Company
Overview
EMCORE
Corporation (EMCORE), a New Jersey corporation established in 1984, offers
a
broad portfolio of compound semiconductor-based components and subsystems
for
the broadband, fiber optic, satellite, solar and wireless communications
markets. EMCORE has three operating segments: Fiber Optics, Photovoltaics,
and
Electronic Materials and Devices. Our integrated
solutions philosophy embodies state-of-the-art technology, material science
expertise, and a shared vision of our customer's goals and objectives to
be
leaders in the transport of video, voice and data over copper, hybrid fiber/coax
(HFC), fiber, satellite, and wireless networks.
EMCORE’s
solutions include: optical components and subsystems for fiber-to-the-premise,
cable television, and high speed data and telecommunications networks; solar
cells, solar panels, and fiber optic ground station links for global satellite
communications; and RF transistor materials for high bandwidth wireless
communications systems, such as WiMAX and Wi-Fi Internet access and 3G mobile
handsets and PDA devices.
Through
its joint venture participation in GELcore, LLC, EMCORE plays a vital role
in
developing and commercializing next-generation High-Brightness LED technology
for use in the general and specialty illumination markets.
Industry
Overview
Advances
in information technologies have created a growing need for efficient and
high-performance electronic and optoelectronic systems that operate at very
high
frequencies, emit and detect light, provide higher transmission rates with
increased storage capacities, and can be produced cost-effectively in commercial
volumes. To meet these needs, we develop and manufacture components
and subsystems that incorporate our internally produced compound semiconductor
materials. Our products have several advantages
over traditional silicon devices including higher operating speeds, lower
power
consumption, reduced noise and distortion, higher temperature performance,
light
emitting properties, higher detection efficiency, and higher light emission
efficiency. In
fiscal
2005, we offered innovative products, categorized into three segments, “Fiber
Optics,” “Photovoltaics,” and “Electronic Materials and Devices.” Collectively,
these products and the products offered by our joint venture, GELcore, serve
the
communications, cable television, defense and homeland security, satellite
and
terrestrial power, wireless, and lighting and illlumination markets.
EMCORE’s
Operating Segments
Fiber
Optics
EMCORE's
Fiber Optics segment provides optical components, subsystems and systems
that
enable the transmission of video, voice and data over high-capacity fiber
optic
cables. Our products enable information that is encoded on light signals
to be
transmitted, routed (switched), and received in communication systems. EMCORE’s
Fiber Optics segment serves the cable television (CATV), fiber-to-the-premise
(FTTP), telecommunications, data and satellite communications, storage area
network and, increasingly, the defense and homeland security markets.
Over
the
past several years, communications networks have experienced dramatic growth
in
data transmission traffic due to worldwide Internet access, e-mail, and
e-commerce. As Internet content expands to include full motion video on-demand,
HDTV, multi-channel high quality audio, online video conferencing, image
transfer, online multi-player gaming, and other broadband applications, the
delivery of such data will place a greater demand on available bandwidth
and
require the support of higher capacity networks. The bulk of this traffic,
which
continues to grow at a very high rate, is already routed through the optical
networking infrastructure used by local and long distance carriers, as well
as
Internet service providers. Optical fiber offers substantially greater bandwidth
capacity, is less error prone, and is easier to administer than older copper
wire technologies. As greater bandwidth capability is delivered closer to
the
end user, increased demand for higher content, real-time, interactive visual
and
audio content is expected. We believe that EMCORE is well positioned to benefit
from the continued deployment of these higher capacity fiber optic networks.
Cable
Television (CATV) and Fiber-to-the-premise (FTTP) Networks
-
The
communications industry in which we participate in continues to be dynamic.
The
driving factor is the competitive environment that exists between cable
operators, telephone companies, and satellite and wireless service providers.
Each are rapidly investing capital to deploy a converging multi-service network
capable of delivering “triple play services”, i.e. digitalized video, voice and
data content, bundled as a service provided by a single communication provider.
As
a
market leader in radio frequency (RF) transmission over fiber products for
the
CATV industry, EMCORE enables cable companies to offer multiple forms of
communications to meet the expanding demand for high-speed Internet, on-demand
and interactive video, and other new services (such as HDTV and VOIP).
