<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER:
000-23461
----------------
SPECTRA-PHYSICS LASERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 77-0264342
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1335 TERRA BELLA AVENUE, MOUNTAIN VIEW, CALIFORNIA, 94043
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
650-961-2550
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the Registrant's common stock, par
value $0.01 per share, at June 30, 2000 was 16,595,265 shares.
================================================================================
<PAGE> 2
SPECTRA-PHYSICS LASERS, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I Financial information
Item 1. Financial statements and supplementary data:
(a) Consolidated Balance Sheets at June 30, 2000 and December 31, 1999...................................... 3
(b) Consolidated Statements of Operations for the three and six months ended June 30, 2000 and 1999........ 4
(c) Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and 1999.................. 5
(d) Notes to Consolidated Financial Statements.............................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk...............................................16
Part II Other Information........................................................................................17
Signatures...............................................................................................20
</TABLE>
2
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SPECTRA-PHYSICS LASERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- -----------
(UNAUDITED) (SEE NOTE)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 15,792 $ 23,278
Accounts receivable, net ............................... 39,155 38,246
Inventories ............................................ 34,697 26,582
Deferred tax assets .................................... 9,657 9,657
Prepaid expenses and other current assets .............. 7,379 5,906
--------- ---------
Total current assets ........................... 106,680 103,669
--------- ---------
Property, plant and equipment, net ....................... 45,588 42,015
Intangible assets, net ................................... 2,230 1,794
Other assets ............................................. 3,017 4,799
--------- ---------
Total assets ................................... $ 157,515 $ 152,277
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................... $ 9,362 $ 10,015
Borrowings under credit facilities ..................... 14,131 13,655
Accrued and other current liabilities .................. 20,428 22,052
--------- ---------
Total current liabilities ...................... 43,921 45,722
Long-term liabilities .................................... 1,137 1,093
Commitments and contingencies
Stockholders' equity:
Common stock ........................................... 166 162
Additional paid-in capital ............................. 102,499 98,320
Retained earnings ...................................... 11,291 9,428
Accumulated other comprehensive income (loss) .......... (1,499) (2,448)
--------- ---------
Total stockholders' equity ..................... 112,457 105,462
--------- ---------
Total liabilities and stockholders' equity ..... $ 157,515 $ 152,277
========= =========
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the
audited consolidated financial statements at that date but does not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
SPECTRA-PHYSICS LASERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales ................................................ $ 42,349 $ 34,901 $ 79,617 $ 65,982
Cost of products sold .................................... 25,777 21,751 48,410 42,911
-------- -------- -------- --------
Gross margin ......................................... 16,572 13,150 31,207 23,071
-------- -------- -------- --------
Operating expenses:
Research and development ............................... 6,081 4,234 11,580 8,385
Selling, general and administrative .................... 9,246 8,820 17,643 17,330
Restructuring .......................................... (115) 73 (115) 541
-------- -------- -------- --------
Total operating expenses ............................. 15,212 13,127 29,108 26,256
-------- -------- -------- --------
Operating income (loss) .............................. 1,360 23 2,099 (3,185)
-------- -------- -------- --------
Other income (expense):
Interest income ........................................ 244 233 482 451
Foreign currency gain .................................. 189 156 344 113
-------- -------- -------- --------
Total other income ................................... 433 389 826 564
-------- -------- -------- --------
Income (loss) before income taxes .................... 1,793 412 2,925 (2,621)
Income tax provision (benefit) ........................... 632 157 1,062 (996)
-------- -------- -------- --------
Net income (loss) .................................... $ 1,161 $ 255 $ 1,863 $ (1,625)
======== ======== ======== ========
Net income (loss) per share:
Basic .................................................. $ 0.07 $ 0.02 $ 0.11 $ (0.10)
Diluted ................................................ $ 0.07 $ 0.02 $ 0.11 $ (0.10)
Shares used in computing net income (loss) per share:
Basic .................................................. 16,579 16,168 16,522 16,168
Diluted ................................................ 17,376 16,168 17,365 16,168
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
SPECTRA-PHYSICS LASERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ............................................ $ 1,863 $ (1,625)
Adjustments to reconcile net income (loss) to cash used in
operating activities:
Depreciation and amortization .............................. 3,644 3,157
Changes in operating assets and liabilities:
Accounts receivable ..................................... 991 11,224
Inventories ............................................. (8,115) (4,066)
Prepaid expenses and other current assets ............... (1,473) (2,496)
Accounts payable ........................................ (653) (1,341)
Accrued and other current liabilities ................... (108) (5,098)
-------- --------
Total cash used in operating activities ................ (3,851) (245)
-------- --------
INVESTING ACTIVITIES
Payments for intangible assets ............................... (600) --
Purchases of property, plant and equipment ................... (7,122) (6,645)
Other ........................................................ (17) (45)
-------- --------
Total cash used in investing activities ................ (7,739) (6,690)
-------- --------
FINANCING ACTIVITIES
Net borrowings under credit facilities ....................... 476 (3,256)
Stock option exercises ....................................... 4,183 --
-------- --------
Total cash provided by (used in) financing activities .. 4,659 (3,256)
-------- --------
Effect of changes in foreign currency exchange rates ......... (555) (782)
-------- --------
Decrease in cash and cash equivalents .............. (7,486) (10,973)
Cash and cash equivalents at beginning of year ............... 23,278 34,620
-------- --------
Cash and cash equivalents at end of period ................... $ 15,792 $ 23,647
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
SPECTRA-PHYSICS LASERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Spectra-Physics Lasers, Inc. (the "Company") designs, develops,
manufactures and distributes lasers, laser systems and optics for the
industrial, original equipment manufacturer ("OEM"), and research and
development markets.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
The Company's fiscal year ends on December 31. The Company's fiscal
quarters end on the Friday of the thirteenth week of each quarter. For
presentation purposes, the financial statements reflect the calendar month-end
date.
2. RECENT ACCOUNTING PRONOUNCEMENT
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements."
