Climate Change Data

Environmental Metrics

Social Achievements

• Announced a workforce reduction in October 2001 that decreased its overall headcount by 105 employees or approximately 12%.

Climate Goals & Targets

Environmental Challenges

• May continue to incur operating losses.
• Must continually improve existing products, design and sell new products and manage the costs of research and development in order to effectively compete.
• May engage in acquisitions that may harm our operating results, dilute our shareholders and cause us to incur debt or assume contingent liabilities.
• Rapid growth places a strain on our resources.
• Industry is rapidly changing.
• Fluctuations in our quarterly operating results may negatively impact our stock price.
• Joint venture partner, who has control of the venture, may make decisions that we do not agree with and that adversely affect our net income.
• Significant amount of investments in marketable securities.
• Large percentage of our revenues are from foreign sales, certain export risks may disproportionately affect our revenues.
• Will lose sales if we are unable to obtain government authorization to export our products.
• Operating results could be harmed if we lose access to sole or limited sources of materials or services.
• Products are difficult to manufacture and our production could be disrupted if we are unable to avoid manufacturing difficulties.
• Face lengthy sales and qualifications cycles for our products and, in many cases, must invest a substantial amount of time and funds before we receive orders.
• Industry demand for skilled employees, particularly scientific and technical personnel with compound semiconductor experience, exceeds the number of skilled personnel available.
• Protecting our trade secrets and obtaining patent protection is critical to our ability to effectively compete for business.
• Failure to obtain or maintain the right to use certain intellectual property may adversely affect our financial results.
• Interruptions in our business and a significant loss of sales to Asia may result if our primary Asian distributor fails to effectively market and service our products.
• Management's stock ownership gives them the power to control business affairs and prevent a takeover that could be beneficial to unaffiliated shareholders.
• Unsuccessful control of the hazardous raw materials used in our manufacturing process could result in costly remediation fees, penalties or damages under environmental and safety regulations.
• Business or our stock price could be adversely affected by issuance of preferred stock.
• Certain provisions of New Jersey law and our charter may make a takeover of our company difficult even if such takeover could be beneficial to some of our shareholders.
• Price of our common stock has fluctuated widely in the last year and may fluctuate widely in the future.
• Markets in which we compete are highly competitive. An increase in competition would limit our ability to maintain and increase our market share.

Mitigation Strategies

• 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.
• In order to meet the challenges of the current economic climate, EMCORE announced a workforce reduction in October 2001 that decreased its overall headcount by 105 employees or approximately 12%.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Negative worldwide economic conditions resulting in decreased sales and increased operating costs.
• Unpredictable future revenue and fluctuating operating results.
• Difficulty in achieving operational and material cost reductions and production efficiencies.
• Significant liquidity and capital requirements.
• Volatility in the market price of common stock.
• Limited lead times with customers restricting revenue forecasting.
• Dependence on a small number of customers.
• Long-term, firm commitment supply agreements resulting in insufficient or excess inventory.
• Reliance on limited or single sources of materials, components, or services.
• Potential for contract manufacturers to fail to deliver qualified products.
• Inability to keep pace with rapid technological change.
• High costs of developing and improving technology.
• Intense competition and price reductions.
• Potential for product obsolescence.
• Difficulty in manufacturing products.
• Warranty claims, product recalls, and product liability.
• Lengthy sales and qualification cycles for new products.
• Inaccurate estimation of customer demand.
• Potential for inventory write-downs.
• Unique risks associated with different sales contracts.
• Significant international sales exposing the company to additional risks.
• Increased operations in China exposing the company to political, legal, and economic risks.
• Difficulty in obtaining government authorization to export products.
• Difficulty in protecting trade secrets and obtaining patent protection.
• Failure to comply with environmental and safety regulations.
• Failure to attract and retain key personnel.
• Risks associated with the availability and coverage of insurance.
• Potential failure of information technology infrastructure.
• Potential deficiencies in internal controls.
• Difficulties in acquisitions and joint ventures.
• Changes to financial accounting standards.
• Natural disasters or other catastrophic events.

Mitigation Strategies

• Implementation of measures to align cost structure with revenue forecasts.
• Pursuit of strategic options to maximize shareholder value, including joint ventures and asset sales.
• Operational and material cost reductions and productivity improvement initiatives.
• Establishment of a three-year $35 million asset-backed revolving credit facility with Wells Fargo Bank.
• Cost reduction initiatives involving facility consolidation and product redesign.
• Cost reduction throughout the company.
• Transferring manufacturing of certain product lines to low-cost contract manufacturers.
• Divesting or exiting non-strategic product lines.
• Improved utilization of existing manufacturing capabilities.
• Strategic focus on video transport business.
• Pursuit of new business opportunities in defense and government sectors.
• Negotiating multi-year, binding contractual commitments with suppliers.
• Implementation of a supply-chain management program.
• Re-qualification of new suppliers.
• Increased use of contract manufacturers located outside the U.S.
• Investing in research and development to maintain technological competitiveness.
• Developing lower cost versions of existing products.
• Maintaining product liability insurance.
• Close work with customers to qualify products.
• Closely managing production and inventory levels.
• Quarterly evaluation of ending inventories.
• Creation of a joint venture with San’an Optoelectronics to establish a low-cost manufacturing operation in China.
• Product redesign to eliminate the impact of ITC orders.
• Implementation of security measures to protect information technology infrastructure.
• Implementation of measures to improve internal controls.
• Ongoing monitoring and changes to processes to improve internal controls.

Supply Chain Management

Responsible Procurement

• Supply agreements with key suppliers.
• Outsourcing production to contract manufacturers.
• Monitoring contract manufacturers for compliance.

Climate-Related Risks & Opportunities

Opportunities

• Growth in the terrestrial solar power generation market.

Sustainable Products & Innovation

• High-efficiency compound semiconductor-based multi-junction solar cell products.
• Concentrating photovoltaic (CPV) power systems.