AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1999
REGISTRATION NO. 333-
_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
OPTICAL COATING LABORATORY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 68-0164244
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2789 NORTHPOINT PARKWAY, SANTA ROSA, CALIFORNIA 95407
(707) 545-6440
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
CHARLES J. ABBE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OPTICAL COATING LABORATORY, INC.
2789 NORTHPOINT PARKWAY
SANTA ROSA, CALIFORNIA 95407
(707) 545-6440
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
COPIES TO:
JOHN V. ERICKSON, Esq.
Collette & Erickson LLP
555 California Street, Suite 4350
San Francisco, California 94104
(415) 788-4646
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [_]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [_]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
<PAGE>
statement number of the earlier effective registration statement for
the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
Title of Shares Amount To Be Proposed Maximum Proposed Amount Of
To Be Registered Registered Offering Price Aggregate Reg. Fee
Per Share (a) Offering
Price (a)
- --------------------------------------------------------------------------
Common Stock, 129,285 $89.75 $11,603,329 $3,516
$.01 value per share
(a) Estimated pursuant to Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high
and low prices of the Registrant's Common Stock on the Nasdaq National
Market on September 21, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 1999
PROSPECTUS
- ----------
129,285 SHARES
OPTICAL COATING LABORATORY, INC.
COMMON STOCK
_________________________
This prospectus relates to 129,285 shares of our Common Stock
that have been issued to certain former stockholders of OPKOR Inc.
(the "Selling Stockholders") in connection with our acquisition of
OPKOR Inc. Some of these stockholders may wish to sell these shares
from time to time on the over-the-counter market in regular brokerage
transactions, in transactions directly with market makers or in
certain privately negotiated transactions, and this prospectus allows
them to do so. For additional information on the methods of sale, you
should refer to the section entitled "Plan of Distribution" on page
15. We will not receive any of the proceeds from the sale of such
shares but have agreed to bear the expenses of registration of the
shares offered by this prospectus, which we estimate to be $3,516.
Our Common Stock is traded on the Nasdaq Stock Market under the
symbol OCLI. The average of the high and low prices of shares of
Common Stock as reported by the Nasdaq Stock Market on September 21,
1999 was $89.75 per share.
_____________________
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
_____________________
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL A REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________
<PAGE>
The date of this prospectus is September 22, 1999
TABLE OF CONTENTS
PAGE
HOW TO GET INFORMATION ABOUT OCLI 2
INFORMATION INCORPORATED BY REFERENCE 2
THE COMPANY 3
RECENT DEVELOPMENTS 3
RISK FACTORS 3
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS 13
USE OF PROCEEDS 14
SELLING STOCKHOLDERS 14
PLAN OF DISTRIBUTION 15
LEGAL MATTERS 16
EXPERTS 16
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS AND IN ANY PROSPECTUS SUPPLEMENT. NO
ONE HAS BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE SHARES OF COMMON STOCK ARE NOT BEING OFFERED IN ANY
JURISDICTION WHERE THE OFFER IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE
DATE ON THE FRONT OF THIS DOCUMENT.
HOW TO GET INFORMATION ABOUT OCLI
OCLI is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
therefore files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "SEC").
You can inspect many of such reports, proxy and information statements
and other information on the SEC's internet website at
http://www.sec.gov.
You can also inspect and copy such reports, proxy and information
statements and other information at the SEC's Public Reference Room,
450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain
information on the operation of the Public Reference Room by calling
the SEC at Tel: 1-800-SEC-0330. You can also inspect and copy such
reports, proxy and information statements and other information may
also be inspected and copied at the following Regional Offices of the
SEC: New York Regional Office, Seven World Trade Center, Suite 1300,
New York, New York 10048; and Chicago Regional Office, Northwest
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. OCLI's common stock is listed on the Nasdaq National Market
System, and you can inspect such reports, proxy and information
statements and other information at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
This prospectus constitutes part of a registration statement on
Form S-3 filed by OCLI with the SEC under the Securities Act of 1933,
as amended (the "Securities Act"). This prospectus does not contain
all of the information set forth in the registration statement. For
<PAGE>
further information with respect to OCLI and the shares, you should
refer to the registration statement either at the SEC's website or at
the address set forth in the preceding paragraph. Statements in this
prospectus concerning any document filed as an exhibit to this
prospectus are not necessarily complete, and, in each instance, you
should refer to the copy of such document which has been filed as an
exhibit to the registration statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information
we file with them into this prospectus, which means that we can
include important information in this prospectus by referring you to
documents previously filed with the SEC. Information we incorporate
by reference is considered to be part of this prospectus, and
information we file subsequently with the SEC will automatically
supercede and update the information contained in this prospectus. We
incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, until the Selling Stockholders have sold all the
shares offered pursuant to this prospectus.
1. Our annual report on Form 10-K for the fiscal year ended
October 31, 1998, filed pursuant to Section 13(a) of the Exchange
Act;
2. Our quarterly reports on Form 10-Q for the fiscal quarters ended
January 31, 1999, April 30, 1999 and July 31, 1999, filed
pursuant to Section 13(a) of the Exchange Act;
3. Our current reports on Form 8-K dated November 18, 1998,
December 22, 1998 and May 19, 1999, filed pursuant to Section
13(a) of the Exchange Act;
4. Our proxy statement dated March 4, 1999, filed pursuant to
Section 14 of the Exchange Act;
5. The description of our capital stock contained in our
registration statement on Form 8-A, as amended by our amendment
to the registration statement on Form 8-A/A filed on May 5, 1999;
and
6. Our registration statement (Reg. No. 333-76853) filed on Form S-3
on April 22, 1999, as amended by our amendments to the
registration statement on Form S-3 filed on May 7, 1999 and May
18, 1999 and the final prospectus filed pursuant to Rule
424(b)(4) dated May 20, 1999.
We will furnish to you without charge, upon written or oral
request, a copy of any of the documents or information incorporated by
reference herein, except for certain exhibits to such documents.
Written or telephone requests should be directed to Agie Navarro,
Assistant Secretary, Optical Coating Laboratory, Inc., 2789 Northpoint
Parkway, Santa Rosa, California 95407-7397, Telephone: (707) 545-6440.
<PAGE>
THE COMPANY
We were incorporated in Delaware in 1948, reincorporated in
California in 1963 and, in 1987, again reincorporated in Delaware.
Together with our subsidiaries, we are engaged primarily in the
design, development, manufacture and marketing of multi-layer optical
thin film coated products and processes which are used to affect,
manage and control light. Our principal offices and manufacturing
facilities are at 2789 Northpoint Parkway, Santa Rosa, California
95407- 7397, Telephone: (707) 545-6440. We also have manufacturing
facilities and distribution subsidiaries throughout Europe and parts
of Asia. At July 31, 1999, we, including our subsidiaries, had
approximately 1,459 employees.
RECENT DEVELOPMENTS
We recently announced our unaudited financial results for our
third quarter of fiscal 1999. For the three month period ended July
31, 1999, our revenues totaled $89.9 million, an increase of 33% over
revenues of $67.4 million in the third quarter of fiscal 1998.
Income from operations for the third quarter of fiscal 1999
totaled $9.5 million, which represents an increase of 48% over
$6.4 million reported in the third quarter of fiscal 1998. Net income
applicable to our common stock totaled $6.2 million, or $0.41 per
share on a diluted basis, compared to $0.27 per share on a diluted
basis for the third quarter of fiscal 1998.
RISK FACTORS
You should carefully consider the risks and uncertainties
described below before making an investment decision. If any of the
following risks actually occur, our business, financial condition or
operating results could be materially harmed. This could cause the
trading price of our common stock to decline, and you may lose all or
part of your investment.