SAB 101 includes requirements for recognizing shipments as revenue when the
terms of the sale include customer acceptance provisions or an obligation of the
seller to install the product. In such instances, SAB 101 generally requires
that revenue recognition occur at completion of installation and/or upon
customer acceptance. SAB 101 requires that companies conform their revenue
recognition practices to the requirements therein no later than the fourth
quarter of calendar 2000. The Company has not yet completed its analysis to
determine the effect that SAB 101 will have on its financial statements.
3. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- -----------
<S> <C> <C>
Raw material ................... $13,748 $15,277
Work in process ................ 9,692 3,482
Finished goods ................. 11,257 7,823
------- -------
$34,697 $26,582
======= =======
</TABLE>
4. NET INCOME (LOSS) PER SHARE
Statement of Financial Accounting Standards (SFAS) No. 128 requires the
presentation of basic and diluted net income (loss) per share. Basic net income
(loss) per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding during the period. Diluted net
income per share is computed giving effect to all dilutive potential common
shares that were outstanding during the period. Dilutive potential common shares
consist of the incremental common shares issuable upon the exercise of stock
options. Diluted net loss per share does not include such incremental common
shares issuable upon the exercise of stock options as they were anti-dilutive.
Approximately 0.2 million and 0.1 million options to acquire shares of common
stock were excluded from the calculation of diluted net income (loss) per share
for the three and six months ended June 30, 2000, respectively, as they were
antidilutive. Stock options granted by subsidiaries of the Company were not
included in the calculation of net income (loss) per share as they were
anti-dilutive.
6
<PAGE> 7
The following table presents the calculation of basic and diluted net
income (loss) per share as required under SFAS No. 128 (in thousands, except per
share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) ...................................... $ 1,161 $ 255 $ 1,863 $ (1,625)
======== ======== ======== ========
Denominator:
Denominator for basic net income (loss) per share:
Weighted average shares ............................. 16,579 16,168 16,522 16,168
Effect of dilutive securities:
Employee stock options .............................. 797 -- 843 --
-------- -------- -------- --------
Denominator for diluted net
income (loss) per share ............................. 17,376 16,168 17,365 16,168
======== ======== ======== ========
Net income (loss) per share -- Basic ..................... $ 0.07 $ 0.02 $ 0.11 $ (0.10)
Net income (loss) per share -- Diluted ................... $ 0.07 $ 0.02 $ 0.11 $ (0.10)
</TABLE>
5. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) was as follows (in thousand):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income (loss) ............................. $ 1,161 $ 255 $ 1,863 ($1,625)
Foreign currency translation adjustments ...... (125) (437) (555) (1,185)
Unrealized gain on forward foreign currency
contracts, net of income taxes .............. 647 82 1,504 1,319
------- ------- ------- -------
Comprehensive income (loss).................... $ 1,683 ($ 100) $ 2,812 ($1,491)
======= ======= ======= =======
</TABLE>
Accumulated other comprehensive income (loss) presented in the
accompanying consolidated balance sheets consist of the cumulative foreign
currency translation adjustments and net unrealized gains (losses) on forward
foreign currency contracts.
6. ENVIRONMENTAL MATTERS
See Part II., Item 1. Legal Proceedings
7. SEGMENT REPORTING
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" requires enterprises to report information about operating segments
in annual financial statements and selected information about reportable
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers.
DESCRIPTION OF THE TYPES OF PRODUCTS AND SERVICES FROM WHICH EACH OF THE
REPORTABLE SEGMENT DERIVES ITS REVENUES
The Company has five reportable segments: Passive Components (PC)
business unit; the Industrial and Scientific Lasers (ISL) business unit; the
Original Equipment Manufacturer (OEM) business unit; Opto Power Corporation
(OPC); and Spectra-Physics Distribution (SPD) business unit. PC designs and
manufactures optics, thin films, and fabricated parts for all operating units
within the Company and external customers. ISL designs, markets and manufactures
high power semiconductor-based and conventional lasers for the industrial and
scientific markets. ISL also designs, manufactures, and markets low power laser
sources and beam delivery
7
<PAGE> 8
systems for OEM products in the industrial and medical instrumentation markets.
OEM designs, markets and manufactures high power semiconductor-based lasers for
various OEM markets. OPC designs, markets and manufactures high power
semiconductor lasers. SPD is the Company's worldwide sales, service and support
organization. Certain 1999 segment information has been reclassified to conform
to the 2000 presentation.
MEASUREMENT OF SEGMENT PROFIT OR LOSS AND SEGMENT ASSETS
The Company evaluates performance and allocates resources based on
Earnings Before Interest and Taxes (EBIT). The accounting policies of the
reportable segments are the same as those described in the summary of
significant accounting policies.
Intersegment sales and transfers are recorded at intercompany transfer
prices which approximate sales as if conducted on an arm's length basis.
FACTORS MANAGEMENT USED TO IDENTIFY THE COMPANY'S REPORTABLE SEGMENTS
The Company's reportable segments are business units that are, except
for SPD, organized primarily by technology (for example, high power
semiconductor lasers, semiconductor laser pumped solid state lasers, ultrafast
lasers, and optics.) The reportable segments are each managed separately because
they manufacture and distribute distinct products based on different technology
and different production methods.
