SAN JOSE, Calif., Oct. 26 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI) today
announced quarterly revenues and earnings for the quarter ended September 30,
1998.
For the third quarter ended September 30, 1998, SDL reported revenues of
$25.6 million compared to revenues of $24 million in the third quarter of
1997. Third quarter 1998 net income was a record $3.1 million or $0.21 per
share on a diluted basis. This was an increase of 26 percent compared to a
net income of $2.5 million or $0.17 per share on a diluted basis for the third
quarter of 1997. Diluted earnings per share for the third quarter of 1998
were computed based on 14.7 million shares, compared to 14.4 million shares
for the third quarter of 1997.
For the third quarter, the company's gross margins reached 36.1 percent.
This compares to gross margins of 31.8 percent for the same quarter in 1997
and 34.5 percent for the second quarter of 1998.
For the nine months ended September 30, 1998, SDL reported record revenues
of $76.7 million up 15 percent, compared to revenues of $66.5 million for the
first nine months of 1997. Net income for the same period was a record
$8.7 million or $0.59 per share on a diluted basis, compared to a net loss of
$26.5 million or $1.97 per share in the first nine months of 1997. Diluted
earnings per share for the first nine months of 1998 were computed based on
14.6 million shares, compared to 13.4 million shares for the first nine months
of 1997.
Third quarter revenue was down one percent sequentially from the record
$25.8 million recorded in the second quarter of 1998 as strong growth in
revenue from dense wavelength division multiplexing (DWDM) products was offset
by a reduction in U.S. government revenue. Net income increased by seven
percent over net income for the second quarter of 1998 due to higher gross
margins.
"We are very pleased with our results this quarter," said Donald R.
Scifres, Chairman and Chief Executive Officer. "We improved our revenue mix,
benefited from better yields from the new wafer fab, and as a result, we
increased gross margins and reported record net income for the quarter."
"We are very encouraged by the increased demand for our DWDM products,"
Scifres continued. "For the first nine months of 1998, DWDM product growth
increased 95 percent over the comparable period last year as we capitalized on
this demand with an expanded and diversified DWDM customer base. In addition
to our more than one dozen existing telecommunications and cable TV customers
taking products at a rate of over $1 million per year, we recently received
our first three contracts for 980 nm lasers for use in undersea DWDM systems.
One of these contracts is for production with shipments beginning in Q4 1998,
and two are for qualification testing which we began during the third
quarter."
Scifres went on to say, "Because of the growth in our DWDM product lines,
we are announcing today a major expansion of our SDL Optics manufacturing
facilities in Victoria, British Columbia. These facilities provide advanced
packaging and assembly for our DWDM fiber optic-based product lines. The
33,000 square foot facility expands our SDL Optics manufacturing floor space
by over 100 percent. It is expected to be operational by October 1999. We
believe this new facility will be a key element in continuing our success in
the DWDM marketplace."
SDL designs, manufactures and markets semiconductor optoelectronic
integrated circuits, semiconductor lasers, fiber optic related products 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 expected expansion and operational readiness of the facility in Victoria,
British Columbia and the continuing success in the DWDM marketplace. Reasons
why actual results might differ include risks related to the new facility's
role in the company's continuing success in the DWDM marketplace, the ability
to maintain yields and expand gross margins, the ability to expand production
including shipping of units to submarine customers, and possible cancellation
of customer orders. 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, 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 - unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997(A)
Total revenues $25,571 $23,951 $76,738 $66,537
Cost of revenues 16,342 16,325 50,387 48,676
Gross Margin 9,229 7,626 26,351 17,861
Operating expenses:
Research and
development 2,684 2,340 7,856 7,649
Selling, general and
administrative 3,337 2,799 9,420 36,874
Amortization of
purchased intangibles 193 163 582 487
Total operating expenses 6,214 5,302 17,858 45,010
Operating income(loss) 3,015 2,324 8,493 (27,149)
Interest(income), net (335) (266) (917) (1,003)
Income(loss) before
income taxes 3,350 2,590 9,410 (26,146)
Provision for income
taxes 251 139 706 367
Net income(loss) $3,099 $2,451 $8,704 $(26,513)
Net income(loss) per
share - basic $0.22 $0.18 $0.63 $(1.97)
Net income(loss) per
share - diluted $0.21 $0.17 $0.59 $(1.97)
Number of weighted
average shares - basic 13,882 13,546 13,806 13,449
Number of weighted average
shares - diluted 14,666 14,431 14,637 13,449
(A) Includes one-time charges totaling $30,911.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1998 1997
(unaudited) (A)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $19,850 $14,993
Accounts receivable, net 20,359 19,960
Inventory 17,165 13,938
Other current assets 3,233 2,738
Total current assets 60,607 51,629
Property and equipment, net 31,609 26,298
Long-term cash investments 6,438 11,613
Other assets (including purchased intangibles)4,736 4,684
$103,390 $94,224
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $7,561 $8,469
Accrued liabilities 6,183 7,148
Total current liabilities 13,744 15,617
Long-term liabilities 2,557 2,020
Stockholders' equity 87,089 76,587
$103,390 $94,224
(A) Derived from audited financial statements.
SOURCE SDL, Inc.
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CONTACT:
Donald R. Scifres, Chairman and CEO, or
Michael L. Foster, VP Finance and CFO, both of SDL, Inc.,
408-943-9411; or general info, Lisa Horn Chainey and Jose
Mallabo, or investor contact, Kristi Larson, all of The Financial
Relations Board, 415-986-1591
NOTE TO EDITORS: For more information on SDL, Inc. at no cost,
please call 1-800-PRO-INFO or 908-544-2850 if calling from
outside the U.S., ticker symbol SDLI.
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