This prospectus contains forward-looking statements that involve
known and unknown risks and uncertainties. These statements relate to
our plans, objectives, expectations and intentions. Our actual results
could differ materially from those discussed in these statements.
Factors that could contribute to these differences include those
discussed below and elsewhere in this prospectus.
WE RELY HEAVILY ON JDS UNIPHASE FOR THE DESIGN, PACKAGING, ASSEMBLY,
TESTING, DISTRIBUTION, SALES AND MARKETING OF CERTAIN OF OUR
TELECOMMUNICATIONS PRODUCTS.
. We rely on JDS Uniphase to design, package, assemble, distribute,
sell and market our products. Under the terms of our agreements,
JDS Uniphase has primary responsibility for the design, packaging
and assembly of WDM products covered by these agreements. JDS
Uniphase also has exclusive sales, marketing and distribution
responsibilities for such products. If JDS Uniphase is unable to
successfully distribute, market and sell our products, we may be
unable to find a substitute distribution, marketing or sales
partner or develop these capabilities ourselves. We also rely on
<PAGE>
JDS Uniphase for significant financial and technical contributions
to these programs.
. We lack control over management decisions. We share with JDS
Uniphase the responsibility for making certain management decisions
as they relate to the WDM products covered by the agreements.
Certain decisions are made by a management committee that has equal
representation from JDS Uniphase and ourselves. Our interests may
not always be aligned. If we disagree with JDS Uniphase on specific
matters or general program direction, a neutral party will make the
decision. Such a decision may not be in our best interests.
. Our share of profits could be reduced. Under our agreements with
JDS Uniphase, if the majority of the WDM products covered by the
agreements incorporate wavelength discrimination components not
originating from us, our share of the profits under the agreements
will be significantly reduced. In addition, we share any losses
incurred under the agreements.
. JDS Uniphase can terminate our agreements or fail to perform. JDS
Uniphase can terminate the agreements without cause beginning in
2015. If JDS Uniphase terminates the agreements or fails to provide
adequate resources to the program, we cannot be certain that we
could obtain substitute resources or a substitute partner to
commercialize our products.
. JDS merged with Uniphase. We cannot be certain what effect, if
any, this merger will have on us.
WE RELY EXCLUSIVELY ON SICPA'S USE OF OUR LIGHT INTERFERENCE PIGMENTS
TO PRODUCE OPTICALLY VARIABLE INK FOR THE SECURITY MARKET.
We have a strategic alliance with SICPA for the marketing and sale of
our light interference pigments used in connection with currency,
stamps, credit cards, passports and other specified value documents.
Under a license and supply agreement, we rely exclusively on SICPA to
market and sell these products worldwide. We currently do not plan to
develop our own marketing and sales organization for our light
interference pigments for use in connection with such value documents.
SICPA has the right to terminate the agreement if we breach it. If
SICPA terminates our agreement or if it is unable to successfully
market and sell our light interference pigments for the applications
covered by the agreement, our business may be harmed and we may be
unable to find a substitute marketing and sales partner or develop
these capabilities ourselves. Also, if SICPA fails to meet its minimum
purchase requirements under the agreement for any reason, our
operating results would be adversely affected.
WE MUST KEEP PACE WITH CHANGING TECHNOLOGICAL AND CUSTOMER
REQUIREMENTS TO REMAIN COMPETITIVE.
The market for our products, particularly in the telecommunications
and display markets, is characterized by the existence of many
competing technologies, rapid technological change, frequent new
product introductions and enhancements, changes in customer demands
and evolving industry standards. Our existing products could be
rendered obsolete if we fail to remain competitive in any of these
ways. We have also found that the life cycles of our products are
<PAGE>
difficult to estimate, primarily because they may vary according to
the particular application or vertical market segment. We believe that
our future success will depend upon our ability to continue to enhance
our current product line while we develop and introduce new products
that keep pace with competitive and technological developments. We
also must introduce these products in a timely manner to meet our
customers' changing needs. These developments require us to continue
to make substantial product development investments. Because of these
and other market conditions, we can not be certain that we will be
able to make the technological improvements or the research
investments necessary to offer our products in a timely or effective
manner.
We expect that new technologies will emerge as competition in the
telecommunications equipment industry increases and the need for
higher and more cost-effective bandwidth transmission expands. If
alternatives to our thin film filter-based products, such as products
based on planar waveguide, fiber grating or any other technologies,
are adopted by our customers, our telecommunications business would
suffer.
The light interference pigments market is also susceptible to changing
technology and customer requirements. Growth in the demand for our
ChromaFlairR product within the consumer markets will depend upon our
ability to develop a more cost-effective process to manufacture our
light interference pigment products. Also, the trend toward electronic
currency, such as pre-paid or "smart cards," may decrease the market
for our light interference pigments used on paper currency.
WE DEPEND ON THE TELECOMMUNICATIONS INDUSTRY FOR GROWTH IN THE SALES
OF OUR WDM AND SATELLITE PRODUCTS.
Our ability to grow our WDM and satellite products businesses depends
in part on the continued growth and success of the telecommunications
industry. Recently, telecommunications markets around the world have
been deregulating and opening to global competition. This deregulation
generally has resulted in increased competition and demand for
telecommunications products and services. Additionally, the growing
volume of data, voice and video traffic has increased bandwidth
demand. These trends have driven increased demand for our WDM and
satellite products. However, such trends may not continue in a manner
that is favorable to us.
The rate at which long distance carriers and other fiber optic network
operators have built new fiber optic networks or installed new systems
in their existing fiber optic networks has fluctuated in the past and
may continue to fluctuate in the future. These fluctuations may result
in reduced demand for new or upgraded fiber optic systems that utilize
our products. We can not be certain that technological or other
developments in the telecommunications industry will favor growth in
the markets served by our products. Moreover, as the
telecommunications industry consolidates and realigns to accommodate
technological and other developments, there is a risk that certain of
our customers and telecommunication service providers may consolidate
or align themselves together in a manner adverse to our business
interests.
<PAGE>
Growth of our satellite component business depends on growth in the
number of satellite launches. In 1999, 2000, 2003 and 2004, the number
of launches per year are expected to decrease from 1998 figures.
Continuation of this trend would have an adverse effect on our
satellite business.
WE DEPEND ON THE PROJECTION DISPLAY AND FLAT PANEL DISPLAY MARKETS FOR
GROWTH IN THE SALES OF OUR DISPLAY PRODUCTS.
Our ability to grow our display products business depends
significantly on the continued growth and success of the projection
and flat panel display markets. Advances in the technology used in
computer monitors, televisions, conference room projectors and other
display devices have led to increased demand for flat panel displays
and projection displays. We cannot be certain that growth in these
markets will continue or that technological or other changes in this
industry will result in continued growth. In addition, the display
market is subject to pricing pressure, consolidation and realignment
as industry participants try to position themselves to take advantage
of the changing competitive landscape. There is a risk that any
consolidations and realignments may adversely affect our business, and
pricing pressure will adversely affect our operating results.
WE DEPEND ON OUR OEM CUSTOMERS FOR THE SALE OF OUR PRODUCTS AND FOR
INFORMATION RELATING TO THE DEVELOPMENT OF NEW PRODUCTS.
