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which represents a $0.10 increase in net loss per share when compared to the prior year. During fiscal 2011, Emcore recorded $1.8 million of non-operating expense related to its Suncore joint venture.


As of September 30, 2011, cash, cash equivalents, and restricted cash totalled approximately $16.1 million. With respect to measures taken to improve liquidity, in December 2011, Emcore amended the Wells Fargo credit facility, which included adding new classes of assets into the borrowing base calculation and reducing the excess availability covenant requirements. As a result of this amendment, the firm can increase its potential borrowings by up to $14 million.


In addition, the company entered into an equity line of credit arrangement with Commerce Court Small Cap Value Fund, Ltd. in August 2011, pursuant to which, it may sell up to $50 million in shares of its common stock over the 24-month term.


Business Outlook and Commentary


As disclosed on October 24, 2011, flood waters infiltrated the offices and manufacturing floorspace of Emcore’s primary contract manufacturer in Thailand. The areas used to manufacture its fibre optic products and our process and test equipment were submerged in several feet of flood water for more than a month. As a result, the manufacturing infrastructure that supports approximately 50% of Emcore’s Fibre Optics segment revenue was damaged.


This has had a significant impact on operations and the firm’s ability to meet customer demand for fibre optics products. Production capabilities for three major product lines were impacted: these include Telecom products, such as tunable lasers and our high-volume tunable XFP line (our low-volume TXFP production line is in the Bay Area and producing products), Cable television (CATV) laser components and transmitters, and other legacy products.


174 www.compoundsemiconductor.net January / February 2012


Over the past two months, Emcore has been developing and implementing alternative manufacturing plans in its facilities in China and the U.S. to meet short-term customer demand. Concurrently, Emcore has been focusing on rebuilding the high-volume production infrastructure for impacted product lines in other locations owned by its primary contract manufacturer in Thailand, as well its China facility.


The focus during the rebuild is on a quick recovery and strategies to better configure the equipment for efficiency, reduce costs and provide manufacturing diversification in order to turn this crisis into an opportunity.


Purchase orders have been issued to replace the damaged process and test equipment and new equipment is now being received. Between its own facilities and its contract manufacturer, Emcore expects to rebuild its production capacity for its CATV business by the end of March 2012, and rebuild the production capacity of its Telecom production lines before the end of May 2012. The company is working closely with customers on its recovery manufacturing plan to align with their needs.


As for the inventory materials, Emcore were able to move a significant portion of its finished goods inventory to the second story of the facility right before the flood waters reached the manufacturing floor. This has allowed Emcore to serve the near-term demands of some key customers. The major focus is to work with customers to meet their near-term needs and to ascertain that the demand will still be there for Emcore’s products when it is back to full capacity. Emcore says many of its key customers for Telecom products have stepped up and committed their demand through non- cancellable purchase orders and pre-payments. As a result, the production capacity for tunable lasers in calendar 2012, when it is fully recovered, is almost fully booked with the existing commitments from customers.


Emcore has entered into agreements with its


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