EXHIBIT 99.1
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PRESS RELEASE
EMCORE CORPORATION REPORTS FISCAL 2004 THIRD QUARTER AND NINE-MONTH RESULTS
THIRD QUARTER REVENUES INCREASE 25% FROM A YEAR AGO. YEAR TO DATE REVENUES
INCREASE 56% FROM A YEAR AGO.
SOMERSET, New Jersey, August 2, 2004 -- EMCORE Corporation (NASDAQ: EMKR), a
leading provider of compound semiconductor products for the rapidly expanding
broadband and wireless communications markets, today announced its financial
results for the fiscal 2004 third quarter and nine-months ended June 30, 2004.
Revenues for the third quarter of 2004 were $21.2 million, an increase of 25%
from the $17.0 million reported in the prior year, but down 9% sequentially from
the $23.2 million in the previous quarter. Revenues from the photovoltaics and
electronic materials and devices product lines met expectations; however, fiber
optic revenues associated with EMCORE's new transceiver product line were $4.0
million below expectations. The shortfall was caused predominantly by supply
chain issues; specifically, a vendor supplied contaminated material that was not
identified until testing of the finished modules. To maintain the integrity of
EMCORE's business and product line, management decided not to ship the finished
modules because of the risk of warranty returns. To reduce the risk of a future
occurrence, EMCORE has implemented additional quality screens within its supply
chain and has reworked the finished modules to satisfy additional customer
specifications. The new transceiver product is ramping and shipments commenced
the week of July 12, 2004. Management believes that the materials and process
issues have been resolved. EMCORE incurred an additional $1.3 million charge in
research and development in the third quarter associated with the contaminated
materials pending resolution of returns to its vendors.
For the nine months ended June 30, 2004, revenues totaled $67.5 million, an
increase of $24.3 million, or 56% as compared to the same period a year earlier.
Backlog as of June 30, 2004 increased $2.9 million, or 8% to $38.2 million
sequentially.
Gross profit for the quarter was $0.4 million, or 2%, compared to a gross profit
of $0.6 million, or 4% a year earlier. Sequentially, gross margins decreased
$2.2 million as a result of lower revenues and unfavorable product mix.
Operating expenses for the third quarter ended June 30, 2004 increased $0.9
million to $12.3 million as compared to last quarter. The increase was related
to research and development expenses attributable to the contaminated materials.
Otherwise, research & development would have decreased by $0.4 million. Selling,
general and administrative expenses decreased approximately $0.1 million
sequentially. Operating expenses increased $2.0 million from the $10.3 million
reported in the same period a year earlier.
Cash, cash equivalents and marketable securities at June 30, 2004 totaled
approximately $58.0 million, an increase of $29.6 million and $20.0 million from
September 30, 2003 and June 30, 2003, respectively.
Separately, the Company has identified opportunities in its cost structure to
further reduce costs that management believes will not impact the Company's
ability to continue to lead its markets in terms of technology and manufacturing
execution. Total savings are targeted at $1.5 million per quarter, which
management anticipates will be realized over the next three to six months.
EXHIBIT 99.1
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MANAGEMENT DISCUSSION AND OUTLOOK:
Reuben F. Richards, Jr., President and CEO of EMCORE Corporation, reiterated
"Our shortfall in revenues this quarter is not related to end market demand for
our products. We are confident that the quality control issues have been
resolved, and production has resumed the week of July 12. While we are obviously
disappointed with shipments being delayed, the demand for these units remains
strong. We currently have purchase orders for this product line of approximately
$10 million that we intend to ship over the next two quarters. Further, we are
maintaining our revenue guidance for fiscal 2004 of $90 to $100 million.
Revenues for our fiscal fourth quarter are expected to increase 20% to $25
million."
EMCORE will discuss the quarterly results further on a conference call to be
held on Tuesday, August 3, 2004 at 9:00 a.m. ET. To participate in the call,
U.S. callers should dial (toll free) 888-896-0863 and international callers
should dial 973-582-2703. A replay of the call will be available beginning
August 3, 2004 at 11:15 a.m. ET until August 9, 2004 at 11:59 p.m. ET.
The replay call-in number for U.S. callers is 877-519-4471, for international
callers it is 973-341-3080, and the access code is 4458424#. Also, the call 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.
COMPANY HIGHLIGHTS:
Highlights from the third quarter include:
o EMCORE was Selected by Anadigics as its Primary RF Transistor Wafer
Supplier. The Company was selected by ANADIGICS, Inc. (NASDAQ: ANAD),
a leading supplier of wireless and broadband solutions, to be
ANADIGICS' primary supplier for all Radio Frequency (RF) materials.
