<PAGE> 1
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 March 31, 2000
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.)
394 ELIZABETH AVENUE
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 May 1, 2000 was 16,568,285.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Systems-related ....................................... $ 13,370 $ 13,354 $ 25,347 $ 20,640
Materials-related ..................................... 10,555 2,718 15,079 5,557
-------- -------- -------- --------
Total revenues ................................. 23,925 16,072 40,426 26,197
Cost of revenues:
Systems-related ....................................... 7,564 8,063 15,082 12,353
Materials-related ..................................... 6,425 1,140 8,685 2,866
-------- -------- -------- --------
Total cost of revenues ......................... 13,989 9,203 23,767 15,219
-------- -------- -------- --------
Gross profit .................................... 9,936 6,869 16,659 10,978
Operating expenses:
Selling, general and administrative ................... 5,271 3,225 9,995 6,368
Goodwill amortization ................................. 1,098 1,098 2,196 2,197
Research and development .............................. 4,662 4,348 9,370 10,272
-------- -------- -------- --------
Total operating expenses ................................. 11,031 8,671 21,561 18,837
-------- -------- -------- --------
Operating loss .................................. (1,095) (1,802) (4,902) (7,859)
Other (income) expense:
Stated interest (income) expense, net .................. (615) 463 (693) 693
Imputed warrant interest expense, non-cash ............. 680 317 843 633
Equity in net loss of unconsolidated affiliates ........ 3,047 1,395 5,813 1,671
-------- -------- -------- --------
Total other expense ...................................... 3,112 2,175 5,963 2,997
-------- -------- -------- --------
Net loss ........................................ ($ 4,207) ($ 3,977) ($10,865) ($10,856)
======== ======== ======== ========
PER SHARE DATA:
Net loss per basic and diluted share (see note 5) ........ ($ 0.28) ($ 0.44) ($ 0.77) ($ 1.17)
-------- -------- -------- --------
Weighted average basic and diluted shares outstanding used
in per share data calculations ........................... 14,895 9,427 14,314 9,409
-------- -------- -------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE> 3
EMCORE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AT MARCH 31, AT SEPTEMBER 30,
---------------- -----------------
2000 1999
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................. $ 122,203 $ 7,165
Accounts receivable, net of allowance for doubtful accounts
of $555 and $563 at March 31, 2000 and
September 30, 1999, respectively ............................ 17,677 11,423
Accounts receivable, related parties .................................. 1,865 2,480
Inventories, net ...................................................... 21,631 13,990
Other current assets .................................................. 4,723 389
--------- ---------
Total current assets ................................................. 168,099 35,447
Property, plant and equipment, net ...................................... 50,693 46,282
Goodwill, net ........................................................... 2,930 5,126
Investments in unconsolidated affiliates ................................ 7,766 9,496
Other assets, net ....................................................... 885 3,260
--------- ---------
Total assets ......................................................... $ 230,373 $ 99,611
--------- ---------
LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable .................................................... $ 11,303 $ 5,359
Accrued expenses .................................................... 3,701 4,173
Advanced billings ................................................... 8,767 4,350
Capital lease obligations - current ................................. 383 713
Other current liabilities ........................................... 293 162
--------- ---------
Total current liabilities ......................................... 24,447 14,757
Convertible subordinated debenture ...................................... -- 7,800
Capital lease obligations, net of current portion ....................... 96 141
Other liabilities ....................................................... 1,405 1,097
--------- ---------
Total liabilities .................................................. 25,948 23,795
--------- ---------
Mandatorily redeemable, convertible preferred stock, 1,030,000
shares issued and outstanding at September 30, 1999 .................. 0 14,193
SHAREHOLDERS' EQUITY:
Preferred stock, $.0001 par value, 5,882,353 shares authorized .......... -- --
Common stock, no par value, 50,000,000 shared authorized,
16,287,022 shares issued and outstanding at March 31, 2000; 13,353,807
shares issued and outstanding at September 30,
1999 ................................................................. 306,160 152,426
Accumulated deficit ..................................................... (94,243) (83,256)
Notes receivable from warrant issuances and stock sales ................. (7,492) (7,547)
--------- ---------
Total shareholders' equity .............................................. 204,425 61,623
--------- ---------
Total shareholders' equity and mandatorily redeemable,
convertible preferred stock ......................................... 204,425 75,816
--------- ---------
Total liabilities, shareholders' equity and mandatorily
redeemable, convertible preferred stock .......................... $ 230,373 $ 99,611
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
---------------------------
2000 1999
---------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ................................................................... ($ 10,865) ($ 10,856)
--------- ---------
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization ........................................... 7,819 5,662
Provision for doubtful accounts ......................................... 240 120
Provision for inventory valuation ....................................... 520 --
Detachable warrant accretion and debt issuance cost amortization ........ 843 633
Equity in net loss of unconsolidated affiliates ......................... 5,813 1,671
Deferred gain on sales to an unconsolidated affiliate ................... 439 1,259
Compensatory stock issuances ............................................ 255 211
Change in assets and liabilities:
Accounts receivable - trade .................................... (6,477) (4,145)