Television is also undergoing a major transformation, as the US government
requires television stations to broadcast exclusively in digital format,
abandoning the analog format used for decades. Although the transition date
for
digital transmissions is not expected for several years, the build-out of
these
television networks has already begun. To support the telephone companies
plan
to offer competing video, voice and data services through the deployment
of new
fiber-based systems, EMCORE has developed and maintains customer qualified
FTTP
components and subsystem products. Our CATV and FTTP products include broadcast
analog and digital fiber optic transmitters, quadrature amplitude modulation
(QAM) transmitters, video receivers, and passive optical network (PON)
transceivers.
As
part
of our strategy, we are committed to identifying strategic opportunities
that
either compliment or broaden our markets. In May 2005, EMCORE acquired the
analog CATV and RF over fiber specialty businesses from JDS Uniphase Corporation
(JDSU). This acquisition is expected to 1) solidify our leadership position
in
the CATV marketplace; 2) offer an optimal path to higher volume with improved
overall product margins; and 3) expand our product line offering while
broadening our customer base in the CATV market segment.
Telecommunications
Networks -
Our
state-of-the-art optical components and modules enable high-speed (up to
an
aggregate 40 gigabits per second or Gb/s) optical interconnections that drive
architectures in next-generation carrier class switching and routing networks.
Our parallel optical modules facilitate high channel count optical interconnects
in multi-shelf central office equipment. These systems sit in the network
core
and in key metro nodes of voice telephony and Internet infrastructures, and
are
highly expandable with pay-as-you-grow capacity scaling. EMCORE is a leader
in
providing optical modules to the telecom equipment market area with its most
comprehensive parallel optical transceiver product family, including 12-lane
SNAP-12TM,
OptoCubeTM,
4-lane
QuadLinkTM
and
SmartLinkTM
transceivers. In addition, EMCORE provides the telecom industry with distributed
feedback (DFB) lasers, p-type, intrinsic, and n-type semiconductor material
(PIN) and avalanche photodetector (APD) components, in various packages,
for
OC-48 and OC-192 applications.
Data
Communications Networks
-
EMCORE’s leading-edge optical components and modules for data applications
include 10G Ethernet LX4, 10G Ethernet EX4, 10G Ethernet CX4, and
SmartLinkTM
transceivers. These modules support 10G Ethernet, optical Infiniband, and
parallel optical interconnects for enterprise Ethernet, metro Ethernet and
high
performance computing (HPC), also called "super computing" applications.
These
high-speed modules enable switch-to-switch, router-to-router, and
server-to-server backbone connections at aggregate speeds of 10G and above.
Pluggable LX4 modules in X2 or XENPAK form factors provide a
"pay-as-you-populate" cost structure during installation. The LX4 module
can
transmit data over both multi-mode and single-mode optical fiber, enabling
transmission of optical 10G Ethernet signals over 300 meters of legacy
multi-mode fiber or 10km of single-mode fiber. The EX4 extends optical span
lengths to over 1km of multi-mode and 40km of single-mode fiber. CX4 modules
similarly allow the cost-effective transmission of Ethernet signals over
legacy
copper cable. EMCORE’s parallel optical modules also are used in switched bus
architectures that are needed for next-generation blade servers, clustered
and
grid interconnected servers, super computers and network-attached
storage.
Satellite
Communications Networks - EMCORE
manufactures satellite communications fiber optics products, including
transmitters, receivers, subsystem, and systems, that transport wideband
microwave signals between satellite hub equipment and antenna
dishes.
Storage
Area Networks -
Our
optical components also are used in the high-end data storage market, and
include high-speed, 850 nm vertical cavity surface emitting lasers (VCSELs)
and
PIN photodiode components, and 10G transmit and receive optical subassemblies
(TOSAs/ROSAs). In the future, EMCORE anticipates selling our integrated
pluggable X2 or XENPAK form factor modules into the emerging 10G FibreChannel
segment. These products provide optical interfaces for switches and storage
systems used in large enterprise mission-critical applications, such as
inventory control or financial systems.
Defense
and Homeland Security
-
Leveraging its expertise in high frequency RF module design, EMCORE offers
a
suite of ruggedized products intended for the government and defense markets.
EMCORE’s specialty fiber products include fiber optic gyro components used in
precision guidance munitions; RF fiber optic link components for towed decoy
systems and phased array radar antennas; RF over fiber links for device remoting
and optical networks; and emerging applications such as RF photonic systems.
