SDL Announces Record Results For 2000 Third Quarter

Source: SDL, Inc.

Revenue Rises 33 Percent and Pro forma Operating Income Increases 52 Percent Versus Prior Quarter

San Jose, CA. SDL, Inc. (Nasdaq: SDLI) today announced record revenues of $146.5 million and pro forma net income of $40.4 million, or $0.45 per diluted share, for the third quarter ended September 30, 2000.

Driven by significant increases in shipments of communications products for both terrestrial and undersea fiber optic systems, third quarter revenue was 208 percent above that reported for the year earlier quarter ended September 30, 1999 and 33 percent higher than revenue in the second quarter of 2000. Revenue from fiber optic communications products increased 38 percent over the second quarter and by 332 percent over the prior year quarter, and represented a record 90 percent of total revenue. Sequential growth remained strong in both terrestrial (up 42 percent) and undersea (up 28 percent) sectors of the fiber optic communications business.

Including merger expenses, purchased intangible amortization charges, non-cash stock compensation expense and payroll tax on stock options, the company reported a net loss of $115.8 million, or $1.34 per diluted share, for the quarter.

On a pro forma basis, SDL reported net income of $40.4 million, or $0.45 per share, for the quarter, an increase of 420 percent over the $7.8 million, or $0.11 per share, pro forma net income for the quarter ended September 30, 1999. Pro forma operating income rose by 52 percent over Q2 2000 and increased by more than six times over such income from the prior year quarter. Due to improved product mix, higher yields and volume efficiencies, the third quarter pro forma operating margin expanded to a record 39.4 percent of revenue.

The following table summarizes pro forma results for the quarters ended September 30, 2000 and 1999.

(in millions, except share amounts) Three months ended

September 30 2000 1999 Revenues $146.5 $47.5 Gross margin (a) 82.9 20.9 Income from operations (a) 57.7 9.4 Income before income taxes (a) 63.7 10.0 Net income (a) 40.4 7.8 Net income per diluted share (a) $0.45 $0.11 Diluted weighted average shares outstanding 90.8 68.3

(a) Pro forma results for the quarter ended September 30, 2000 exclude merger costs incurred to date associated with the proposed merger with JDS Uniphase, amortization of purchased intangible assets, non-cash stock compensation expenses and payroll taxes on stock option exercises. Pro forma results for the quarter ended September 30, 1999 exclude amortization of purchased intangible assets and non-cash stock compensation expenses.

For the nine months ended September 30, 2000, SDL reported revenue of $329.2 million, up 156 percent compared to revenues of $128.3 million in the first nine months of 1999. Pro forma net income for the same period was a record $84.6 million or $1.01 per diluted share, compared to pro forma net income of $18.9 million or $0.29 per diluted share in the first nine months of 1999.

Commenting on the quarter s performance, SDL s Chairman and Chief Executive Officer, Donald R. Scifres said, "SDL s record financial performance in the third quarter reflects our leadership position in multiple sectors of the fiber optics communications market. Demand remained exceptionally strong in both terrestrial and undersea segments, both in traditional areas of SDL leadership, such as pump lasers, as well as in emerging product areas such as Raman amplification and optical transmitter and receiver modules. In order to serve this growing backlog of orders, we have started or have plans to expand all of our manufacturing facilities around the world."

Scifres continued, "It is also very gratifying to observe the success of our integrated communications sales force in selling a broad range of products to customers who previously purchased only one or two SDL products. With the many long-term contracts and design wins accomplished this year, we are able to project that SDL will be a $1 billion company in 2001."

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 leadership position in multiple sectors of the fiber optics communications market, its plans to expand manufacturing capabilities at all of its sites in anticipation of growing backlog of orders, and the company s expectations to be a $1 billion company in 2001. 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 expand manufacturing facilities successfully to meet customer demand, the company s inability to meet customer demand with its existing facilities, 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, and Form 10-Q for the quarters ended March 31 and June 30, 2000.

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.

Contact: SDL, Inc. Donald R. Scifres, Chairman and CEO Michael L. Foster, VP Finance and CFO Financial Relations Board Lisa Horn Chainey (general) Susan Katz (investors) Tel: (408) 943-9411 Dawn Swidorski (media) Tel: (415) 986-1591