Terrestrial and Undersea Fiber Optic Markets Drive Q4 Revenues Up 92 Percent
Triggering 282 Percent Net Income Growth
SAN JOSE, Calif., Jan. 31 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI) today
announced record revenues and income for the fourth quarter ended December 31,
1999.
Led by significant increase in shipment of products for both terrestrial
and undersea fiber optic systems, fourth quarter revenue was a record
$58.7 million. This represents a 92 percent increase compared to the
corresponding 1998 quarter. Total revenue increased 24 percent from the
$47.5 million reported for the September 1999 quarter. Sales of fiber optic
communication products increased 44 percent over the third quarter, and by
179 percent over the prior year quarter, as demand for SDL solutions continued
to grow in terrestrial, undersea and metro/cable markets.
Fourth quarter net income was a record $12.0 million, or $0.32 per share
on a diluted basis. This was an increase of 282 percent compared to net
income of $3.1 million, or $0.10 on a diluted basis for the fourth quarter of
1998. Earnings per share increased 45 percent from the preceding quarter and
220% over the fourth quarter of 1998. The Company's operating margin
increased to 20.6 percent, up 1.9 points from the September 1999 quarter, and
up 10.3 points from the prior year quarter. This improvement was driven by a
reduction in expenses relative to revenue, and continued gross margin
improvement due to a more profitable product mix, and increases in yields and
factory utilization.
For the year ended December 31, 1999, SDL reported revenue of
$187.0 million, up 66 percent compared to revenue of $112.8 million for 1998.
Revenue from fiber optic communications products grew by 179 percent.
Excluding acquisition-related charges in the first half of 1999, net income
for 1999 was a record $29.9 million, or $0.87 per diluted share, compared to
$7.9 million, or $0.26 per diluted share in 1998.
Commenting on the quarter's performance, SDL's Chairman and Chief
Executive Officer Donald R. Scifres said, "We are delighted with the
performance of our fiber optics communications business. Over 40% sequential
growth was achieved in all three of our major markets; terrestrial, undersea
and metro/cable. This growth is driven by our strategy to provide leading
edge products that are designed to enable an expanding list of key customers
to install the most advanced fiber optic communication systems in the world.
Attesting to the strength of these products, over 50 percent of our fourth
quarter communications revenue came from products first introduced into
production in 1999. We believe these strong products, in addition to the new
products planned for introduction at the Optical Fiber Conference in March
this year, will continue to broaden our customer base and support strong
growth into 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 continued growth in demand for SDL's products, continued gross margin
improvement, the company's strategy to provide leading-edge products designed
to enable an expanding list of its key customers to install the most advanced
fiber optic communications systems in the world, the company's new product
introductions planned for March this year, and the strength of the company's
products that should allow the company to broaden its customer base and
achieve excellent results in the future. 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 the company's products, the company's inability to
manufacture the new products in production volumes to achieve the increased
gross margins, competitors' introduction of increasingly competitive 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/A for the year
ended January 1, 1999, and the Company's quarterly report on Form 10-Q for the
quarters ended March 31, June 30, and September 30, 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 http://www.sdli.com .
SDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)
(in thousands, except per share data -unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
1999 1998 1999 1998
Total revenues $58,677 $30,535 $ 187,021 $ 112,792
Cost of revenues (b) 32,576 18,302 107,238 74,061
Gross Margin 26,101 12,233 79,783 38,731
Operating expenses
Research and development 5,733 3,318 19,043 12,659
Selling, general and
administrative 8,045 5,575 26,695 17,593
Merger costs - - 2,677 -
In-process research
and development - - 1,495 -
Amortization expense 210 193 809 777
Total operating
expenses 13,988 9,086 50,719 31,029
Operating income 12,113 3,147 29,064 7,702
Interest income, net 4,257 357 5,429 1,284
Income before income
taxes 16,370 3,504 34,493 8,986
Provision for income
taxes 4,375 360 9,280 1,083
Net income $11,995 $3,144 $25,213 $7,903
Net income per
share - basic $0.34 $0.11 $0.78 $0.28
Net income per
share - diluted $0.32 $0.10 $0.74 $0.26
Number of weighted
average shares
- basic 35,511 29,338 32,160 28,718
Number of weighted
average shares
- diluted 37,687 30,938 34,235 30,362
(a) Prior periods have been restated to reflect the acquisition of IOC
International plc on a pooling-of-interest basis. The three and
twelve month periods ended December 31, 1998 are combined with IOC's
three and twelve month periods ended September 30, 1998, and the
three and twelve month periods ended December 31, 1999 are combined
with IOC's three and twelve month periods ended December 31, 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)
December 31, December 31,
1999 1998 (a)
(unaudited)
Assets
Current assets:
Cash, cash equivalents
and marketable securities $314,135 $34,658
Accounts receivable, net 41,445 23,042
Inventory 32,070 21,288
Other current assets 3,659 3,875
Total current assets 391,309 82,863
Property and equipment, net 59,772 39,848
Long-term marketable securities - 3,552
Other assets 9,872 5,797
$460,953 $132,060
Liabilities and
stockholders' equity
Current liabilities:
Accounts payable $18,277 $10,014
Other accrued liabilities 17,770 9,144
Total current liabilities 36,047 19,158
Long-term liabilities 4,758 4,696
Stockholders' equity 420,148 108,206
$460,953 $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.
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Related links:
http://www.sdli.com
CONTACT:
Donald R. Scifres, Chairman and CEO or
Michael L. Foster, VP Finance and CFO, of SDL, Inc.,
408-943-9411; or General Info., Lisa Horn Chainey, Investors,
Susan Katz, or Media, Scott Marx, of The Financial Relations
Board, 415-986-1591
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