Photovoltaics
EMCORE
serves the global satellite communications market by providing advanced solar
cell products and solar panels. Compound semiconductor solar cells are used
to
power satellites because they are more resistant to radiation levels in space
and convert substantially more power from light, consequently weighing less
per
unit of power than silicon-based solar cells. These characteristics increase
satellite useful life, increase payload capacity, and reduce launch costs.
EMCORE’s Photovoltaics segment designs and manufactures multi-junction compound
semiconductor solar cells for both commercial and military satellite
applications. We currently manufacture and sell one of the most efficient
and
reliable, radiation resistant advanced triple-junction solar cells in the
world,
with an average "beginning of life" efficiency of 27.5%. EMCORE is also the
only
manufacturer to supply true monolithic bypass diodes, for shadow protection,
utilizing several EMCORE patented methods. A satellite’s broadcast success and
corresponding revenue depend on its power efficiency and its capacity to
transmit data.
EMCORE
also provides covered interconnect cells (CICs) and solar panel lay-down
services, giving us the capacity to manufacture complete solar panels. We
can
provide satellite manufacturers with proven integrated satellite power solutions
that considerably improve satellite economics. Satellite manufacturers and
solar
array integrators rely on EMCORE to meet their satellite power needs with
our
proven flight heritage. Through well-established partnerships with major
satellite manufacturers and a proven manufacturing process, we play a vital
role
in the evolution of satellite communications around the world.
EMCORE
is
adapting its high efficiency solar cell product for terrestrial applications.
Intended for use with solar concentrator systems, these cells have already
been
measured at 35% efficiency and further improvements are anticipated. We believe
that these systems will be competitive with silicon technologies because
they
are more efficient than silicon and, therefore, benefit more from concentration
than silicon. With energy prices at all time highs, the demand for alternative
energy sources continues to gain momentum. The terrestrial solar cell market
is
currently estimated at $7 billion, growing at a 28% CAGR, and is expected
to
reach $30 billion by 2010, according to CSLA
Asia-Pacific Markets.
EMCORE
is working with several concentrator systems manufacturers to develop system
elements for this product line.
In
April
2005, EMCORE announced plans to consolidate solar panel operations into a
state-of-the-art facility located in Albuquerque, New Mexico. The establishment
of a modern solar panel manufacturing facility, adjacent to the Albuquerque
solar cell fabrication operations, should enable superior consistency, as
well
as reduced manufacturing costs. The
synergy of these operations located on one site is expected to provide the
highest quality, highest reliability, and most cost-effective solar components
to surpass current technologies and offerings. EMCORE will ensure that the
space
qualification of this facility is commensurate with the heritage of its existing
solar panel operation located in City of Industry, California. Production
operations at the California solar panel facility will be discontinued during
fiscal 2006 and completely closed by March 2007. By
consolidating operations into a single location, EMCORE Photovoltaics expects
to
realize annual cost savings in fiscal 2007 and beyond, which will enable
us to
better compete in the terrestrial and space power markets.
Electronic
Materials and Devices
EMCORE’s
RF materials are compound semiconductor materials used in wireless
communications. These materials have a broader bandwidth and superior
performance at higher frequencies compared to silicon-based materials. EMCORE’s
Electronic Materials and Devices (EMD) segment currently produces both GaAs
and
GaN based transistor wafers. For GaAs materials, EMD produces 4-inch and
6-inch
wafers for three different applications: InGaP hetero-junction bipolar
transistors (HBTs), pseudomorphic high electron mobility transistor wafers
(pHEMTs), and enhancement-mode pHEMT transistor wafers (E-modes). These
materials are used for power amplifiers and switches in GSM, CDMA multiband
wireless handsets, WiMAX, Wi-Fi, broadband, cellular handsets, and in wireless
LAN applications. InGaP HBT materials provide higher linearity, higher
power-added efficiency, as well as greater reliability than first generation
AlGaAs HBT technologies. For GaN materials, EMD produces 2-inch, 3-inch,
and
4-inch AlGaN/GaN HEMT materials. These materials are designed to meet future
wireless base station infrastructure requirements for higher power and
frequency, along with temperature operation at industry leading efficiencies.
