SDL Announces Record Results for 2000 Fourth Quarter and Fiscal 2000 Q4 Revenue Rises 20 Percent Over Q3

Source: SDL, Inc. (abridged version)

SAN JOSE, Calif. SDL, Inc. today announced record revenues of $175.6 million and pro forma net income of $48.2 million, or $0.53 per diluted share, for the fourth quarter ended December 31, 2000. Revenue for the full year was a record $504.8 million and pro forma net income was $132.8 million, or $1.55 per diluted share.

Driven by continued strong growth in shipments of products for fiber optic communication systems, fourth quarter revenue was triple that reported for the year earlier quarter ended December 31, 1999 and 20 percent higher than revenue in the third quarter of 2000. Revenue from fiber optic communications products increased 22 percent over the third quarter and by 265 percent over the prior year quarter, and represented a record 92 percent of total revenue. Sequential growth remained strong in both terrestrial (up 21 percent) and undersea (up 26 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 $122.8 million, or $1.41 per share, for the quarter.

On a pro forma basis, SDL reported fourth quarter net income of $48.2 million, or $0.53 per share, an increase of 277 percent over the $12.8 million, or $0.17 per share, pro forma net income for the quarter ended December 31, 1999. Pro forma operating income rose by 20 percent over Q3 2000, and increased by more than five times over such income for the prior year quarter. The fourth quarter pro forma operating margin remained at a record 39.4 percent of revenue.

For the calendar year, total revenue was $504.8 million, up 170 percent over the $187.0 million accomplished in 1999. Sales of fiber optic communications products grew by a factor of 3.6, or 257 percent, and represented 89 percent of the year s total revenue compared to 67 percent in 1999. Pro forma net income in 2000 was $132.8 million, or $1.55 per diluted share, up 321 percent from the $31.6 million, or $0.46 per diluted share, earned in 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 fourth quarter reflects our product diversification and technical leadership position in multiple sectors of the fiber optics communications market. Demand remained strong in both terrestrial and undersea sectors, generating record bookings and backlog. Export sales into the Asia-Pacific region were particularly strong in Q4, rising over 100 percent sequentially. Reflecting the worldwide demand and competitiveness of our product lines, international revenue represented a record 59 percent of total revenue in Q4.

``It is also very gratifying to observe our success in broadening our customer base, especially for amplifier products and AWG-based multiplexers, Scifres continued. ``In Q4, we had eight customers with over $10 million revenue and 20 customers with over $1 million revenue. There is clearly a new set of customers ramping output which require SDL s leading edge products.

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. 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, June 30 and September 30, 2000.

SDL s products power the transmission of data, voice and Internet information over fiber optic networks to meet the needs of telecommunications, data transmission, dense wavelength division multiplexing (DWDM) and cable television 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.