Accounts receivable - related parties .......................... 641 (2,247)
Inventories .................................................... 8,216) (239)
Other current assets ........................................... 4,322) (86)
Other assets ................................................... (151) 316
Accounts payable ............................................... 5,943 (2,891)
Accrued expenses ............................................... (494) 1,260
Advanced billings .............................................. 4,417 3,502
Other liabilities .............................................. -- (53)
--------- ---------
Total adjustments .......................................................... 7,270 4,973
--------- ---------
Net cash used for operating activities ................................. (3,595) (5,883)
--------- ---------
INVESTING ACTIVITIES:
Purchase of property, plant, and equipment ................................. (9,932) (10,449)
Investments in unconsolidated affiliates ................................... (4,083) (5,771)
Payments of restricted cash ................................................ -- 62
--------- ---------
Net cash used for investing activities ................................. (14,015) (16,158)
--------- ---------
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCING ACTIVITIES:
Proceeds from public stock offering, net of $8,250 issue costs ............. 127,750 --
Proceeds from preferred stock offering, net of $500 issue costs ............ -- 21,200
Payments under notes payable - related party, net .......................... -- (7,000)
Proceeds under bank loans .................................................. -- 5,050
Payments on capital lease obligations ...................................... (373) (225)
Proceeds from exercise of stock options .................................... 1,271 200
Dividends paid on preferred stock .......................................... (133) --
Proceeds from exercise of stock purchase warrants .......................... 4,078 --
Proceeds from shareholders' notes receivable ............................... 55 --
--------- ---------
Net cash provided by financing activities .............................. 132,648 19,225
========= =========
Net decrease in cash and cash equivalents .................................. 115,038 (2,816)
Cash and cash equivalents, beginning ....................................... 7,165 4,456
========= =========
Cash and cash equivalents, ending .......................................... 122,203 1,640
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest .............................. $ 220 $ 865
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
EMCORE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1999
AND THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SHAREHOLDERS' TOTAL
COMMON STOCK ACCUMULATED NOTES SHAREHOLDERS'
SHARES AMOUNT DEFICIT RECEIVABLE EQUITY
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1997 ................ 6,000 $ 45,817 ($ 23,777) $ (209) $ 21,831
Issuance of common stock purchase
warrants ..................................... -- 1,310 -- -- 1,310
Issuance of common stock on exercise of
warrants in exchange for notes
receivable ................................ 1,828 7,458 -- (7,458) --
Issuance of common stock and common stock
purchase options and warrants in connection
with the acquisition of MODE .............. 1,462 32,329 -- -- 32,329
Stock option exercise ........................ 36 83 -- -- 83
Stock purchase warrant exercise .............. 6 23 -- -- 23
Issuance of common stock on exercise of
warrants in exchange for subordinated notes .. 18 72 -- -- 72
Compensatory stock issuance .................. 26 351 -- -- 351
Net loss ..................................... -- -- (36,419) -- (36,419)
--------- --------- --------- --------- ---------
BALANCE AT SEPTEMBER 30, 1998 ................ 9,376 $ 87,443 ($ 60,196) ($ 7,667) $ 19,580
========= ========= ========= ========= =========
Issuance of common stock from public
offering, net of issuance costs of $5,000 .... 3,000 52,000 -- -- 52,000
Stock purchase warrant exercise .............. 322 2,450 -- -- 2,450
Issuance of common stock purchase warrants ... -- 2,596 -- -- 2,596
Redemption of shareholders' notes receivable . -- -- -- 120 120
Conversion of mandatorily redeemable
convertible preferred stock into common
stock ..................................... 520 7,125 -- -- 7,125
Compensatory stock issuance .................. 26 436 -- -- 436
Stock option exercise ........................ 110 376 -- -- 376
Preferred stock dividends .................... -- -- (319) -- (319)
Periodic accretion of redeemable preferred
stock to mandatory redemption value ....... -- -- (52) -- (52)
Net loss ..................................... -- -- (22,689) -- (22,689)
--------- --------- --------- --------- ---------
BALANCE AT SEPTEMBER 30, 1999 ................ 13,354 $ 152,426 ($ 83,256) ($ 7,547) $ 61,623
========= ========= ========= ========= =========
Issuance of common stock from public
offering, net of issuance costs of $8,250 .... 1,000 127,750 -- -- 127,750
Stock purchase warrant exercise .............. 413 4,078 -- -- 4,078
Redemption of shareholders' notes
receivable ................................ -- -- -- 55 55
Conversion of mandatorily redeemable
convertible preferred stock into common
stock ..................................... 1,030 14,167 -- -- 14,167
Conversion of convertible subordinated
debenture, net of issuance costs of
$2,275 .................................... 341 5,525 -- -- 5,525
Compensatory stock issuances ................. 7 255 -- -- 255
Issuance of common stock purchase warrants ... -- 689 -- -- 689
Stock option exercise ........................ 142 1,271 -- -- 1,271
Preferred stock dividends .................... -- -- (82) -- (82)
Periodic accretion of redeemable preferred
stock to mandatory redemption
value ..................................... -- -- (40) -- (40)
Net loss ..................................... -- -- (10,865) -- (10,865)
--------- --------- --------- --------- ---------
BALANCE AT MARCH 31, 2000 .................... 16,287 $ 306,160 ($ 94,243) ($ 7,492) $ 204,425
========= ========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE> 7
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 the Company's consolidated
financial position as of March 31, 2000, the consolidated results of operations
for the three- and six-month periods ended March 31, 2000 and 1999, and the
consolidated cash flows for the six-month periods ended March 31, 2000 and 1999.