Information about segments (in thousands):
<TABLE>
<CAPTION>
ALL
PC ISL OEM OPC SPD OTHERS TOTAL
-------- -------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Three months ended June 30, 2000:
Net sales to external customers ... $ 95 $ -- $ -- $ 732 $ 41,701 $ (179) $ 42,349
Intersegment net sales ............ 5,338 20,993 13,343 7,243 -- -- 46,917
Segment EBIT ...................... (1,255) 3,711 3,408 (214) (3,648) (179) 1,823
Segment assets at June 30, 2000 ... 17,360 31,466 14,419 36,136 70,711 -- 170,092
Three months ended June 30, 1999:
Net sales to external customers ... $ 218 $ -- $ -- $ 1,844 $ 32,150 $ 689 $ 34,901
Intersegment net sales ............ 3,318 18,076 7,043 4,629 -- -- 33,066
Segment EBIT ...................... (435) 3,589 713 (535) (2,208) (220) 904
Segment assets at June 30, 1999 ... 12,668 27,297 9,118 36,855 58,959 2,345 147,242
Six months ended June 30, 2000:
Net sales to external customers ... $ 189 $ -- $ -- $ 1,847 $ 77,734 $ (153) $ 79,617
Intersegment net sales ............ 10,187 40,093 26,951 13,034 -- -- 90,265
Segment EBIT ...................... (1,593) 6,866 6,894 (639) (6,841) (515) 4,172
Six months ended June 30, 1999:
Net sales to external customers ... $ 403 $ -- $ -- $ 3,808 $ 60,601 $ 1,170 $ 65,982
Intersegment net sales ............ 6,865 36,201 14,646 7,894 -- -- 65,606
Segment EBIT ...................... (742) 6,983 1,361 (1,370) (4,559) (747) 926
</TABLE>
8
<PAGE> 9
Reconciliation of segment information to financial statements (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales:
Total external sales for reportable segments ............. $ 42,528 $ 34,212 $ 79,770 $ 64,812
Intersegment sales for reportable segments ............... 46,917 33,066 90,265 65,606
Other sales .............................................. (179) 689 (153) 1,170
Elimination of intersegment sales ........................ (46,917) (33,066) (90,265) (65,606)
-------- -------- -------- --------
Total consolidated net sales .......................... $ 42,349 $ 34,901 $ 79,617 $ 65,982
======== ======== ======== ========
Income (loss) before income taxes:
Total EBIT for reportable segments ....................... $ 2,002 $ 1,124 $ 4,687 $ 1,673
Other EBIT ............................................... (179) (220) (515) (747)
Corporate expenses ....................................... (1,753) (1,364) (2,938) (2,658)
Other expenses not allocated to segments ................. 1,175 556 750 (912)
Restructuring ............................................ 115 (73) 115 (541)
Interest income .......................................... 244 233 482 451
Foreign currency gain .................................... 189 156 344 113
-------- -------- -------- --------
Total consolidated income (loss) before income taxes .. $ 1,793 $ 412 $ 2,925 ($ 2,621)
======== ======== ======== ========
</TABLE>
8. RESTRUCTURING CHARGE
During 1999, the Company recorded $2.5 million of restructuring expense
associated with severance and other direct costs of terminating 65 employees
($1.8 million) and non-cash charges related to exiting the disk texturing system
business ($0.7 million), of which $0.5 million was recorded in the six months
ended June 30, 1999. During the six months ended June 30, 2000, the Company
reversed $0.1 million of unused excess restructuring reserves.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
Certain information in this quarterly report on Form 10-Q, including but
not limited to the Management's Discussion and Analysis of Financial Condition
and Results of Operations, may constitute forward-looking statements as such
term is defined in Section 27A of the Securities Act of 1933 (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934. Certain
forward-looking statements can be identified by the use of forward-looking
terminology such as, "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "estimates," "look(s) forward to",
"anticipates," or "hopeful," or the negative thereof or other comparable
terminology, or by discussions of strategy, plans or intentions. Forward-looking
statements involve risks and uncertainties, including sales initiatives and
those described in the Risk Factors section of Item 1 of Spectra-Physics Lasers,
Inc's (the "Company's") Annual Report on Form 10-K, which could cause actual
results to be materially different than those in the forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company assumes no
obligation to update such information.
OVERVIEW
The Company is a leader in the design, development, manufacture and
distribution of lasers, laser systems and optics for a broad range of markets.
Thermo Electron Corporation beneficially owned approximately 78% of the
Company's outstanding common stock as of June 30, 2000.
Net sales for products are recognized upon shipment. The Company derives
its revenue primarily from the sale of high power semiconductor-based and
conventional lasers, laser systems and optics. High power semiconductor-based
lasers and laser systems are sold into the OEM/industrial market and research
and development market. The OEM/industrial market is characterized by unit
sales, with varying prices, in volumes of as much as several thousand units.
Conventional lasers are primarily sold into the research and development market.
This market is typically characterized by the sale of single units and systems
with prices that range from approximately $3,000 to $500,000. Sales in this
market have historically varied from quarter to quarter due to seasonal
fluctuations and governmental spending patterns. Optics are sold in varying
units and per unit prices. Over the last several years, a growing proportion of
the Company's total net sales and most of its sales growth have been from high
power semiconductor-based lasers.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements."
SAB 101 includes requirements for recognizing shipments as revenue when the
terms of the sale include customer acceptance provisions or an obligation of the
seller to install the product. In such instances, SAB 101 generally requires
that revenue recognition occur at completion of installation and/or upon
customer acceptance. SAB 101 requires that companies conform their revenue
recognition practices to the requirements therein no later than the fourth
quarter of calendar 2000. The Company has not yet completed its analysis to
determine the effect that SAB 101 will have on its financial statements.
The Company's sales have shown a pattern in the last several years
whereby the fiscal fourth quarter net sales represent a large portion of the
Company's annual net sales and whereby the Company's first quarter net sales
decline significantly compared to the fourth quarter of the prior fiscal year.
The Company believes these sales patterns result in part because of seasonal
sales pattern related to customers' fiscal years and in part from the Company's
incentive compensation plan which compensates employees based on annual results.
The Company recognizes that the non-linear pattern of its shipments leads to
inefficiencies in asset and employee utilization. The Company is taking steps to
mitigate this sales trend, but this pattern is likely to continue in the near
term.
The Company's gross margin is affected by a number of factors, including
product mix, product pricing, cost of components, the proportion of third party
products incorporated into the Company's systems, foreign currency exchange
rates and manufacturing costs. For example, since high power semiconductor-based
lasers and laser systems generally have higher gross margins than conventional
lasers, absent other factors, a shift in sales toward high power
semiconductor-based lasers and laser systems would lead to a gross margin
improvement for the Company. On the other hand, if market conditions in the
highly competitive conventional laser market forced the Company to lower unit
prices, the Company would suffer a decline in gross margin unless the Company
were able to timely offset the price reduction by a reduction in production
costs or by sales of other products with higher gross margins. Either of these
events could have a material effect on the Company's business, operating results
and financial condition.