We sell a substantial portion of our products to a relatively small
number of original equipment manufacturers (OEMs). The timing and
amount of sales to these customers ultimately depend on sales levels
and shipping schedules for the OEM products into which our products
are incorporated. We have no control over the shipping dates or volume
of products shipped by our OEM customers, and we cannot be certain
that our OEM customers will continue to ship products that incorporate
our products at current levels or at all. Failure of these OEMs to
achieve significant sales of products incorporating our products and
fluctuations in the timing and volume of such sales could be harmful
to our business. In addition, failure of our OEM customers to inform
us of changes in their production needs in a timely manner can hinder
our ability to effectively manage our business.
In addition, we rely on our OEM customers to inform us of
opportunities to develop new products that serve end user demands. If
our OEM customers do not present us with market opportunities early
enough for us to develop products to meet end user needs in a timely
fashion or if the OEMs fail to anticipate end user needs at all, we
may fail to develop new products or modify our existing products for
our end user markets. In addition, if our OEM customers fail to
accurately anticipate end user demands, we may spend resources on
products that are not commercially successful.
ACQUIRING COMPLEMENTARY COMPANIES WILL EXPOSE US TO ADDITIONAL RISKS.
From time to time, we intend to acquire companies with products and
services complementary to our own that we believe can help us
commercialize our products quickly and efficiently. These
acquisitions and any future acquisitions will expose us to increased
risks and costs, including the following:
<PAGE>
. failure to retain customers;
. integrating new operations and technologies;
. assimilating and retaining new personnel; and
. diverting financial and management resources from existing
operations.
We may not be able to generate sufficient profits from any of these
acquisitions to offset the associated acquisition costs. We will also
be required to maintain uniform standards of quality and service,
controls, procedures and policies. We may have difficulty assimilating
and maintaining uniformity over Opkor's operations because it is
located in Rochester, New York, which is far from our California
headquarters. Our failure to maintain any of these standards may hurt
relationships with customers, employees and new management personnel.
In addition, our future acquisitions may result in additional stock
issuances that could be dilutive to our stockholders.
WE MAY NOT BE ABLE TO ENTER INTO STRATEGIC ALLIANCES TO EFFECTIVELY
COMMERCIALIZE OUR PRODUCTS.
As we develop optical products, we often rely on strategic alliances
with other companies in a particular market to commercialize our
products in a timely or effective manner. Our current strategic
alliance partners provide us with assistance in the marketing, sales
and distribution of our diverse line of products. We may be unable to
find appropriate strategic alliances in markets in which we have
little experience, which could prevent us from bringing our products
to market in a timely manner, or at all. In our decorative pigments
business, we may form alliances that would help us penetrate the
automotive and other industries. If we do not enter into effective
alliances, our ChromaFlairR products may not achieve satisfactory
market penetration.
OUR FAILURE TO MANAGE GROWTH COULD ADVERSELY AFFECT US.
The recent accelerated growth of our business has placed, and is
expected to continue to place, a strain on our limited personnel,
management and other resources. In particular, the growth of our
telecommunications business related to fiber optic networks and our
light interference pigments business related to security and value
documents has required us to allocate significantly increased amounts
of manufacturing capabilities, personnel and other resources to those
markets. In addition, our ability to manage and allocate resources is
complicated by the number, diversity and complexity of our product
lines. Our management, personnel, systems, procedures and controls may
be inadequate to support our existing and future operations. If
required to manage future growth, the implementation of management
systems can be time consuming and costly. In order to manage future
growth effectively, we will need to attract, train, integrate,
motivate, manage and retain employees successfully to continue to
improve our operational, financial and management systems.
WE MUST MANAGE OUR MANUFACTURING OPERATIONS AND FACILITIES EFFECTIVELY
TO MEET CHANGING CAPACITY REQUIREMENTS.
<PAGE>
We currently manufacture all of our products at our facilities in
Santa Rosa, California, Hillend, Scotland, Atsugi, Japan and
Rochester, New York. We are currently experiencing manufacturing
capacity constraints and we are in the process of expanding our
manufacturing capacity at some of these facilities. In addition, many
of our customers have requested that we build manufacturing
capabilities that are near or on their facilities to provide just-in-
time production capabilities. If our plans to expand our manufacturing
capacity are not implemented on a timely basis, we could face
production shortfalls. In addition, we may be required to make
additional capital investments in new or existing manufacturing
facilities. Rapid increases in production levels to meet unanticipated
demand could result in higher costs for components and subassemblies
and higher overtime costs and other expenses. These higher
expenditures could lower our profit margins. Further, if production is
increased rapidly, there may be decreased manufacturing yields, which
may also lower our margins.
In order to meet forecasted demand, we will need to increase our
manufacturing capability for light interference pigments. We currently
intend to begin operating our third light interference pigment
production machine in the middle of 2000. In the past, we have
experienced significant problems during the initial phases of
operating a new machine, which required us to take substantial write-
offs of inventory and incur substantial expenses to solve these
problems. If we encounter similar problems with this new machine, our
production capability and our operating results will suffer.
Many of our machines are the only manufacturing sources for particular
products and are running at or near capacity. We do not have plans to
develop redundancy for much of our production capability. Therefore, a
breakdown or catastrophic damage to certain machines would severely
and adversely affect our business. In addition, it can take up to two
years to replace certain production machines.
We are expanding our manufacturing capabilities and expending capital
in anticipation of a level of customer orders that may not be
achieved. If demand falls below our forecast, we could have excess
production or excess capacity. Excess production could result in
higher inventories of our products. If we were unable to sell these
inventories, we would be forced to write off such inventories as
obsolete products. Excess manufacturing capacity could lead to higher
production costs and lower margins.
We have in the past and may in the future experience difficulties in
the management of our manufacturing facilities located overseas
because of the distance from our headquarters and difference in time
zone. To the extent that we expand our overseas manufacturing
capabilities, these issues will be increased.
OUR OPERATING RESULTS MAY FLUCTUATE.
Our quarterly revenues and bookings are likely to fluctuate
significantly in the future due to a number of factors, many of which
are outside our control. Factors that could affect our revenues and
bookings include the following:
<PAGE>
. variations in the size or timing of orders and shipments of our
products;
. new product introductions by competitors;
. delays in introducing new products or components;
. delays of orders forecasted by our customers;
. just in time manufacturing processes and consignment inventory for
key customers that may delay the scheduling of orders;
. delays in planned manufacturing capacity upgrades;
. delays by our customers in the completion of upgrades of
telecommunications infrastructure;
. variations in capital spending budgets of telecommunications
service providers; and
. delays in obtaining regulatory approval for commercial deployment
of certain telecommunications and other products.
A significant portion of our operating expenses are relatively fixed
in nature. Changes in revenue may cause significant fluctuations in
our operating results from quarter to quarter.
To achieve our revenue objectives, we depend on obtaining orders for
shipment in the same quarter. Furthermore, our agreements with our
customers generally do not contain binding purchase commitments and
provide that our customers may change delivery schedules and cancel
orders within specified timeframes without significant penalty. We
generally recognize revenue upon shipment of products to the customer
except in the case of JDS Uniphase, where we recognize revenue upon
shipment by JDS Uniphase to their customers. Refusal of customers or
end users to accept shipped products, returns of shipped products or
delays or difficulties in collecting accounts receivable could result
in significant charges against income. We may be unable to obtain
sufficient orders in any quarter, or anticipate the cancellation or
deferral of such orders in a quarter.
We have experienced and expect to continue to experience seasonality
in our business. Our sales have been affected by a seasonal decrease
in demand in the last quarter of each calendar year, which coincides
with the first quarter of our fiscal year, due to year-end
fluctuations in orders and operations of our customers, a fewer number
of workdays during the winter holiday season, and the significant
seasonality of consumer electronics products for which we provide
components. We expect this trend to continue, although other trends
may emerge. These trends, or other fluctuations in the timing of
customer orders, may cause quarterly or annual fluctuations.