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
six-month periods ended March 31, 2000 are not necessarily indicative of the
results for the fiscal year ending September 30, 2000 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. Revenues for the
systems-related business unit consist of sales of EMCORE's TurboDisc(R)
production systems as well as spare parts and services related to these systems.
Our systems-related business unit assists our customers with device design,
process development and optimal configuration of TurboDisc production 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. There are no intercompany sales
transactions between the two operating segments. Available segment information
has been presented in the Statements of Operations.
NOTE 2. SHAREHOLDERS' EQUITY
SHELF REGISTRATION
On January 19, 2000, the Company filed a shelf registration statement (the
"Shelf Registration Statement") with the Securities and Exchange Commission to
offer from time to time up to 2.0 million shares of common stock. The Shelf
Registration Statement became effective on February 4, 2000.
PUBLIC OFFERING
On March 1, 2000, the Company completed the issuance of 1.0 million common
stock shares under the Shelf Registration Statement that resulted in proceeds of
$127.8 million, net of issuance costs of $8.2 million. A portion of the proceeds
was used to repay all outstanding bank indebtedness.
PREFERRED STOCK CONVERSION
On November 30, 1998, the Company sold an aggregate of 1,550,000 shares of
Series I Redeemable Convertible Preferred Stock (the "Series I Preferred Stock")
for aggregate consideration of $21.7 million before deducting costs and
expenses, which amounted to approximately $500,000. The Series I Preferred Stock
was recorded net of issuance costs. The excess of the preference amount over the
carrying value was being accreted by periodic charges to accumulated deficit.
The Series I Preferred Stock carried a dividend of 2% per annum that was charged
to accumulated deficit. In June 1999, 520,000 shares of the Series I Preferred
Stock were converted to common stock. During the six-month period ended March
31, 2000, the remaining 1,030,000 shares of the Series I Preferred Stock were
converted to common stock.
7
<PAGE> 8
EMCORE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. JOINT VENTURES
In May 1999, General Electric Lighting and the Company formed GELcore, a
joint venture to develop and market High Brightness Light-Emitting Diode ("HB
LED") lighting products. General Electric Lighting and the Company 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, the Company has a 49% non-controlling interest in the GELcore venture
and accounts for its investment under the equity method of accounting. For the
six-month period ended March 31, 2000, the Company recognized a loss of $2.5
million related to this joint venture which has been recorded as a component of
other income and expense. As of March 31, 2000, the Company's net investment in
this joint venture amounted to $2.8 million.
In May 1999, in connection with the GELcore venture, General Electric
funded the Company's initial capital contribution of $7.8 million in GELcore.
The funding was in the form of a subordinated debenture (the "Debenture") with
an interest rate of 4.75%. The Debenture was to mature in 2006 and was
convertible into common stock of the Company at the conversion price of $22.875
or 340,984 shares. In addition, General Electric also received 282,010 warrants
to purchase common stock at $22.875 per share. These warrants are exercisable at
any time and expire in 2006. These warrants were valued using Black Scholes
model, resulting in a valuation of $2.6 million, which was included in other
assets as a deferred financing cost. The asset was being amortized over the life
of the Debenture. In March 2000, General Electric converted the subordinated
debenture into 340,984 shares of common stock. In conjunction with recording the
conversion, the unamortized warrant value of approximately $2.3 million was
charged against common stock as an equity issuance cost. On a fully diluted
basis, General Electric would own approximately 4% of the common stock of the
Company.
In March 1997, the Company and a subsidiary of Uniroyal Technology
Corporation formed Uniroyal Optoelectronics LLC, a joint venture, to
manufacture, sell and distribute HB LED wafers and package-ready devices. Under
the terms of the joint venture agreement, the Company has a 49% non-controlling
interest in this joint venture and accounts for its investment under the equity
method of accounting. In March 2000, the Company invested an additional $4.1
million in this venture. For the six months ended March 31, 2000, the Company
recognized a loss of $3.3 million related to this joint venture, which has been
recorded as a component of other income and expense. As of March 31, 2000, the
Company's net investment in this joint venture amounted to $4.4 million.