The Company spends a significant amount of resources on research and
development. In 2000 and 1999, the Company has focused much of these resources
on high power semiconductor-based lasers and optics for the telecommunications
market. The Company expects to continue to spend substantial resources in
developing high power semiconductor-based lasers and optics for the
telecommunications market while making focused research and development
expenditures to maintain its leadership position in its other markets.
A significant proportion of the Company's sales are to international
customers and are denominated in currencies other than the U.S. dollar. The
Company also has sales and support operations located in certain European
10
<PAGE> 11
countries and in Japan which operate in local currencies. As a result, while the
Company attempts to hedge its economic risk of foreign currency fluctuations,
the Company is exposed to fluctuations in foreign currency exchange rates. These
fluctuations have had in the past, and may have in the future, a significant
impact on the Company's results of operations.
The Company has five reportable segments: Passive Components (PC)
business unit; the Industrial and Scientific Lasers (ISL) business unit; the
Original Equipment Manufacturer (OEM) business unit; Opto Power Corporation
(OPC); and Spectra-Physics Distribution (SPD) business unit. PC designs and
manufactures optics, thin films, and fabricated parts for all operating units
within the Company and external customers. ISL designs, markets and manufactures
high power semiconductor-based and conventional lasers for the industrial and
scientific markets. ISL also designs, manufactures and markets low power laser
sources and beam delivery systems for OEM products in the industrial and medical
instrumentation markets. OEM designs, markets and manufactures high power
semiconductor-based lasers for various OEM markets. OPC designs, markets and
manufactures high power semiconductor lasers. SPD is the Company's worldwide
sales, service and support organization. Reference is made to Footnote 7 of the
Consolidated Financial Statements included in the 1999 Annual Report on Form
10-K for disclosures of certain financial information related to the reportable
segments.
11
<PAGE> 12
RESULTS OF OPERATIONS
The following tables set forth, for the periods indicated, the Company's
results of operations in dollar terms and as a percentage of net sales and the
percent change from 1999 to 2000:
<TABLE>
<CAPTION>
PERCENT OF
NET SALES PERCENT
THREE MONTHS ENDED THREE MONTHS ENDED CHANGE
JUNE 30, JUNE 30, 2000 TO
----------------------- -------------------- --------
2000 1999 2000 1999 1999
-------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales ........................... $ 42,349 $ 34,901 100.0% 100.0% 21.3%
Cost of products sold ............... 25,777 21,751 60.9% 62.3% 18.5%
-------- -------- ------ ------ ------
Gross margin .................... 16,572 13,150 39.1% 37.7% 26.0%
-------- -------- ------ ------ ------
Operating expenses:
Research and development .......... 6,081 4,234 14.4% 12.1% 43.6%
Selling, general and administrative 9,246 8,820 21.8% 25.3% 4.8%
Restructuring ..................... (115) 73 (0.3)% 0.2% NM
-------- -------- ------ ------ ------
Total operating expenses ........ 15,212 13,127 35.9% 37.6% 15.9%
-------- -------- ------ ------ ------
Operating income ................ 1,360 23 3.2% 0.1% 5813.0%
-------- -------- ------ ------ ------
Other income (expense):
Interest income ................... 244 233 0.6% 0.7% 4.7%
Foreign currency gain ............. 189 156 0.4% 0.4% 21.2%
-------- -------- ------ ------ ------
Total other income .............. 433 389 1.0% 1.1% 11.3%
-------- -------- ------ ------ ------
Income before income taxes ...... 1,793 412 4.2% 1.2% 335.2%
Income tax provision ................ 632 157 1.5% 0.5% 302.5%
-------- -------- ------ ------ ------
Net income ...................... $ 1,161 $ 255 2.7% 0.7% 355.3%
======== ======== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
NET SALES PERCENT
SIX MONTHS ENDED SIX MONTHS ENDED CHANGE
JUNE 30, JUNE 30, 2000 TO
----------------------- ------------------- -------
2000 1999 2000 1999 1999
-------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales ............................... $ 79,617 $ 65,982 100.0% 100.0% 20.7%
Cost of products sold ................... 48,410 42,911 60.8% 65.0% 12.8%
-------- -------- ------ ------ ------
Gross margin ........................ 31,207 23,071 39.2% 35.0% 35.3%
-------- -------- ------ ------ ------
Operating expenses:
Research and development .............. 11,580 8,385 14.5% 12.7% 38.1%
Selling, general and administrative ... 17,643 17,330 22.2% 26.3% 1.8%
Restructuring ......................... (115) 541 -0.1% 0.8% NM
-------- -------- ------ ------ ------
Total operating expenses ............ 29,108 26,256 36.6% 39.8% 10.9%
-------- -------- ------ ------ ------
Operating income (loss) ............. 2,099 (3,185) 2.6% -4.8% NM
-------- -------- ------ ------ ------
Other income (expense):
Interest income ....................... 482 451 0.6% 0.7% 6.9%
Foreign currency gain ................. 344 113 0.4% 0.2% 204.4%
-------- -------- ------ ------ ------
Total other income .................. 826 564 1.0% 0.9% 46.5%
-------- -------- ------ ------ ------
Income (loss) before income taxes ... 2,925 (2,621) 3.6% -4.0% NM
Income tax provision (benefit) .......... 1,062 (996) 1.3% -1.5% NM
-------- -------- ------ ------ ------
Net income (loss) ................... $ 1,863 ($ 1,625) 2.3% -2.5% NM
======== ======== ====== ====== ======
</TABLE>
NM -- not meaningful
12
<PAGE> 13
THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Net sales
Net sales were $42.3 million and $34.9 million in the three months ended
June 30, 2000 and 1999, respectively, representing an increase of 21.3%. Net
sales for the three months ended June 30, 2000, calculated using foreign
currency exchange rates for the same period in 1999, increased 22.8%.
