<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 333-94911
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED AND IS EFFECTIVE. THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION - FEBRUARY 16, 2000
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 4, 2000)
- --------------------------------------------------------------------------------
1,000,000 Shares
EMCORE logo
EMCORE CORPORATION
Common Stock
- --------------------------------------------------------------------------------
EMCORE Corporation is selling 1,000,000 shares of common stock. The shares of
common stock are included for quotation on the Nasdaq National Market under the
symbol "EMKR." On February 15, 2000, the last reported sale price in the Nasdaq
National Market was $76.81 per share.
<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds, before expenses, to EMCORE........................ $ $
</TABLE>
SEE "RISK FACTORS" ON PAGES 2 TO 8 OF THE ACCOMPANYING PROSPECTUS FOR FACTORS
THAT SHOULD BE CONSIDERED BEFORE INVESTING IN THE SHARES OF EMCORE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
The underwriters may, under certain circumstances, purchase up to 150,000
additional shares from EMCORE at the public offering price, less underwriting
discounts and commissions. Delivery and payment for the shares will be on
, 2000.
PRUDENTIAL VOLPE TECHNOLOGY
a unit of Prudential Securities
WIT SOUNDVIEW
ROTH CAPITAL PARTNERS
Incorporated
February , 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE PROSPECTUS PAGE
- --------------------- ---- ---------- ----
<S> <C> <C> <C>
Forward Looking Statements............. S-2 The Company............................. 1
Prospectus Supplement Summary.......... S-3 Risk Factors............................ 2
Use of Proceeds........................ S-7 Use of Proceeds......................... 9
Price Range of Common Stock and Plan of Distribution.................... 9
Dividend Policy...................... S-7 Description of Securities............... 10
Capitalization......................... S-8 Legal Matters........................... 11
Dilution............................... S-9 Experts................................. 11
Selected Financial Data................ S-10 Where to Find More Information.......... 11
Business............................... S-12
Management............................. S-25
Underwriting........................... S-28
Legal Matters.......................... S-29
Experts................................ S-29
</TABLE>
- --------------------------------------------------------------------------------
We were incorporated in the State of New Jersey in September 1986. Our
World Wide Web site is www.emcore.com. Our web site is not part of this
prospectus supplement. EMCORE and TurboDisc(R) are registered trademarks of
EMCORE and Gigalese(R), Gigarray(R) and the EMCORE logo are trademarks of
EMCORE. Each trademark, trade name or service mark of any other company
appearing in this prospectus supplement belongs to its holder.
- --------------------------------------------------------------------------------
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We have based these forward-looking
statements largely on our current expectations and projections about future
events and financial trends affecting the financial condition of our business.
These forward-looking statements are subject to a number of risks, uncertainties
and assumptions about us, including, among other things:
- general economic and business conditions, both nationally and in our
markets;
- our expectations and estimates concerning future financial performance,
financing plans and the effect of competition;
- anticipated trends in the compound semiconductor wafers and devices
business;
- existing and future regulations affecting the compound semiconductor
wafers and devices business; and
- other risk factors set forth in the "Risk Factors" section of the
prospectus.
In addition, in this prospectus supplement and the accompanying prospectus,
the words "believe," "may," "will," "estimate," "continue," "anticipate,"
"intend," "expect" and similar expressions, as they relate to us, our business
or our management, are intended to identify forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus supplement and the accompanying
prospectus may not occur and actual results could differ materially from those
anticipated or implied in the forward-looking statements.
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus
supplement, the accompanying prospectus and the documents incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any jurisdiction
where the offer or sale is not permitted. You should not assume that the
information in this prospectus supplement and the accompanying prospectus is
accurate as of any other date than the date on the front cover of this
prospectus supplement.
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere in this prospectus
supplement. This summary is not complete and may not contain all of the
information that you should consider before investing in our common stock. You
should read this prospectus supplement and the accompanying prospectus
carefully.
EMCORE CORPORATION
EMCORE designs, develops and manufacturers 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. Our production tools and process, and technology enable our customers
to manufacture commercial volumes of high-performance electronic devices using
compound semiconductors. Our products are used in a wide variety of applications
in the communications (satellite, data, telecommunications and wireless),
consumer and automotive electronics, computers and peripherals and lighting
markets. EMCORE's customers include AMP Inc., General Motors Corp., Hewlett
Packard Co., Hughes-Spectrolab, JDS Uniphase Corporation, Loral Space &
Communications, Lucent Technologies, Inc., Siemens AG's Osram GmbH subsidiary,
Sumitomo Electric Industries, Ltd. and 12 of the largest electronics
manufacturers in Japan.
Compound semiconductors are the key components of electronic systems and
electronic circuits and are used in today's most advanced information systems.
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. These elements are combined in our proprietary
manufacturing process to create a round disk or wafer that has multiple layers
of thin films of semiconductor materials on it. The wafers are further processed
to create devices that are ready to be packaged by our customers for use in
their products. Many compound semiconductor materials have unique physical
properties that allow electrons to move at least four times faster than through
semiconductors based on silicon. Advantages of compound semiconductor devices
over silicon devices include:
- operation at higher speeds;
- lower power consumption;
- less noise and distortion; and
- 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 semiconductors into their products in order to achieve
higher performance.
S-3
<PAGE> 4
We manufacture and sell, either alone or with our joint venture partners,
the following products:
<TABLE>
<CAPTION>
<S> <C>
PRODUCT CURRENT AND POTENTIAL APPLICATIONS
- ------- ----------------------------------
Solar cells Solar panels in communications satellite
power systems
Compound semiconductor devices that emit Traffic lights
light, called high-brightness Miniature lamps
light-emitting diodes ("HB LEDs")* Automotive lighting
Flat panel displays
Compound semiconductor lasers that emit High performance data and telecommunications
light in a cylindrical beam, called lines including fiber optic cables and other
vertical cavity surface emitting lasers networking applications
("VCSELs")
Compound semiconductor sensor devices that Cam and crank shaft sensors for automobiles
can detect a magnetic field and sense the Antilock brake systems
position of a metal object called magneto Brushless motors
resistive sensors (MR sensors) Engine timing sensors
Compound semiconductor materials that Cellular phone handsets
transmit and receive communications called Fiber optics
radio frequency materials (RF materials) Satellite transmitters and receivers
TurboDisc(R) production systems Platform technology for all of the above
* Products under development
</TABLE>
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:
- apply our core scientific and manufacturing technology across multiple
product applications;
- target high growth opportunities;
- partner with key industry participants; and
- continue our investment in research and development to maintain
technology leadership.
We have recently established a number of strategic relationships through
joint ventures and long-term supply agreements including:
- a Memorandum of Understanding with JDS Uniphase Corporation for the
development, manufacturing and marketing of a family of fiberoptic array
transceivers;
- a three year supply agreement with Agilent Technologies, Inc. for VCSEL
arrays;
- a joint venture with GE Lighting to develop and market white light and
colored HB LED lighting products;
- a long-term purchase agreement for solar cells with Space Systems/Loral,
a wholly-owned subsidiary of Loral Space & Communications; and
- a cooperative development agreement and a three-year purchase agreement
with Sumitomo Electronic to provide certain RF materials for use in
cellular handsets.
S-4
<PAGE> 5
RECENT DEVELOPMENTS
In January 2000, we signed a Memorandum of Understanding with JDS Uniphase
Corporation ("JDS Uniphase"). Under this Memorandum of Understanding, we and JDS
Uniphase will, upon execution of a final agreement, jointly develop, manufacture
and market a family of fiberoptic array transceivers based on our 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. We will manufacture VSCEL arrays and design gigabit
speed control circuits, photodetectors, optical links and other components. JDS
Uniphase will design and develop the optical packaging for the products and
handle all marketing and worldwide sales and distribution. We intend that the
initial product jointly developed and commercialized in our 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.
It is expected that JDS Uniphase will place an initial purchase order upon
the signing of the agreement. The terms and conditions of delivery will be
finalized upon completion of development of the product. We expect to begin
shipments of an array transceiver by the second calendar quarter.
In January 2000, we entered into a three-year supply agreement with Agilent
Technologies, Inc., a leading supplier of fiberoptic transceivers and integrated
circuits for infrastructure products for the Internet. Under this agreement, we
will manufacture Gigarray(R) VCSEL arrays for use in parallel optical
transceivers. The initial purchase order under the agreement is contingent upon
our development of a component that meets Agilent's specifications. We expect to
begin shipping sample products in June 2000 with full commercial shipments
commencing by year end.
S-5
<PAGE> 6
THE OFFERING
<TABLE>
<S> <C>
Shares offered by EMCORE............................ 1,000,000 shares
Shares outstanding after this offering.............. 15,452,837 shares
Use of proceeds..................................... To expand manufacturing capacity for new data
communications and wireless products, to fund
additional investments in joint ventures and
for other general corporate purposes.