Recently, EMCORE has also combined into a single RF structure, InGaP HBT
and
pHEMT materials (combinational materials). We believe that our ability to
produce high volumes of RF materials at a low cost will encourage their adoption
in new applications and products.
EMCORE
continues to work closely with its customers to develop next-generation
technology to help them achieve their product roadmap objectives. In fiscal
2005, EMCORE started production of integrated HBT and pHEMT materials. The
combination of these two devices in a single epi structure consolidates the
processing requirement for EMCORE’s customers. Additionally, the close
integration of these devices enables our customers to increase the efficiency
and performance of the devices by incorporating improved power control, better
linearity and smaller size. Anadigics, Inc., a leading supplier of wireless
and
broadband solutions, announced that it had selected EMCORE to be their primary
supplier for all their RF materials. EMCORE also works closely with and supplies
advanced materials to several other industry leaders.
EMCORE
supports GaN development projects through participation in government DARPA
programs centered on wide bandgap communication and radar systems. EMCORE
has
secured several long-term contracts to provide critical GaN HEMT epitaxial
materials to industry leading device, component, and system manufactures.
EMCORE
anticipates converting these DARPA sponsored programs into long-term commercial
business at the conclusion of the existing contracts.
Joint
Venture - GELcore
In
January 1999, General Electric Lighting and EMCORE formed GELcore, a joint
venture to address the solid-state lighting market with high brightness light
emitting diode-based (HB-LED) lighting systems. HB-LEDs
are solid-state compound semiconductor devices that emit light. They are
used in
miniature packages in everyday applications, including commercial displays,
transportation, general and specialty illumination, computers, and other
consumer electronics. HB-LEDs offer substantial advantages over small
incandescent bulbs, including longer life, lower maintenance costs and energy
consumption, and smaller space requirements. Groups of HB-LEDs can make up
single or full-color electronic displays. Presently, HB-LED chips are used
for
backlighting applications, including wireless handsets, cellular handsets,
computer monitors, and automotive dashboard lighting. In addition, they are
used
in consumer products, office equipment, full color displays, neon and
fluorescent replacements, message advertising, informational signs, landscape
lighting, and traffic signals. While growing its business in commercial
applications, GELcore is focused on the general illumination market as its
ultimate goal.
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. EMCORE
has a 49% non-controlling interest in the GELcore venture. GELcore combines
EMCORE's materials science and device design expertise with General Electric
Lighting's brand name recognition, phosphor technology, and extensive marketing
and distribution capabilities. EMCORE participates in the development and
commercialization of next-generation LED technology for use in the general
and
specialty illumination markets. GELcore's products include traffic lights,
channel letters, and other signage and display products that incorporate
HB-LEDs. In the near term, GELcore expects to deploy its HB-LED products
in the
commercial and industrial markets, including medical, aerospace, commercial
refrigeration, transportation, appliance, and general and specialty illumination
applications. GELcore’s operating results are accounted for using the equity
method of accounting and its financial reporting is on a calendar year basis.
Since its inception, GELcore has had a compound annual revenue growth rate
of
23%, with calendar 2004 revenue totaling $68.0 million. EMCORE expects that
GELcore’s calendar 2005 revenue will approximate $80.0 million.
HB-LEDs
have the potential to significantly reduce overall U.S. lighting energy
consumption. Energy savings to date from HB-LEDs have been estimated to exceed
the power produced from one large electric power plant -- more than 8 billion
kilowatt-hours. If solid-state lighting achieves anticipated price and
performance targets, over the next two decades U.S. lighting energy consumption
could be reduced by over 30 percent. HB-LED traffic signals use only 10 percent
of the electricity consumed by the incandescent lamps they replace. Moreover,
LED signals last several times longer, allowing for additional savings through
reduced maintenance costs. HB-LEDs also have made inroads into mobile
applications, such as brake and signal lights on trucks, buses, and automobiles.
In 2002, an estimated 41 million gallons of gasoline and 142 million gallons
of
diesel fuel were saved because of HB-LED use on these vehicles. If our nation's
entire fleet of automobiles, trucks, and buses were converted to HB-LED
lighting, an estimated 1.4 billion gallons of gasoline and 1.1 billion gallons
of diesel fuel could be saved. (The information in this paragraph is based
on
published reports prepared by Navigant Consulting for the US Department of
Energy.)