Approximately 80% of the increase in net sales was attributable to increased
sales of high power semiconductor-based lasers and laser systems and the
remainder of the increase in net sales related to sales of conventional
products. The increased sales of high power semiconductor-based lasers and laser
systems was the result of increased sales in the computer and microelectronics
manufacturing market, particularly the semiconductor industry, and in the image
recording markets. The increase in conventional product sales reflects increased
sales in the research markets. Sales of high power semiconductor-based lasers
and laser systems were 65.4% of total sales in the three months ended June 30,
2000 compared to 61.7% of total sales in the three months ended June 30, 1999.
Net sales in the following geographic markets were:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------
2000 1999
------- -------
(IN THOUSANDS)
<S> <C> <C>
North America .................... $21,276 $17,804
Japan ............................ 9,511 5,837
Europe ........................... 7,424 8,690
Other Asia ....................... 2,258 1,322
Rest of the World ................ 1,880 1,248
------- -------
$42,349 $34,901
======= =======
</TABLE>
Net sales for the three months ended June 30, 2000 at actual currency
exchange rates increased 62.9% for Japan, 70.8% for Other Asia, 19.5% for North
America and 50.6% for Rest of the World, and decreased 14.6% for Europe. Net
sales for the three months ended June 30, 2000, calculated using foreign
currency exchange rates for the same period in 1999, increased 46.8% for Japan
and decreased 2.6% for Europe.
Net sales were $79.6 million and $66.0 million in the six months ended
June 30, 2000 and 1999, respectively, representing an increase of 20.7%. Net
sales for the six months ended June 30, 2000, calculated using foreign currency
exchange rates for the same period in 1999, increased 21.1%. Approximately all
of the increase in net sales was attributable to increased sales of high power
semiconductor-based lasers and laser systems. This increase was experienced in
all of the Company's major product markets, with the largest increases, in
dollar terms, in the computer and microelectronics manufacturing and image
recording markets. Sales of high power semiconductor-based lasers and laser
systems were 65.4% of total sales in the six months ended June 30, 2000 compared
to 58.8% of total sales in the six months ended June 30, 1999.
Net sales in the following geographic markets were:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
2000 1999
------- -------
(IN THOUSANDS)
<S> <C> <C>
North America ............................ $38,801 $30,188
Japan .................................... 20,403 15,471
Europe ................................... 13,468 15,819
Other Asia ............................... 3,833 2,560
Rest of the World ........................ 3,112 1,944
------- -------
$79,617 $65,982
======= =======
</TABLE>
Net sales for the six months ended June 30, 2000 at actual currency
exchange rates increased 31.9% for Japan, 49.7% for Other Asia, 28.5% for North
America and 60.1% for Rest of World, and decreased 14.9% for Europe. Net sales
for the six months ended June 30, 2000, calculated using foreign currency
exchange rates for the same period in 1999, decreased 4.2% for Europe and
increased 20.1% for Japan.
13
<PAGE> 14
Net sales are attributed in the above tables based on the location of
the Company's customer. Substantially all sales in North America, Other Asia and
Rest of the World are denominated in U.S. dollars. Europe and Japan in the above
table include sales from the Company's European and Japanese sales subsidiaries,
respectively. Export sales to countries not located in Asia are included in Rest
of the World.
Cost of products sold and gross margin
Cost of products sold includes all manufacturing materials and labor and
a proportionate share of overhead costs, as well as costs of shipping, tooling,
royalties, third party products incorporated in the Company's products and
provisions for excess and obsolete inventories and warranty. Cost of products
sold varies by product mix, product pricing, cost of components, the proportion
of third party products incorporated in systems manufactured by the Company, and
manufacturing costs.
Gross margin was $16.6 million and $13.2 million for the three months
ended June 30, 2000 and 1999, respectively, representing an increase of 26.0%.
As a percentage of net sales, gross margin was 39.1% and 37.7% in the three
months ended June 30, 2000 and 1999, respectively. The principal reasons for the
increase in gross margin as a percentage of net sales was the higher proportion
of sales of high power semiconductor-based lasers and laser systems which
generally have higher gross margins than conventional products and increased
overhead absorption resulting from the higher sales.
Gross margin was $31.2 million and $23.1 million for the six months
ended June 30, 2000 and 1999, respectively, representing an increase of 35.3%.
As a percentage of net sales, gross margin was 39.2% and 35.0% in the six months
ended June 30, 2000 and 1999, respectively. The principal reasons for the
increase in gross margin as a percentage of net sales were the increased
overhead absorption resulting from higher sales and favorable product mix.
Operating expenses
Operating expenses totaled $15.2 million and $13.1 million in the three
months ended June 30, 2000 and 1999, respectively, representing an increase of
15.9%. As a percentage of net sales, operating expenses were 35.9% and 37.6% in
the three months ended June 30, 2000 and 1999, respectively. Included in
operating expenses were the reversal of excess restructuring reserves of $0.1
million in 2000 and restructuring expenses of $0.1 million in 1999.
Operating expenses totaled $29.1 million and $26.3 million in the six
months ended June 30, 2000 and 1999, respectively, representing an increase of
10.9%. As a percentage of net sales, operating expenses were 36.6% and 39.8% in
the six months ended June 30, 2000 and 1999, respectively. Included in operating
expenses were the reversal of excess restructuring reserves of $0.1 million in
2000 and restructuring expenses of $0.5 million in 1999.
Research and development expenses represent expenses associated with
Company funded research and new product development, and efforts designed to
improve the performance of existing products and manufacturing processes.
Customer funded product development engineering for certain OEM customers and
the U.S. government, which to date has been minimal, is recorded as a reduction
of research and development expenses. Research and development expenses are
charged to operations as incurred.
Research and development expenses totaled $6.1 million and $4.2 million
for the three months ended June 30, 2000 and 1999, respectively, representing an
increase of 43.6%. As a percentage of net sales, research and development
expenses were 14.4% and 12.1% in the three months ended June 30, 2000 and 1999,
respectively. Research and development expenses totaled $11.6 million and $8.4
million for the six months ended June 30, 2000 and 1999, respectively,
representing an increase of 38.1%. As a percentage of net sales, research and
development expenses were 14.5% and 12.7% in the six months ended June 30, 2000
and 1999, respectively. Most of the increases in research and development
expenses for the three and six month periods ended June 30, 2000 compared to
June 30, 1999 related to development efforts for products for the
telecommunications market.