WE ARE DEPENDENT ON A SMALL NUMBER OF CUSTOMERS IN CERTAIN INDUSTRIES.
We believe that a substantial majority of our revenues will
continue to be derived from sales to a relatively small number of
customers for the foreseeable future. In addition, we believe that
sales to these customers will be focused on a small number of
<PAGE>
applications. The loss of a significant customer for any reason or
reduced production by a customer, could result in a significant loss
of revenue. In addition, some of our products are sold to customers in
industries, such as consumer products, that experience significant
fluctuations in demand based on economic conditions, consumer demand
and other factors that are beyond our control. There can be no
assurance that we will be able to increase or maintain our levels of
sales in periods of economic stagnation or downturn. In the past,
OEMs have reduced the amount of purchases of our products in an effort
to reduce their costs in response to economic crises.
WE ARE DEPENDENT ON KEY SUPPLIERS OF RAW MATERIALS.
We manufacture all of our products using materials procured from
third-party suppliers. Certain of these materials are obtained from a
single source and others are available from limited sources. In
addition, some of the components are custom parts produced to our
specifications. For example, we currently rely on Corning Incorporated
to supply a special grade microsheet flat glass that is used in some
of our products. Other materials are procured from single-source
suppliers even though other suppliers are available. Any interruption
in the operations of vendors of single-sourced materials could
adversely affect our ability to meet our scheduled product deliveries
to customers. Delays in key component or product deliveries may occur
due to shortages resulting from a limited number of suppliers, the
financial or other difficulties of such supplier or a limitation in
component product availability. If we are unable to obtain a
sufficient supply of materials from our current sources, we could
experience difficulties in obtaining alternative sources quickly or in
altering product designs to use alternative materials. Resulting
delays or reductions in product shipments could damage customer
relationships. Further, a significant increase in the price of one or
more of these materials could have a material adverse effect on our
operating results.
In addition, we are an extremely large consumer of electricity.
Unforeseen increases in the cost of electricity or interruptions or
reductions in our current supply of electricity could materially
affect our ability to manufacture our products in a cost-effective or
timely manner.
THE SALES CYCLE FOR OUR PRODUCTS IS LENGTHY AND SUBJECT TO DELAYS
BEYOND OUR CONTROL, WHICH MAY ADVERSELY IMPACT OUR RESULTS OF
OPERATIONS.
The sales cycle associated with our products typically is
lengthy, often lasting three to fifteen months. Our customers usually
conduct significant technical evaluations of our products prior to the
commitment of capital and other resources. In addition, purchasing
decisions may be delayed because of our customers' internal budget
approval procedures. Furthermore, end users of our products may have
lengthy testing and approval processes that will delay purchases of
our products by our customers. For example, countries adopting
security measures for their currency often will consider and test
alternatives to our light interference pigments prior to making a
purchasing decision. Because of the lengthy sales cycle and the large
size of customers' orders, if orders forecasted for a specific
customer for a particular quarter do not occur in that quarter, our
<PAGE>
operating results for that quarter could be materially adversely
affected.
WE ARE DEPENDENT ON KEY PERSONNEL WITH EXPERTISE IN THE MANAGEMENT OF
LIGHT.
Due to the specialized nature of our business, we are highly
dependent on the continued service of, and on the ability to attract
and retain, qualified engineering, sales, marketing and senior
management personnel in the area of light management. The competition
for such personnel is intense. The loss of any key employees or
management could have a material adverse effect on our business and
operating results. In addition, if we are unable to hire additional
qualified personnel as needed, we may not be able to adequately manage
and complete our existing sales commitments and to bid for and execute
additional sales. We may not be able to continue to attract and retain
the qualified personnel necessary for the development of our business.
We must provide significant training for our growing employee
base due to the highly specialized nature of our technological
expertise in the area of light management and thin film optical
coating. Our current engineering personnel may be inadequate, and we
may fail to assimilate and train new employees successfully. Highly
skilled employees with the education and training that we require,
especially employees with significant experience and expertise in thin
film optical coating and fiber optics, are in high demand. Once
trained, our employees may be hired by our competitors.
We do not have "key person" insurance coverage for the loss of
any of our employees. Any officer or employee of our company can
terminate his or her relationship with us at any time. Except for
three employees of our OPKOR Inc. subsidiary, none of our employees
are bound by any non-competition agreements with us.
OUR PRODUCTS ARE SUBJECT TO GOVERNMENTAL AND INDUSTRY REGULATIONS,
CERTIFICATIONS AND APPROVALS.
The commercialization of our products may be delayed or made more
costly due to required government and industry approval processes. In
the past, the United States federal government has attempted to
restrict the export of our satellite-related products to certain
foreign countries for reasons of national security. Development of
applications for our ChromaFlairR products may require significant
testing that could delay our sales. For example, certain uses in
cosmetics may be regulated by the Food and Drug Administration, which
has extensive and lengthy approval processes. Durability testing by
the automobile industry of our pigments used with automotive paints
can take up to three years. If we change a product for any reason
including technological changes or changes in the manufacturing
process, prior approvals or certifications may be invalid and we may
need to go through the approval process again. Additionally, some of
our telecommunications products may need to obtain Bellcore
certification. This certification process can last six months or
longer. If we are unable to obtain these or other government or
industry certifications in a timely manner, or at all, our results
could be adversely affected.
<PAGE>
THERE ARE MANY RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.
We expect sales to customers outside of the United States to
continue to represent a significant percentage of our revenues for the
foreseeable future. International sales are subject to a number of
risks, including the following:
. changes in foreign government regulations and standards;
. export license requirements, tariffs, taxes and other trade
barriers;
. requirements or preferences of foreign nations for domestic
products;
. fluctuations in currency exchange rates relative to the U.S.
dollar;
. difficulty in collecting accounts receivable;
. difficulty in managing foreign operations; and
. political and economic instability.
If our customers or end users of our products are impacted by
currency devaluations or general economic crises, such as the economic
crisis currently affecting many Asian and Latin American economies,
their ability to purchase our products could be materially adversely
affected. Payment cycles for international customers typically are
longer than those for customers in the United States. Foreign markets
for our products may develop more slowly than currently anticipated
for a variety of reasons. These reasons include environmental issues,
economic downturns, the availability of favorable pricing for other
communications services or the availability and cost of related
equipment.
WE HAVE SIGNIFICANT EXPOSURE TO FOREIGN INVESTMENTS.
We have significant capital investments in Scotland and Japan. We
record changes in the value of those countries' currencies relative to
the U.S. dollar as direct charges or credits to equity. In addition to
our manufacturing operations in Scotland and Japan, we also have a
sales presence in other European and Asian countries. A significant
weakening of the currencies in Europe or Asia in relation to the U.S.
dollar could reduce the reported results of those operations. In
addition, our export sales could be subject to competitive price
pressures if the U.S. dollar was to strengthen compared to the
currency of foreign competitors.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL
PROPERTY RIGHTS.
Our success and ability to compete are significantly dependent on
our proprietary technology. We rely on a combination of patent, trade
secret, copyright and trademark laws and contractual restrictions to
establish and protect proprietary rights in our products. Our pending
patent applications may not be granted. Even if they are granted, the
claims covered by the patents may be reduced from those included in
<PAGE>
our applications. Any patent might be subject to challenge in court
and, whether or not challenged, might not be broad enough to prevent
third parties from developing equivalent technologies or products. We
have entered into confidentiality and invention assignment agreements
with our employees, and we enter into non-disclosure agreements with
some of our suppliers, distributors and customers so as to limit
access to and disclosure of our proprietary information. These
statutory and contractual arrangements may not prove sufficient to
prevent misappropriation of our technology or to deter independent
third-party development of similar technologies. In addition, the laws
of some foreign countries might not protect our products or
intellectual property rights to the same extent as do the laws of the
United States. Protection of our intellectual property might not be
available in every country in which our products might be
manufactured, marketed or sold.