Nasdaq National Market symbol....................... EMKR
</TABLE>
The outstanding share information set forth above is based on the number of
shares outstanding as of December 31, 1999 and excludes:
(i) 4,188,176 shares of common stock reserved for issuance upon:
- the exercise of options outstanding which have a weighted average
exercise price of $10.87 per share;
- the exercise of warrants which have a weighted average exercise price of
$11.45 per share;
- the conversion of our convertible subordinated debenture held by General
Electric; and
(ii) up to 150,000 additional shares that may be purchased if the underwriters
exercise their over-allotment option in full.
RISK FACTORS
You should consider the risk factors described in the accompanying
prospectus before investing in EMCORE's common stock.
S-6
<PAGE> 7
USE OF PROCEEDS
We estimate our net proceeds from the offering to be $71.7 million (based
on an assumed public offering price of $76.81 per share) after deducting the
underwriting discounts and commissions and estimated offering expenses. We
currently intend to use the net proceeds from the sale of our common stock to
expand manufacturing capacity for new data communications and wireless products,
to fund additional investments in joint ventures and for other general corporate
purposes. Pending such uses, the net proceeds may temporarily be invested in
short term, interest bearing, investment grade securities or guaranteed
obligations of the U.S. Government.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
EMCORE's common stock is included for quotation on the Nasdaq National
Market under the symbol "EMKR." The following table sets forth the quarterly
high and low sale prices for EMCORE's common stock during the two most recent
fiscal years and subsequent interim period.
<TABLE>
<CAPTION>
HIGH LOW
FISCAL YEAR ENDED SEPTEMBER 30, 1998: ------ ------
<S> <C> <C>
First Quarter............................................. $23.38 $15.50
Second Quarter............................................ $19.63 $11.00
Third Quarter............................................. $16.75 $ 9.00
Fourth Quarter............................................ $13.50 $ 6.00
FISCAL YEAR ENDED SEPTEMBER 30, 1999:
First Quarter............................................. $18.38 $ 7.25
Second Quarter............................................ $28.75 $13.88
Third Quarter............................................. $23.00 $12.88
Fourth Quarter............................................ $25.00 $11.25
FISCAL YEAR ENDED SEPTEMBER 30, 2000:
First Quarter............................................. $39.25 $12.06
Second Quarter (through February 15, 2000)................ $76.81 $30.63
</TABLE>
We have not declared or paid dividends on our common stock since we were
formed. We currently do not intend to pay dividends on our common stock in the
foreseeable future so that we may reinvest our earnings in our business. The
payment of dividends, if any, on our common stock in the future will be at the
discretion of our board of directors.
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth our capitalization:
- on an actual basis as of December 31, 1999,
- on a pro forma basis, to reflect the conversion of preferred stock into
common stock, and
- pro forma, as adjusted, to reflect our receipt of the estimated net
proceeds from our sale of 1,000,000 shares of common stock.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------
PRO FORMA,
AS
ACTUAL PRO FORMA(1) ADJUSTED(1)
-------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt.............................................. $ 7,800 $ 7,800 $ 7,800
Commitments and contingencies:
Mandatorily redeemable Series I convertible preferred
stock, 657,143 shares issued and outstanding
(redeemable at maturity for $9,200); none issued and
outstanding pro forma and pro forma as adjusted........ 9,100 -- --
Shareholders' equity:
Preferred stock, $0.0001 par, 5,882,353 shares
authorized............................................. -- -- --
Common stock, no par value, 50,000,000 shares authorized,
13,795,694 shares issued and outstanding; 14,452,837
shares pro-forma; and 15,452,837 shares pro forma as
adjusted............................................... 158,023 167,123 238,827
Accumulated deficit....................................... (90,017) (90,017) (90,017)
Notes receivable from warrant issuance and stock sales.... (7,498) (7,498) (7,498)
-------- -------- --------
Total shareholders' equity........................ 60,508 69,608 141,312
-------- -------- --------
Total shareholders' equity and mandatorily
redeemable preferred stock...................... 69,608 69,608 141,312
-------- -------- --------
Total capitalization.............................. $ 77,408 $ 77,408 $149,112
======== ======== ========
</TABLE>
- ---------------
(1) As of February 7, 2000 the Series I preferred stock were voluntarily
converted into common stock.
The numbers in this table exclude (i) 4,188,176 shares of common stock
reserved for issuance upon:
- the exercise of options which have a weighted average exercise price of
$10.87 per share;
- the exercise of warrants which have a weighted average exercise price of
$11.45 per share;
- the conversion of the convertible subordinated debenture held by General
Electric; and
(ii) up to 150,000 additional shares that may be purchased if the underwriters
exercise their over-allotment option in full.
S-8
<PAGE> 9
DILUTION
Our net tangible book value as of December 31, 1999 was $53.6 million or
approximately $3.88 per share. Net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided by the number of
shares of common stock outstanding. Assuming the sale by us of 1,000,000 shares
of common stock in this offering at the assumed public offering price of $76.81
per share, the application of the estimated net proceeds therefrom, and the
conversion of preferred stock into common stock, our as adjusted net tangible
book value as of December 31, 1999 would have been $134.4 million or
approximately $8.70 per share. This represents an immediate increase in as
adjusted net tangible book value of $4.82 per share to our existing shareholders
and an immediate dilution in as adjusted net tangible book value of $68.11 per
share to new investors. The following table sets forth this per share dilution.
<TABLE>
<S> <C> <C>
Assumed public offering price..................................... $76.81
Net tangible book value as of December 31, 1999........... $3.88
As adjusted increase in net tangible book value
attributable to new investors.......................... $4.82
As adjusted net tangible book value after the Offering............ $ 8.70
------
Dilution to new investors......................................... $68.11
======
</TABLE>
The foregoing table assumes no exercise of any outstanding stock options or
warrants.
S-9
<PAGE> 10
SELECTED FINANCIAL DATA
The following selected consolidated financial data for the five most recent
fiscal years ended September 30, 1999 of EMCORE is qualified by reference to and
should be read in conjunction with the Financial Statements and the Notes
thereto, and other financial information incorporated by reference into the
prospectus. The Statement of Operations Data set forth below with respect to
fiscal years 1997, 1998 and 1999 and the Balance Sheet Data as of September 30,
1998 and 1999 are derived from EMCORE's audited financial statements which are
incorporated by reference into the prospectus. The Statement of Operations Data
for fiscal years 1995 and 1996 and the Balance Sheet Data as of September 30,
1995, 1996 and 1997 are derived from audited financial statements not included
herein. The selected financial data as of December 31, 1999 and for the three
months ended December 31, 1998 and 1999 are derived from EMCORE's unaudited
consolidated financial statements, which in the opinion of EMCORE's management,
reflect all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the financial position and results of
operations for these periods. Operating results for the three months ended
December 31, 1999 are not necessarily indicative of the results that may be
expected for the entire fiscal year ending September 30, 2000.
On December 5, 1997, EMCORE acquired MicroOptical Devices, Inc. ("MODE") in
a stock transaction accounted for under the purchase method of accounting for
$32.8 million. In connection with this transaction, EMCORE recorded a
non-recurring, non-cash charge of $19.5 million for acquired in-process research
and development, which affects the comparability of EMCORE's operating results
and financial condition.
