. On a sequential basis, gross profit increased 12%
or $2.3 million from $19.6 million. For the nine-month period, gross profit
earned on systems-related revenues increased 148% or $26.5 million from $17.9
million to $44.4 million. This is due primarily to the overall increase in
sales, as well as, improved manufacturing efficiencies. Component and service
related revenues continue to increase since EMCORE's production system installed
base now exceeds 400 MOCVD systems. For the nine-month period, gross profit
earned on materials-related revenues increased 21% or $2.4 million from $11.3
million to $13.6 million. Management expects gross profits on materials-related
sales to increase due to recent yield improvements in manufacturing processes
and expected increased production output due to EMCORE's strong order backlog of
material-related products.

Selling, General and Administrative. Selling, general and administrative
expenses increased by 20% or $1.2 million from $5.9 million for the three-month
period ended June 30, 2000 to $7.1 million for the three-month period ended June
30, 2001. For the nine-month period ended June 30, 2001, selling general and
administrative expenses increased 36% or $5.7 million from $15.9 in 2000 to
$21.6 million in 2001. On a sequential basis, selling, general and
administrative expenses decreased 6% or $0.5 million from $7.6 million incurred
in the prior quarter. A significant portion of the year-over-year increase was
due to headcount increases in marketing and sales personnel to support domestic
and foreign markets and other administrative headcount additions to sustain
internal support. The decrease in actual expenses from the prior quarter was
largely due to cost control programs placed into service. As a percentage of
revenue, selling, general and administrative expenses decreased from 23% for the
nine-month period ended June 30, 2000 to 15% for the nine-month period ended
June 30, 2001. On a sequential basis, as a percentage of revenue, selling,
general and administrative expenses decreased from 16% realized in the prior
quarter to 13%.

Goodwill Amortization. Goodwill of $3.1 million was recorded in connection
with our acquisitions of Analytical Solutions, Inc. and Training Solutions, Inc.
in January 2001. During the three months ended June 30, 2001, goodwill
amortization totaled $0.2 million.

15


Research and Development. Research and development expenses increased 132%
or $7.9 million from $6.0 million in the three-month period ended June 30, 2000
to $13.9 million in the three month-period ended June 30, 2001. For the
nine-month period ended June 30, 2001, research and development increased 154%
or $23.7 million from $15.4 million in 2000 to $39.1 million in 2001. On a
sequential basis, research and development expenses increased 16% or $1.9
million from $12.0 million incurred in the last quarter. To maintain growth and
to continue to pursue market leadership in materials science technology,
management expects the amount to continue to invest a significant amount of its
resources in research and development. EMCORE expects the amount of research and
development expenditures to continue at similar levels for the remainder of
fiscal year 2001 as EMCORE finalizes the development and commercialization of
new fiber optic products, including long wavelength VCSELs (vertical cavity
surface emitting lasers), optical subassemblies and modules. As a percentage of
revenue, research and development expenses increased from 25% for the three
months ended March 31, 2001 to 26% for the three months ended June 30, 2001.

Interest income, net. For the three-month period ended June 30, 2001, net
interest income decreased $1.9 million from $2.0 million in 2000 to $68,000. For
the nine-month period ended June 30, 2001, interest expense decreased $0.3
million from $2.6 million in 2000 to $2.4 million in 2001. The decrease in net
interest income is the result of additional interest expense incurred from the
5% convertible subordinated notes due 2006.

Other income, net. Other income includes a net gain of $5.9 million related
to the settlement of litigation, recorded in March 2001.

Equity in unconsolidated affiliates. Since EMCORE does not have a
controlling economic and voting interest in its joint ventures, EMCORE accounts
for these joint ventures under the equity method of accounting.

For the quarters ended June 30, 2000 and 2001, EMCORE incurred a net loss
of approximately $1.4 million related to the GELcore joint venture, up from a
$1.2 million loss incurred in the quarter ended June 30, 2000. On a sequential
basis, GELcore's net loss increased 63% or $0.6 million from $0.9 million
incurred last quarter. On April 11, 2001, EMCORE invested an additional $3.9
million into this joint venture. As of June 30, 2001, EMCORE's net investment in
this joint venture amounted to $10.3 million.