NOTE 4. INVENTORIES
The components of inventories, net of reserves, consisted of the following:
<TABLE>
<CAPTION>
AS OF AS OF
(AMOUNTS IN THOUSANDS) MARCH 31, 2000 SEPTEMBER 30, 1999
-------------- ------------------
<S> <C> <C>
Raw materials............................. $11,919 $9,146
Work-in-process.......................... 7,864 3,620
Finished goods............................ 1,848 1,224
-------- ---------
Total .................. $21,631 $13,990
======== =========
</TABLE>
8
<PAGE> 9
EMCORE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. EARNINGS PER SHARE
The Company accounts for earnings per share under the provision of
Statement of Financial Accounting Standards No. 128 "Earnings per share". Basic
earnings per common share were calculated by dividing net loss by the weighted
average number of common stock shares outstanding during the period. The effect
of outstanding common stock purchase options and warrants have been excluded
from the earnings per share calculation since the effects of such securities are
anti-dilutive. The following table reconciles the number of shares utilized in
the earnings per share calculations for the three- and six-month periods ending
March 31, 2000 and 1999, respectively.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
. ENDED MARCH 31, ENDED MARCH 31,
-------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss .................................... ($ 4,207) ($ 3,977) ($10,865) ($10,856)
Preferred stock dividends .......... (15) (108) (82) (145)
Periodic accretion of redeemable
preferred stock to mandatory
redemption value ................... (5) (18) (40) (24)
-------- -------- -------- --------
Net loss attributable to common
shareholders ................................ ($ 4,227) ($ 4,103) ($10,987) ($11,025)
======== ======== ======== ========
Net loss per basic and diluted share ........ ($ 0.28) ($ 0.44) ($ 0.77) ($ 1.17)
======== ======== ======== ========
Weighted average of outstanding common shares
- - basic ..................................... 14,895 9,427 14,314 9,409
Effect of dilutive securities:
Stock option and warrants .......... -- -- -- --
Weighted average of outstanding common shares
- - diluted ................................... 14,895 9,427 14,314 9,409
======== ======== ======== ========
</TABLE>
NOTE 6. RELATED PARTIES
In 1999, the Company's Chairman personally guaranteed the Company's bank
facility and extended a line of credit to the Company. In recognition of these
services, the Company's Board of Directors granted a warrant for 300,000 shares
of common stock to the Chairman. The warrant was immediately exercisable at
$12.94 per share. The warrant was issued during the current period, and as it
related to past services, the fair value was charged as an expense in the
Statement of Operations. The Company assigned a fair value of approximately
$700,000 to the warrants, which was based upon the Company's application of the
Black-Scholes option-pricing model. The consequent expense was charged to
"Imputed warrant interest, non-cash".
The President of Hakuto Co. Ltd. ("Hakuto"), the Company's Asian
distributor, is a member of the Company's Board of Directors and Hakuto is a
minority shareholder of the Company. During the six months ended March 31, 2000
and 1999, sales made through Hakuto amounted to approximately $6.5 million and
$5.1 million, respectively.
9
<PAGE> 10
EMCORE CORPORATION
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE
EMCORE'S ACTUAL RESULTS TO DIFFER FROM THOSE PROJECTED IN
FORWARD-LOOKING STATEMENTS:
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, you are advised that this report contains both
statements of historical facts and forward-looking statements.
This report includes forward-looking statements that reflect current
expectations or beliefs of EMCORE concerning future results and events. The
words "expects," "intends," "believes," "anticipates," "likely," "will", and
similar expressions often identify forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results and events to differ materially from those
anticipated in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to: 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 described in EMCORE's filings
with the Securities and Exchange Commission. The forward-looking statements
contained in this report 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.
OVERVIEW:
EMCORE designs, develops and manufactures compound semiconductor
materials and is a leading developer and manufacturer of the tools and
manufacturing processes used to fabricate compound semiconductor wafers and
devices. EMCORE's products are used for a wide variety of applications in the
communications (satellite, data, telecommunications and wireless), consumer and
automotive electronics, computers and peripherals and lighting markets. EMCORE
provides its customers with a broad range of compound semiconductor products and
services intended to meet their diverse technology requirements.
EMCORE has developed extensive materials science expertise, process
technology and MOCVD production systems to address its customers' needs and
believes that its proprietary TurboDisc(R) 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. This
platform technology provides the basis for the production of various types of
compound semiconductor wafers and devices and enables EMCORE to address the
critical need of manufacturers to cost-effectively get to the market faster with
high volumes of new and improved high-performance products. EMCORE's compound
semiconductor products and services include:
o development of materials and processes;
o design and development of devices;
o fabrication and assembly of MOCVD production systems; and
o manufacture of wafers and devices in high volumes.
10
<PAGE> 11
EMCORE CORPORATION
OVERVIEW: (CONTINUED)
Customers can take advantage of EMCORE's vertically integrated approach
by purchasing custom-designed wafers and devices from EMCORE or they can
manufacture their own devices in-house using a TurboDisc production system
configured to their specific needs. Our customers include Agilent Technologies
Ltd., AMP, Inc., General Motors Corp., Hewlett Packard Co., Hughes-Spectrolab,
JDS Uniphase Corporation, Loral Space & Communications, Lucent Technologies,
Inc., Motorola, Inc., Siemens AG's Osram, Sumitomo Electric Industries, Ltd. and
12 of the largest electronics manufacturers in Japan.