<TABLE>
<CAPTION>
QUARTER ENDED
FISCAL YEARS ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
------- ------- ------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................. $18,137 $27,779 $47,752 $ 43,760 $ 58,341 $ 10,125 $ 16,501
Cost of sales....................... 9,927 18,607 30,094 24,676 33,158 6,016 9,778
------- ------- ------- -------- -------- -------- --------
Gross profit...................... 8,210 9,172 17,658 19,084 25,183 4,109 6,723
Operating expenses:
Selling, general and
administrative.................. 4,452 6,524 9,346 14,082 14,433 3,143 4,724
Goodwill amortization............. -- -- -- 3,638 4,393 1,099 1,098
Research and development:
Recurring......................... 1,852 5,401 9,001 16,495 20,713 5,924 4,708
One-time acquired in-process...... -- -- -- 19,516 -- -- --
------- ------- ------- -------- -------- -------- --------
Total operating expenses..... 6,304 11,925 18,347 53,731 39,539 10,166 10,530
Operating income (loss)............. 1,906 (2,753) (689) (34,647) (14,356) (6,057) (3,807)
Stated interest expense (income),
net . .......................... 265 297 520 973 866 230 (78)
Imputed warrant interest
expense......................... -- 126 3,988 601 1,136 316 163
Equity in net loss of
unconsolidated affiliates....... -- -- -- 198 4,997 276 2,766
------- ------- ------- -------- -------- -------- --------
Total other expenses......... 265 423 4,508 1,772 6,999 822 2,851
------- ------- ------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary item.......... 1,641 (3,176) (5,197) (36,419) (21,355) (6,879) (6,658)
Provision for income taxes...... 125 -- 137 -- -- -- --
------- ------- ------- -------- -------- -------- --------
Income (loss) before extraordinary
item.............................. 1,516 (3,176) (5,334) (36,419) (21,355) (6,879) (6,658)
Extraordinary item.............. -- -- 285 -- 1,334 -- --
------- ------- ------- -------- -------- -------- --------
Net income (loss)................... $ 1,516 $(3,176) $(5,619) $(36,419) $(22,689) $ (6,879) $ (6,658)
======= ======= ======= ======== ======== ======== ========
Income (loss) per basic and diluted
shares before extraordinary
item.............................. $ 0.89 $ (1.06) $ (1.14) $ (4.15) $ (2.05) $ (0.74) $ (0.49)
======= ======= ======= ======== ======== ======== ========
Net income (loss) per basic and
diluted shares.................... $ 0.89 $ (1.06) $ (1.20) $ (4.15) $ (2.18) $ (0.74) $ (0.49)
======= ======= ======= ======== ======== ======== ========
Weighted average shares used in
calculating per share data........ 1,701 2,994 4,669 8,775 10,590 9,390 13,740
======= ======= ======= ======== ======== ======== ========
</TABLE>
S-10
<PAGE> 11
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
------- ------- ------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)........ $ 2,208 $ 1,151 $12,156 $ (2,017) $ 20,690 $ 2,793 $ 16,318
Total assets........................ 10,143 20,434 39,463 73,220 99,611 77,883 99,939
Long-term liabilities............... 3,000 8,947 7,577 26,514 9,038 25,019 9,018
Redeemable convertible preferred
stock............................. -- -- -- -- 14,193 21,242 9,100
Shareholders' equity................ 1,509 522 21,831 19,580 61,623 12,792 60,508
</TABLE>
S-11
<PAGE> 12
BUSINESS
COMPANY 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
production tools and process technology enable its customers to manufacture
commercial volumes of high-performance electronic devices using compound
semiconductors. EMCORE has recently established a number of strategic
relationships through joint ventures, long-term supply agreements and an
acquisition in order to facilitate the development and manufacture of new
products in targeted growth markets. 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's customers include Agilent, AMP
Incorporated, General Motors Corp., Hewlett Packard Co., Hughes-Spectrolab, JDS
Uniphase, Loral Space & Communications, Lucent Technologies, Inc., Motorola,
Inc., Siemens AG's Osram GmbH subsidiary, Sumitomo Electric Industries, Ltd. and
12 of the largest electronics manufacturers in Japan.
INDUSTRY OVERVIEW
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:
- operation at higher speeds;
- lower power consumption;
- less noise and distortion; and
- optoelectronic properties that enable these devices to emit and detect
light.
Compound semiconductor devices can be used to perform individual functions
as discrete devices, such as solar cells, HB LEDs, VCSELs, MR sensors and RF
materials. Compound semiconductor devices can also be combined into integrated
circuits, such as transmitters, receivers and alphanumeric displays. Although
compound semiconductors are more expensive to manufacture than silicon-based
devices, electronics manufacturers are increasingly integrating compound
semiconductor devices into their products in order to achieve higher performance
in applications targeted for a wide variety of markets. These include satellite
communications, data communications, telecommunications, wireless
communications, consumer and automotive electronics, computers and peripherals
and lighting.
The following factors have resulted in an increased demand for compound
semiconductor products and systems that enable electronic systems manufacturers
to reach the market faster with large volumes of high-performance products and
applications:
- rapid build-out of satellite communications systems;
- widespread deployment of fiber optic networks and the increasing use of
optical systems within these networks;
- launch of new wireless services and wireless high speed data systems;
S-12
<PAGE> 13
- increasing use of infrared emitters and optical detectors in computer
systems;
- emergence of advanced consumer electronics applications, such as DVDs and
flat panel displays;
- increasing use of high-performance electronic devices in automobiles; and
- the anticipated conversion to HB LEDs from incandescent, halogen and
compact fluorescent lighting.
The following chart summarizes the principal markets, examples of
applications for compound semiconductor devices, products incorporating these
devices and certain benefits and characteristics of these devices.
<TABLE>
REPRESENTATIVE
MARKET APPLICATIONS PRODUCTS BENEFITS/CHARACTERISTICS
------ -------------- --------- -------------------------
<S> <C> <C> <C>
Data communications High-speed fiber optic VCSEL components Increased network capacity
networks and and arrays Increased data
optical links HB LEDs transmission
(including Lasers speeds
Gigabit Ethernet, RF materials Increased bandwidth
asynchronous
transfer mode,
or ATM, and
FibreChannel networks)
Wireless communications Cellular telephones HB LEDs Improved display
Pagers RF materials visibility
PCS handsets Improved signal to noise
Direct broadcast systems performance
Lower power consumption
Increased network capacity
Reduced network congestion
Extended battery life
Telecommunications High capacity fiber VCSEL components Increased data transmission
optic trunk lines and arrays speeds
Lasers
RF materials Increased bandwidth
Lighting Flat panel displays HB LEDs Lower power consumption
Solid state lighting Miniature lamps Longer life
Outdoor signage and
display
Digital readout signals
Satellite communications Power modules for Solar cells Radiation tolerance
satellites RF materials Conversion of more light
Satellite to ground to power than silicon
communication
Reduced launch costs
Increased bandwidth
Automotive electronics Engine sensors MR sensors Reduced weight
Dashboard displays HB LEDs Lower power consumption
Indicator lights Lower emissions
Antilock brake systems
Computers and peripherals Local area networks VCSEL components Increased data
Chip-to-chip and and arrays transmission speeds
board-to-board Transceivers
optical links Increased bandwidth
Consumer electronics DVDs HB LEDs Improved display
Radios VCSEL components visibility
Telephones and arrays High-speed data
Calculators Integrated circuits transmission
CD-Roms Lasers Low power
requirements
</TABLE>
S-13
<PAGE> 14
COMPOUND SEMICONDUCTOR PROCESS TECHNOLOGY
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, phosphorous or nitrogen. The resulting compounds include gallium
arsenide, indium phosphide, gallium nitride, indium antimonide and indium
aluminum phosphide. The performance characteristics of compound semiconductors
are dependent on the composition of these compounds. Many of the unique
properties of compound semiconductor devices are achieved by the layering of
different compound semiconductor materials in the same device. This layered
structure creates an optimal configuration to permit the emission or detection
of light and the detection of magnetic fields.
Accordingly, the composition and properties of each layer and the control
of the layering process, or epitaxy, are fundamental to the performance of
advanced electronic and optoelectronic compound semiconductor devices. The
variation of thickness and composition of layers determines the intensity and
color of the light emitted or detected and the efficiency of power conversion.
The ability to vary the intensity, color and efficiency of light generation and
detection enables compound semiconductor devices to be used in a broad range of
advanced information systems.
Compound semiconductor device manufacturers predominantly use four methods
to deposit compound materials: molecular beam epitaxy, vapor phase epitaxy,
liquid phase epitaxy and metal organic chemical vapor deposition ("MOCVD"). The
use of molecular beam epitaxy technology can yield wafers having high thickness
uniformity. Compound semiconductor materials fabricated using liquid phase
epitaxy or vapor phase epitaxy technologies often have high electronic and
optical properties. However, due to the nature of the underlying processes, none
of these methods can be easily scaled up to high volume production, which is
necessary for the commercial viability of compound semiconductor devices. All of
the methods used to manufacture compound semiconductor devices pose technical,
training and safety challenges that are not present in the manufacture of
silicon devices. These production systems typically require expensive reactant
materials, the use of certain toxic chemicals and tight control over numerous
manufacturing parameters. The key differences between MOCVD and the three other
methods are that compound semiconductor wafers fabricated using MOCVD generally
possess a better combination of uniformity and optical and electronic properties
and are easier to produce in high volumes than wafers manufactured by the three
more traditional methods. Currently, MOCVD technology is being used to
manufacture a broad range of compound semiconductor devices.
Historically, manufacturers who use compound semiconductor devices in their
products have met research, pilot production and capacity needs with in-house
systems and technologies. However, as the need for the production of commercial
volumes of high-performance compound semiconductor devices and the variety of
these devices increases, manufacturers are often unable to meet these
requirements using in-house solutions. In response to these growing demands for
higher volumes of a broad range of higher performance devices, manufacturers are
increasingly turning to outside vendors to meet their needs for compound
semiconductor wafers and devices.
THE EMCORE SOLUTION
EMCORE provides a broad range of compound semiconductor products and
services intended to meet its customers' 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
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cost-effectively get to market faster with high volumes of new and improved
high-performance products. EMCORE's compound semiconductor products and services
include:
- materials and process development;
- design and development of devices;
- MOCVD production systems; and
- manufacture of wafers and devices in high volumes.