WE MAY BE SUBJECT TO FUTURE CLAIMS OF INFRINGEMENT OF INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.
We may in the future receive notices of claims of infringement of
other parties' patent, trademark, copyright and other intellectual
property rights. Any such claims, even those without merit, could be
time consuming to defend, result in costly litigation, divert
management's attention and resources or cause us to enter into
unfavorable royalty or licensing agreements. The assertion of such
claims could have a material adverse effect on our business.
OUR INDUSTRIES ARE HIGHLY COMPETITIVE WITH MANY ESTABLISHED
COMPETITORS, WHO MAY INCLUDE OUR CUSTOMERS, STRATEGIC ALLIANCE
PARTNERS AND SUPPLIERS.
The markets for our products are intensely competitive and
characterized by rapidly changing technology. We currently experience
competition from numerous companies in each of the markets in which we
participate.
In the fiber optic communications market, we face competition
from E-Tek Dynamics, Inc. and DiCon Fiberoptics, Inc., as well as
other WDM component vendors for the sale of WDM products. In the
optical switch markets, we will compete with these same companies, and
potentially with JDS Uniphase, our strategic partner for our WDM
business. In the satellites market, we compete with Pilkington
Aerospace, a division of Pilkington plc.
We face competition with our light interference pigments in the
security and value documents market from alternative technologies such
as holograms, embedded threads and watermarks. In the decorative
applications market for our light interference pigments, we compete
with providers of lower cost, lower performance special effects
pigments such as BASF AG and Merck KGaA. These companies are also
important customers for decorative pigments.
In the display market, we have a large number of domestic and
foreign competitors for our Glare/GuardR anti-glare optical filters.
Companies that purchase coated glass and assemble and sell filters in
competition with us include Fellowes Manufacturing Company, Polaroid
<PAGE>
Corporation, ACCO Brands, Inc. and Minnesota Mining and Manufacturing
Company (3M). Certain of these companies purchase private label
products from us for resale in competition with our Glare/GuardR
product line. In the flat panel display market, we face competition
from Japanese coating companies such as Nidek Co., Ltd., Toppan
Printing Co., Ltd. and Tore. In projection display components, our
competition includes Viratec Thin Films, Inc., Balzers and Leybold
Group, Nitto Optical Co., Ltd., Nikon Corporation and Fuji
Photo-Optical.
Competitors in any portion of our business are also capable of
rapidly becoming competitors in other portions of our business. Our
existing and potential customers are often our current and potential
competitors. These companies may develop or acquire additional
competitive products or technologies in the future and thereby reduce
or cease their purchases from us. Additionally, we compete with large,
diversified companies such as BASF and Merck KGaA that are also our
suppliers. We may also face competition in the future from these and
other parties that develop fiber optic components based upon the
technologies similar to or different from the technologies employed by
us.
We expect competition in general to intensify substantially,
particularly in the expanding telecommunications and special effects
pigments markets. We further expect competition to be broadly based on
varying combinations of manufacturing capacity, ability to deliver
products on time, and technical features, each of which may render our
existing products non-competitive, obsolete or unmarketable. The
development of new high-precision products is a complex and uncertain
process requiring high levels of innovation and highly skilled
assembly and manufacturing processes, as well as the accurate
anticipation of technological and market trends. Many of our
competitors have substantially greater financial, technical,
manufacturing, marketing and other resources with which to develop new
technologies and to promote their products. We may be unable to
identify, develop, manufacture, market or support new or enhanced
products successfully or on a timely basis. We also may be unable to
respond effectively to product announcements by competitors,
technological changes or emerging industry standards. We also face
competition from numerous smaller companies.
OUR STOCK PRICE IS AT OR NEAR ITS HISTORICAL HIGH AND MAY FLUCTUATE
SIGNIFICANTLY.
The trading price of our common stock has been and is likely
to be highly volatile. Our stock price could be subject to wide
fluctuations in response to a variety of factors, including the
following:
. failure to meet securities analysts' estimates;
. changes in financial estimates by securities analysts;
. conditions, trends or announcements in the telecommunications,
light interference pigment products, display, office automation or
aerospace and instrumentation industry;
<PAGE>
. announcements of technological innovations by us or our
competitors;
. new products or services offered by us or our competitors;
. announcements of significant acquisitions, strategic alliances,
joint ventures or capital commitments by us or our competitors;
. additions or departures of key personnel;
. sales of common stock;
. accounting pronouncements or changes in accounting rules that
affect our financial statements; and
. other events or factors that may be beyond our control.
In addition, the stock markets in general, and the Nasdaq
National Market in particular, have experienced extreme price and
volume fluctuations recently. These fluctuations often have been
unrelated or disproportionate to the operating performance of these
companies. Our stock is particularly susceptible to market
fluctuations because of the small number of shares of our stock
available on the public market. Furthermore, the trading price of our
common stock is at or near historical highs and our price-to-earnings
multiple is substantially above historical levels. Our trading price
and multiple may not be sustained. Broad market and industry factors
may materially adversely affect the market price of our common stock,
regardless of our actual operating performance. In the past, following
periods of volatility in the market price of a company's securities,
securities class action litigation often has been instituted against
that company. Litigation like this, if instituted, could result in
substantial costs and a diversion of management's attention and
resources.
WE FACE RISKS RELATING TO THE YEAR 2000 ISSUE.
The "Year 2000" issue is the result of computer programs that
were written using two digits rather than four digits to define the
applicable year. If our computer programs with date-sensitive
functions are not Year 2000 compliant, they may recognize a date using
"00" as 1900 rather than the Year 2000. This could result in system
failures or miscalculations causing disruption of operations,
including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business
activities.
We have identified our Year 2000 risk in three components:
internal business software; internal non-financial software and
imbedded chip technology; and external noncompliance by customers and
suppliers. We are in the process of installing an enterprise resource
planning system and we currently expect to be in full compliance with
our internal financial systems before the Year 2000. However, if, due
to unforeseen circumstances, the implementation is not completed on a
timely basis, the Year 2000 could have a material impact on our
operations. If we are unable to achieve Year 2000 compliance for our
major non-financial systems, the Year 2000 could have a material
impact on our operations.
<PAGE>
Any failure of third-party networks, systems or services upon
which our business depends could have a material adverse impact on our
business. We also rely on other systems and services that third
parties provide to our customers. As a result, the success of our plan
to address Year 2000 issues depends in part on parallel efforts being
undertaken by other third parties. We have begun to identify and
initiate communications with third parties whose networks, systems or
services are critical to our business to determine the status of their
Year 2000 compliance. We cannot assure you that all such parties will
provide accurate and complete information, or that all their networks,
systems or services will achieve full Year 2000 compliance in a timely
fashion. In the event that any of our significant customers and
suppliers do not successfully and timely achieve Year 2000 compliance,
and we are unable to replace them with new customers or alternate
suppliers, our business or operations could be adversely affected.
Although we believe that all of our current products are
Year 2000 compliant, we cannot be certain that there will not be
claims against us, particularly since we have been in business for
over 50 years. The outcome and the costs involved in defending such
claims could have an adverse effect on our business. In addition,
responding to customer inquiries regarding Year 2000 issues has
created a burden on our internal resources.
