Segment Data and Related Information

12 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Data and Related Information

Segment Data and Related Information

We have three operating divisions within the following two reporting segments:

• Fiber Optics: EMCORE Digital Fiber Optics Products and EMCORE Broadband Fiber Optics Products are aggregated as a separate reporting segment, Fiber Optics. Our Fiber Optics reporting segment provides optical components, subsystems, and systems for high-speed telecommunications, cable television (CATV), and fiber-to-the-premises (FTTP) networks, as well as products for satellite communications, video transport, and specialty photonics technologies for defense and homeland security applications.

• Photovoltaics: EMCORE Photovoltaics is a separate reporting segment, Photovoltaics. Our Photovoltaics reporting segment provides products for both space and terrestrial solar power applications. For space solar power applications, we offer high-efficiency multi-junction solar cells, covered interconnect cells (CICs), and complete satellite solar panels. For terrestrial power applications, we offer high-efficiency GaAs solar cells for concentrating photovoltaic (CPV) power systems.

On September 17, 2014, EMCORE entered into an Asset Purchase Agreement (the ‘‘Agreement’’) with Photon Acquisition Corporation (‘‘Purchaser’’), a Delaware corporation and an affiliate of private equity firm Veritas Capital, pursuant to which Purchaser will acquire substantially all of the assets, and assume substantially all of the liabilities, primarily related to or used in connection with the Photovoltaics Business. At a special meeting of EMCORE'S shareholders held on December 5, 2014, EMCORE'S shareholders approved the sale of the Photovoltaics Business, and on December 10, 2014 EMCORE completed the Photovoltaics Asset sale.

As a result, the financial results of the entire Photovoltaics Business will be presented as discontinued operations on the Consolidated Statements of Operations beginning in the first quarter of fiscal year 2015. Accordingly, the Company will have one remaining reportable segment: Fiber Optics.

On October 22, 2014, EMCORE entered into an Asset Purchase Agreement (the "Purchase Agreement") with NeoPhotonics Corporation, a Delaware corporation ("NeoPhotonics") pursuant to which the Company has agreed to sell certain assets, and transfer certain liabilities of the Company's telecommunications business (the "Purchased Assets") to NeoPhotonics for an aggregate purchase price of $17.5 million, subject to certain adjustments, consisting of $1.5 million in cash at closing and a promissory note in the principal amount of $16.0 million (the "Promissory Note"). The Promissory Note will bear interest of 5.0% per annum for the first year and 13.0% per annum for the second year, payable semi-annually in cash, and matures two years from the closing of the transaction contemplated by the Purchase Agreement (collectively, the "Digital Products Business" and, the sale of the Digital Products Business, the "Digital Products Assets Sale"). In addition, the Promissory Note will be subject to prepayments under certain circumstances, and will be secured by certain of the assets to be sold to NeoPhotonics in the transaction. The Purchased Assets include fixed assets, inventory, and intellectual property for the ITLA, micro-ITLA, T-TOSA and T-XFP product lines within the Company’s telecommunications business. The purchase price is subject to certain adjustments for inventory, net accounts receivable and pre-closing revenue levels, which will increase or decrease the principal amount under the Promissory Note as applicable. The transaction is subject to customary closing conditions and is expected to close by early January 2015.

As the result of this transaction, we expect assets and liabilities of the telecommunications business which is included within the fiber optics results below, to be classified as held for sale and the financial results to be reported as discontinued operations in the Company's consolidated financial statements in the first quarter of fiscal year 2015. The telecommunications business to be sold represents 26% of our consolidated revenue for the fiscal year ended September 30, 2014 and 16% of our total assets as of September 30, 2014.

We evaluate our reportable segments pursuant to ASC 280, Segment Reporting. The Company's Chief Executive Officer is the chief operating decision maker and he assesses the performance of the operating segments and allocates resources to segments based on their business prospects, competitive factors, net revenue, operating results, and other non-GAAP financial ratios.

Revenue: The following tables set forth revenue attributable to each of our reporting segments and by geographic region with revenue assigned to geographic regions based on our customers’ billing addresses.

Segment Revenue	For the Fiscal Years Ended September 30,
(in thousands)	2014		2013		2012
Fiber Optics revenue	$	101,552	$	96,977	$	96,153
Photovoltaics revenue	73,226		71,170		67,628
Total revenue	$	174,778	$	168,147	$	163,781

Revenue by Geographic Region	For the Fiscal Years Ended September 30,
(in thousands)	2014		2013		2012
United States	$	111,428	$	107,341	$	111,962
Asia	40,244		44,373		27,519
Europe	21,196		15,318		15,032
Other	1,910		1,115		9,268
Total revenue	$	174,778	$	168,147	$	163,781

Significant Customers: For the fiscal years ended September 30, 2014, 2013 and 2012, our top 5 customers accounted for 35%, 34%, 33%, respectively, of our annual consolidated revenue.  Significant customers are defined as customers that represented greater than 10% of total consolidated revenue, by reporting segment. No single customer from the Fiber segment represented greater than 10% of our consolidated revenue for the fiscal years ended September 30, 2014, 2013 and 2012.

No single customer from the Photovoltaics segment represented greater than 10% of our consolidated revenue for the fiscal years ended September 30, 2014 and 2013. For the fiscal year ended September 30, 2012, revenue from Space Systems Loral represented 14% of our total consolidated revenue. Revenue from Suncore represented 9% of our consolidated revenues for the fiscal year ended September 30, 2013. See Note 15 - Suncore Joint Venture for additional disclosures related to the Suncore revenues.

Operating (Loss) Income: The following table sets forth operating (loss) income attributable to each of our reporting segments.

Operating (Loss) Income	For the Fiscal Years Ended September 30,
(in thousands)	2014			2013			2012
Fiber Optics operating loss	$	(25,400	)	$	(8,382	)	$	(26,684	)
Photovoltaics operating income (loss)	6,292			8,602			(8,941		)
Total operating (loss) income	$	(19,108	)	$	220		$	(35,625	)

Non-Cash Expenses: The following tables set forth our significant non-cash expenses attributable to each of our reporting segments.

Depreciation, Amortization, and Accretion Expense	For the Fiscal Years Ended September 30,
(in thousands)	2014		2013		2012
Fiber Optics segment	$	5,986	$	5,737	$	5,246
Photovoltaics segment	2,532		2,951		4,174
Total depreciation, amortization, and accretion expense	$	8,518	$	8,688	$	9,420

Stock-based Compensation Expense	For the Fiscal Years Ended September 30,
(in thousands)	2014		2013		2012
Fiber Optics segment	$	2,792	$	2,668	$	4,678
Photovoltaics segment	1,647		1,541		3,078
Total stock-based compensation expense	$	4,439	$	4,209	$	7,756

Long-lived Assets: Long-lived assets consist primarily of property, plant, and equipment and also goodwill and intangible assets.  The following table sets forth long-lived assets for each of our reporting segments and our unallocated Corporate division.

Long-lived Assets	As of September 30, 2014		As of September 30, 2013
(in thousands)
Fiber Optics segment	$	18,976	$	23,804
Photovoltaics segment	39,137		40,048
Unallocated Corporate division	8,400		8,435
Long-lived assets	$	66,513	$	72,287

As of September 30, 2014, 2013 and 2012 approximately 81%, 80% and 86%, respectively, of our long-lived assets were located in the United States. The remaining assets are primarily located in China and Thailand.