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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-82797
JDS Uniphase Corporation
8,000,000 Shares of Common Stock
The 8,000,000 shares of our common stock offered by this prospectus will be
held by certain of our stockholders in exchange for exchangeable shares of JDS
Uniphase Canada Ltd., a subsidiary of ours. We have agreed to bear the expenses
of registration of the shares in this prospectus.
Our common stock is listed on the Nasdaq National Market under the symbol:
JDSU
The last sale price of our common stock on the Nasdaq National Market on July
12, 1999 was US$166.375 per share ($83.188 per share after giving effect to a
stock dividend of one share of common stock for each outstanding share of common
stock scheduled to occur on July 23, 1999).
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5.
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.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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July 27, 1999
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You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
Information contained in our Web site does not constitute part of this
document.
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JDS UNIPHASE
JDS Uniphase is the leading provider of advanced fiberoptic components and
modules. These products are sold to leading telecommunications and cable
television system providers worldwide, which are commonly referred to as OEMs
and include Alcatel, Ciena, General Instrument, Lucent, Nortel, Pirelli,
Scientific Atlanta, Siemens and Tyco. Our components and modules are basic
building blocks for fiberoptic networks and perform both optical-only (passive)
and optoelectronic (active) functions within these networks. Our products
include semiconductor lasers, high-speed external modulators, transmitters,
amplifiers, couplers, multiplexers, circulators, tunable filters, optical
switches and isolators for fiberoptic applications. We also supply our OEM
customers with test instruments for both system production applications and
network installation. In addition, we design, manufacture and market laser
subsystems for a broad range of commercial applications, which include
biotechnology, industrial process control and measurement, graphics and printing
and semiconductor equipment manufactured by our customers.
Our corporate headquarters in the United States is located at 163 Baypointe
Parkway, San Jose, California 95134, where the phone number is (408) 434-1800.
Our corporate headquarters in Canada is located at 570 West Hunt Club Road,
Nepean, Ontario, and the phone number at this location is (613) 727-1304.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks and uncertainties described below and the other information in this
prospectus before deciding whether to invest in shares of our common stock. If
any of the following risks actually occur, our business, financial condition and
results of operations could be materially adversely affected. This could cause
the trading price of our common stock to decline, and you may lose part or all
of your investment.
The statements contained in this prospectus that are not purely historical
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act,
including, without limitation, statements regarding JDS Uniphase's expectations,
hopes, beliefs, anticipations, commitments, intentions and strategies regarding
the future. Actual results could differ from those projected in any
forward-looking statements for the reasons, among others, detailed in the
following "Risk Factors." The fact that some of the "Risk Factors" described in
this prospectus may be the same or similar to those described in our past
filings means only that those risks are present in multiple periods. We believe
that many of the risks detailed here are part of doing business in the industry
in which we compete and will likely be present in all periods reported. The fact
that certain risks are endemic to the industry does not lessen the significance
of the risk. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus might not occur.
DIFFICULTIES WE MAY ENCOUNTER MANAGING OUR GROWTH COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS
Both JDS FITEL and Uniphase have historically achieved their growth through
a combination of internally developed new products and acquisitions. As part of
our strategy to sustain growth, we expect to continue to pursue acquisitions of
other companies, technologies and complementary product lines. We also expect to
continue developing new components, modules and other products for our customer
base, seeking to further penetrate these markets. The success of each
acquisition will depend upon:
- our ability to manufacture and sell the products of the businesses
acquired,
- continued demand for these acquired products by our customers,
- our ability to integrate the acquired business' operations, products and
personnel,
- our ability to retain key personnel of the acquired businesses, and
- our ability to expand our financial and management controls and reporting
systems and procedures.
Difficulties in Integrating Uniphase and JDS FITEL Could Adversely Affect Our
Business
Uniphase combined its operations with JDS FITEL on June 30, 1999 in a
merger of equals. If we fail to successfully integrate the businesses of JDS
FITEL and Uniphase, the combined business will suffer. Uniphase and JDS FITEL
have complementary business operations located principally in the United States,
Canada and Europe. Our success depends in large part on the successful
integration of these geographically diverse
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operations and the technologies and personnel of the two companies. As part of
this integration, we need to combine and improve our computer systems to
centralize and better automate processing of our financial, sales and
manufacturing data. Our management came from the prior management teams of both
companies and many members of management did not previously work with other
members of management. The integration of the two businesses may result in
unanticipated operational problems, expenses and liabilities and the diversion
of management attention. The integration may not be successful, and, if so, our
operating results would suffer as a result.
