SDL Announces Record Results for 1999 Third Quarter Revenue Rises 76 Percent With Net Income Up 250 Percent
SAN JOSE, Calif., Oct. 26 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI - news) today announced record revenues and income for the third quarter ended September 30, 1999. Led by a significant increase in shipments of products for undersea fiber optic systems, third quarter revenue was a record $47.5 million. This represents a 76 percent increase compared to $27.0 million for the corresponding 1998 quarter. Total revenue increased 10 percent from the $43.2 million reported for the June 1999 quarter. Commercial revenue was up 19 percent from the preceding quarter and represented 95 percent of total revenue. As expected, the sequential growth in commercial revenue was offset by a 55 percent decline in U.S. government contract sales.
Third quarter net income was a record $7.4 million, or $0.22 per share on a diluted basis. This was an increase of 250 percent compared to net income of $2.1 million, or $0.07 per share on a diluted basis, for the third quarter of 1998. The company's gross margin increased to 43.9 percent, up 1.7 points from the June 1999 quarter, and up 8.8 points from the prior year quarter. This gross margin improvement was driven by an increase in factory volume spread over a fixed manufacturing cost base, an improved product mix, and yield improvements in certain product lines.
For the nine months ended September 30, 1999, SDL reported record revenue of $128.3 million, up 56 percent compared to revenues of $82.3 million in the first nine months of 1999. Excluding acquisition-related charges in the first half of 1999, net income for the first three quarters of 1999 was a record $17.9 million, or $0.54 per diluted share, compared to $4.8 million, or $0.16 per diluted share, in the same period last year.
Commenting on the quarter's performance, SDL's Chairman and Chief Executive Officer Donald R. Scifres said, ``We are very pleased with our revenue and profit growth in the third quarter. Our operating staff did a marvelous job ramping production of pump lasers for undersea fiber systems and other commercial products to successfully offset the significant drop we had forecasted in government satellite revenue. We also successfully brought on line our new 44,000 square foot manufacturing facility in Victoria, British Columbia. With the qualified manufacturing capacity we now have in place, we believe we are well positioned to capitalize on the terrific growth opportunities presented by the fiber optic communications market.'
Scifres continued, ``These growth opportunities are being fueled by new markets opening up as well as our introduction of an exciting set of leading edge products. Last year our communication products were being sold primarily to build terrestrial fiber optic systems with virtually no revenue from the undersea fiber optic market. This past quarter, almost 25 percent of our product revenue was from this new undersea fiber optic market. Our new product offerings, such as Raman pump lasers and 10 gigabit per second modulators and drivers, also helped to fuel our growth and our prospects for the future.'
Statements in this press release which are not historical including statements regarding SDL's or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the company's prospects for rapid growth in the fiber optic communications market, new markets opening up, and the company's new products and their future prospects. It is important to note that the Company's actual results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially include risks related to uncertainties in competition in and customer demand for fiber optic communications products, the company's inability to manufacture the new products in production volumes, and the risk factors listed from time to time in the Company's SEC reports including but not limited to, the annual report on Form 10-K/A for the year ended January 1, 1999, and the Company's quarterly report on Form 10-Q for the first and second quarters of 1999.
SDL's products power the transmission of data, voice and Internet information over fiber optic networks to meet the needs of telecommunications, dense wavelength division multiplexing (DWDM), cable television and satellite communications applications. They enable customers to meet the bandwidth needs of increasing Internet, data, video and voice traffic by expanding their fiber optic communications networks much more quickly and efficiently than would be possible using conventional electronic and optical technologies. SDL's optical products also serve a variety of non-communications applications, including materials processing and printing. Additional information about SDL, Inc. is available on the Internet at www.sdli.com .
SDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)
(in thousands, expect per share data -- unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
Total revenues $47,507 $26,958 $128,344 $82,257
Cost of revenues 26,656 17,498 74,662(b) 55,759
Gross Margin 20,851 9,460 53,682 26,498
Operating expenses
Research and development 5,237 3,200 13,310 9,342
Selling, general
and administrative 6,527 4,036 18,650 12,019
Merger costs -- -- 2,677 --
In-process research
and development -- -- 1,495 --
Amortization expense 210 193 599 582
Total operating expenses 11,974 7,429 36,731 21,943
Operating income 8,877 2,031 16,951 4,555
Interest income, net 589 330 1,172 927
Income before income taxes 9,466 2,361 18,123 5,482
Provision for income taxes 2,082 251 4,905 723
Net income $7,384 $2,110 $13,218 $4,759
Net income per share -- basic $0.23 $0.07 $0.43 $0.17
Net income per share -- diluted $0.22 $0.07 $0.40 $0.16
Number of weighted
average shares -- basic 32,093 28,672 31,043 28,519
Number of weighted
average shares -- diluted 34,146 30,240 33,085 30,179
(a) Prior periods have been restated to reflect the acquisition of IOC
International plc on a pooling-of-interest basis. The three and nine
month periods ended September 30, 1998 are combined with IOC's three
and nine month periods ended June 30, 1998, and the three and nine
month periods ended September 30, 1999 are combined with IOC's three
and nine month periods ended September 30, 1999.
(b) Includes one-time charges of $0.7 million related to the Polaroid
fiber laser acquisition in the quarter ended March 31, 1999.
SDL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1999 1998 (a)
(unaudited)
Assets
Current assets:
Cash, cash equivalents
and marketable securities $292,349 $34,658
Accounts receivable, net 42,685 23,042
Inventory 30,008 21,288
Other current assets 3,946 3,875
Total current assets 368,988 82,863
Property and equipment, net 53,431 39,848
Long-term marketable securities -- 3,552
Other assets 8,369 5,797
$430,788 $132,060
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $12,165 $10,014
Other accrued liabilities 18,098 9,144
Total current liabilities 30,263 19,158
Long-term liabilities 4,710 4,696
Stockholders' equity 395,815 108,206
$430,788 $132,060
(a) The prior period balance sheet has been restated to include IOC on a
pooling-of-interest basis. Because of different year ends, the
December 31, 1998 balance sheet includes the accounts of IOC as of
September 30, 1998.
For more information on SDL, Inc. at no cost, please call 800-PRO-INFO (U.S.) or 732-544-2850 (Int'l), ticker SDLI.
SOURCE: SDL, Inc. |
