SDL Reports Record First Quarter Results

SAN JOSE, Calif., April 20 -- SDL Inc. announced record revenues of $72.2 million and pro forma net income of $17 million, or 22 cents per diluted share, for the first quarter ended March 31, 2000. The net income figures -- which exclude charges related to the company's acquisition of Queensgate Instruments, as well as the amortization of purchased intangible assets and non-cash stock compensation expenses -- represent an increase of 250 percent over the $4.9 million, or eight cents per share, reported in the first quarter of 1999.
First quarter revenue was 92 percent above that reported for the quarter ending March 31, 1999, and 23 percent higher than revenue in the fourth quarter of 1999; the company attributed these results to significant increases in shipments of communications products for both terrestrial and undersea fiber optic systems. Revenue from fiber optic communications products increased 35 percent over the fourth quarter of 1999, and 163 percent over the first quarter of the prior year. SDL's first-quarter results include figures from Queensgate Instruments following the closing of its acquisition on March 8, 2000. SDL Queensgate contributed $929,000 to consolidated revenue in March.
The company reported GAAP net income of $14.2 million, or 19 cents per diluted share for the quarter. These results include a $1.2-million charge for in-process research and development related to the Queensgate transaction; $1.7 million of amortization of purchased intangible assets; and $654,000 of non-cash stock compensation expense.
SDL's pro forma operating margin was a record 30.5 percent, up eight points from the final quarter of last year and up 14.7 points from the first quarter of 1999. The company attributed the improvement to continued reduction in expenses relative to revenue, as well as to significant gross margin improvement, due to the growth in telecommunications revenue and increases in yields and production efficiency.