In order to facilitate the development and manufacture of new products
in targeted growth areas, EMCORE has established a number of strategic
relationships through joint ventures, long-term supply agreements and an
acquisition. The most significant strategic relationships are summarized below:
o In May 2000, EMCORE signed an agreement with Motorola, Inc. to meet
their requirements for epitaxial tools, wireless electronic
materials and technology. This relationship includes supplying
Motorola with epitaxial process technology and multiple MOCVD
production tools, as well as purchase orders for electronic device
epitaxial wafers. Motorola also announced that EMCORE was awarded
their Standard Supplier Designation, making EMCORE the only
qualified supplier of MOCVD tools for Motorola's compound
semiconductor factories. EMCORE will also transfer full pHEMT epi
technology from its E2M foundry division to Motorola in order to
ensure full compatibility between the wafers supplied by E2M and
Motorola's internal production on the EMCORE tools.
o In January 2000, EMCORE signed a Memorandum of Understanding with
JDS Uniphase Corporation ("JDS Uniphase"). Under the Memorandum of
Understanding, EMCORE and JDS Uniphase will, upon execution of a
final agreement, jointly develop, manufacture and market a family of
fiberoptic array transceivers based on EMCORE's laser technology
that facilitate light to logic (electronic signal in/modulated light
signal out) for fiberoptic communications solutions used in
switches, routers and computer backplanes. EMCORE will manufacture
VCSEL arrays and design gigabit speed control circuits,
photodetectors, optical links and other components. JDS Uniphase
will provide technical support for the optical packaging for the
products and handle all marketing and worldwide sales and
distribution. EMCORE intends that the initial product jointly
developed and commercialized in this alliance with JDS Uniphase will
be an array transceiver with twelve channels each operating at 1.25
Gigabits/second, yielding a compact, high speed data link. These
products are designed to make possible short distance links between
dense wavelength division multiplexing systems (DWDM), high-speed
routers and SONET (long-haul telecommunications) equipment. EMCORE
expects to begin shipping samples of an array transceiver by the
third calendar quarter;
o In January 2000, EMCORE entered into a three-year supply agreement
with Agilent Technologies, Inc. ("Agilent"), a leading supplier of
fiberoptic transceivers and integrated circuits for infrastructure
products for the Internet. Under this agreement, EMCORE will
manufacture Gigarray(R) VCSEL arrays for use in parallel optical
transceivers. The initial purchase order under the agreement is
contingent upon EMCORE's development of a component that meets
Agilent's specifications. EMCORE expects to begin shipping sample
products in June 2000, with full commercial shipments commencing by
calendar year-end;
o In May 1999, EMCORE and General Electric Lighting formed GELcore, a
joint venture to develop and market 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. GELcore seeks to combine EMCORE's materials
science expertise, process technology and compound semiconductor
production systems with General Electric Lighting's brand name
recognition and extensive marketing and distribution capabilities.
GELcore's long-term goal is to develop products to replace
traditional lighting. EMCORE has invested $7.8 million in GELcore
and has seconded various employees to the joint venture to assist in
the development of products;
11
<PAGE> 12
EMCORE CORPORATION
OVERVIEW: (CONTINUED)
o In November 1998, EMCORE signed a long-term supply agreement with
Space Systems/Loral, a wholly owned subsidiary of Loral Space &
Communications. Under this agreement, EMCORE supplies compound
semiconductor high-efficiency gallium arsenide solar cells for
Loral's satellites. EMCORE began shipping solar cells in December
1999 and has already completed initial purchase orders totaling over
$6.1 million. In March 2000, EMCORE received more purchase orders
from Space Systems/Loral totaling $13.1 million. EMCORE services
this agreement through a newly completed facility in Albuquerque,
New Mexico. This facility presently employs approximately 75 people,
including sales and marketing, administrative and manufacturing
personnel;
o In March 1997, EMCORE and a wholly owned subsidiary of Uniroyal
Technology Corporation formed Uniroyal Optoelectronics LLC, a joint
venture, to manufacture, sell and distribute HB LED wafers and
package-ready devices. This joint venture commenced operations in
July 1998. EMCORE has invested over $10.0 million in Uniroyal
Optoelectronics and has seconded various employees to the joint
venture to assist in the development of products; and
o In March 1997, EMCORE acquired MicroOptical Devices, Inc. ("MODE")
in a stock transaction accounted for under the purchase method of
accounting for a purchase price of $32.8 million. This acquisition
allowed EMCORE to expand its technology base into the data
communications and telecommunications markets. MODE, a development
stage company, constituted a significant and strategic investment
for EMCORE to acquire and gain access to MODE's in-process research
and development of micro-optical technology. As part of this
acquisition, EMCORE recorded goodwill of approximately $13.2
million, which is being charged against operations over a three-year
period, and will, therefore impact financial results through
December 2000. MODE's operations are located in Albuquerque, New
Mexico and currently employ approximately 73 people including sales
and marketing, administrative and manufacturing personnel.
EMCORE has generated a significant portion of its sales to customers
outside the United States. In fiscal 1997, 1998 and 1999, international sales
constituted 42.0%, 39.1% and 52.5%, respectively, of revenues. For the six
months ended March 31, 2000, international sales constituted 44.5% of revenues.