EMCORE's six-inch GaAs RF transistor wafers will be used to produce
power amplifiers and related devices that are used in widespread
wireless applications, such as cellular telephones, laptop computers
and wireless infrastructure networks.
o EMCORE Corporation Acquired Corona Optical Systems. The Company
acquired Corona Optical Systems located in Lombard, IL and Eau Claire,
WI in a cash for stock merger. Corona Optical Systems is a market
leader in parallel optics with an ultra small form factor transceiver,
the OptoCube(R) transceiver, which is currently being deployed by Tier
1 customers for use in high-density telecom switching boxes. In the
last twelve months before closing, Corona had revenues of approximately
$2.9 million. Approximately 13 employees of Corona Optical Systems will
join EMCORE. EMCORE expects that sales of Corona's OptoCube(R)
transceiver will exceed $4 million in the next twelve months.
o EMCORE Transferred CX4 XENPAK Manufacturing to Asia and Began Volume
Shipping. The ECX-7700 four-channel CX4 XENPAK module became available
for volume shipping. In addition, the Company announced that with the
transfer of its manufacturing resources to Asia, it now offers the
lowest cost 10 Gigabit Ethernet (10GE) XENPAK-based solution.
o EMCORE Announced a Distribution Agreement with BUPT-GUOAN. The Company
announced an agreement with BUPT-GUOAN BROADBAND NETWORK TECH. CO. LTD
(BUPT-Beijing University of Posts and Telecom) to distribute EMCORE's
fiberoptic cable television and satellite communications products in
China. The agreement combines the strengths of EMCORE's Ortel
Division, with its unique expertise in Hybrid Fiber/Coax (HFC) and
Fiber-to-the-Premise (FTTP) network architectures, products and
technologies, and BUPT-GUOAN, with its domestic sales and support
staff and intimate knowledge of China's broadband marketplace.
EXHIBIT 99.1
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ABOUT EMCORE
EMCORE Corporation offers a versatile portfolio of compound semiconductor
products for the rapidly expanding broadband and wireless communications markets
and the solid-state lighting industry. The company's integrated solutions
philosophy embodies state-of-the-art technology, material science expertise, and
a shared vision of our customer's goals and objectives to be leaders and
pioneers in the rapidly growing communications market. EMCORE's solutions
include: optical components for fiber-to-the premise, cable television, and high
speed data and telecommunications; solar cells, solar panels and fiberoptic
satellite links for global satellite communications; and electronic materials
for high bandwidth communications systems, such as Internet access and wireless
telephones. Through its joint venture participation in GELcore, LLC, EMCORE
plays a vital role in developing and commercializing next-generation LED
technology for use in the general illumination market. For further information
about EMCORE, visit http://www.emcore.com.
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. 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 include, without limitation, (a) any statements or implications
regarding EMCORE's ability to remain competitive and a leader in its industry,
and the future growth of EMCORE, the industry and the economy in general; (b)
statements regarding the expected level and timing of benefits to EMCORE from
its current cost reduction efforts, including (i) expected cost reductions and
their impact on EMCORE's financial performance, (ii) EMCORE's continued
leadership in technology and manufacturing in its markets, and (iii) the belief
that the cost reduction efforts will not impact product development or
manufacturing execution; (c) any statement or implication that the products
described in this press release (i) will be successfully introduced or marketed,
(ii) will be qualified and purchased by our customers, or (iii) will perform to
any particular specifications or performance or reliability standards; (d) any
and all guidance provided by EMCORE regarding its expected financial performance
in current or future periods, including, without limitation, with respect to
anticipated revenues for the fourth quarter of fiscal 2004. 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) EMCORE's cost reduction efforts may not be
successful in achieving their expected benefits, or may negatively impact
EMCORE's operations; (b) reduced revenues resulting from the TurboDisc sale; (c)
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 and (d) other risks and uncertainties
described in EMCORE's filings with the Securities and Exchange Commission such
as cancellations, rescheduling or delays in product shipments; manufacturing
capacity constraints; lengthy sales and qualification cycles; difficulties in
the production process; changes in semiconductor industry growth; increased
competition; delays in developing and commercializing new products; and other
factors. The forward-looking statements contained in this news release are made
as of the date hereof and EMCORE does not assume any obligation to update the
reasons why actual results could differ materially from those projected in the
forward-looking statements.