EMCORE’s
Strategy
Management’s
objective is to maximize shareholder value by capitalizing upon EMCORE’s
leading-edge compound semiconductor materials and device expertise to provide
cost-effective materials, components and subsystems for the broadband, fiber
optic, satellite, solar and wireless communications markets. Specifically,
the
key elements of EMCORE’s strategy include:
I.
Leverage Leading-Edge Compound Semiconductor Expertise Across Multiple Product
Applications
Purchasing
components from multiple vendors can result in too many layers of margin
costs,
such that the final integrated subsystem is neither cost competitive nor
effective in deploying new product technologies or responding to customer
demands. We believe a vertically integrated structure in which key technologies
are produced internally is the most beneficial way to maximize gross margins
and
meet customer objectives. By having the know-how and intellectual property
to
internally produce and supply compound semiconductor products, EMCORE can
stay
ahead of the competition in both performance and cost
effectiveness.
II.
Target Potential High Growth Market Opportunities
EMCORE
targets potential high growth market 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
products because of their enhanced performance characteristics. EMCORE is
focusing its product development efforts in the high growth areas of fiber
optic
communications (FTTP infrastructure), data and telecommunications (high data
rate technologies), energy generation (terrestrial concentrator solar cells
and
modules), defense and homeland security (RF transport for defense applications),
integrated GaAs epitaxial technology (3G handsets, PDAs, WiMAX / Wi-Fi
networking), and energy conservation (LED-based technologies through GELcore).
III.
Pursue Strategic Acquisitions and Partnership with Industry Leading
Companies
EMCORE
is
committed to the ongoing evaluation of strategic opportunities that can expand
our addressable markets and strengthen our competitive position. Where
appropriate, EMCORE will acquire additional products, technologies, or
businesses that are complimentary to, or broaden the markets we operate in.
Over
the past several years, several acquisitions have expanded not only our
materials expertise, but also our components and subsystems technologies.
EMCORE
also seeks to develop long-term relationships with leading companies in each
of
the industries that we serve. We develop these relationships through long-term,
high-volume supply agreements, joint ventures, investments, and other
arrangements. EMCORE continues to work closely with its customers to develop
next-generation technology to help them achieve their product roadmap
objectives. Recently, EMCORE announced product design wins with Cisco Systems,
Inc. (10G LX4 and CX4 XENPAK), JDS Uniphase Corporation and Finisar (10G
TOSAs
& ROSAs), Tellabs, Inc. (FTTP Integrated PON transceiver), Alcatel (FTTP
video receiver), and Scientific-Atlanta, Inc. and Aurora Networks (CATV HFC
transmitters). These product launches were successful due to the solid
collaboration we have with these leading companies.
IV.
Invest in Research and Development to Maintain Technology Leadership and
Lower
Production Costs
Through
substantial investment in research and development (R&D), EMCORE seeks to
expand its leadership position in compound semiconductor-based communications
products and subsystems. EMCORE works with its customers to enhance the
performance of our processes, materials science, and fiber optic module design
expertise, including the development of new low-cost, high-volume wafers,
components, and subsystems for our customers. To remain a leader in our markets,
EMCORE not only addresses our customers’ current needs, but we respond to their
evolving requirements to remain designed into their product lifecycles. In
addition, EMCORE’s development efforts are constantly focused on lowering the
production costs of its products. In
2005,
EMCORE’s product development projects included an X2 form factor for LX4, an
extended reach version of the LX4 (the EX4), a high density 1310 nm transmitters
for CATV, a triplexer for FTTP applications, and a 32 channel QAM transmitter
for CATV. EMCORE expects significant revenue from each of these products
in
fiscal 2006. In addition, during fiscal 2005, our photovoltaic division
developed a small concentrator unit using our high-efficiency gallium arsenide
solar cells for terrestrial applications. We intend to expend additional
resources during fiscal 2006 to further develop this technology and establish
cost effective manufacturing and distribution capabilities.
V.
Target Positive Cash Flows and Income From Operations
Management
is committed to achieving operating profitability by reducing EMCORE’s cost
structure and lowering the breakeven points of every product line, with the
goal
of achieving positive operating income during the second half of fiscal 2006.