OUR MANUFACTURING FACILITIES ARE CONCENTRATED IN AN AREA SUSCEPTIBLE
TO EARTHQUAKES.
Our headquarters and most of our manufacturing facilities are
concentrated in an area where there is a risk of significant
earthquake activity. Substantially all of the production equipment
that currently accounts for our revenues, as well as planned
additional production equipment, is or will be located in a known
earthquake zone. In addition, much of our plant and equipment was
built a number of years ago and are not in compliance with current
seismic codes. We cannot predict the extent of the damage that our
facilities and equipment would suffer in the event of an earthquake or
how such damage would affect our business. We currently maintain
earthquake insurance in the amount of $20.9 million with a deductible
of five percent of insured value. However, we cannot be certain if
this type of insurance will be available in the future at reasonable
rates, or at all, or if this insurance will be sufficient to cover all
damages that we may suffer as a result of an earthquake.
OUR BUSINESS IS SUBJECT TO THE RISKS OF PRODUCT RETURNS, PRODUCT
LIABILITY AND PRODUCT DEFECTS.
Products as complex and precise as ours frequently contain
undetected errors or flaws, especially when first introduced or when
new versions are released. The occurrence of errors could result in
product returns and other losses to us or to our customers. Some of
our products are used in applications that have severe consequences if
our products or the products in which our products are incorporated
should fail. Such failure also could result in the loss of or delay in
market acceptance of our products. Due to the recent introduction of
some of our products, we have limited experience with the problems
that could arise with these products.
<PAGE>
Our purchase agreements with our customers typically contain
provisions designed to limit our exposure to potential product
liability claims. However, the limitation of liability provision
contained in our purchase agreements may not be effective as a result
of federal, state or local laws or ordinances or unfavorable judicial
decisions in the United States or other countries. We have not
experienced any material product liability claims to date, but the
sale and support of our products entails the risk of such claims. In
addition, any failure by our products to properly perform could result
in claims against us by our customers. We maintain insurance to
protect against certain claims associated with the use of our
products, but our insurance coverage may not adequately cover any
claim asserted against us. In addition, even claims that ultimately
are unsuccessful could result in our expenditure of funds in
litigation and loss of management time and resources.
OUR MANUFACTURING PROCESSES MAY EXPOSE US TO ENVIRONMENTAL
LIABILITIES.
We are subject to various federal, state, local and foreign
environmental laws and regulations, including those governing the use,
discharge and disposal of hazardous substances in the ordinary course
of our manufacturing process. In the past, we have found ground water
contamination at our facilities and have had to spend substantial
amounts of money to contain and monitor the contamination. Although we
believe that our current manufacturing operations comply in all
material respects with applicable environmental laws and regulations,
environmental legislation has been enacted and may in the future be
enacted or interpreted to create environmental liability with respect
to our facilities or operations. We cannot be certain that
environmental claims will not be asserted against us in the future.
SOME ANTI-TAKEOVER PROVISIONS MAY AFFECT THE PRICE OF OUR COMMON
STOCK.
The Board of Directors has the authority to issue up to 100,000
shares of preferred stock and to determine the rights, preferences and
privileges of those shares without any further vote or action by the
stockholders. Of these 100,000 shares, 10,000 shares are currently
designated "Series A Preferred Stock" in connection with our
stockholders' rights plan described below, and 15,000 shares were
designated "Series B Cumulative Convertible Preferred Stock," of which
6,650 shares remain available for future issuance. The rights of the
holders of common stock may be adversely affected by the rights of the
holders of any preferred stock that may be issued in the future. Some
provisions of our certificate of incorporation and bylaws could have
the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting common stock. These include
provisions that limit the ability of stockholders to take action by
written consent, call special meetings, remove a director for cause,
amend the by-laws or approve a merger with another company.
We are subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, the statute
prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period
of three years after the date of the transaction in which the person
<PAGE>
became an interested stockholder, unless the business combination is
approved in a prescribed manner. For purposes of Section 203, a
"business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested
stockholder, and an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years prior, did
own) 15.0% or more of the corporation's voting stock.
We have a stockholders' rights plan, commonly referred to as a
"poison pill," that makes it difficult, if not impossible, for a
person to acquire control of us without the consent of our Board of
Directors.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On February 22, 1999, we agreed to pay $1.8 million in cash and
issue an aggregate of 267,285 shares of Common Stock to the Selling
Stockholders pursuant to the terms of an Agreement and Plan of Merger
among OPKOR Inc. ("OPKOR"), OPKOR Acquisition Corp. ("Acquisition")
and us (the "Merger Agreement") in exchange for all of the outstanding
shares of OPKOR's common stock. Under the terms of the Merger
Agreement, Acquisition, our wholly owned subsidiary, merged into OPKOR
resulting in OPKOR becoming our wholly owned subsidiary (the
"Merger"). All outstanding options to acquire shares of OPKOR common
stock were exercised or cancelled prior to the effective date of the
Merger.
The shares of Common Stock issued to the Selling Stockholders
were exempt from registration under the Securities Act. An aggregate
of 138,000 of the shares issued to the Selling Stockholders were
registered pursuant to our registration statement (Reg. No. 333-76853)
filed on Form S-3 on April 22, 1999, as amended by our amendments to
the registration statement on Form S-3 filed on May 7, 1999 and May
18, 1999 and the final prospectus filed pursuant to Rule 424(b)(4)
dated May 20, 1999. In accordance with the Merger Agreement, we filed
the registration statement of which this prospectus is a part to
register the remaining 129,285 of those shares of Common Stock issued
pursuant to the Merger (the "Shares").
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders, but we have agreed to bear certain
expenses of registration of those Shares under federal and state
securities laws, which we estimate to be $3,516. This Registration
Statement is intended to satisfy some of our obligations under the
Merger Agreement.
SELLING STOCKHOLDERS
The following table provides certain information concerning the
beneficial ownership of our Common Stock by each Selling Stockholder
both before and upon completion of the offering described in this
prospectus, assuming each Selling Stockholder offers and sells all of
its or his/her respective Shares. Selling Stockholders may, however,
offer and sell all, or some or none of their Shares. We are unable to
determine the exact number of Shares that will actually be sold. The
respective donees, pledgees and transferees or other successors in
<PAGE>
interest of the Selling Stockholders may also sell the Shares listed
below as being held by the Selling Stockholders. No Selling
Stockholder will beneficially own one percent or greater of our
outstanding Common Stock upon the sale of their Shares offered hereby.
In the past three years, none of the Selling Stockholders has had a
material relationship with OCLI, except that certain Selling
Stockholders have become non-officer employees of OPKOR or OCLI after
the Merger.
BENEFICIAL % PRIOR
OWNERSHIP PRIOR TO THE BENEFICIAL
TO OFFERING(1) OFFERING(2) OFFERED THE OFFERING
------------- --------- ------------- -----------
NAME # OF SHARES % # OF SHARES # OF SHARES
- -----------------------------------------------------------------------------
Charles R. Gardner 40,000 * 40,000 0
Richard L. Mulchay 37,411 * 37,411 0
Claude Tribastone 37,411 * 37,411 0
Rexford R. Fisher, Sr. 4,258 * 4,258 0
New York State Science
& Tech Foundation 2,023 * 2,023 0
David F. Howard 1,795 * 1,795 0
Richard S. and
Molly R. Ives 1,000 * 1,000 0
Michael Missig 898 * 898 0
Andrea L. Messina 898 * 898 0
HLM Family Fund 898 * 748 0
Annie Fisher 895 * 895 0
Paul R. Messina 750 * 750 0
Steven Messina 748 * 748 0
Lewis H. Mariotti 722 * 722 0
Michael H. Messina 688 * 688 0
. Less than 1%
(1) Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Shares of
common stock subject to options currently exercisable, or exercisable
within 60 days of August 31, 1999, are deemed outstanding for
computing the percentage of the person holding such options but are
not deemed outstanding for computing the percentage of any other
person. Except as indicated by footnote and subject to community
property laws where applicable, the persons named in the table have
sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them.
