SAN JOSE, Calif., Apr 19, 2000 -- SDL, Inc. (Nasdaq:SDLI) today announced record revenues of $72.2 million and pro forma net income of $17.0 million, or $0.22 per diluted share, for the first quarter ended March 31, 2000.
Again led by significant increases in shipments of communications products for
both terrestrial and undersea fiber optic systems, first quarter revenue was 92
percent above that reported for the quarter ending March 31, 1999, and 23
percent higher than revenue in the fourth quarter of 1999. Revenue from fiber
optic communications products increased 35 percent over the fourth quarter, and
by 163 percent over the prior year quarter. Results for the first quarter
include results of Queensgate Instruments from the closing of its acquisition on
March 8, 2000. SDL Queensgate contributed $929,000 to consolidated revenue in
March.
Including acquisition-related and purchased intangibles amortization charges and
non-cash stock compensation expense, the company reported GAAP net income of
$14.2 million, or $0.19 per diluted share for the quarter. This includes a $1.2
million charge for in-process research and development related to the Queensgate
transaction, $1.7 million of amortization of purchased intangible assets and
$654,000 of non-cash stock compensation expense.
On a pro-forma basis, excluding acquisition-related charges, amortization of
purchased intangible assets and non-cash stock compensation expense, SDL
reported net income of $17.0 million, or $0.22 per share for the quarter, an
increase of 250 percent over the $4.9 million, or $0.08 per share, pro forma net
income for the quarter ending March 31, 1999. Pro forma operating margin was a
record 30.5 percent, up 8.0 points from the December 1999 quarter and up 14.7
points from the prior year quarter. This improvement was driven by continued
reduction in expenses relative to revenue and significant gross margin
improvement due to the growth in telecommunications revenue and increases in
yields and factory efficiency.
The following table summarizes pro forma results for the quarters ended March
31, 2000 and 1999.
(in millions,
except share amounts) Three months ended March 31
2000 1999
Revenues $72.2 $37.7
Gross profit (a) 34.6 15.3
Income from operations (a) 22.0 5.9
Income before income taxes (a) 26.5 6.2
Net income (a) 17.0 4.9
Net income per diluted share (a) $0.22 $0.08
Diluted weighted average
shares outstanding 76.5 64.3
(a) Pro forma results for the quarter ended March 31, 2000 exclude the
in-process research and development charge related to the Queensgate
acquisition, amortization of purchased intangible assets and non-cash
stock compensation expenses. Pro forma results for the quarter ended
March 31, 1999 exclude the in-process research and development charge
and other charges related to the Polaroid fiber laser acquisition,
amortization of purchased intangible assets and non-cash stock
compensation expenses.
Commenting on the quarter's performance, SDL's Chairman and Chief Executive
Officer, Donald R. Scifres said, "The results for the first quarter exceeded our
expectations as customer demand for a wide variety of our fiber communications
products increased dramatically. We benefited from rising demand for Raman
amplification, 980 nm pump products, lithium niobate modulators and drivers, and
fiber gratings, among other products."
Scifres continued, "Looking ahead, we are projecting a need for increased
manufacturing facilities sooner than we had previously anticipated. To this end,
we are in the process of identifying or building out expansion sites in Santa
Clara, California, Witham, U.K., and Plainfield, New Jersey, the site of SDL
Veritech, our most recent acquisition. We also just completed the expansion of
our active fiber plant in Norwood, Massachusetts. We expect that our present
facilities will be capable of meeting growing customer demand as we move to
increased work shift coverage and investment in more automated production
equipment in our existing factories."