Selling, general and administrative expenses include the costs of the
Company's sales and support subsidiaries in the United Kingdom, France, Germany,
the Netherlands and Japan as well as the Company's North American sales and
support organization, and other administrative expenses such as legal and
accounting.
Selling, general and administrative expenses totaled $9.2 million and
$8.8 million for the three months ended June 30, 2000 and 1999, respectively,
representing an increase of 4.8%. As a percentage of net sales, selling, general
and administrative expenses were 21.8% and 25.3% in the three months ended June
30, 2000 and 1999, respectively.
14
<PAGE> 15
Selling, general and administrative expenses totaled $17.6 million and
$17.3 million for the six months ended June 30, 2000 and 1999, respectively,
representing an increase of 1.8%. As a percentage of net sales, selling, general
and administrative expenses were 22.2% and 26.3% in the six months ended June
30, 2000 and 1999, respectively.
Interest income
Interest income totaled $0.2 million in each of the three months ended
June 30, 2000 and 1999, respectively. Interest income totaled $0.5 million in
each the six months ended June 30, 2000 and 1999, respectively. Interest income
was earned on the Company's invested cash and cash equivalents.
Foreign currency gain (loss)
At June 30, 2000, the Company had contracts for the sale of foreign
currencies and the purchase of U.S. dollars totaling $ 46.9 million. At June 30,
2000, the Company had deferred gains relating to its foreign currency contracts
of approximately $0.6 million (net of income taxes), substantially all of which
is expected to be recognized in income over the next twelve months.
The following table provides information about the Company's foreign
currency derivative financial instruments outstanding as of June 30, 2000. The
information is provided in U.S. dollar amounts, as presented in the Company's
consolidated financial statements. The table presents the notional amount (at
contract exchange rates) and the weighted average contractual foreign currency
exchange rates. All contracts mature within twelve months.
Foreign currency spot/forward contracts (in thousands, except average
contract rates):
<TABLE>
<CAPTION>
AVERAGE
NOTIONAL CONTRACT
AMOUNT RATE
-------- --------
<S> <C> <C>
Japanese Yen ............... $ 30,054 100.9498
British Pound Sterling ..... 3,124 0.6393
German Marks ............... 4,377 1.8770
Netherlands Guilder ........ 1,170 2.1321
Australian Dollar .......... 385 1.7123
Euro ....................... 5,966 1.0515
French Franc ............... 1,809 6.3677
-------- --------
$ 46,885
========
Estimated fair value $ 591(*)
========
</TABLE>
(*) The estimated fair value is based on the estimated amount at which the
contracts could be settled based on forward exchange rates.
During the three and six months ended June 30, 2000, the Company
recorded foreign currency gains of $0.2 million and $0.3 million, respectively,
principally related to gains incurred principally as a result of favorable
foreign exchange rate movements on unhedged accounts receivable.
Income tax provision
Income taxes have been provided in the financial statements as if the
Company were a separate taxable entity.
During the three months ended June 30, 2000, the Company adjusted its
effective tax rate for the year to 36.3% from 38.0% to reduce certain tax
reserves no longer needed. The Company anticipates that its effective tax will
remain at 36.3% for the remainder of fiscal 2000, increasing to 38% in fiscal
2001. Income tax provisions of $0.6 million and $0.2 million were recorded in
the three months ended June 30, 2000 and 1999, respectively. An income tax
provision of $1.1 million was recorded in the six months ended June 30, 2000 and
an income tax benefit of $1.0 million was recorded in the six months ended June
30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had working capital of $62.8 million,
including cash and cash equivalents of $15.8 million, compared to working
capital at December 31, 1999 of $57.9 million, including cash and cash
equivalents of $23.3 million.
15
<PAGE> 16
Cash used in operating activities was $3.9 million and $0.2 million in
the six months ended June 30, 2000 and 1999, respectively. Cash used in
operating activities for the six months ended June 30, 2000 includes increases
of inventories of approximately $8.1 million. Cash used in investing activities,
mostly purchases of property, plant and equipment, was $7.7 million and $6.7
million in the six months ended June 30, 2000 and 1999, respectively. Cash
provided by financing activities was $4.7 million in the six months ended June
30, 2000 reflecting primarily stock option exercises. Cash used in financing
activities was $3.3 million in the six months ended June 30, 1999. The effect of
foreign currency exchange rate changes on cash was $0.6 million in the six
months ended June 30, 2000 compared to $0.8 million in the six moths ended June
30, 1999.
These activities resulted in a decrease in cash and cash equivalents of
$7.5 million and $11.0 million in the six months ended June 30, 2000 and 1999,
respectively.
The Company has unsecured short-term credit facilities in Japan with
several banks. The facilities allow aggregate borrowings of 1.3 billion Yen and
bear interest at 1.625% per annum. At June 30, 2000 approximately $14.1 million
of borrowings were outstanding under these facilities. The Company's foreign
subsidiaries other than Japan have credit facilities aggregating approximately
$3.7 million, none of which was outstanding as of June 30, 2000. The Company
also has available in the U.S. through December 2000 a committed, unsecured
$15.0 million credit facility none of which was outstanding at June 30, 2000.
From time to time, the amount available under the credit facilities may be
reduced by the amount of guarantees supplied by the applicable bank.
The Company has reviewed its short- and long-term liquidity needs. The
Company expects that its liquidity needs for at least the next twelve months
will be met by cash flows from operations, existing cash balances and borrowings
available under its credit facilities.
EUROPEAN MONETARY UNION (EMU)
The euro is the new currency introduced by certain European countries
collectively known as the European Monetary Union (EMU). The euro was introduced
on January 1, 1999 and the eleven participating EMU members established fixed
conversion rates between their existing currencies (legacy currencies) and the
euro. The legacy currencies have no value of their own but are subsets of the
euro. The legacy currencies and the euro will both be used through June 30, 2002
when the legacy currencies will be withdrawn (euro only environment).