(2) Percentage of 14,160,066 shares of voting Common Stock based on
shares outstanding as of August 31, 1999.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time
by the Selling Stockholders of up to 129,285 shares of Common Stock
issued in connection with the Merger. This prospectus has been
<PAGE>
prepared in connection with registering the Shares in accordance with
the terms of the Merger Agreement to allow for sales of Shares by the
Selling Stockholders to the public. While we have registered the
Shares for sale pursuant to the terms of the Merger Agreement, the
Selling Stockholders will act independently of OCLI in making any
decisions with respect to the timing, manner and size of any sale, and
registration of the Shares does not necessarily mean that any of such
Shares will be offered and sold by the Selling Stockholders. We will
not receive any proceeds from the sale of Shares by the Selling
Stockholders.
The Shares may be sold from time to time directly by any of the
Selling Stockholders, or donees, pledgees, transferees or other
successors in interest ("Transferees") thereof. Alternatively, the
Selling Stockholders or Transferees may from time to time offer the
Shares through dealers or agents, who may receive compensation in the
form of commissions from the Selling Stockholders or Transferees
and/or the purchasers of Shares for whom they may act as agent. The
Selling Stockholders or Transferees and any dealers or agents that
participate in the distribution of Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit
on the sale of Shares by them and any commissions received by any such
dealers or agents might be deemed to be underwriting commissions under
the Securities Act.
The manner of sale of any Shares may take one or more of the
following forms:
. block transactions in which a broker-dealer may sell all or a
portion of the Shares either as agent or as principal in order to
facilitate the block transaction;
. purchases by a broker-dealer as principal and resale by the
same broker-dealer for its own account pursuant to this Prospectus;
. ordinary brokerage transactions and transactions in which a
broker-dealer solicits purchasers;
. sales "at the market" to or through a market maker or into
existing trading markets, on an exchange such as Nasdaq Stock
Market or otherwise; and
. transfers in other ways not involving market makers or
established trading markets, including direct sales to purchasers.
The Selling Stockholders may also dispose of or transfer the
Shares in transactions not involving a sale including by gift,
distribution or other transfer.
In effecting sales, broker-dealers engaged by the Selling
Stockholders may arrange for other broker-dealers to participate. In
addition, any Shares covered by this prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant
to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed
<PAGE>
brokers or dealers. In addition, in certain states, the Shares may not
be sold unless they have been registered or qualified for sale in such
state or an exemption from such registration or qualification
requirement is available and is complied with.
We have agreed to pay certain costs and expenses incurred in
connection with the registration of the Shares, but the Selling
Stockholders are responsible for all brokerage commissions, income and
transfer taxes and others charges incurred in connection with the
offer and sale of the Shares.
LEGAL MATTERS
For the purposes of this offering, Collette & Erickson LLP, San
Francisco, California, is giving its opinion on the validity of
issuance of the Shares. A partner of Collette & Erickson LLP owns
18,883 shares of Common Stock.
EXPERTS
The financial statements of OCLI and its consolidated
subsidiaries and related financial statement schedule as of
October 31, 1998 and 1997 and for each of the three years in the
period ended October 31, 1998, except for Flex Products, Inc., a
consolidated subsidiary, as of October 31, 1997 and for each of the
two years in the period ended October 31, 1997, included and
incorporated by reference in this prospectus have been audited by
Deloitte & Touche LLP, as stated in their reports, which are
incorporated by reference herein.
The financial statements of Flex Products, Inc., not included
herein, as of November 2, 1997 and for each of the two years in the
period ended November 2, 1997 have been audited by KPMG LLP, as stated
in their report, such report being incorporated by reference herein.
The financial statements of OCLI and its consolidated subsidiaries
have been included in reliance upon the reports of Deloitte & Touche
LLP and KPMG LLP given upon their authority as experts in accounting
and auditing. Both of the foregoing firms are independent auditors.
With respect to the unaudited interim financial information for
the three-month periods ended January 31 and April 30, 1999 and 1998
which is included and incorporated by reference, Deloitte & Touche LLP
have applied limited procedures in accordance with professional
standards for a review of such information. However, as stated in
their reports included in OCLI's Quarterly Reports on Form 10-Q for
the quarters ended January 31, 1999, April 30, 1999 and July 31, 1999,
and incorporated by reference herein, they did not audit and they do
not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche LLP is not subject to the
liability provisions of Section 11 of the Securities Act for their
report on the unaudited interim financial information because such
report is not a "report" or a "part" of the registration statement
prepared or certified by an accountant within the meaning of Sections
7 and 11 of the Securities Act.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by
OCLI in connection with the offering described in this Registration
Statement. OCLI will bear no expenses in connection with any sale or
other distribution by the Selling Stockholders of the Shares being
registered other than the expenses of preparation and distribution of
this Registration Statement and the prospectus included in this
Registration Statement. All amounts set forth in the following table
are estimates except the Securities and Exchange Commission
registration fee, the NASD filing fee and the Nasdaq Stock Market
listing fee.
Securities and Exchange Commission Fee $ 3,516
------
NASD filing fee 0
------
Nasdaq National Market listing fee 0
------
Legal Fees and Expenses 5,000
------
Accounting Fees and Expenses 2,000
------
Miscellaneous expenses 0
------
TOTAL $10,516
------
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The indemnification and liability of the our directors and
officers are governed by Delaware law.
Under Section 145 of the General Corporation Law of the State of
Delaware, corporations have broad powers to indemnify their directors
and officers against liabilities that may incur in such capacities,
including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Delaware law also permits corporations to
eliminate the personal liability of directors to corporations and
their stockholders for monetary damages for breach or alleged breach
of directors' fiduciary "duty of care." While Delaware law does not
eliminate the directors' duty of care, it enables corporations to
limit available relief to equitable remedies such as injunction or
rescission. These provisions have no effect on director's liability
for (1) breach of the director's duty of loyalty, (2) acts or
omissions not in good faith or involving intentional misconduct or
knowing violations of law, (3) a corporation's illegal payment of
dividends, (4) approval of any transaction from which the director
derives an improper personal benefit, or (5) on claims arising under
other laws, such as the federal securities laws.
In connection with the our reincorporation in Delaware in
November 1987, we included in our Certificate of Incorporation a
provision limiting directors' liability to the greatest extent
permitted by Delaware corporate law. In addition, our Certificate of
Incorporation and our Bylaws provide that we will indemnify our
directors and officers to the fullest extent permitted under Delaware
law, including circumstances in which indemnification is otherwise
<PAGE>
discretionary. We submitted these charter and Bylaw provisions to our
stockholders, who approved them in March 1987.