Customers can take advantage of EMCORE's vertically integrated approach by
purchasing custom-designed wafers and devices from EMCORE, and they can
manufacture their own devices in-house using a TurboDisc(R) production system
configured to their specific needs.
STRATEGY
EMCORE's objective is to capitalize on its position in MOCVD process
technology and production systems to become the leading supplier of compound
semiconductor wafers, devices and production systems. The key elements of
EMCORE's strategy include:
Apply Core Technology Across Multiple Applications. EMCORE continually
leverages its proprietary core technology to develop compound semiconductor
products for multiple applications in a variety of markets. These activities
include developing new products for targeted applications as well as expanding
existing products into new applications. For example, EMCORE's MR sensors,
currently used by General Motors Corporation as crank shaft sensors, also have
other potential product applications, including as sensors in brushless motors
and antilock brakes. Other existing products which EMCORE intends to introduce
in new applications include VCSELs for communications products and HB LEDs for
broader lighting applications.
Target High Growth Market Opportunities. EMCORE's strategy is to target
high growth opportunities where performance characteristics and high volume
production efficiencies can give compound semiconductors a competitive advantage
over other devices. Historically, while technologically superior, compound
semiconductors have not been widely deployed because they are more expensive to
manufacture than silicon-based semiconductors and other existing solutions.
EMCORE believes that as compound semiconductor production costs are reduced, new
customers will be compelled to use these solutions because of their higher
performance characteristics. For example, EMCORE has reduced the average cost of
compound semiconductor solar cells to the point that customers are replacing
silicon-based solar cells because of the compound semiconductor solar cells'
higher overall efficiency, better end-of-life performance and lower weight.
Partner with Key Industry Participants. EMCORE seeks to identify and
develop long-term relationships with leading companies in targeted industries.
EMCORE develops these relationships in a number of ways including through
long-term, high-volume supply agreements, joint ventures, an acquisition and
distribution and other arrangements. For example, EMCORE has entered into a
joint venture with General Electric Lighting for the development and marketing
of white light and colored HB LED products for automotive, traffic, flat panel
display and other lighting applications. EMCORE also has signed a Memorandum of
Understanding with JDS Uniphase for the joint development, manufacture and
marketing of a family of array transceivers for cost effective, high bandwidth
optical networking products. EMCORE intends to actively seek similar strategic
relationships with other key customers and industry participants in order to
further expand its technological and production base.
Continue Investment to Maintain Technology Leadership. Through substantial
investment in research and development, EMCORE seeks to expand its leadership
position in compound semiconductor production systems, wafers and devices.
EMCORE works with its customers to identify specific performance criteria and
uses this information to enhance the performance of its production systems and
to further expand its process and materials science expertise, including the
development of new low cost, high-volume wafers and devices
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for its customers. In addition, EMCORE's development efforts are focused on
continually lowering the production costs of its solutions.
PRODUCTS
PRODUCTION SYSTEMS
EMCORE is a leading supplier of MOCVD compound semiconductor production
systems, with more than 250 systems shipped as of December 31, 1999. EMCORE
believes that its TurboDisc(R) systems offer significant ownership advantages
over competing systems and that the high throughput capabilities of its
TurboDisc(R) systems make possible superior reproducibility of thickness,
composition, electronic properties and layer accuracy required for electronic
and optoelectronic devices. Each system can be customized for the customer's
throughput, wafer size and process chemistry requirements. EMCORE's production
systems also achieve a high degree of reliability with an average time available
for production, based on customer data, of approximately 95%.
EMCORE believes its TurboDisc(R) systems enable the lowest cost of
ownership for the manufacture of compound semiconductor materials. The major
components of cost of ownership include yield, throughput, direct costs and
capital costs. Yield primarily relates to material uniformity, which is a
function of the precision of the physical and chemical processes by which atomic
layers are deposited. Throughput, the volume of wafers produced per unit of
time, includes both the time required for a process cycle and the handling time
between process steps. Direct costs include consumables used in manufacturing
and processing and the clean room space required for the equipment. Capital
costs include the cost of acquisition and installation of the process equipment.
EMCORE's proprietary TurboDisc(R) technology utilizes a unique high speed
rotating disk in a stainless steel growth chamber with integrated
vacuum-compatible loading chambers. To produce a wafer, a bare substrate, such
as, gallium arsenide, sapphire or germanium, is placed on a wafer carrier in the
TurboDisc(R) growth chamber and subjected to high temperatures. Based on a
predetermined formula, metal organic gases are released into the growth chamber.
These gases decompose on the hot, rapidly spinning wafer. Semiconductor
materials are then deposited on the substrate in a highly uniform manner. The
resulting wafer thus carries one or more ultra-thin layers of compound
semiconductor material, such as gallium arsenide, gallium nitride or indium
aluminum phosphide. The TurboDisc(R) technology not only produces uniformity of
deposition across the wafer, but also offers flexibility for diverse
applications with improved material results and increased production rates. The
unique precision control of reactant gas flow in the TurboDisc(R) technology
platform allows users to scale easily from research to commercial volumes with
substantially reduced time and effort. Upon removal from the growth chamber, the
wafer is transferred to a device processing facility for various steps such as
photolithography, etching, masking, metallization and dicing. Upon completion of
these steps, the devices are then sent for packaging and incorporation in the
customer's product.
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(TurboDisc(R) Diagram)
Wafers are loaded on a multiple wafer platter into the growth chamber,
where they are subjected to high-temperature vacuum conditions and spun at high
speeds. Gases are then introduced into the vacuum growth chamber, and
semiconductor materials become deposited onto the substrate in a highly uniform
manner.
EMCORE's next generation of TurboDisc(R) products are being designed to
provide a number of innovations including:
- new reactor design to improve efficiency;
- cassette-to-cassette wafer handling to increase automation;
- digital control system to reduce noise;
- real-time process control and data acquisition on WindowsNT platform;
- modular component design to ease outsourcing and upgrading; and
- improved temperature control.
WAFERS AND DEVICES
Since its inception, EMCORE has worked closely with its customers to design
and develop process technology and materials science expertise for use in
production systems for its customers' end-use applications. EMCORE has leveraged
its process and materials science knowledge base to manufacture a broad range of
compound semiconductor wafers and devices, such as, solar cells, HB LEDs,
VCSELs, MR sensors and RF materials.
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Within most of these product lines, EMCORE has established strategic
relationships through joint ventures, long-term supply agreements and an
acquisition. A summary of these relationships is found below.
<TABLE>
<CAPTION>
PRODUCTS AND STRATEGIC RELATIONSHIPS
NATURE OF
PRODUCT LINE COMPANY RELATIONSHIP APPLICATION
------------ ------- ------------ -------------
<S> <C> <C> <C>
Solar cells Space Systems/Loral Long-term supply Solar panels in
agreement communications
Lockheed Martin Strategic partner satellite power
Missiles and Space systems.
Union Miniere Inc. Long-term germanium
sourcing agreement
HB LEDs General Electric GELcore joint venture Traffic lights
Lighting for the development,
marketing and Miniature lamps
distribution of white
light and colored HB Automotive lighting
LED products
Flat panel displays
Uniroyal Technology Uniroyal Other lighting
Corporation Optoelectronics Joint applications
venture for the
manufacture of HB
LED wafers and
package-ready devices
VCSELs AMP Incorporated Strategic alliance and Optical links
long-term supply (including Gigabit
agreement Ethernet, ATM and
FibreChannel
networks)
Micro Optical Acquisition
Devices, Inc.
JDS Uniphase Joint development
Corporation manufacturing and
marketing
MR sensors Optek Technology, Emtech joint venture Antilock brake systems
Inc. for packaging and
marketing of MR Brushless motors
sensors
Engine timing sensors
Cam and crank shaft
sensors
General Motors Long-term supply
Corporation agreement
Germanium research and Union Miniere Inc. UMCore joint venture Exploring alternative
development uses for germanium
substrates
RF materials Sumitomo Electric Cooperative development Digital wireless and
Industries, Ltd. agreement cellular applications
Long-term supply
agreement
</TABLE>
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<PAGE> 19
Solar Cells. Compound semiconductor solar cells are used to power
satellites because they are more resistant to radiation levels in space and
convert substantially more light to power, therefore weigh less per unit of
power than silicon-based solar cells. These characteristics increase satellite
life, increase payload capacity and reduce launch costs. EMCORE is currently
involved in five solar cell projects:
- In November 1999, EMCORE entered into a Technical Assistance Agreement
with Loral and Mitsubishi Electric Corporation;
- In November 1998, EMCORE signed a four-year purchase agreement with
Space Systems/Loral, a wholly owned subsidiary of Loral Space &
Communications. Under this agreement, EMCORE will supply compound
semiconductor high efficiency gallium arsenide solar cells for Loral's
satellites. To date, EMCORE has received purchase orders from Space
Systems/Loral that total $7.2 million and will service this agreement
through its newly completed facility in Albuquerque, New Mexico.