EXHIBIT 99.1
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EMCORE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30,
2004 AND 2003 (IN THOUSANDS, EXCEPT INCOME
(LOSS) PER SHARE)
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------------- ----------------------------
2004 2003 2004 2003
---------- ---------- ---------- -----------
Revenue ................................................. $ 21,225 $ 16,986 $ 67,530 $ 43,232
Cost of revenue ......................................... 20,811 16,361 61,255 46,073
-------- -------- -------- --------
Gross profit loss) ........................... 414 625 6,275 (2,841)
Operating expenses:
Selling, general and administrative .................. 5,723 5,979 16,674 15,452
Research and development ............................. 6,535 4,283 18,295 10,944
-------- -------- -------- --------
Total operating expenses ........................ 12,258 10,262 34,969 26,396
-------- -------- -------- --------
Operating loss ......................... (11,844) (9,637) (28,694) (29,237)
Other (Income) expenses:
Interest income ...................................... (201) (200) (558) (905)
Interest expense ..................................... 1,205 2,027 4,915 6,264
Gain from debt extinguishment ........................ -- -- (12,312) (6,614)
Equity in net (income) loss of GELcore ............... (341) 33 (557) 1,335
-------- -------- -------- --------
Total other expenses (income) .................... 663 1,860 (8,512) 80
-------- -------- -------- --------
Loss from continuing operations ........ (12,507) (11,497) (20,182) (29,317)
Discontinued operations:
Income (loss) from discontinued operations .......... -- 2,265 (2,045) 4,647
Gain on disposal of discontinued operations .......... -- -- 19,584 --
-------- -------- -------- --------
Income from discontinued operations..... -- 2,265 17,539 4,647
-------- -------- -------- --------
Net loss ............................... $(12,507) $ (9,232) $ (2,643) $(24,670)
======== ======== ======== ========
Weighted average basic shares used in per share data
calculations ............................................ 46,598 37,051 42,106 36,922
======== ======== ======== ========
Weighted average diluted shares used in per diluted share
data calculation ........................................ 46,598 37,051 42,106 36,922
======== ======== ======== ========
PER SHARE DATA:
Basic per share data:
Loss from continuing operations ...................... $ (0.27) $ (0.31) $ (0.48) $ (0.79)
Income from discontinued operations .................. -- $ 0.06 $ 0.42 $ 0.12
-------- -------- -------- --------
Net loss ............................................. $ (0.27) $ (0.25) $ (0.06) $ (0.67)
======== ======== ======== ========
Diluted per share data
Loss from continuing operations ...................... $ (0.27) $ (0.31) $ (0.48) $ (0.79)
Income from discontinued operations .................. -- $ 0.06 $ 0.42 $ 0.12
-------- -------- -------- --------
Net loss ............................................. $ (0.27) $ (0.25) $ (0.06) $ (0.67)
======== ======== ======== ========
EXHIBIT 99.1
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EMCORE CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2004 AND SEPTEMBER 30, 2003
(IN THOUSANDS)
(UNAUDITED)
AS OF AS OF
JUNE 30, SEPTEMBER 30,
ASSETS 2004 2003
--------- -------------
Current assets:
Cash and cash equivalents .................................................. $ 24,641 $ 28,439
Marketable securities ...................................................... 33,400 --
Accounts receivable, net ................................................... 19,754 14,221
Accounts receivable, GELcore ............................................... 230 325
Inventories, net ........................................................... 15,083 13,963
Prepaid expenses and other current assets .................................. 2,606 1,936
Assets to be disposed ...................................................... -- 44,456
--------- ---------
Total current assets .................................................. 95,714 103,340
Property, plant and equipment, net ........................................... 67,689 74,722
Goodwill ..................................................................... 33,584 30,366
Intangible assets, net ....................................................... 5,363 4,568
Investments in GELcore ....................................................... 9,771 9,214
Other assets, net ............................................................ 8,591 10,229
--------- ---------
Total assets .......................................................... $ 220,712 $ 232,439
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................... $ 13,212 $ 8,155
Accrued expenses ........................................................... 14,974 13,204
Customer deposits .......................................................... 74 295
Capitalized lease obligation, current portion .............................. 30 52
Liabilities to be disposed ................................................. -- 4,170
--------- ---------
Total current liabilities ............................................. 28,290 25,876
Convertible subordinated notes ............................................... 96,051 161,750
Capitalized lease obligation, net of current portion ......................... 8 41
--------- ---------
Total liabilities ..................................................... 124,349 187,667
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.0001 par, 5,882 shares authorized, no shares
outstanding ............................................................. -- --
Common stock, no par value, 100,000 shares authorized, 46,848 shares issued
and 46,828 outstanding at June 30, 2004; 37,327 shares issued and 37,307
outstanding at September 30, 2003 ........................................ 389,521 335,266
Accumulated deficit ....................................................... (292,081) (289,438)
Accumulated other comprehensive loss ...................................... (111) (90)
Shareholders' notes receivable ............................................ (34) (34)
Treasury stock, at cost; 20 shares ........................................ (932) (932)
--------- ---------
Total shareholders' equity ............................................ 96,363 44,772
--------- ---------
Total liabilities and shareholders' equity ............................ $ 220,712 $ 232,439
========= =========
EXHIBIT 99.1
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CONTACT:
EMCORE Corporation TTC Group
Tom Werthan - Chief Financial Officer or Victor Allgeier
(732) 271-9090 (212) 227-0997
info@emcore.com info@ttcominc.com