The introduction of the euro could have an adverse impact on a company's
information systems, its markets and the economies in which it operates.
With regards to information systems, through June 30, 2000, the euro had
no material impact on the Company's information systems. The Company believes
the euro will have no material impact on its systems in 2000. Furthermore, the
Company's review indicates that the Company's information systems can operate in
the "euro only" environment in 2002. As that date gets closer the Company
expects to conduct another survey concerning the euro's impact on information
systems.
With regards to the Company's markets, the Company has reviewed its
customer list and current selling practices and expects no material adverse
impact from the introduction of the euro.
The Company is currently unable to determine the ultimate long term
financial impact of the exclusive use of the euro on the Company's markets and
on the economies of the countries in which the Company operates. This impact
will be dependent upon the evolving competitive situations and macro-economic
impact of the introduction of the euro.
See Part II., Item 1. Legal Proceedings regarding patent infringement
claim.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the Company's exposure to market
risk since December 31, 1999. See Spectra-Physics Lasers, Inc.'s Annual Report
on Form 10-K dated December 31, 1999.
16
<PAGE> 17
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's facilities and operations are subject to a wide variety of
Environmental Laws and Employee Safety Laws. Further, compliance with
Environmental Laws also may require the acquisition of permits or other
authorizations for certain activities and compliance with various standards or
procedural requirements. Although the Company believes that its operations are
in compliance in all material respects with current requirements under
Environmental Laws and Employee Safety Laws, the nature of the Company's
operations exposes it to the risk of liabilities or claims with respect to such
matters.
Certain of these Environmental Laws, including Superfund Laws, hold
owners or operators of land or businesses liable for their own and for previous
owners' or operators' releases of Hazardous Substances. Such Superfund Laws also
provide for responses to and liability for releases of certain Hazardous
Substances into the environment. The nature of the Company's operations and the
long history of industrial uses at some of its current or former facilities
expose the Company to risk of liabilities or claims under Superfund Laws. In
1988, the Company was named on the General Notification List of the
Environmental Protection Agency (EPA) stating that the Company may be a
Potentially Responsible Party (PRP) under Superfund Laws for Hazardous
Substances which may have been generated by its former operations at a former
site. Since that time, the Company has not been named in the EPA's first or
second tier lists, and has not been pursued as a PRP by the EPA or any of the
other PRPs.
Since 1984, the Company's facilities in Mountain View, California
("Mountain View Site") have been undergoing investigation and remediation in
response to past releases of industrial solvents to the soil and groundwater. In
addition, the impacted groundwater has migrated to what is referred to as the
North Bayshore Area. As a result of these past releases, the Mountain View Site
and other neighboring sites are listed on the NPL or the Superfund List under
CERCLA. The Company is subject to Orders that require the Company to perform
remediation on-site and off-site and investigate other potentially responsible
parties. Pursuant to the Orders and other orders issued to other responsible
parties, the Company and other responsible parties are jointly performing and
funding groundwater extraction, treatment and monitoring. All of the required
soil and groundwater remediation and monitoring systems currently required by
the Orders are in place, and consequently the initial capital expenses for such
systems have been incurred. As of November 1999, the Company had been granted
approval by the Regional Water Quality Control Board (RWQCB) to shut down two of
its extraction wells in the North Bayshore Extraction System (NBES) and also to
shut down two soil vapor extraction systems (on site). Since the granting of the
approvals, both wells and both soil vapor extraction systems have been shut
down.
In October 1997, the Company was served with a complaint that had been
filed in the Superior Court of the State of California on behalf of five
individuals seeking an unspecified amount of damages for personal injuries and
property damage incurred by residents of a single location alleged to have
resulted from the Company's and others' negligent and/or intentional handling of
toxic chemicals (Rosario Balcita et al. v. Teledyne Semiconductor,
Spectra-Physics Lasers, et al.). As of December 31, 1999, there has been a
summary judgement ruling in the case in favor of the Company and its
co-defendants in regards to the four adults in the case. The fifth plaintiff has
agreed to settle for a nominal amount. There can be no assurances that other
parties will not come forward and claim personal injury or property damage.
Based on the Company's experience to date, the Company believes that the
future cost of compliance with existing Environmental Laws (or liability for
known environmental liabilities or claims) and Employee Safety Laws should not
have a material adverse effect on the Company's business, operating results or
financial condition. However, future events, such as changes in existing laws
and regulations or their interpretation, or the discovery of heretofore unknown
contamination, may give rise to additional compliance costs or liabilities that
could have a material adverse effect on the Company's business, operating
results and financial condition. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of regulatory
agencies or stricter or different interpretations of existing laws, may require
additional expenditures by the Company that may be material.
On June 19, 2000, Rockwell Technologies LLC (Rockwell) filed a complaint
against the Company and its subsidiary, Opto Power Corporation in the United
States District Court for the District of Delaware. The complaint alleges that
the Company and Opto Power have infringed U.S. Patent No. 4,368,098 entitled
"Epitaxial Composite and Method of Making." Rockwell avers that Opto Power has
infringed the patent by performing the patented process and by using wafers
manufactured by the patented process and that Spectra-Physics has infringed the
patent by using and/or selling products made by the patented process. Rockwell
seeks damages, including increased damages due to Defendants' alleged willful
infringement, costs and attorney fees. Rockwell has not sought injunctive relief
as the patent has already expired. The Company believes that Rockwell's
allegations are without merit and the Company intends to vigorously defend this
action.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
17
<PAGE> 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS
At Spectra-Physics Lasers, Inc.'s Annual Meeting of Stockholders held on
May 16, 2000, the following proposals were adopted by margins indicated:
1. To elect five directors to the board of directors to hold office
until the next annual meeting of stockholders and until their
successors have been elected and qualified:
