Memscap to Buy JDSU's Cronos

GRENOBLE, France and SAN JOSE, Calif. -- MEMSCAP (Euronext:MEMS), the leading provider of innovative solutions based on MEMS (micro-electromechanical systems), today announced it has entered an agreement to acquire substantially all of the business and assets of JDS Uniphase's Cronos MEMS business unit.As JDS Uniphase's exclusive supplier of MEMS-based products, MEMSCAP will provide ongoing access to MEMS technology as well as a secure source for the continued availability of MEMS optical products. As part of the agreement, JDS Uniphase has provided MEMSCAP with initial purchase commitments for products and services. In addition to JDS Uniphase, MEMSCAP will gain access to leading systems companies, as well as most of the active optical MEMS product vendors in the market today.The acquisition provides MEMSCAP with a fully operational unit that is well established in MEMS design and foundry services, as well as in optical MEMS. MEMSCAP expects to derive substantial technical and operating efficiencies through integration of Cronos into MEMSCAP's state-of-the-art manufacturing facility in Bernin. The Cronos acquisition will provide MEMSCAP with several active contracts and key customer relationships, a strong base of manufacturing equipment and an extensive intellectual property portfolio encompassing 27 existing patents and 27 patent applications. Cronos is also widely known for its Multi-User MEMS Processes (MUMPS®) foundry service, currently being expanded from polysilicon-based technology to metal and silicon-on-insulator (SOI).According to the terms of the acquisition agreement, MEMSCAP will acquire Cronos free of debt, other liabilities, and any other working capital or cash balances. MEMSCAP will issue 10,500,000 common shares initially to JDS Uniphase, upon closing of the transaction (subject to certain conditions described below). In addition, MEMSCAP may be required to issue up to 6,500,000 additional shares as consideration, contingent on Cronos achieving certain revenue targets over the two and a half year period after closing.MEMSCAP and JDS Uniphase will enter into a commercial agreement that will make MEMSCAP the exclusive supplier to JDS Uniphase of MEMS chips for MEMS-based products for a period of not less than three years following closing of the acquisition.In a separate release:MEMSCAP (Euronext:MEMS), the leading provider of innovative solutions based on MEMS (micro-electromechanical systems), today announced results for the half year ending June 30, 2002.Revenues for the half year rose to 2.5 million Euros, with second quarter revenues of 1.4 million euros.As MEMSCAP has emphasized since January, the first half of 2002 was expected to be a transitional period as the new fabrication facility began operations. The fab, in operation for several weeks, has already enabled the production and sale of fully qualified optical components to a number of select customers. The ramp-up in production capability will be a key element in achieving the revenue goals set forth for the second half of the year.During the first half of the year, operational expenses rose to 9.5 million Euros, of which 5.0 million Euros went to research and development.Given this focus on heavy investment, MEMSCAP saw an operating loss of 10 million Euros and a net loss of 10.3 million Euros. The net loss figure does not include a research tax credit, estimated at 1.7 million euros for the first half of the year, to be taken at the end of the year.As of June 30, 2002, MEMSCAP had 83.2 million Euros of shareholder equity and a cash position of 11.4 million Euros, prior to the refinancing of the Bernin fabrication facility underwritten by two banking syndicates for equipment and facilities investment (18.1 million and 19.5 million Euros, respectively, not including tax). As of July 25, 2002, taking into account the first payment from the equipment lease, MEMSCAP's cash position rose to 20.5 million Euros. Based on the cash position of June 30, and taking into consideration the total funds issued for the lease-back (37.5 million Euros), cash levels were at nearly 50 million Euros."MEMSCAP's growth is based on long term goals and rapid execution. In less than one year, since the company went public, we have built the most modern MEMS foundry in the world, which is already operational. However, production ramp-up and the sales cycle have inherent delays that affect the entire company despite the excellent performance of our teams and technology," said Jean-Michel Karam, president and chief executive officer, MEMSCAP.Memscap S.A.JDS Uniphase Corp.