If We Fail to Efficiently Combine Uniphase's and JDS FITEL's Sales and Marketing
Forces, Our Sales Could Suffer
We may experience disruption in sales and marketing in connection with our
efforts to integrate Uniphase's and JDS FITEL's sales channels, and we may be
unable to efficiently or effectively correct such disruption or achieve our
sales and marketing objectives after integration. In addition, sales cycles and
sales models for Uniphase's and JDS FITEL's various products may vary
significantly from product to product. Our sales personnel not accustomed to the
different sales cycles and approaches required for products newly added to their
portfolio may experience delays and difficulties in selling these newly added
products. Furthermore, it may be difficult to retain key sales personnel. As a
result, we may fail to take full advantage of the combined sales forces'
efforts, and Uniphase's and JDS FITEL's respective sales approaches and
distribution channels may be ineffective in promoting the other entity's
products, which may have a material adverse effect on our business, financial
condition or operating results.
Integration Costs and Expenses Associated with Uniphase's Combination with JDS
FITEL Have Been Substantial and We May Incur Additional Related Expenses in the
Future
Uniphase and JDS FITEL have incurred direct costs associated with the
combination of approximately $12 million, which will be included as a part of
the total purchase cost for accounting purposes. We may incur additional
material charges in subsequent quarters to reflect additional costs associated
with the combination.
Difficulties in Integrating Other Acquisitions Could Adversely Affect Our
Business
In March 1997, Uniphase acquired Uniphase Laser Enterprise, which produces
our 980-nanometer pump laser products. In June 1998, Uniphase acquired Uniphase
Netherlands. In the case of both acquisitions, Uniphase acquired businesses that
had previously been engaged primarily in research and development and that
needed to make the transition from a research activity to a commercial business
with sales and profit levels that are consistent with our overall financial
goals. This transition has not yet been completed at Uniphase Netherlands, which
continues to operate at higher expense levels and lower gross margins than those
required to meet our profitability goals. In addition, in November 1998,
Uniphase acquired Uniphase Broadband, which manufactures test instruments,
transmitter cards and transceivers for telecommunications applications. We may
not successfully manufacture and sell our products or successfully manage our
growth, and failure to do so could have a material adverse effect on our
business, financial condition and operating results.
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Difficulties in Commercializing New Product Lines
We intend to continue to develop new product lines to address our
customers' diverse needs and the several market segments in which we
participate. As we target new product lines and markets, we will further
increase our sales and marketing, customer support and administrative functions
to support anticipated increased levels of operations from these new products
and markets as well as growth from our existing products. We may not be
successful in creating this infrastructure nor may we realize any increase in
the level of our sales and operations to offset the additional expenses
resulting from this increased infrastructure. Uniphase commenced operations at
Uniphase Telecommunications Products in 1996 to penetrate the cable television
markets, and at Uniphase Network Components in 1998 to develop and market a line
of complementary optical components for our telecommunications customers. In
each case, Uniphase hired development, manufacturing and other staff in
anticipation of developing and selling new products. Our operations may not
achieve levels sufficient to justify the increased expense levels associated
with these new businesses.
WE ARE SUBJECT TO MANUFACTURING DIFFICULTIES
If We Do Not Achieve Acceptable Manufacturing Volumes, Yields or Sufficient
Product Reliability, Our Operating Results Could Suffer
The manufacture of our products involves highly complex and precise
processes, requiring production in highly controlled and clean environments.
Changes in our manufacturing processes or those of our suppliers, or their
inadvertent use of defective or contaminated materials, could significantly
reduce our manufacturing yields and product reliability. Because the majority of
our manufacturing costs are relatively fixed, manufacturing yields are critical
to our results of operations. Certain of our divisions have in the past
experienced lower than expected production yields, which could delay product
shipments and impair gross margins. These divisions or any of our other
manufacturing facilities may not maintain acceptable yields in the future.
Our existing Uniphase Netherlands facility has not achieved acceptable
manufacturing yields since the June 1998 acquisition, and there is continuing
risk attendant to this facility and its manufacturing yields and costs. In
addition, we recently completed construction of a new laser fabrication facility
at Uniphase Netherlands, and this facility has not yet reached targeted yields,
volumes or costs levels. Uniphase Netherlands may not successfully manufacture
laser products in the future at volumes, yields or cost levels necessary to meet
our customers' needs. In addition, Uniphase Fiber Components is establishing a
production facility in Sydney, Australia for fiber Bragg grating products. This
facility may not manufacture grating products to customers' specifications at
the volumes, cost and yield levels required. To the extent we do not achieve
acceptable manufacturing yields or experience product shipment delays, our
business, operating results and financial condition would be materially and
adversely affected.