In fiscal year 1999, the majority of EMCORE's international sales were made to
customers in Asia. In the six-month period ending March 31, 2000, sales in
Europe have already increased 88% over the entire 12-month period of fiscal year
1999. EMCORE's sales revenues from Europe have fluctuated because most sales of
TurboDisc systems are to a limited number of customers, who do not purchase
production systems regularly. EMCORE anticipates that international sales will
continue to account for a significant portion of revenues. Historically, EMCORE
has received all payments for products and services in U.S. dollars and
therefore EMCORE does not anticipate that fluctuations in Europe's Euro-currency
or any other 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
and percentages by geographic region.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, SIX MONTHS ENDED
1997 1998 1999 MARCH 31, 2000
------------------------ ------------------- ----------------------- -----------------------
REVENUE % REVENUE % REVENUE % REVENUE %
--------------- -------- ---------- -------- ------------ --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REGION
North America $27,690 58% $26,648 61% $27,698 48% $22,439 56%
Asia 14,584 31% 15,527 35% 28,211 48% 13,406 33%
Europe 5,478 11% 1,585 4% 2,432 4% 4,581 11%
-------- ---- ------- ---- ------- ---- ------- ----
TOTAL $47,752 100% $43,760 100% $58,341 100% $40,426 100%
======= ==== ======= ==== ======= ==== ======= ====
</TABLE>
12
<PAGE> 13
EMCORE CORPORATION
OVERVIEW - (CONTINUED):
As of March 31, 2000, EMCORE had an order backlog of $84.0 million
scheduled to be shipped through March 31, 2001. This represented an increase of
$40.9 million or 94.9% since September 30, 1999. EMCORE includes in backlog only
customer purchase orders that have been accepted by EMCORE and for which
shipment dates have been assigned within the 12 months to follow and research
contracts that are in process or awarded. Wafer and device agreements extending
longer than one year in duration are included in backlog only for the ensuing 12
months. 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. 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.
Our systems-related business unit assists our customers with device design,
process development and optimal configuration of TurboDisc production 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 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. There are no intercompany sales transactions
between the two operating segments.
RESULTS OF OPERATIONS:
COMPARISON OF THREE- AND SIX-MONTH PERIODS ENDED MARCH 31, 1999 AND 2000
REVENUES. EMCORE's revenues increased $7.8 million or 48.9% from $16.1
million for the three-month period ended March 31, 1999 to $23.9 million for the
three-month period ended March 31, 2000. For the six-month period ended March
31, 2000, revenues increased $14.2 million or 54.3% from $26.2 million in 1999
to $40.4 million in 2000. The increase was primarily attributable to increased
revenues in the materials-related product lines. Revenues from materials-related
sales were $2.7 million and $10.6 million, respectively, for the three-month
periods ended March 31, 1999 and 2000, respectively, and $5.6 million and $15.1
million for the six-month periods ended March 31, 1999 and 2000, respectively.
This revenue growth primarily relates to sales of solar cells to Space
Systems/Loral and sales of pHEMT and HBT epitaxial wafers to wireless
communication companies. Revenues from systems-related sales remained constant
at $13.4 million for the three months ended March 31, 2000 while increasing $4.7
million or 22.8% from $20.6 million to $25.3 million for the six-month periods
ended March 31, 1999 and 2000, respectively. As a percentage of revenues,
systems- and materials-related revenues accounted for 83.1% and 16.9%,
respectively, for the three-month period ended March 31, 1999 and 55.9% and
44.1%, respectively, for the three-month period ended March 31, 2000. EMCORE
expects the product mix between systems and materials to continue to approach
50% as other new products are introduced and production of commercial volumes of
these materials commences. International sales accounted for 45.5% of revenues
for the three-month period ended March 31, 1999 and 44.5% of revenues for the
three-month period ended March 31, 2000.
13
<PAGE> 14
EMCORE CORPORATION
RESULTS OF OPERATIONS: (CONTINUED)
COST OF REVENUES/GROSS PROFIT. Cost of sales includes direct material
and labor costs, allocated manufacturing and service overhead and installation
and warranty costs. EMCORE's gross profit increased $3.1 million or 44.7% from
$6.8 million for the three-month period ended March 31, 1999 to $9.9 million for
the three-month period ended March 31, 2000. For the six-month period ended
March 31, 2000, gross profit increased $5.7 million or 51.8% from $11.0 million
to $16.7 million. As a percentage of revenue, gross profit decreased slightly
from 42.7% of revenue for the three-month period ended March 31, 1999 to 41.5%
of revenue for the three-month period ended March 31, 2000. During the
three-month period ended March 31, 1999, EMCORE sold a compound semiconductor
production system for approximately $2.3 million to the Uniroyal joint venture
in which it has a 49% minority interest. During the three-month period ended
March 31, 2000, EMCORE sold two production systems to the joint venture for a
total of approximately $2.7 million. The deferred gross profit from these sales
will be recognized ratably over the assigned life of the production systems
purchased by the joint venture.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased by $2.0 million or 63.4% from $3.2 million for the
three-month period ended March 31, 1999 to $5.3 million for the three-month
period ended March 31, 2000. For the six-month period ended March 31, 2000,
selling, general and administrative expenses increased $3.6 million or 57.0%
from $6.4 million in 1999 to $10.0 million in 2000. A significant portion of the
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. As a percentage of revenue, selling,
general and administrative expenses increased slightly from 20.1% for the
three-month period ended March 31, 1999 to 22.0% for the three-month period
ended December 31, 2000.