In addition, we have entered into separate Indemnification
Agreements with our directors and officers to the full extent
permitted by applicable law and our Certificate of Incorporation. The
general effect of the indemnification provisions of the Bylaws and the
Indemnification Agreements is to require us, among other things, to
indemnify our directors and officers against certain liabilities that
may arise by reason of their status or service as directors or
officers (provided the officer or director acted in good faith and in
a manner he or she believed to be in or not opposed to our best
interests and, with respect to a criminal proceeding, provided he or
she had no reasonable cause to believe that the conduct was unlawful),
and to advance their expenses (including attorneys' fees) incurred as
a result of any proceeding against them as to which they could be
indemnified. We believe that our charter and Bylaw provisions and the
separate indemnification Agreements are necessary to attract and
retain qualified persons as directors and officers.
At present, we are not aware of any threatened litigation or
proceeding which could result in a claim for indemnification by any
director or officer.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------
4.1 Restated Certificate of Incorporation. Incorporated by
reference to Exhibit (4)(a) of the Registrant's Form 10-Q for
the quarter ended July 31, 1988.
4.2 By-Laws. Incorporated by reference to Exhibit (3)(b) of the
Registrant's Form 8-K under Item 5 dated November 20, 1987.
4.3 Stockholder Rights Agreement between the Registrant and
ChaseMellon Shareholder Services L.L.C. dated December 16,
1997. Incorporated by reference to Exhibit 4.1 of the
Registrant's Form 10-K for the year ended October 31, 1997.
5.1* Opinion and consent of Collette & Erickson LLP.
15* Letter of Deloitte & Touche LLP regarding Unaudited Interim
Financial Information.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of KPMG LLP.
23.3* Consent of Counsel (See Exhibit 5.1, above).
24.1* Power of Attorney (See page 20)
*Not previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that paragraphs (1)(i)
and (1)(ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference
in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby further undertakes that,
for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
<PAGE>
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Rosa,
State of California, on the 22nd day of September 1999.
OPTICAL COATING LABORATORY, INC.
By /s/ CRAIG B. COLLINS
----------------------------
Craig B. Collins, Vice
President, Finance
and Chief Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears above or below hereby appoints John V. Erickson,
Joseph C. Zils, Craig B. Collins, or any of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, to sign and file any and all amendments to this
Registration Statement under the Securities Act of 1933, and all
exhibits and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in
and about the premises, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that
each said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
President, Chief Executive Officer
and Director
/s/Charles J. Abbe (Principal Executive Officer) September 22, 1999
- ------------------------
Charles J. Abbe
Vice President, Finance
/s/Craig B. Collins and Chief Financial Officer September 22, 1999
- ------------------------
Craig B. Collins (Principal Financial Officer)
/s/Holly D. Neal Corporate Controller September 22, 1999
- ------------------------
Holly D. Neal (Principal Accounting Officer)
/s/Herbert M. Dwight, Jr Chairman of the Board September 22, 1999
- -------------------------
Herbert M. Dwight, Jr.
/s/John McCullough Director September 22, 1999
- --------------------------
John McCullough
/s/ Douglas C. Chance Director September 22, 1999
- --------------------------
Douglas C. Chance
/s/ Shoei Kataoka Director September 22, 1999
- ------------------------
Shoei Kataoka
/s/Julian Schroeder Director September 22, 1999
- --------------------------
Julian Schroeder
/s/Renn Zaphiropoulos Director September 22, 1999
- -------------------------
Renn Zaphiropoulos
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------
4.1 Restated Certificate of Incorporation. Incorporated by
reference to Exhibit (4)(a) of the Registrant's Form 10-Q for
the quarter ended July 31, 1988.
4.2 By-Laws. Incorporated by reference to Exhibit (3)(b) of the
Registrant's Form 8-K under Item 5 dated November 20, 1987.
<PAGE>
4.3 Stockholder Rights Agreement between the Registrant and
ChaseMellon Shareholder Services L.L.C. dated December 16,
1997. Incorporated by reference to Exhibit 4.1 of the
Registrant's Form 10-K for the year ended October 31, 1997.
5.1* Opinion and consent of Collette & Erickson LLP.
15* Letter of Deloitte & Touche LLP regarding Unaudited Interim
Financial Information.
23.1* Consent of Deloitte & Touche LLP
23.2 Consent of KPMG LLP
23.3* Consent of Counsel (See Exhibit 5.1, above).
24.1* Power of Attorney (See page 20)
*Not previously filed.
September 22, 1999
Craig B. Collins, Vice
President, Finance and
Chief Financial Officer
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
RE: REGISTRATION OF SECURITIES FOR RESALE ON FORM S-3
-------------------------------------------------
Dear Mr. Collins:
This letter is written to you in connection with the filing
on or about September 22, 1999, of the Registration Statement on
Form S-3 with the Securities and Exchange Commission for the
purpose of registering for resale 129,285 shares of Common Stock,
$.01 par value, to be offered by shareholders of Optical Coating
Laboratory, Inc. (the "Company"), such shares having been issued
in connection with to the Company's acquisition of OPKOR Inc., a
New York corporation.
As counsel to the Company, we have examined such corporate
records, documents and questions of law as we have deemed
necessary or appropriate for the purposes of this opinion. In
such examinations, we have assumed the genuineness of signatures
and the conformity to the originals of the documents supplied to
us as copies. In addition to such examination, we have obtained
from Directors and Officers of the Company such other information
and advice as we have deemed necessary for the purposes of this
opinion.
On the basis of the foregoing, and our examination and
consideration of such other factual and legal matters as we have
deemed appropriate in the premises, we are of the opinion that
the shares to be registered will, when resold, be legally issued,
fully paid and non-assessable.
We consent to the filing of this letter with the Securities
and Exchange Commission as an exhibit to the aforementioned
Registration Statement.
Very truly yours,
Collette & Erickson LLP
<PAGE>
Optical Coating Laboratory, Inc.
Santa Rosa, California
We have made a review, in accordance with standards established
by the American Institute of Certified Public Accountants, of the
unaudited interim financial information of Optical Coating
Laboratory, Inc. and subsidiaries for the periods ended
January 31, 1999, April 30, 1999 and July 31, 1999 as indicated
in our reports dated February 18, 1999, May 19, 1999 and August
19, 1999, respectively; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our reports referred to above, which were
included in your Quarterly Reports on Form 10-Q for the quarters
ended January 31, 1999, April 30, 1999 and July 31, 1999 are
being used in this Registration Statement on Form S-3.
We also are aware that the aforementioned reports, pursuant to
Rule 436(c) under the Securities Act of 1933, are not considered
a part of the Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
San Jose, California
September 22, 1999
To the Board of Directors and Stockholders
Optical Coating Laboratory, Inc.:
We consent to the incorporation by reference in this Registration
Statement No. 333-XXXX on Form S-3 of Optical Coating Laboratory,
Inc. of our report dated November 26, 1997, relating to the
balance sheets of Flex Products, Inc. as of November 2, 1997, and
November 3, 1996, and the related statements of operations,
stockholders' equity and cash flows for the years then ended,
which report appears in the October 31, 1998, annual report on
Form 10-K of Optical Coating Laboratory, Inc., and to the use of
such report appearing herein. We also consent to the reference
to our firm under the heading "Experts" in such Registration
Statement.
KPMG LLP
San Francisco, California
September 22, 1999
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Optical Coating Laboratory, Inc. on Form S-3 of our
report dated December 22, 1998 (January 8, 1999 as to Note 5),
appearing in the Annual Report on Form 10-K of Optical Coating
Laboratory, Inc. for the year ended October 31, 1998, and to the
use of our report dated December 22, 1998 (January 8, 1999 as to
paragraph 8 of Note 6 and February 22, 1999 as to Note 15),
appearing in Registration Statement No. 333-76853 on Form S-3 and
the related prospectus dated May 20, 1999.
Deloitte &Touche LLP
San Jose, California
September 22, 1999