EMCORE plans to start shipping solar cells as early as December 1999
and a majority of the solar cell shipments under the current purchase
order are scheduled for the second fiscal quarter, which ends March
31, 2000;
- In November 1998, EMCORE received a $2.2 million contract under the
U.S. Air Force's Broad Agency Announcement Program for the development
of high-efficiency advanced solar cells;
- In September 1998, EMCORE entered into an agreement with Lockheed
Martin Missiles and Space, a strategic business unit of Lockheed
Martin Corporation, to provide technical management and support for a
Cooperative Research and Development Agreement between Lockheed Martin
and Sandia National Laboratory for the advancement and
commercialization of a new compound semiconductor high-efficiency
solar cell. Pursuant to this strategic agreement, (1) Lockheed Martin
will grant EMCORE a sub-license for all related intellectual property
developed on behalf of or in conjunction with Lockheed Martin and (2)
EMCORE and Lockheed Martin will jointly qualify and validate the
high-efficiency solar cells for operational satellite use; and
- In August 1998, EMCORE and Union Miniere Inc., a mining and materials
company, entered into a long-term supply agreement for germanium,
which EMCORE uses to fabricate solar cells. In addition to their solar
cell relationship, in November 1998, EMCORE formed UMCore, a joint
venture with Union Miniere to explore and develop alternate uses for
germanium using EMCORE's material science and production platform
expertise and Union Miniere's access to and experience with germanium.
UMCore commenced research and development operations in January 1999.
HB LEDs. High-brightness light-emitting diodes ("HB LEDs") are solid state
compound semiconductor devices that emit light. The global demand for HB LEDs is
experiencing rapid growth because HB LEDs have a long useful life, consume
approximately 10% of the power consumed by incandescent or halogen lighting and
improve display visibility. In February 1998, EMCORE and Uniroyal Technology
Corporation formed Uniroyal Optoelectronics, a joint venture to manufacture,
sell and distribute HB LED wafers and package-ready devices.
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.
VCSELs. Vertical cavity surface emitting lasers ("VCSELs") are
semiconductor lasers that emit light in a cylindrical beam. VCSELs offer
significant advantages over traditional laser diodes, including:
- greater control over beam size and wavelength;
- reduced manufacturing complexity and packaging costs;
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- lower power consumption; and
- higher frequency performance.
Leading electronic systems manufacturers are integrating VCSELs into a
broad array of end-market applications including Internet access, digital
cross-connect telecommunications switches, DVD and fiber optic switching and
routing, such as Gigabit Ethernet.
In December 1997, EMCORE acquired MODE, a development stage company
primarily dedicated to the research and development of enabling VCSEL
technologies. In February 1998, EMCORE announced Gigalase, its first commercial
high-speed VCSEL laser. In September 1998, EMCORE signed a four-year purchase
agreement with AMP Incorporated to provide VCSELs for a family of optical
transceivers for the Gigabit Ethernet, FibreChannel and ATM markets. In December
1998, EMCORE announced its second VCSEL product, Gigarray(R), a VCSEL array. In
January 2000, EMCORE signed a Memorandum of Understanding with JDS Uniphase for
the joint development, manufacture and marketing of a family of array
transceivers for the Very Short Reach OC-192 and related markets. Shipments are
expected to begin by the second calendar quarter.
MR Sensors. Magneto resistive ("MR") sensors are compound semiconductor
devices that possess sensing capabilities. MR sensors improve vehicle
performance through more accurate control of engine and crank shaft timing,
which allows for improved spark plug efficiency and reduced emissions. In
January 1997, EMCORE initiated shipments of compound semiconductor MR sensors
using technology licensed to EMCORE from General Motors. This license allows
EMCORE to manufacture and sell to anyone products using this technology. As of
September 30, 1999, EMCORE has delivered over eight million devices to General
Motors Powertrain for crank and cam speed and position sensing applications for
five different engine builds under 20 different vehicle platforms.
In October 1998, EMCORE formed Emtech, a joint venture with Optek
Technology, Inc., a packager and distributor of optoelectronic devices, to
market an expanded line of MR sensors to the automotive and related industries.
This joint venture seeks to combine EMCORE's strength in producing devices with
Optek's strength in packaging and distributing devices to offer off-the-shelf
products and expand market penetration. As of September 30, 1999, the joint
venture had not commenced operations.
RF materials. Radio frequency ("RF") materials are compound semiconductor
materials that transmit and receive communications. Compound semiconductor RF
materials have a broader bandwidth and superior performance at higher
frequencies than silicon-based materials. EMCORE currently produces RF materials
for use as power amplifiers in cellular phone handsets. In addition, EMCORE is
exploring opportunities to market these materials for additional uses in fiber
optic and satellite communications applications. EMCORE believes that its
ability to produce high volumes of RF materials at a low cost will facilitate
their adoption in new applications and new products.
In May 1999, EMCORE signed a long-term agreement with Sumitomo Electric
Industries, Ltd. to jointly develop and produce indium gallium phosphide
("InGaP") epitaxial wafers for use as heterojunction bipolar transistor ("HBT")
devices used in digital wireless and cellular applications. Sumitomo Electric is
one of the world's leading electronics manufacturers. These advanced compound
semiconductor HBT wafers will be produced at EMCORE's Epitaxial Materials
("E2M") wafer foundry in Somerset, New Jersey, and will be used as power
amplifiers in cellular phone handsets. Shipments of commercial product began in
February 2000.
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CUSTOMERS
EMCORE's customers include many of the largest semiconductor,
telecommunications, consumer goods and computer manufacturing companies in the
world. A number of EMCORE's customers are listed below. In addition, EMCORE has
sold its products to 12 of the largest electronics manufacturers in Japan.
<TABLE>
<S> <C> <C>
Agilent LG Semiconductor Rockwell International
AMP Incorporated L.M. Ericcson AB Samsung
The Boeing Company Loral Space & Communications Sharp U.S.A.
General Motors Lucent Technologies Siemens AG -- Osram
Hewlett Packard Motorola Sumitomo Electric Industries,
Honeywell Northrop Grumman Ltd.
Hughes-Spectrolabe Hyundai Philips AG Texas Instruments
Electronics Polaroid Thomson CSF
IBM Westinghouse Electric
JDS Uniphase
</TABLE>
EMCORE has a comprehensive total quality management program with special
emphasis on total customer satisfaction. EMCORE seeks to encourage active
customer involvement with the design and operation of its production systems. To
accomplish this, EMCORE conducts user group meetings among its customers in
Asia, Europe and North America. At annual meetings, EMCORE's customers provide
valuable feedback on key operations, process oriented services, problems and
recommendations to improve EMCORE products. This direct customer feedback has
enabled EMCORE to constantly update and improve the design of its systems and
processes. Changes that affect the reliability and capabilities of EMCORE's
systems are embodied in new designs to enable current and future customers to
utilize systems which EMCORE believes are high quality and cost-efficient. As of
December 31, 1999, EMCORE employed 17 field service engineers who install EMCORE
systems and provide on-site support.
MARKETING AND SALES
EMCORE markets and sells its wafers, devices and systems through a direct
sales force in Europe, North America and Taiwan and through representatives and
distributors elsewhere in Asia. To market and service its products in China,
Japan and Singapore, EMCORE relies on a single marketing, distribution and
service provider, Hakuto Co., Ltd. EMCORE's agreements with Hakuto expire in
March 2008. Hakuto has exclusive distribution rights for certain EMCORE products
in Japan. Hakuto has marketed and serviced EMCORE's products since 1988, is a
minority shareholder in EMCORE and the President of Hakuto is a member of
EMCORE's Board of Directors. On August 16, 1999, EMCORE entered into a two-year
distribution agreement with DI Systems to market and service EMCORE's products
in South Korea. EMCORE and Sumitomo Electric have a two and a half year
distribution agreement, whereby Sumitomo Electric markets, distributes and
services EMCORE's products in Japan. EMCORE recently opened sales offices in
Taiwan and California in order to be closer to its customers. As of December 31,
1999, EMCORE employed 27 persons in sales and marketing.
EMCORE's sales and marketing, senior management and technical staff work
closely with existing and potential customers to provide compound semiconductor
solutions that meet its customers' needs. EMCORE seeks to match the customer's
requirements to an existing design or a modification of a standard design, such
as a change in platform or process design. When necessary, EMCORE will work with
the customer to develop the appropriate design process and to configure and
manufacture the production system to meet the customer's needs. Also, EMCORE
will produce samples to demonstrate conformance to the customer's
specifications. For production systems, the period of time from the initial
contact with the customer to the customer's placement of an order is typically
two to nine months or longer. EMCORE's sales cycle for wafers and devices
usually runs three to nine months, during which time EMCORE develops the formula
of materials necessary to meet the customer's specifications and qualifies the
materials which may also require the delivery of samples. EMCORE believes that
the marketing, management and engineering support involved in this process is
beneficial in developing competitive differentiation and long-term relationships
with its customers.