GOODWILL AMORTIZATION. Goodwill of $13.2 million was recorded in
connection with our acquisition of MODE on March 5, 1997. EMCORE recognized
approximately $1.1 million of goodwill amortization for the three-month periods
ended March 31, 1999 and 2000. As of March 31, 2000, EMCORE had approximately
$2.9 million of net goodwill remaining, which will be fully amortized by
December 2000.
RESEARCH AND DEVELOPMENT. Research and development expenses increased
$314,000 or 7.2% from $4.3 million in the three-month period ended March 31,
1999 to $4.7 million in the three-month period ended March 31, 2000. For the
six-month period ended March 31, 2000, research and development expenses
decreased $902,000 or 8.8% from $10.3 million in 1999 to $9.4 million in 2000.
As a percentage of revenue, research and development expenses decreased from
27.1% for the three-month period ended March 31, 1999 to 19.5% for the
three-month period ended March 31, 2000. The overall year-to-date decrease in
research and development spending was primarily attributable to the elimination
of certain projects as new products were introduced. To maintain growth and to
continue to pursue market leadership in materials science technology, EMCORE
expects to continue to invest a significant amount of its resources in research
and development.
OPERATING LOSS. EMCORE reported a 39.2% decrease in operating loss from
$1.8 million for the three-month period ended March 31, 1999, to an operating
loss of $1.1 million for the three-month period ended March 31, 2000. For the
three-months ended March 31, 2000, EMCORE reported an operating profit before
goodwill amortization of $3,000 compared to an operating loss before goodwill
amortization of $704,000 in the three months ended March 31, 1999. For the
six-month period ended March 31, 2000, operating loss decreased 37.6% from $7.9
million in 1999 to $4.9 million in 2000. The decrease in operating loss was
principally due to a significant increase in revenues and gross profit which was
also slightly offset by deferred gross profit on compound semiconductor
production systems sold to a joint venture.
14
<PAGE> 15
EMCORE CORPORATION
RESULTS OF OPERATIONS: (CONTINUED)
OTHER INCOME/EXPENSE. For the three-month period ended March 31, 2000,
net stated interest changed $1.1 million from net interest expense of $463,000
to net interest income of $615,000. In March 2000, EMCORE completed the issuance
of an additional 1.0 million common stock shares through a public offering,
which resulted in proceeds of $127.8 million, net of issuance costs. A portion
of the proceeds was used to repay all outstanding bank loans, thereby reducing
interest expense and generating interest income on the retained proceeds.
In 1999, EMCORE's Chairman personally guaranteed EMCORE's bank facility
and extended a line a credit to EMCORE. In recognition of these services,
EMCORE's Board of Directors granted a warrant for 300,000 shares of common stock
to the Chairman. The warrant was immediately exercisable at $12.94 per share.
The warrant was issued during the current period, and as it related to past
services, the fair value was charged as an expense in the statement of
operations. EMCORE assigned a fair value of approximately $700,000 to the
warrants, which was based upon EMCORE's application of the Black-Scholes
option-pricing model. The consequent expense was charged to "Imputed warrant
interest, non-cash"
Because EMCORE does not have a controlling economic and voting interest
in the General Electric Lighting, Uniroyal Technology and Union Miniere joint
ventures, EMCORE accounts for these joint ventures under the equity method of
accounting. For the three-month period ended March 31, 1999, EMCORE incurred a
net loss of $497,000 related to the GELcore joint venture, a $757,000 net loss
related to the Uniroyal joint venture and a $141,000 net loss related to the
Union Miniere joint venture. For the three-month period ended March 31, 2000,
EMCORE incurred a net loss of $1.1 million related to the GELcore joint venture,
a $1.9 million net loss related to the Uniroyal joint venture and a $25,000 net
loss related to the Union Miniere joint venture. For the six-month period ended
March 31, 1999, EMCORE incurred a net loss of $497,000 related to the GELcore
joint venture, a $1.0 million net loss related to the Uniroyal joint venture and
a $141,000 net loss related to the Union Miniere joint venture. For the
six-month period ended March 31, 2000, EMCORE incurred a net loss of $2.5
million related to the GELcore joint venture, a $3.3 million net loss related to
the Uniroyal joint venture and a $52,000 net loss related to the Union Miniere
joint venture.
INCOME TAXES. As a result of its losses, EMCORE did not incur any income
tax expense in any of the three- and six-month periods ended March 31, 1999 and
2000.
NET LOSS. EMCORE reported a $230,000 increase in net loss from $4.0
million for the three-month period ended March 31, 1999, to a net loss of $4.2
million for the three-month period ended March 31, 2000. The increase in net
loss was primarily attributable to the significant increase in the net loss from
unconsolidated affiliates.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $120.6 million from $1.6 million
at September 30, 1999 to $122.2 million at March 31, 2000. For the six-month
period ended March 31, 2000, net cash used for operations amounted to $3.6
million, primarily due to EMCORE's net loss and increases in accounts receivable
and inventory, partially offset by increases in accounts payable and non-cash
charges related to both equity in net losses from unconsolidated affiliates and
depreciation and amortization. Net cash used for investment activities amounted
to $14.0 million, primarily due to the purchase and manufacture of new equipment
for the facilitation of EMCORE's wafer and device product lines, and clean room
modifications and enhancements. In fiscal year 2000, EMCORE plans to quadruple
the production capacity for GaInP HBTs and pHEMTs to meet wireless and
fiberoptic market demands. Net cash provided by financing activities for the
six-month period ended March 31, 2000 amounted to approximately $132.6 million
primarily from the issuance of 1.0 million common stock shares under EMCORE's
Shelf Registration Statement which resulted in proceeds of $127.8 million, net
of issuance costs.
