EMCORE CORPORATION 401(K) SAVINGS PLAN
Published on July 1, 2002
EMCORE Corporation
401(k) Savings Plan
Independent Auditors' Report
Financial Statements
Years Ended December 31, 2001 and 2000
Supplemental Schedules
Year Ended December 31, 2001
EMCORE CORPORATION
401(k) SAVINGS PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 2001:
Schedule H, line 4i - Schedule of Assets Held at End of Year 8
Schedule H, line 4j - Schedule of Reportable Transactions -
Aggregate by Issue 9
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of the
EMCORE Corporation 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the EMCORE Corporation 401(k) Savings Plan (the "Plan") as of December 31,
2001 and 2000, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2001
and 2000, and the changes in net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
at end of year and of reportable transactions are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These schedules are the responsibility
of the Plan's management. Such schedules have been subjected to the auditing
procedures applied in our audit of the basic 2001 financial statements and, in
our opinion, are fairly stated in all material respects when considered in
relation to the basic 2001 financial statements taken as a whole.
June 26, 2002
EMCORE CORPORATION
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
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ASSETS 2001 2000
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INVESTMENTS, AT FAIR VALUE
Money Market:
Prudential Government Securities Trust $ 456,955 $ 312,803
Prudential Government Securities 6,974 98,690
Mutual Funds:
AIM Aggressive Growth 958,236 738,344
Alliance Growth Class A 932,775 731,540
Mutual Beacon Class I 335,346 203,775
Oppenheimer Quest Opportunity Value Class A 448,114 336,442
Prudential Active Balanced A 372,239 293,655
Prudential Active Balanced B - 30,296
Prudential Equity Class A 1,250,377 1,131,556
Prudential Equity Class B - 114,476
Prudential Government Income Class A 96,408 60,237
Prudential Government Income Class B - 3,086
Prudential Small Company Class A 892,119 658,336
Prudential Small Company Class B - 53,052
Prudential Utility Class A 759,551 750,647
Prudential Utility Class B - 81,818
Putnam Voyager Class A 1,092,494 847,947
Scudder-Dreman High Return Class A 565,641 399,230
EMCORE Corporation Stock Fund 1,896,331 5,087,512
Participants' Loans Fund 166,867 146,595
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Total investments 10,230,427 12,080,037
EMPLOYER'S CONTRIBUTIONS RECEIVABLE 51,335 46,685
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NET ASSETS AVAILABLE FOR BENEFITS $10,281,762 $12,126,722
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The accompanying notes are an integral part of these financial statements.
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EMCORE CORPORATION
401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2001 AND 2000
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The accompanying notes are an integral part of these financial statements.
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EMCORE Corporation
401(k) Savings Plan
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000
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1. DESCRIPTION OF PLAN
The following description of the EMCORE Corporation 401(k) Plan (the
"Plan") provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions.
General - The Plan is a defined contribution plan established to provide
retirement benefits to eligible employees of EMCORE Corporation (the
"Company"). The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Participation - Individuals become eligible on the first day of the month
immediately following their completion of one month of service provided
they are 20 years of age or older. Each participant's account is credited
with the participant's contribution and allocations of the Company's
matching contribution and Plan earnings.
Contributions - Participants may elect to contribute to the Plan through a
salary reduction up to the maximum tax deferral amount allowed pursuant to
IRS regulations. Participants may also contribute amounts representing
distributions from other qualified defined benefit or contribution plans.
The Company contributes 50 percent of the first 6 percent of base
compensation that a participant contributes to the Plan, which is
calculated on a bi-weekly basis. All employer contributions are in the form
of the Company's common stock. The Company may also at its discretion
choose to make an additional profit sharing contribution to participants
who are credited with more than 500 hours of service during the plan year
and are employed by the Company on the last day of the year.
Vesting - Participants are immediately vested in their contributions plus
actual earnings thereon. Vesting in the Company's matching and
discretionary contributions plus actual earnings thereon is based on years
of continuous service. A participant becomes 100 percent vested after five
years of credited service, with vesting taking place ratably over such
period. A participant becomes 100 percent vested in all employer
contributions upon reaching age 60, at death, if permanently and totally
disabled, or upon termination of the Plan.
Investment Options - Upon enrollment in the Plan, a participant may direct
employee contributions in any percent increments in any of the available
investment options. Participants may change their investment options at any
time. Only employer contributions are in the form of EMCORE Corporation
common stock. For the year ended December 31, 2001, the EMCORE Corporation
stock fund depreciated in value by $3,846,000, the Company contributed
$684,026, current year forfeitures totaled $81,700, and participants
received distributions of $110,507.
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Description of investment options:
Money Market -
Prudential Government Securities Trust and Prudential Government
Securities - Funds are invested in United States Government
securities.
