SDL Expands Product Portfolio with Entree to the High Growth Passives Market
SAN JOSE, Calif., May 10 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI)
announced today the signing of a definitive acquisition agreement with the
shareholders of Photonic Integration Research, Inc. (PIRI) valued at
$1.8 billion. PIRI, a privately held company located in Columbus, Ohio, is a
leading manufacturer of arrayed waveguide gratings (AWGs) that enable the
routing of individual wavelength channels in fiber optic systems. These
products are used in optical multiplexing (mux) and demultiplexing (demux)
applications for dense wavelength division multiplexed (DWDM) fiber optic
systems. The acquisition expands SDL's traditional role as a leader in active
components in fiber optic systems to that of a leader in advanced passive
components. Further, the acquisition of PIRI responds to the needs of SDL's
customers going forward, by adding a critical silicon wafer based optical
integration technology which is expected to improve performance and lower
costs in next generation DWDM systems.
The acquisition agreement provides for a $31.25 million cash payment and
the issuance of approximately 10.2 million shares of SDL, Inc. stock, based on
the May 9, 2000 SDL closing stock price, in exchange for all of the stock of
PIRI; the exact number of shares will not be determined until closing.
Completion of the transaction is subject to customary closing conditions,
including government and regulatory approval, and is expected to close by the
end of the second quarter. The transaction, excluding acquisition-related
charges and amortization of intangible assets, is expected to be accretive
from the date of closing.
PIRI will continue to operate as a wholly owned subsidiary of SDL, Inc.
In the quarter ended March 31, 2000, PIRI achieved revenues in excess of
$20 million and currently has 133 employees. Dr. Tadashi Miyashita, President
of PIRI, is expected to continue with SDL as the General Manager of the SDL
subsidiary and will report to Greg Dougherty, chief operating officer of SDL.
Donald R. Scifres, CEO and chairman of SDL, Inc. stated, "We believe PIRI
is the established leader in the rapidly growing market for AWG devices. As
the channel count in DWDM fiber optic systems continues to increase towards
several hundred DWDM channels and as the channel spacing continues to decrease
towards 100 and 50 GHz, AWG products are expected to become the preferred
technology over dielectric filter based wavelength mux and demux products for
advanced systems. As a result of the trend towards higher channel count
systems, RHK, an industry consulting firm, has estimated that AWG products
will be a $1.2 billion market in 2003, with a CAGR of approximately
60 percent. We are pleased to be able to acquire PIRI at the beginning of a
cycle with high projected market growth."
Scifres continued, "SDL is also a strong believer in optical integration
technologies. The power of integrated circuit style manufacturing processes
utilized in the silica waveguide technology available at PIRI is crucial for
next generation product development. Going forward, we expect to integrate
more advanced devices such as variable optical attenuators, optical switches
and optical add/drop multiplexers with the AWG products. This optical
integration is expected to improve product performance while lowering
manufacturing costs, thereby providing the best value for our customers."
Dr. Miyashita added, "By combining with SDL, we are teaming with a market
leader which we believe will help us to expand our manufacturing and customer
base. SDL has also maintained a core group of scientists in the field of
silica waveguide technology which will further complement our technical
expertise. We believe that with SDL as our partner, we are well positioned in
a high growth market. This is a win for our current customers, and our
employees as well."
About PIRI
PIRI, formed in 1987 by NTT Corporation, Mitsubishi Corporation and
Battelle, who together with Mitsubishi International Corporation are the
current shareholders, is the leading supplier of AWG products and silica
waveguide technology used in fiber optic mux/demux products. PIRI also offers
a line of other products including thermo-optic switches used in optical
add/drop multiplexers, thermo-optic based variable optical attenuators (VOAs)
used in gain equalization, and optical splitters used for distribution of the
optical signals. PIRI's products are applicable to the undersea, long haul
and metro markets.
About SDL
SDL's products power the transmission of data, voice and Internet
information over fiber optic networks to meet the needs of telecommunications,
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 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 .
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
PIRI's position in the market for AWGs, SDL's position in the market for
active components in fiber optic systems and the impact of the acquisition on
SDL's position in the market for advanced passive components and the growth of
that market, SDL's ability to use silicon wafer based optical integration
technology to improve performance and lower costs of products in next
generation DWDM systems, the expectation that the transaction, excluding
acquisition-related charges and amortization of intangible assets, will be
accretive, the Company's belief that AWG products will become preferred over
dielectric filter based wavelength mux/demux products, the belief that the
integrated circuit style manufacturing processes and optical integration
available at PIRI is crucial for next generation product development and will
improve product performance and lower manufacturing costs, the ability of the
merged companies to successfully integrate and expand their product lines,
customer base and manufacturing capabilities, the ability of SDL's customers
to expand their fiber optic communications networks, the Company's expectation
to retain PIRI's president, the belief that PIRI is well positioned in a
rapidly growing market, the ability to integrate more advanced optical devices
with AWGs, the high projected growth of the market for AWGs, and the expected
closing date. 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 delay or failure
to complete the transaction or successfully integrate the acquired business,
an inability to retain PIRI's president or other key personnel, risks related
to uncertainties in or failure to meet customer product specifications and
market requirements, an inability to expand the company's product lines and
customer base, the possibility of emerging competing technologies 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.
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, both of SDL, Inc.,
408-943-9411, or General, Lisa Horn Chainey or Marcia Nakamura,
Investors, Susan Katz, or Media, Chris Wood, all of The Financial
Relations Board, 415-986-1591
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