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SERVICE AND SUPPORT
EMCORE maintains a worldwide service and support network responsible for
on-site maintenance and process monitoring on either a contractual or
time-and-materials basis. Customers may purchase annual service contracts under
which EMCORE is required to maintain an inventory of replacement parts and to
service the equipment upon the customer's request. EMCORE also sells replacement
parts from inventory to meet customer needs. EMCORE pursues a program of system
upgrades for customers to increase the performance of older systems. EMCORE
generally does not offer extended payment terms to its customers and generally
adheres to a warranty policy of one year. Consistent with industry practice,
EMCORE maintains an inventory of components for servicing systems in the field
and it believes that its inventory is sufficient to satisfy foreseeable
short-term customer requirements. Since fiscal 1998, EMCORE has operated a
warehouse depot in Taiwan to provide improved service to its Asian customers.
RESEARCH AND DEVELOPMENT
To maintain and improve its competitive position, EMCORE's research and
development efforts are focused on designing new proprietary processes and
products, improving the performance of existing systems, wafers and devices and
reducing costs in the product manufacturing process. EMCORE has dedicated 21
TurboDisc(R) systems for both research and production that are capable of
processing virtually all compound semiconductor materials. The research and
development staff utilizes x-ray, optical and electrical characterization
equipment which provide instant data allowing for shortened development cycles
and rapid customer response. EMCORE's recurring research and development
expenses were approximately $9.0 million in fiscal year 1997, $16.5 million in
fiscal year 1998, $20.7 million in fiscal year 1999 and $4.7 million in the
quarter ended December 31, 1999. EMCORE also incurred a one-time, non-cash
research and development expense in fiscal year 1998 in the amount of $19.5
million in connection with the acquisition of MODE. EMCORE expects to continue
to expend substantial resources on research and development. As of September 30,
1999, EMCORE employed 77 persons in research and development, 33 of whom held
Ph.D.s in materials science or related fields.
EMCORE also competes for research and development funds. In view of the
high cost of development, EMCORE solicits research contracts that provide
opportunities to enhance its core technology base or promote the
commercialization of targeted products. EMCORE presently has ten contracts under
the Small Business Innovative Research programs or similar government sponsored
programs. From inception until December 31, 1999, government and other external
research contracts have provided approximately $15.3 million to support EMCORE's
research and development efforts. EMCORE is also positioned to market technology
and process development expertise directly to customers who require it for their
own product development efforts.
INTELLECTUAL PROPERTY AND LICENSING
EMCORE's success and competitive position for production systems, wafers
and devices depend significantly on its ability to maintain trade secrets and
other intellectual property protections. Our strategy is to rely on both trade
secrets and patents. A "trade secret" is information that has value to the
extent it is not generally known, not readily ascertainable by others through
legitimate means and protected in a way that maintains its secrecy. Reliance on
trade secrets is only an effective business practice insofar as trade secrets
remain undisclosed and a proprietary product or process is not reverse
engineered or independently developed. In order to protect its trade secrets,
EMCORE takes certain measures to ensure their secrecy, such as executing
non-disclosure agreements with its employees, joint venture partners, customers
and suppliers. EMCORE also has an aggressive program to actively patent all
areas of its technology.
To date, EMCORE has been issued eleven (11) U.S. patents and others are
either pending (eight (8) patents) or under in-house review (25 disclosures).
These U.S. patents will expire between 2005 and 2013. None of these U.S. patents
claim any material aspects of current and planned commercial versions of
EMCORE's systems, wafers or devices. EMCORE only relies on trade secrets to
protect its intellectual
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property when it believes publishing patents would make it easier for others to
reverse engineer EMCORE's proprietary processes.
EMCORE is a licensee of certain VCSEL technology and associated patent
rights owned by Sandia Corporation. The Sandia license grants EMCORE:
- exclusive rights (subject to certain rights granted to Department of
Energy and AT&T Corporation) to develop, manufacture and sell products
containing Sandia VCSEL technologies for barcode scanning and plastic
optical fiber communications applications under five U.S. patents that
expire between 2007 and 2015;
- nonexclusive rights with respect to all other applications of these
patents; and
- nonexclusive rights to employ a proprietary oxidation fabrication
method in the manufacture of VCSEL products under a sixth U.S. patent
that expires in 2014. EMCORE's exclusivity with respect to the barcode
scanning and plastic optical fiber communications applications expires
in 2003 or such earlier time as we fail to meet certain development
and marketing criteria. EMCORE's success and competitive position as a
producer of VCSEL products depends on the continuation of its rights
under the Sandia license, the scope and duration of those rights and
the ability of Sandia to protect its proprietary interests in the
underlying technology and patents.
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(R) 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 judgment
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
its customers who did not hold licenses directly from Rockwell. Management has
reviewed and assessed its likely royalty obligations and believes that it has
the appropriate amounts reserved at both September 30, 1999 and December 31,
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.
ENVIRONMENTAL REGULATIONS
EMCORE is subject to federal, state and local laws and regulations
concerning the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials used in its research and development
and production operations, as well as laws and regulations concerning
environmental remediation and employee health and safety. The production of
wafers and devices involves the use of certain hazardous raw materials,
including, but not limited to, ammonia, phosphine and arsene. If EMCORE's
control systems are unsuccessful in preventing release of these or other
hazardous materials, EMCORE could experience a substantial interruption of
operations. EMCORE has retained an environmental consultant to advise it in
complying with applicable environmental and health and safety laws and
regulations, and believes that it is currently, and in the past has been, in
substantial compliance with all such laws and regulations.
BACKLOG
As of December 31, 1999, EMCORE had an order backlog of $46.6 million,
scheduled to be shipped through December 31, 2000. This represented an increase
of 8.1% from September 30, 1999. This increase primarily relates to increased
production systems bookings in Asia and initial orders for solar cells from
Loral. EMCORE only includes in backlog 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
recognizes revenue from the sale of its systems and materials upon shipment. For
research contracts with the U.S. government and commercial enterprises with
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durations greater than six months, EMCORE recognizes revenue to the extent of
costs incurred plus a portion of estimated gross profit, as stipulated in such
contracts, based on contract performance.
MANUFACTURING
EMCORE's manufacturing operations are located at EMCORE's headquarters in
Somerset, New Jersey and in Albuquerque, New Mexico and include systems
engineering and production, wafer fabrication and design and production of
devices. Many of EMCORE's manufacturing operations are computer monitored or
controlled to enhance reliability and yield. EMCORE manufactures its own systems
and outsources some components and sub-assemblies, but performs all final system
integration, assembly and testing. As of September 30, 1999, EMCORE had 267
employees involved in manufacturing. EMCORE fabricates wafers and devices at its
facilities in Somerset, New Jersey and Albuquerque, New Mexico and has a
combined clean room area totaling approximately 12,000 square feet. EMCORE's
joint venture with Uniroyal Technology Corporation began to manufacture HB LED
wafers and package-ready devices at its Tampa, Florida manufacturing facility.
In May 1998, EMCORE received ISO 9001 and QS 9002 quality certification for its
Somerset, New Jersey facility. In November, 1999, EMCORE received ISO 9001
quality certification for its newly completed solar cell facility in
Albuquerque, New Mexico. EMCORE is pursuing IS 9001 quality certification for
its VCSEL facility in Albuquerque, New Mexico.
Outside contractors and suppliers are used to supply raw materials and
standard components and to assemble portions of end systems from EMCORE
specifications. EMCORE depends on sole, or a limited number of, suppliers of
components and raw materials. EMCORE generally purchases these single or limited
source products through standard purchase orders. EMCORE also seeks to maintain
ongoing communications with its suppliers to guard against interruptions in
supply and has, to date, generally been able to obtain sufficient supplies in a
timely manner. EMCORE maintains inventories it believes are sufficient to meet
its near term needs. EMCORE implemented a vendor program through which it
inspects quality and reviews suppliers and prices in order to standardize
purchasing efficiencies and design requirements to maintain as low a cost of
sales as possible. However, operating results could be materially and adversely
affected by a stoppage or delay of supply, receipt of defective parts or
contaminated materials, and increase in the pricing of such parts or EMCORE's
inability to obtain reduced pricing from its suppliers in response to
competitive pressures.
COMPETITION
The markets in which EMCORE competes are highly competitive. EMCORE
competes with several companies for sales of MOCVD systems including Aixtron
GmbH and Nippon-Sanso K.K. Ltd. The primary competitors for EMCORE's wafer
foundry include Epitaxial Products Inc., Kopin Corporation and Quantum Epitaxial
Designs, Inc. EMCORE's principal competitors for sales of VCSEL-related products
include Honeywell, Inc. and Mitel Corporation. The principal competitors for MR
sensors are Honeywell, Inc., Matshushita Electric Industrial Co. Ltd., Siemens
AG and Asahi. The principal competitors for HB LEDs and EMCORE's joint ventures
with Uniroyal Technology Corporation and General Electric Lighting include the
Phillips Electronics and Hewlett Packard Company joint venture, Siemens AG's
Osram GmbH subsidiary, Nichia Chemical Industries and Toshiba Corporation.