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 need for increased manufacturing facilities sooner than previously
anticipated to meet growing customer demand and the company's ability in the
meanwhile to meet growing customer demand with its existing factories. 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 the company's inability to
meet customer demand with its existing facilities, the company's inability to
expand manufacturing facilities successfully to meet customer demand,
uncertainties in competition and in customer demand for the company's products,
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 for the year ended
December 31, 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
(in thousands, except per share data - unaudited)
Three Months Ended
March 31,
2000 1999
Total revenues $72,206 $37,666
Cost of revenues 37,616 23,033
Gross profit 34,590 14,633
Operating expenses
Research and development 5,903 3,781
Selling, general and administrative 7,298 5,680
In-process research and development 1,200 1,495
Amortization of purchased intangibles 1,744 179
Total operating expenses 16,145 11,135
Operating income 18,445 3,498
Interest income, net 4,485 286
Income before income taxes 22,930 3,784
Provision for income taxes 8,686 1,161
Net income $14,244 $2,623
Net income per share - basic $0.20 $0.04
Net income per share - diluted $0.19 $0.04
Number of weighted average shares
- basic 72,019 60,176
Number of weighted average shares
- diluted 76,507 64,296
SDL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2000 1999
(unaudited) (A)
Assets
Current assets:
Cash, cash equivalents and
marketable securities $315,142 $314,135
Accounts receivable, net 49,652 41,445
Inventory 36,971 32,070
Other current assets 3,628 3,659
Total current assets 405,393 391,309
Property and equipment, net 65,670 59,772
Intangible assets 93,258 2,948
Other assets 15,951 6,924
$580,272 $460,953
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $19,151 $18,277
Other accrued liabilities 21,344 17,770
Total current liabilities 40,495 36,047
Long-term liabilities 14,527 4,758
Stockholders' equity 525,250 420,148
$580,272 $460,953
(A) Derived from audited financial statements included in the Company's
Annual Report Form 10-K filed with the Securities and Exchange
Commission.
SDL, INC.
PRO FORMA CONDENSED STATEMENTS OF INCOME
(in millions, except per share data - unaudited)
Three Months Ended March 31, 2000
Pro Forma
As Reported Adjustments Pro Forma
Revenue $72,206 - $72,206
Cost of revenues 37,616 - 37,616
Gross profit 34,590 - 34,590
Research and development 5,903 - 5,903
Selling, general and
administrative (a) 7,298 (654) 6,644
In-process research
and development (b) 1,200 (1,200) -
Amortization of purchased
intangibles (c) 1,744 (1,744) -
Total operating expenses 16,145 (3,598) 12,547
Operating income 18,445 3,598 22,043
Interest income, net 4,485 - 4,485
Income before income taxes 22,930 3,598 26,528
Provision for income taxes (d) 8,686 864 9,550
Net income $14,244 $ 2,734 $16,978
Net income per share - basic $0.20 - $0.24
Net income per share - diluted $0.19 - $0.22
Number of weighted average
shares outstanding 72,019 72,019
Number of weighted average
shares and equivalents 76,507 76,507
(a) Adjusted to exclude $654,000 of non-cash stock compensation expense
(b) Adjusted to exclude in process R&D related to the acquisition of
Queensgate Instruments
(c) Adjusted to exclude amortization of purchased intangible assets
including $1.5 million related to the acquisition of Queensgate
Instruments
(d) Adjusted to exclude income tax effects of (a) and (c) above using an
effective tax rate of 36 percent
SDL, INC.
PRO FORMA CONDENSED STATEMENTS OF INCOME
(in millions, except per share data - unaudited)
Three Months Ended March 31, 1999
Pro Forma
As Reported Adjustments Pro Forma
Revenue $37,666 - $37,666
Cost of revenues (a) 23,033 (700) 22,333
Gross profit 14,633 700 15,333
Research and development 3,781 - 3,781
Selling, general and
administrative (b) 5,680 (68) 5,612
In-process research and
development (c) 1,495 (1,495) -
Amortization of purchased
intangibles (d) 179 (179) -
Total operating expenses 11,135 (1,742) 9,393
Operating income 3,498 2,442 5,940
Interest income, net 286 - 286
Income before income taxes 3,784 2,442 6,226
Provision for income taxes (e) 1,161 209 1,370
Net income $ 2,623 $2,233 $ 4,856
Net income per share - basic $0.04 - $0.08
Net income per share - diluted $0.04 - $0.08
Number of weighted average
shares outstanding 60,176 60,176
Number of weighted average
shares and equivalents 64,296 64,296
(a) Adjusted to exclude $700,000 one-time charge related to the
acquisition of Polaroid's fiber laser business in February 1999
(b) Adjusted to exclude $68,000 of non-cash stock compensation expense
(c) Adjusted to exclude in-process R&D related to the Polaroid acquisition
(d) Adjusted to exclude amortization of purchased intangible assets
(e) Adjusted to exclude (a), (b) and (d) above using an effective tax rate
of 22 percent
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. |