<TABLE>
<CAPTION>
FOR ABSTAIN
---------- -------
<S> <C> <C>
Patrick L. Edsell 16,238,377 127,625
Denis A. Helm 16,200,605 165,397
Lawrence C. Karlson 16,238,227 127,775
Earl R. Lewis 16,199,818 166,184
Polyvios C. Vintiadis 16,237,290 128,712
</TABLE>
2. To approve the adoption of the 2000 Spectra-Physics Lasers, Inc.
Employee Stock Purchase Plan:
<TABLE>
<CAPTION>
Delivered
For Against Abstain Not Voted
---------- ------ ------- ---------
<S> <C> <C> <C> <C>
14,780,745 49,590 1,245 1,534,422
</TABLE>
3. To approve the adoption of the 2000 Spectra-Physics Lasers, Inc.
Stock Incentive Plan:
<TABLE>
<CAPTION>
Delivered
For Against Abstain Not Voted
---------- ------ ------- ---------
<S> <C> <C> <C> <C>
13,396,270 1,433,665 1,645 1,534,422
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1 Plan of Reorganization of the Company (Incorporated by reference
to exhibit 2.1 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
3.1 Certificate of Incorporation of the Company, as amended
(Incorporated by reference to exhibit 3.1 of the Company's
Registration Statement on Form S-1 (No. 333-38329))
3.2 Bylaws of the Company (Incorporated by reference to exhibit 3.2
of the Company's Registration Statement on Form S-1 (No.
333-38329))
4.1 Specimen of Common Stock Certificate (Incorporated by reference
to exhibit 4.1 of Amendment No. 1 of the Company's Registration
Statement on Form S-1 (No. 333-38329))
10.1 Agreement by and between Spectra-Physics USA and the Company,
dated as of August 29, 1997 (Incorporated by reference to
exhibit 10.1 of the Company's Registration Statement on Form S-1
(No. 333-38329))
10.2 Registration Rights Agreement between Spectra-Physics USA and
the Company (Incorporated by reference to exhibit 10.2 of
Amendment No. 2 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
10.3 Form of Executive Incentive Plan (Incorporated by reference to
exhibit 10.5 of Amendment No. 1 of the Company's Registration
Statement on Form S-1 (No. 333-38329))
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.4 1997 Spectra-Physics Lasers, Inc. Stock Option Plan
(Incorporated by reference to exhibit 10.6 of Amendment No. 1 of
the Company's Registration Statement on Form S-1 (No.
333-38329))
10.5 Patent License Agreement dated as of October 4, 1997 by and
between the Company, as licensor, and Spectra Precision, Inc.,
as licensee (Incorporated by reference to exhibit 10.7 of
Amendment No. 1 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
10.6 Patent License Agreement dated as of October 4, 1997 by and
between Spectra Precision, Inc., as licensor, and the Company,
as licensee (Incorporated by reference to exhibit 10.8 of
Amendment No. 1 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
10.7 Tradename and Trademark License Agreement dated as of August 29,
1997 by and between the Company, Spectra-Physics AB and certain
Spectra-Physics AB subsidiaries (Incorporated by reference to
exhibit 10.9 of Amendment No. 1 of the Company's Registration
Statement on Form S-1 (No. 333-38329))
10.8 Employment Agreement dated January 1, 1998, between the Company
and Patrick L. Edsell (Incorporated by reference to Exhibit
10.10 of the Company's 1998 Annual Report on Form 10-K)
27.1 Financial Data Schedule
</TABLE>
(b) REPORTS ON FORM 8-K:
None.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Spectra-Physics Lasers, Inc.
Date: August 9, 2000 /s/ PATRICK L. EDSELL
-----------------------------------------------
Patrick L. Edsell
Chairman, President and Chief Executive Officer
Date: August 9, 2000 /s/ SETH HALIO
-----------------------------------------------
Seth Halio
Vice President, Finance, and Treasurer
(Principal Financial Officer)
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1 Plan of Reorganization of the Company (Incorporated by reference
to exhibit 2.1 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
3.1 Certificate of Incorporation of the Company, as amended
(Incorporated by reference to exhibit 3.1 of the Company's
Registration Statement on Form S-1 (No. 333-38329))
3.2 Bylaws of the Company (Incorporated by reference to exhibit 3.2
of the Company's Registration Statement on Form S-1 (No.
333-38329))
4.1 Specimen of Common Stock Certificate (Incorporated by reference
to exhibit 4.1 of Amendment No. 1 of the Company's Registration
Statement on Form S-1 (No. 333-38329))
10.1 Agreement by and between Spectra-Physics USA and the Company,
dated as of August 29, 1997 (Incorporated by reference to
exhibit 10.1 of the Company's Registration Statement on Form S-1
(No. 333-38329))
10.2 Registration Rights Agreement between Spectra-Physics USA and
the Company (Incorporated by reference to exhibit 10.2 of
Amendment No. 2 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
10.3 Form of Executive Incentive Plan (Incorporated by reference to
exhibit 10.5 of Amendment No. 1 of the Company's Registration
Statement on Form S-1 (No. 333-38329))
10.4 1997 Spectra-Physics Lasers, Inc. Stock Option Plan
(Incorporated by reference to exhibit 10.6 of Amendment No. 1 of
the Company's Registration Statement on Form S-1 (No.
333-38329))
10.5 Patent License Agreement dated as of October 4, 1997 by and
between the Company, as licensor, and Spectra Precision, Inc.,
as licensee (Incorporated by reference to exhibit 10.7 of
Amendment No. 1 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
10.6 Patent License Agreement dated as of October 4, 1997 by and
between Spectra Precision, Inc., as licensor, and the Company,
as licensee (Incorporated by reference to exhibit 10.8 of
Amendment No. 1 of the Company's Registration Statement on Form
S-1 (No. 333-38329))
10.7 Tradename and Trademark License Agreement dated as of August 29,
1997 by and between the Company, Spectra-Physics AB and certain
Spectra-Physics AB subsidiaries (Incorporated by reference to
exhibit 10.9 of Amendment No. 1 of the Company's Registration
Statement on Form S-1 (No. 333-38329))
10.8 Employment Agreement dated January 1, 1998, between the Company
and Patrick L. Edsell (Incorporated by reference to Exhibit
10.10 of the Company's 1998 Annual Report on Form 10-K)
27.1 Financial Data Schedule
</TABLE>
21