EMCORE also faces competition from manufacturers that implement in-house systems
for their own use. In addition, EMCORE competes with many research institutions
and universities for research contract funding. EMCORE also sells its products
to current competitors and companies with the capability of becoming
competitors. As the markets for EMCORE's products grow, new competitors are
likely to emerge and present competitors may increase their market share.
EMCORE believes that the primary competitive factors in the markets in
which EMCORE's products compete are yield, throughput, performance, breadth of
product line, customer satisfaction, customer commitment to competing
technologies and, in the case of production systems, capital and directs costs
and size of installed base. Competitors may develop enhancements to, or future
generations of, competitive products that offer superior price and performance
factors. EMCORE believes that in order to remain competitive, it must invest
significant financial resources in developing new product features and
enhancements and in maintaining customer satisfaction worldwide.
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<PAGE> 25
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
EMCORE's executive officers and directors, their ages and positions are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Thomas J. Russell, Ph.D(1)(2).............. 67 Chairman
Reuben F. Richards, Jr.(2)................. 44 President, Chief Executive Officer and
Director
Thomas G. Werthan.......................... 43 Vice President -- Finance, Chief Financial
Officer and Director
Richard A. Stall (2)....................... 43 Vice President -- Technology, Chief
Technical Officer and Director
Robert Louis-Dreyfus....................... 52 Director
Hugh H. Fenwick(l)(3)...................... 62 Director
Shigeo Takayama(3)......................... 83 Director
Charles T. Scott(l)(3)..................... 50 Director
John J. Hogan, Jr.......................... 55 Director
William J. Kroll........................... 55 Executive Vice President-Strategic Planning
Paul Rotella............................... 44 Vice President
Thomas M. Brennan.......................... 45 Vice President
Robert P. Bryan............................ 34 Vice President
Craig W. Farley............................ 40 Vice President
Howard W. Brodie........................... 32 Vice President, General Counsel and
Secretary
Thomas Miehe............................... 40 Vice President
David D. Hess.............................. 38 Corporate Controller
</TABLE>
(1) Member of Compensation Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
Thomas J. Russell, Ph.D. has been a director of EMCORE since May 1995 and
was elected Chairman of the Board in December 1996. Dr. Russell founded
Bio/Dynamics, Inc. in 1961 and managed the company until its acquisition by IMS
International in 1973, following which he served as President of that company's
Life Sciences Division. From 1984 until 1988, he served as director, then as
Chairman, of IMS International until its acquisition by Dun & Bradstreet in
1988. From 1988 to 1992, he served as Chairman of Applied Biosciences, Inc.
Since 1992, he has been an investor and director of several companies. Dr.
Russell currently serves as a director of Cordiant plc. Dr. Russell is one of
three trustees of the AER 1997 Trust.
Reuben F. Richards, Jr. joined EMCORE in October 1995 as its President and
Chief Operating Officer and became Chief Executive Officer in December 1996. Mr.
Richards has been a director of EMCORE since May 1995. From September 1994 to
December 1996, Mr. Richards was a Senior Managing Director of Jesup & Lamont
Capital Markets Inc. ("JLCM"). From December 1994 to 1997, he was a member and
President of JLMP. From 1992 until 1994, Mr. Richards was a principal with
Hauser, Richards & Co., a firm engaged in corporate restructuring and management
turnarounds. From 1986 until 1992, Mr. Richards was a director at
Prudential-Bache Capital Funding in its Investment Banking Division. Mr.
Richards also serves on the boards of EMCORE's two joint ventures, GELcore LLC
and UOE LLC.
Thomas G. Werthan joined EMCORE in 1992 as its Chief Financial Officer,
Vice President-Finance, Secretary and a director. Mr. Werthan is a Certified
Public Accountant and has over 17 years experience in assisting high technology,
venture capital financed growth companies. Prior to joining EMCORE in 1992, he
was associated with The Russell Group, a venture capital partnership, as Chief
Financial Officer for several portfolio companies. The Russell Group was
affiliated with Thomas J. Russell. From 1985 to 1989, Mr. Werthan served as
Chief Operating Officer and Chief Financial Officer for Audio Visual Labs, Inc.,
a manufacturer of multimedia and computer graphics equipment.
S-25
<PAGE> 26
Richard A. Stall, Ph.D became a director of EMCORE in December 1996. Dr.
Stall helped found EMCORE in 1984 and has been Vice President-Technology since
October 1984, except for a sabbatical year in 1993, during which Dr. Stall acted
as a consultant to EMCORE and his position was left unfilled. Prior to 1984, Dr.
Stall was a member of the technical staff of AT&T Bell Laboratories and was
responsible for the development of molecular beam expitaxy technologies. He has
co-authored more than 75 papers and holds six patents on MBE and MOCVD
technology and the characterization of compound semiconductor materials.
Robert Louis-Dreyfus became a director of EMCORE in March 1997. Mr.
Louis-Dreyfus has been the Chairman of the Board and Chief Executive Officer of
Adidas AG since April 1993. From 1990 until 1993 he had been the Chief Executive
Officer of Saatchi & Saatchi plc (now Cordiant p1c) and a director of Saatchi &
Saatchi plc from January 1990 until December 1994. Since 1992, he has been an
investor and a director of several other companies. From 1982 until 1988, he
served as Chief Operating Officer (1982 to 1983) and then as Chief Executive
Officer (from 1984 to 1988) of IMS International until its acquisition by Dun &
Bradstreet in 1988.
Hugh H. Fenwick served as a director of EMCORE from 1990 until 1995, and
was again elected to serve on EMCORE's board of directors in June 1997. Since
1992, Mr. Fenwick has been a private investor and he currently holds the office
of Mayor of Bernardsville, New Jersey, to which he was elected in 1994. From
1990 until 1992, Mr. Fenwick was the Executive Director of the Alliance for
Technology Management at the Stevens Institute in Hoboken, New Jersey. Prior to
that time, Mr. Fenwick worked as a marketing executive with Lockheed Electronics
and with Alenia (formerly Selenia), an Italian subsidiary of Raytheon.
Shigeo Takayama became a director of EMCORE in July 1997. Mr. Takayama is
the Chairman, President and founder of Hakuto, EMCORE's distributor of EMCORE's
products in Japan, China and Singapore. Mr. Takayama is a Director Emeritus of
Semiconductor Equipment & Material International ("SEMI"), Chairman of the Japan
Electronics Products Importers Association ("JEPIA") and director of the Japan
Machinery Importers' Association ("JMIA").
Charles T. Scott became a director of EMCORE in February 1998. Mr. Scott is
presently Chairman of Cordiant Communications Group p1c, the successor
corporation of the Saatchi & Saatchi Advertising Group. He joined Saatchi &
Saatchi Company in 1990 and served as Chief Financial Officer until 1992 when he
was appointed Chief Operating Officer. In 1993, he became Chief Executive
Officer and held that position until 1996 when he assumed the title of Chairman.
He also serves as a director of several other privately held corporations.
John J. Hogan, Jr. became a director of EMCORE in February 1999. Mr. Hogan
has been President of a private investment management company since October
1997. Prior to that time, he had been with the law firm of Dewey Ballentine
since 1969. He also serves as a director of several other corporations and is a
former executive officer and/or director of various subsidiaries of S.A. Louis
Dreyfus et Cie.
William J. Kroll joined EMCORE in 1994 as Vice President-Business
Development and in 1996 became Executive Vice President-Strategic Planning.
Prior to 1994, Mr. Kroll served for seven years as Senior Vice President of
Sales and Marketing for Matheson Gas Products, Inc., a manufacturer and
distributor of specialty gases and gas control and handling equipment. In that
position, Mr. Kroll was responsible for $100 million in sales and 700 employees
worldwide. Prior to working at Matheson Gas Products, Mr. Kroll was Vice
President of Marketing for Machine Technology, Inc., a manufacturer of
semiconductor equipment for photoresis applications, plasma strip and related
equipment.
Paul Rotella joined EMCORE in 1996 as Director of Manufacturing and became
Vice President TurboDisc(R) Manufacturing in October 1997. Currently, Mr.
Rotella is Vice President of the TurboDisc(R) Systems Division and has overall
business unit responsibility. Prior to 1996, Mr. Rotella served for three years
as worldwide Manufacturing Operations Manager for Datacolor International, a
manufacturer of color measurement and control instrumentation. Prior to working
at Datacolor International, Mr. Rotella spent 18 years with the Aerospace unit
of AlliedSignal Inc., where he was responsible for Manufacturing and
Manufacturing Engineering for various Space, Flight, Missile and Test systems.