Over the past several years, management has implemented a number of initiatives
to help achieve this goal. EMCORE has (i) outsourced high volume product
manufacturing to contract manufacturers; (ii) consolidated various corporate
functions; (iii) reduced outside contractors and temporary workers; (iv)
implemented programs to improve manufacturing process yields; (v) focused
R&D efforts on projects that are expected to generate returns within one
year without, we believe, jeopardizing future revenue opportunities; and
(vi)
initiated workforce reductions. In fiscal 2006, further cost reductions will
be
realized from facility consolidations and transfer of additional products
to
contract manufacturers.
Acquisitions
In
addition to using our internal capacity to develop and manufacture products
for
our target markets, EMCORE continues to expand its portfolio of communications
products and technologies through acquisitions:
-
In May
2005, EMCORE acquired the analog CATV and RF over fiber specialty businesses
from JDSU. Product
lines acquired through this acquisition include: HFC 1550-nm broadcast
transmitters, in both legacy and linearized optical modulated designs, to
link
between cable network headends and hubs, 1310-nm transmitters linking cable
network hubs and nodes, 1550-nm DWDM QAM transmitters, associated analog
receivers, amplifiers for extending fiber network reach for FTTP applications,
and RF and microwave over fiber specialty products for defense and satellite
communications. With
this
acquisition, EMCORE consolidated certain key intellectual properties in the
areas of analog CATV transmission and predistortion, and now offers the most
complete and best-of-breed fiber optic product portfolios for the CATV and
FTTP
marketplaces. Our CATV products support various network architectures and
address our customers’ needs of transmitting and receiving signals in short to
long haul, forward to return path, and headend to hub to node configurations.
Our FTTP products include PON transceivers for Optical Network Terminals
(ONTs),
directly and externally modulated optical transmitters for optical line
terminals (OLTs), and high-power (35 dbm) erbium-doped fiber amplifiers (EDFAs)
for in-line signal amplification. As a result of this acquisition, we believe
we
have one of the broadest optical communications product portfolios in the
industry.
-
In
November 2005, EMCORE announced that it acquired
privately held Phasebridge, Inc. of Pasadena, California through an asset
acquisition. The acquisition included its products, technical and engineering
staff, certain assets and intellectual properties and technologies.
Phasebridge’s operations will be integrated into the Ortel division of EMCORE,
which is located nearby in Alhambra, California. Founded
in
2000, Phasebridge is known as an innovative provider of high
performance, high value, miniaturized multi-chip system-in-package optical
modules and subsystem solutions for a wide variety of markets, including
fiber
optic gyroscopes (FOG) for weapons
& aerospace guidance, RF over fiber links for device remoting and optical
networks, and emerging technologies such as optical RF frequency synthesis
and
processing and terahertz spectroscopy.
Please
refer to Management’s Discussion and Analysis of Financial Condition and Results
of Operations under Item 7 and Financial Statements and
Supplemental Data under Item 8 for further discussion of these
acquisitions.
Divestiture
In
April
2005, EMCORE divested product technology focused on gallium nitride (GaN)-based
power electronic devices for the
power
device industry. The new company, Velox Semiconductor Corporation (Velox),
raised $6.0 million from various venture capital partnerships. Five EMCORE
employees transferred to Velox as full-time personnel and EMCORE contributed
intellectual property and equipment receiving a 19.2% stake in Velox. As
of
September 30, 2005, the recorded value of EMCORE’s investment in Velox was
approximately $1.3 million.
Investments
In
addition to the GELcore joint venture and Velox investment mentioned above,
in
February 2002, EMCORE purchased $1.0 million of preferred stock of Archcom
Technology, Inc. (Archcom), a venture-funded, start-up optical networking
components company that designs, manufactures, and markets a series of high
performance lasers and photodiodes for the datacom and telecom industries.
During fiscal 2004, Archcom raised additional capital, but EMCORE did not
participate. As a result, we reduced the carrying value of our investment
in
Archcom by 50%, or $0.5 million and recorded this expense as an investment
loss
in the statement of operations.
In
October 2004, EMCORE invested $1.0 million in K2 Optronics, Inc., a
California-based company specializing in the design and manufacture of external
cavity lasers, to strengthen our partnership in designing next-generation,
high-performance, long-wavelength components on an exclusive basis for the
CATV
and FTTP markets. As part of the acquisition of the JDSU businesses, EMCORE
also
paid $0.5 million to purchase JDSU's equity interest in K2 Optronics,
Inc.