As our customers' needs for our products increase, our ability to increase
our manufacturing volumes to meet these needs and satisfy customer demand will
have a material effect on our business, operating results and financial
condition. In some cases, existing manufacturing techniques, which involve
substantial manual labor, may be insufficient to achieve the volume or cost
targets of our customers. As such, we will need to develop new manufacturing
processes and techniques, which are anticipated to involve higher levels of
automation, to achieve the targeted volume and cost levels. In addition, it
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is frequently difficult at a number of our manufacturing facilities to hire
qualified manufacturing personnel in a timely fashion, if at all, when customer
demands increase over shortened time periods. While we continue to devote
research and development efforts to improvement of our manufacturing techniques
and processes, we may not achieve manufacturing volumes and cost levels in our
manufacturing activities that will fully satisfy customer demands.
If Our Customers Do Not Qualify Our Manufacturing Lines For Volume Shipments,
Our Operating Results Could Suffer
Customers will not purchase any of our products (other than limited numbers
of evaluation units) prior to qualification of the manufacturing line for the
product. Each new manufacturing line must go through varying levels of
qualification with our customers. This qualification process determines whether
the manufacturing line achieves the customers' quality, performance and
reliability standards. Delays in qualification can cause a product to be dropped
from a long term supply program and result in significant lost revenue
opportunity over the term of that program. As noted above, we are currently
completing a new manufacturing facility in Australia. We may experience delays
in obtaining customer qualification of this facility and our new facility at
Uniphase Netherlands. If we fail in the timely qualification of these or other
new manufacturing lines, our operating results and customer relationships would
be adversely affected.
OUR OPERATING RESULTS MAY SUFFER AS A RESULT OF PURCHASE ACCOUNTING TREATMENT,
THE IMPACT OF AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES RELATING TO OUR
COMBINATION WITH JDS FITEL
Under U.S. generally accepted accounting principles that apply to us, we
will account for the combination of Uniphase and JDS FITEL using the purchase
method of accounting. Under purchase accounting, we will record the estimated
market value of our common shares and the Exchangeable Shares issued in
connection with Uniphase's combination with JDS FITEL, the fair value of the
options to purchase JDS FITEL common shares which became options to purchase our
common shares and the amount of direct transaction costs as the cost of
acquiring the business of JDS FITEL. That cost will be allocated to the
individual assets acquired and liabilities assumed, including various
identifiable intangible assets such as in-process research and development,
acquired technology, acquired trademarks and trade names and acquired workforce,
based on their respective fair values. We will allocate the excess of the
purchase cost over the fair value of the net assets to goodwill. We estimate
that we will expense in-process research and development of $177 million as of
June 30, 1999. We will amortize goodwill over a five year period. The amount of
purchase cost to be allocated to goodwill and other intangibles is estimated to
be $3.2 billion, including the related deferred tax effect. If we amortized
goodwill and other intangible assets in equal quarterly amounts over a five year
period following completion of Uniphase's combination with JDS FITEL, the
accounting charge attributable to these items would be $161 million per quarter
and $643 million per fiscal year. As a result, purchase accounting treatment of
Uniphase's combination with JDS FITEL will result in a net loss for us in the
foreseeable future, which could have a material and adverse effect on the market
value of our stock.
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OUR STOCK PRICE COULD FLUCTUATE SUBSTANTIALLY
The Unpredictability of Our Quarterly Operating Results Could Cause Our Stock
Price to be Volatile or Decline
Each of JDS FITEL and Uniphase has experienced, and we expect to continue
to experience, fluctuations in our quarterly results, which in the future may be
significant and cause substantial fluctuations in the market price of our stock.
All of the concerns we discuss under Risk Factors could affect our operating
results, including, among others:
- the timing of the receipt of product orders from a limited number of
major customers,
- the loss of one or more of our major suppliers or customers,
- competitive pricing pressures,
- the costs associated with the acquisition or disposition of businesses,
- our ability to design, manufacture and ship technologically advanced
products with satisfactory yields on a timely and cost-effective basis,
- the announcement and introduction of new products by us, and
- expenses associated with any intellectual property or other litigation.