S-26
<PAGE> 27
Thomas M. Brennan joined EMCORE as a result of EMCORE's December 1997
acquisition of MODE and now serves as a Vice President of EMCORE. Prior to
co-founding MODE, Mr. Brennan was a senior member of the technical staff at
Sandia National Laboratories from 1986 to 1996. At Sandia, he focused his
efforts on the material growth of III-V compound semiconductors, reactor design,
in-situ reactor diagnostics and material characterization. His responsibilities
and activities included growth of some of the first VCSEL material at Sandia and
in the U.S., and development of new and unique manufacturing techniques for
VCSEL material growth. Prior to joining Sandia, Mr. Brennan was a member of the
technical staff at AT&T Bell Laboratories from 1980 to 1984. At both facilities,
he focused his efforts on expitaxial materials growth and characterization and
expitaxial reactor design.
Howard W. Brodie joined EMCORE in August 1999 and serves as Vice President,
General Counsel and Secretary of the Company. From September 1995 to August
1999, Mr. Brodie was an associate at the law firm of White & Case LLP, a New
York law firm that has served as outside counsel to EMCORE since 1997. While at
White & Case LLP, Mr. Brodie practiced securities law and mergers and
acquisitions. Mr. Brodie has worked on EMCORE matters since 1998, helping to
negotiate and structure the joint ventures with General Electric Lighting, Union
Miniere, Inc. and Optek Technology Inc. and assisting in EMCORE's public
offering which closed in June 1999. From August 1994 to August 1995, Mr. Brodie
served as a judicial law clerk to Chief Judge Gilbert S. Merritt on the Sixth
Circuit Court of Appeals.
Robert P. Bryan joined EMCORE as a Vice President as a result of EMCORE's
December 1997 acquisition of MODE. Prior to co-founding MODE in 1995, he was a
co-founder of Vixel Corporation, a Bloomfield, Colorado company which, at the
time, was the first commercial company to develop and manufacture VCSEL devises
for data links. He was the specific oversight executive for optoelectronic
product development, including all engineering management to include all
components and products. From 1990 to 1992, he was a senior member of the
technical staff at Sandia National Laboratories where his research focused on
the areas of VCSEL design, fabrication and characterization.
Craig W. Farley joined EMCORE in June 1998 as Vice President-Wafer
Manufacturing. Dr. Farley has experience in all phases of compound semiconductor
device design and manufacturing. Prior to joining EMCORE, he spent 11 years of
Rockewell International Corporation ("Rockewell") where he served as a member of
the technical staff at Rockewell's Science Center from 1987 to 1994 and as
Manager of Advanced Device Technology for Rockwell's Gallium Arsenide
Manufacturing facility from 1994 to 1998.
David D. Hess joined EMCORE in 1989 as General Accounting Manager. He was
named Controller in 1990. Mr. Hess is a Certified Public Accountant and has more
than ten years experience in monitoring and controlling all phases of product
and process cost and general accounting systems. Prior to his employment at
EMCORE, he held several positions as cost accounting manager, divisional
accountant and inventory control supervisor in manufacturing firms such as
Emerson Quiet Kool (air conditioner manufacturers), Huls, North America
(paint/solvent processors), and Brintec Corporation (screw machine
manufacturers).
Thomas Miehe joined EMCORE in 1997 as Marketing Manger for the E(2)M
Division prior to becoming Director of Marketing and Sales at corporate
headquarters in Somerset. In March of 1999, Mr. Miehe assumed the post of
Corporate Vice President, Sales and Marketing. Prior to joining EMCORE, Mr.
Miehe worked at Sumitomo Electric. He held various positions at Sumitomo, the
last being Senior Manager Sales & Marketing for compound semiconductor products.
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<PAGE> 28
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named
below, for whom Prudential Securities Incorporated, SoundView Technology Group,
Inc. and Roth Capital Partners Incorporated are acting as representatives. We
are obligated to sell, and the underwriters are obligated to purchase, all of
the shares offered on the cover page of this prospectus supplement. Subject to
conditions of the underwriting agreement, each underwriter has severally agreed
to purchase the shares indicated opposite its name.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- ------------ ---------
<S> <C>
Prudential Securities Incorporated..........................
SoundView Technology Group, Inc.............................
Roth Capital Partners Incorporated..........................
---------
Total............................................. 1,000,000
=========
</TABLE>
The underwriters may sell more shares than the total numbers of shares
offered on the cover page of this prospectus supplement and they have for a
period of 30 days from the date of this prospectus supplement, an over-allotment
option to purchase up to 150,000 additional shares from us. If any additional
shares are purchased, the underwriters will severally purchase the shares in the
same proportion as per the table above.
The representatives of the underwriters have advised us that the shares
will be offered to the public at the offering price indicated on the cover page
of this prospectus supplement. The underwriters may allow to selected dealers a
concession not in excess of $ per share and such dealers may reallow a
concession not in excess of $ per share to certain other dealers. After
the shares are released for sale to the public, the representatives may change
the offering price and the concessions.
We have agreed to pay to the underwriters the following fees, assuming both
no exercise and full exercise of the underwriters' over-allotment option to
purchase additional shares:
<TABLE>
<CAPTION>
TOTAL FEES
---------------------------------------------
FEE WITHOUT EXERCISE OF FULL EXERCISE OF
PER SHARE OVER-ALLOTMENT OPTION OVER-ALLOTMENT OPTION
--------- --------------------- ---------------------
<S> <C> <C> <C>
Fees paid by us................................ $ $ $
</TABLE>
In addition, we estimate that we will spend approximately $ in expenses
for this offering. We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments that the underwriters may be required to make in respect of these
liabilities.
We, our officers and directors and certain shareholders have entered into
lock-up agreements pursuant to which we and they have agreed not to offer or
sell any shares of common stock or securities convertible into or exchangeable
or exercisable for shares of common stock for a period of 90 days from the date
of this prospectus supplement without the prior written consent of Prudential
Securities Incorporated, on behalf of the underwriters. Prudential Securities
Incorporated may, at any time and without notice, waive the terms of these
lock-up agreements specified in the underwriting agreement.
Prudential Securities Incorporated, on behalf of the underwriters, may
engage in the following activities in accordance with applicable securities
rules:
- Over-allotments involving sales in excess of the offering size creating a
short position. Prudential Securities Incorporated may elect to reduce
this short position by exercising some or all of the over-allotment
option;
- Stabilizing and short covering; stabilizing bids to purchase the shares
are permitted if they do not exceed a specified maximum price. After the
distribution of shares has been completed, short covering purchases in
the open market may also reduce the short position. These activities may
cause the price of the shares to be higher than would otherwise exist in
the open market; and
S-28
<PAGE> 29
- Penalty bids permitting the representatives to reclaim concessions from a
syndicate member for the shares purchased in the stabilizing or short
covering transactions.
Such activities, which may be commenced and discontinued at any time, may
be effected on the Nasdaq National Market, in the over-the-counter market or
otherwise. Also and prior to the pricing of the shares, and until such time when
a stabilizing bid may have been made, some or all of the underwriters who are
market maker in the shares may make bids for or purchases of shares subject to
certain restrictions, known as passive market making activities.
Prudential Securities Incorporated facilitates the marketing of new issues
online through its PrudentialSecurities.com division. Clients of Prudential
Advisor(SM), a full service brokerage firm program, may view offering terms and
a prospectus online and place orders through their financial advisors.
A prospectus supplement and an accompanying prospectus in electronic format
are being made available on an Internet web site maintained by Wit SoundView's
affiliate, Wit Capital Corporation. Only the prospectus supplement and the
accompanying prospectus in electronic format are part of this prospectus
supplement, accompanying prospectus or the registration statement of which this
prospectus supplement forms a part.
Each underwriter has represented that it has complied and will comply with
all applicable law and regulations in connection with the offer, sale or
delivery of the shares and related offering materials in the United Kingdom,
including:
- the Public Offers of Securities Regulations 1995;
- the Financial Services Act 1986; and
- the Financial Services Act 1986. (Investment Advertisements)
(Exemptions) Order 1996 (as amended).
LEGAL MATTERS
Certain legal matters in connection with the legality of the common stock
offered hereby will be passed upon for us by White & Case LLP, Miami, Florida,
who may rely on Dillon, Bitar & Luther, our New Jersey counsel. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by Latham & Watkins, Washington, D.C.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus supplement by reference from EMCORE's
Annual Report on Form 10-K/A for the year ended September 30, 1999, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and has been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
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<PAGE> 30
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EMCORE logo
PRUDENTIAL VOLPE TECHNOLOGY
a unit of Prudential Securities
WIT SOUNDVIEW
ROTH CAPITAL PARTNERS
Incorporated
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