Mutual Funds -
AIM Aggressive Growth - Funds are invested in equity securities of
small to medium-sized companies.
Alliance Growth - Funds are invested in equity securities issued by
companies with favorable earnings and long-term growth prospects.
Mutual Beacon - Funds are invested in common and preferred stocks and
corporate debt.
Oppenheimer Quest Opportunity Value - Funds are invested among stocks,
bonds and cash.
Prudential Active Balanced - Funds are invested in a mix of equity
securities, fixed-income securities and money market instruments.
Prudential Equity - Funds are invested in common stocks of major and
established corporations.
Prudential Government Income - Funds are invested in bonds backed by
the United States Government or by government-linked agencies.
Prudential Small Company - Funds are invested in common stocks
selected for their potential for high return on equity, increased
earnings, increasing or expected dividends and low price/earnings
ratios.
Prudential Utility - Funds are invested in equity and debt securities
of utility companies, including electric, gas, telephone and cable
companies.
Putnam Voyager - Funds are invested primarily in common stocks of
mid-size firms.
Scudder-Dreman High Return - Funds are invested in common stocks that
pay high dividends relative to the dividend yield of the S&P 500
index.
EMCORE Corporation Stock - Only employer contributions are in the form of
EMCORE Corporation common stock.
Payment of Benefits - The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account. On
termination of service due to death, disability or retirement, a
participant or their beneficiary may elect to receive either a lump-sum
amount equal to the value of the participant's vested interest in his or
her account or annual installments over a ten-year period. If an employee
is terminated prior to age 60 for other reasons, the employee may request
distribution of their vested account balance.
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Forfeitures - If a participant's employment terminates for reasons other
than retirement before attaining age 60, disability or death, the unvested
portion of the individual's account is forfeited. Forfeitures of employer
matching contributions shall be used to reduce future employer
contributions. Participant forfeitures were approximately $81,700 and
$79,200 for the years ended December 31, 2001 and 2000, respectively.
Continuity of Plan - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, participants receive 100 percent of the
vested interest in his or her account as a lump-sum distribution.
Participant Loans - Participants may borrow from their fund accounts from a
minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or
50 percent of their vested account balance. Loan transactions are treated
as transfers to (from) the investment fund(s), from (to) the participants'
loan fund. Loan terms range from 1-5 years or up to 25 years for the
purchase of a primary residence. Loans are collateralized by the balance in
the participant's account and bear interest at a rate commensurate with
local prevailing rates as determined by the plan administrator. Interest
rates in 2001 ranged from 6.0 percent to 10.5 percent. Principal and
interest is paid ratably through bi-weekly payroll deductions.
Administrative Fees - All administrative expenses of the Plan are paid by
the Company. Fees paid by the Company on behalf of the Plan amounted to
approximately $30,000 and $21,000 for the years ended December 31, 2001 and
2000, respectively.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared
under the accrual method of accounting.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, and the reported amount of
changes during the reporting period. The preparation of financial
statements in conformity with generally accepted accounting principles also
requires management to make estimates and assumptions that affect the
disclosures of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value. Shares in mutual funds are valued based on the quoted
market prices of the underlying securities which represent the net asset
value of shares held by the Plan. The Company's stock is valued at its
quoted market price. Participants' loans are valued at cost which
approximates fair value.
The Plan presents in the statement of changes in net assets available for
benefits the net (depreciation) appreciation in the fair value of its
investments which consists of both realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
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Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
Payment of Benefits - Benefits are recorded when paid. There were no
outstanding benefits payable to terminated employees as of December 31,
2001 and 2000.
3. INVESTMENTS
The fair values of the individual investments that represent 5% or more of
the Plan's assets as of December 31, 2001 and 2000 are as follows:
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $4,854,951 as follows:
Mutual Funds $(1,008,551)
EMCORE Corporation Stock Fund (3,846,400)
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$(4,854,951)
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[OBJECT OMITTED]
4. TAX STATUS
The Company adopted a standardized prototype plan which received an
Internal Revenue Service opinion letter dated March 11, 1994 that stated
that the Plan and related trust are designed in accordance with applicable
sections of the Internal Revenue Code. The Plan has since been amended.
However, the plan administrator and the Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code.
******
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EMCORE CORPORATION
401(k) SAVINGS PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS HELD AT END OF YEAR
AS OF DECEMBER 31, 2001
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(1) The cost of the investment in the EMCORE Corporation Stock Fund at December
31, 2001 was $2,074,801.
(2) Interest rates range from 6.0 percent to 10.50 percent. Maturity dates
range from 2002 through 2006.
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EMCORE CORPORATION 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4J - SCHEDULE OF REPORTABLE TRANSACTIONS
SERIES OF TRANSACTIONS - BY ISSUE
FOR THE YEAR ENDED DECEMBER 31, 2001
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