EMCORE also incurred a net loss of approximately $1.3 million related to
the UOE joint venture in the quarter ended June 30, 2001, down from a $1.7
million loss incurred in the quarter ended June 30, 2000. On a sequential basis,
UOE's net loss decreased 54% or $1.5 million from $2.8 million incurred last
quarter. As of June 30, 2001, EMCORE's net investment in this joint venture
amounted to $3.0 million and Emcore's ownership interest in the joint venture
dropped to 36%. On August 2, 2001, Emcore sold its minority ownership position
in this joint venture to Uniroyal Technology Corporation and received 2.0
million shares of UTCI common stock as consideration for the transaction.

Income Taxes. As a result of its losses, EMCORE did not incur any income
tax expense in both the three and nine-month periods ended June 30, 2001 and
2000.

EMCORE has experienced and expects to continue to experience significant
fluctuations in quarterly results. Factors which have had an influence on and
may continue to influence EMCORE's operating results in a particular quarter
include, but are not limited to, the timing of receipt of orders, cancellation,
rescheduling or delay in product shipment or supply deliveries, product mix,
competitive pricing pressures, EMCORE's ability to design, manufacture and ship
products on a cost effective and timely basis, including the ability of EMCORE
to achieve and maintain acceptable production yields for wafers and devices,
regional economic conditions and the announcement and introduction of new
products by EMCORE and by its competitors. The timing of sales of EMCORE's
TurboDisc production systems may cause substantial fluctuations in quarterly
operating results due to the substantially higher per unit price of these
products relative to EMCORE's other products. If the compound semiconductor
industry experiences downturns or slowdowns, EMCORE's business, financial
condition and results of operations may be materially and adversely affected.

16


Liquidity and Capital Resources

EMCORE has funded operations to date through sales of equity, bank
borrowings, subordinated debt and revenues from product sales. In May 2001,
EMCORE issued $175.0 million of 5% convertible subordinated notes due in 2006.
In June 1999, EMCORE completed a secondary public offering and raised
approximately $52.0 million, net of issuance costs. In March 2000, EMCORE
completed an additional public offering and raised approximately $127.8 million,
net of issuance costs. As of June 30, 2001, EMCORE had working capital of
approximately $215.4 million, including $159.6 million in cash, cash equivalents
and marketable securities.

Cash used for operating activities approximated $38.9 million during the
nine-month period ended June 30, 2001 as a result of increases in inventory,
accounts receivable and other current assets. The increase in accounts
receivable was within expectations of the 100% increase in revenues from the
prior year. For the nine months ended June 30, 2001 net cash used for investment
activities amounted to $114.5 million. EMCORE's capital expenditures totaled
$80.8 million, which was used primarily for capacity expansion at both New
Jersey and New Mexico's manufacturing facilities. EMCORE quadrupled its
production capacity for GaInP HBTs and pHEMTs to meet wireless and fiber optic
market demands. Completed in January 2001, EMCORE tripled its cleanroom
manufacturing capacity in New Mexico by adding on an additional 36,000 square
feet to the existing 50,000 square foot building which houses EMCORE's solar
cell, optical components and networking products. EMCORE's planned capital
expenditures are expected to total approximately $90.0 million during fiscal
year 2001. Capital spending in fiscal year 2001 also includes the purchase of
and continued upgrades to manufacturing facilities, continued investment in
analytical and diagnostic research and development equipment, upgrading and
purchasing computer equipment and the manufacture of TurboDisc MOCVD production
systems used internally for production of materials-related products. EMCORE's
net investment in marketable securities increased by $27.4 million during the
nine months ended June 30, 2001. Net cash provided by financing activities for
the nine months ended June 30, 2001 amounted to approximately $184.4 million. On
May 7, 2001, EMCORE completed the private placement of $175 million aggregate
principal amount of 5% convertible subordinated notes due 2006. The notes are
convertible into EMCORE common stock at a conversion price of $48.76 per share.
EMCORE intends to use the proceeds of the offering for general corporate
purposes, including capital expenditures, working capital, funding its joint
ventures and for research and development. In addition, EMCORE may use a portion
of the proceeds of the offering to strategically acquire or invest in
complementary businesses, products or technology, either directly or through its
joint venture.


Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB"), issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible Assets". Statement No.
141 requires that all business combinations initiated after June 30, 2001, be
accounted for using the purchase method of accounting. In addition, it further
clarifies the criteria for recognition of intangible assets separately from
goodwill. Statement No. 142 establishes new standards for goodwill acquired in a
business combination and eliminates the amortization of goodwill over its
estimated useful life. Rather, goodwill will now be tested for impairment
annually, or more frequently if circumstances indicate potential impairment, by
applying a fair value based test. EMCORE expects to adopt this statement during
the first quarter of fiscal 2002. As of June 30, 2001, EMCORE had $2.8 of
unamortized goodwill resulting from prior acquisitions. EMCORE will record
approximately $155,000 of additional goodwill amortization through the remainder
of fiscal year 2001.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the nine months ended June 30, 2001, EMCORE invested in high-grade
corporate debt, commercial paper, government securities and other investments at
fixed interest rates that vary by security. No other material changes in market
risk were identified.

17

This report contains forward-looking statements based on our current
expectations, estimates, and projections about our industry, management's
beliefs, and certain assumptions made by us. Words such as "anticipates",
"expects", "intends", "plans", "believes", "seeks", "estimates", "may", "will"
and variations of these words or similar expressions are intended to identify
forward-looking statements. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. These statements are not a guarantee of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, our actual results could differ materially and adversely
from those expressed in any forward-looking statements as a result of various
factors, including, but not limited to:


o rapid growth which places a strain on our resources;
o our expectation of continued operating losses;
o rapidtechnology changes in the compound semiconductor industry that
require us to continually improve existing products, design and sell
new products and manage the costs of research and development in order
to effectively compete;
o fluctuations in our quarterly operating results which may negatively
impact our stock price;
o the fact that our joint venture partner, who have control of the
venture, may make decisions that we do not agree with and thereby
adversely affect our net income;
o our exposure to export risks since a large percentage of our
revenues are from foreign sales;
o the potential for us to lose sales if we are unable to obtain
government authorization to export our products;
o the fact that our products are difficult to manufacture and small
manufacturing defects can adversely affect our production yields and
our operating results;
o lengthy sales and qualifications cycles for our products that are
typical of our industry and, in many cases, require us to invest a
substantial amount of time and funds before we receive orders;
o industry demand for skilled employees, particularly scientific and
technical personnel with compound semiconductor experience which
exceeds the number of skilled personnel available;
o protecting our trade secrets and obtaining patent protection which is
critical to our ability to compete for business;
o licenses that may be required to continue to manufacture and sell
certain of our compound semiconductor wafers and devices, the expense
of which may adversely affect our results of operations;
o interruptions in our business and a significant loss of sales to Asia
which may result if our primary Asian distributor fails to effectively
market and service our products;
o our management's stock ownership which gives them the power to control
business affairs and prevent a takeover that could be beneficial to
unaffiliated shareholders;
o the consequences of unsuccessful control of the hazardous raw
materials used in our manufacturing process which could result in
costly remediation fees, penalties or damages under environmental and
safety regulations;
o our business or our stock price which could be adversely affected by
issuance of preferred stock;
o certain provisions of New Jersey Law and our charter which may make a
takeover of our company difficult even if such takeover could be
beneficial to some of our shareholders;
o fluctuations in the price of our common stock which may continue in
the future.



Our Annual Report on Form 10-K and other SEC filings discuss some of the
important risk factors that may affect our business, results of operations and
financial condition. We undertake no obligation to revise or update publicly and
forward-looking statements for any reason.

18


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

2.1 Membership Interest Purchase Agreement, dated as of August 2,
2001, by and among Uniroyal Technology Corporation, Uniroyal
Compound Semiconductor Inc., Uniroyal Optoelectronics, LLC and
the Company.

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended June 30,
2001.








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 14, 2001 By: /s/ Reuben F. Richards, Jr.
--------------------------------
Reuben F. Richards, Jr.
President and Chief Executive Officer

Date: August 14, 2001 By: /s/ Thomas G. Werthan
--------------------------------
Thomas G. Werthan
Vice President and Chief Financial Officer








19