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Here's the full report. Conference call begins at 2:00 PST. I'll post a summary when it's over.
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February 03, 1999 16:15
SDL Announces Record Revenue and Earnings
SAN JOSE, Calif., Feb. 3 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI) today announced record revenues and earnings for the fourth quarter and year ended December 31, 1998.
For the fourth quarter ended December 31, 1998, SDL reported record revenues of $29.4 million compared to $24.8 million in the fourth quarter 1997. Fourth quarter 1998 net income more than doubled, rising 125 percent to $4.1 million, or $0.28 per share on a diluted basis, compared to net income of $1.8 million, or $0.13 per share on a diluted basis, reported for the fourth quarter 1997. Diluted earnings per share were computed on 14.9 million shares compared to 14.4 million shares in 1997.
For the year ended December 31, 1998, SDL reported record revenue of $106.1 million and net income of $12.8 million, or $0.87 per share on a diluted basis, compared to revenues of $91.4 million and a net loss of $24.7 million, or $1.83 per share on a diluted basis, for 1997. Shares used in the computation of diluted per share amounts for 1998 were 14.7 million shares compared to 13.5 million shares in 1997.
Commenting on the quarter, Donald R. Scifres, chairman and chief executive officer, said, "We are very pleased by the growth of our communications product lines. Driven by demand in the long haul terrestrial sector, our communications products represented 66 percent of our total fourth quarter revenue versus 47 percent in the same quarter last year. The demand for our flagship 980 nm pump modules has grown over 100 percent over the past 12 months, attributable largely to the start of installation of dense wavelength division multiplexed (DWDM) fiber optic networks that provide increased throughput for the growing data, voice and Internet traffic. We also initiated production on the first undersea fiber optic supply contract during the quarter. We expect to continue to increase production levels on this contract in early 1999."
"Our increased focus on higher margin communications products, plus steady improvements in our manufacturing efficiencies, helped to boost gross margins to 38.7 percent in the quarter as compared to 36.1 percent and 34.5 percent in the previous two quarters respectively," Scifres continued. "In fiscal 1999, we will remain dedicated to sustaining strong margins, in part, by expanding our DWDM product line, upgrading manufacturing capabilities, and strengthening our customer relationships."
SDL designs, manufactures and markets fiber optic-related products, lasers and optoelectronic-based systems. The company's products are used in a diversity of markets such as telecommunications, cable television, dense wavelength division multiplexing, satellite communications, printing, medical and materials processing markets.
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 anticipated 1999 increase in production levels of undersea fiber optic products, expansion in the DWDM product line, upgrading of manufacturing facilities and strengthening customer relationships. Reasons why actual results might differ include risks related to the company's inability to increase yields and production levels, inability to expand product lines, delay or inability in upgrading manufacturing facilities, and inability to strengthen customer relationships. All forward-looking statements are made as of today, and SDL disclaims any duty to update such statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's annual report on Form 10-K for the 1997 fiscal year, the quarterly reports on Forms 10-Q for the first three quarters of 1998, and other SEC filings. Copies of these filings may be obtained by contacting SDL or the SEC.
SDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data -- quarter results unaudited)
Three Months Ended Years Ended
December 31 December 31
1998 1997 1998 1997(A)
Total revenues $29,400 $24,827 $106,138 $ 91,364
Cost of revenues 18,032 16,478 68,419 65,154
Gross Margin 11,368 8,349 37,719 26,210
Operating expenses:
Research and development 2,834 2,145 10,690 9,794
Selling, general and
administrative 4,179 3,735 13,599 40,609
Amortization of purchased
intangibles 193 184 775 671
In-process research and
development -- 753 -- 753
Total operating expenses 7,206 6,817 25,064 51,827
Operating income(loss) 4,162 1,532 12,655 (25,617)
Interest(income), net (294) (352) (1,211) (1,355)
Income(loss) before
income taxes 4,456 1,884 13,866 (24,262)
Provision for income taxes 337 50 1,043 417
Net income(loss) $4,119 $1,834 $12,823 $(24,679)
Net income(loss) per share
- basic $0.29 $0.13 $0.92 $(1.83)
Net income(loss) per share
- diluted $0.28 $0.13 $0.87 $(1.83)
Number of weighted average
shares - basic 14,125 13,642 13,887 13,497
Number of weighted average
shares - diluted 14,925 14,444 14,709 13,497
(A) Includes one-time charges totaling $30,911.
SDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AS PERCENTAGE OF TOTAL REVENUE
(In thousands, except per share data - quarter results unaudited)
The following table sets forth certain operating results expressed as a
percentage of total revenue for the periods indicated.
Three Months Ended Years Ended
December 31 December 31
1998 1997 1998 1997(A)
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 61.3% 66.4% 64.5% 71.3%
Gross Margin 38.7% 33.6% 35.5% 28.7%
Operating expenses:
Research and development 9.6% 8.6% 10.1% 10.7%
Selling, general and
administrative 14.2% 15.0% 12.8% 44.5%
Amortization of purchased
intangibles 0.7% 0.8% 0.7% 0.7%
In-process research and
development 0.0% 3.0% 0.0% 0.8%
Total operating expenses 24.5% 27.4% 23.6% 56.7%
Operating income(loss) 14.2% 6.2% 11.9% (28.0%)
Interest(income), net (1.0%) (1.4%) (1.2%) (1.6%)
Income(loss) before income
taxes 15.2% 7.6% 13.1% (26.6%)
Provision for income taxes 1.2% 0.2% 1.0% 0.4%
Net income(loss) 14.0% 7.4% 12.1% (27.0)
(A) Includes one-time charges totaling $30,911.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
1998 1997
(B) (B)
Assets
Current assets:
Cash, cash equivalents and
short-term cash investments $25,864 $14,993
Accounts receivable, net 22,070 19,960
Inventory 19,679 13,938
Other current assets 3,306 2,738
Total current assets 70,919 51,629
Property and equipment, net 32,931 26,298
Long-term cash investments 3,552 11,613
Other assets (including
purchased intangibles) 5,075 4,684
$112,477 $94,224
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $9,385 $8,469
Accrued liabilities 7,176 7,148
Total current liabilities 16,561 15,617
Long-term liabilities 2,669 2,020
Stockholders' equity 93,247 76,587
$112,477 $94,224
(B) Derived from audited financial statements
SOURCE SDL, Inc.
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