15
<PAGE> 16
EMCORE CORPORATION
LIQUIDITY AND CAPITAL RESOURCES: (CONTINUED)
In March 1997, EMCORE entered into a $10.0 million loan agreement with
First Union National Bank (the "Loan Agreement") that had an interest rate of
prime plus 50 basis points. In December 1999, the Loan Agreement was extended
through January 31, 2001. The Loan Agreement's financial covenants were modified
under the third amendment, and management believes that EMCORE will be able to
comply with such requirements throughout fiscal year 2000. The Company was in
compliance with all covenants and no amounts were outstanding under this
facility at March 31, 2000.
EMCORE believes that its current liquidity, together with available
credit, should be sufficient to meet its cash needs for working capital through
fiscal year 2001. However, if the available credit facilities, cash generated
from operations and cash on hand are not sufficient to satisfy EMCORE's
liquidity requirements, EMCORE will seek to obtain additional equity or debt
financing. Additional funding may not be available when needed or on terms
acceptable to EMCORE. If EMCORE is required to raise additional financing and if
adequate funds are not available or not available on acceptable terms, the
ability to continue to fund expansion, develop and enhance products and
services, or otherwise respond to competitive pressures will be severely
limited. Such a limitation could have a material adverse effect on EMCORE's
business, financial condition or operations.
In 1992, EMCORE received a royalty bearing, non-exclusive license under
a patent held by Rockwell International Corporation which relates to an aspect
of the manufacturing process used by TurboDisc systems. In October 1996 EMCORE
initiated discussions with Rockwell to receive additional licenses to permit
EMCORE to use this technology to manufacture and sell compound semiconductor
wafers and devices. In November 1996, EMCORE suspended these negotiations
because of litigation surrounding the validity of the Rockwell patent. EMCORE
also ceased making royalty payments to Rockwell under the license during the
pendency of the litigation. In January 1999, the case was settled and a
judgement was entered in favor of Rockwell. As a result, EMCORE may be required
to pay royalties to Rockwell for certain of its past sales, of wafers and
devices to customers who did not hold licenses directly from Rockwell.
Management has reviewed and reassessed the royalty agreements and concluded that
it has the appropriate amounts reserved at both March 31, 2000 and September 30,
1999. If EMCORE is required to pay Rockwell amounts in excess of its reserves,
its business, financial condition and results of operations could be materially
and adversely affected.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the three- and six-month periods ended March 31, 2000 and 1999,
EMCORE was not a party to any derivative contracts, heding or other material
market risk transactions.
16
<PAGE> 17
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
The following matters were submitted to a vote of shareholders at the
Company's 2000 Annual Meeting of Shareholders held February 16, 2000:
a) Election of directors
NUMBER OF SHARES
----------------------
FOR WITHHELD
--- --------
Hugh H. Fenwick 11,712,580 337,168
Thomas G. Werthan 11,712,433 337,315
Shigeo Takayama 11,404,089 645,649
b) Ratify selection of Deloitte & Touche LLP as independent auditors of
the Company for fiscal year ended September 30, 2000. Number of shares:
For: 11,958,787 Against: 57,900 Abstain: 33,061
c) Approval of EMCORE's 2000 Stock Option Plan
Number of shares: For: 6,674,725 Against: 2,322,551 Abstain: 16,595
d) Approval of EMCORE's Employee Stock Purchase Plan
Number of shares: For: 8,909,676 Against: 91,025 Abstain: 13,170
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
27 - Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed the following reports:
- Form 8-K filed February 16, 2000
- Form 8-K/A filed February 24, 2000
- Form 8-K filed February 25, 2000
17
<PAGE> 18
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: May 15, 2000 By: /s/ Reuben F. Richards, Jr.
---------------------------------------------
Reuben F. Richards, Jr.
President and Chief Executive Officer
Date: May 15, 2000 By: /s/ Thomas G. Werthan
---------------------------------------------
Thomas G. Werthan
Vice President, Finance and Administration
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF EMCORE CORPORATION FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 122,203
<SECURITIES> 0
<RECEIVABLES> 20,097
<ALLOWANCES> (555)
<INVENTORY> 21,631
<CURRENT-ASSETS> 4,723
<PP&E> 79,160
<DEPRECIATION> (28,467)
<TOTAL-ASSETS> 230,373
<CURRENT-LIABILITIES> 24,447
<BONDS> 0
0
0
<COMMON> 306,160
<OTHER-SE> (101,735)
<TOTAL-LIABILITY-AND-EQUITY> 230,373
<SALES> 23,925
<TOTAL-REVENUES> 23,925
<CGS> 13,989
<TOTAL-COSTS> 13,989
<OTHER-EXPENSES> 14,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> (4,207)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,207)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,207)
<EPS-BASIC> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