In addition to concerns potentially affecting our operating results
addressed elsewhere under Risk Factors, the following factors may also influence
our operating results:
- our product mix,
- the relative proportion of our domestic and international sales,
- the timing differences between when we incur expenses to increase our
marketing and sales capabilities and when we realize benefits, if any,
from such expenditures, and
- fluctuations in the foreign currencies of our foreign operations.
Furthermore, our sales often reflect orders shipped in the same quarter
that they are received, which makes our sales vulnerable to short term
fluctuations in customer demand and difficult to predict. Also, customers may
cancel or reschedule shipments, and production difficulties could delay
shipments. In addition, we sell our telecommunications equipment products to
OEMs who typically order in large quantities, and therefore the timing of such
sales may significantly affect our quarterly results. An OEM supplies system
level network products to telecommunications carriers and others and
incorporates our components in these system level products. The timing of such
OEM sales can be affected by factors beyond our control, such as demand for the
OEMs' products and manufacturing risks experienced by OEMs. In this regard, we
have experienced rescheduling of orders by customers in each of our markets and
may experience similar rescheduling in the future. As a result of all of these
factors, our results from operations may vary significantly from quarter to
quarter.
In addition to the effect of ongoing operations on quarterly results,
acquisitions or dispositions of businesses, our products or technologies have in
the past resulted in, and may in the future, result in reorganization of our
operations, substantial charges or other
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expenses, which have caused and may in the future cause fluctuations in our
quarterly operating results and cash flows. See, for example, "Risk
Factors -- Our Operating Results May Suffer as a Result of Purchase Accounting
Treatment, the Impact of Amortization of Goodwill and Other Intangibles Relating
to Our Combination with JDS FITEL."
Finally, our net revenues and operating results in future quarters may be
below the expectations of public market securities analysts and investors. In
such event, the price of our common stock and the Exchangeable Shares would
likely decline, perhaps substantially.
Factors Other Than Our Quarterly Results Could Cause Our Stock Price to be
Volatile or Decline
The market price of our common stock has been and is likely to continue to
be highly volatile due to causes other than our historical quarterly results,
such as:
- announcements by our competitors and customers of technological
innovations or new products,
- developments with respect to patents or proprietary rights,
- governmental regulatory action, and
- general market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies, which may cause the price of our stock to decline.
OUR SALES WOULD SUFFER IF ONE OR MORE OF OUR KEY CUSTOMERS SUBSTANTIALLY REDUCED
ORDERS FOR OUR PRODUCTS
Our customer base is highly concentrated. Historically, orders from a
relatively limited number of OEM customers accounted for a substantial portion
of Uniphase's and JDS FITEL's net sales from telecommunications products. We
expect that, for the foreseeable future, sales to a limited number of customers
will continue to account for a high percentage of our net sales. Sales to any
single customer may vary significantly from quarter to quarter. If current
customers do not continue to place orders we may not be able to replace these
orders with new orders from new customers. In the telecommunications markets,
our customers evaluate our products and competitive products for deployment in
their telecommunications systems. Our failure to be selected by a customer for
particular system projects can significantly impact our business, operating
results and financial condition. Similarly, even if our customers select us, if
our customers are not selected as the primary supplier for an overall system
installation, we can be similarly adversely affected. Such fluctuations could
have a material adverse effect on our business, financial condition and
operating results.
INTERRUPTIONS AFFECTING OUR KEY SUPPLIERS COULD DISRUPT PRODUCTION, COMPROMISE
OUR PRODUCT QUALITY AND ADVERSELY AFFECT OUR SALES
We currently obtain various components included in the manufacture of our
products from single or limited source suppliers. A disruption or loss of
supplies from these companies or a price increase for these components would
have a material adverse effect
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on our results of operations, product quality and customer relationships. We
have a sole source supply agreement for a critical material used in the
manufacture of our passive products. This agreement may be terminated by either
party on six months prior notice. It is our objective to maintain strategic
inventory of the key raw material provided by this supplier. We also depend on a
single source for filters for our passive products which we obtain exclusively
through a joint venture with Optical Coating Laboratories, Inc. In addition, we
currently utilize a sole source for the crystal semiconductor chip sets
incorporated in our solid state microlaser products and acquire our pump diodes
for use in our solid state laser products from Opto Power Corporation and GEC.
We obtain lithium niobate wafers, gallium arsenide wafers, specialized fiber
components and certain lasers used in our telecommunications products primarily
from Crystal Technology, Inc., Fujikura, Ltd., Philips Key Modules and Sumitomo,
respectively. We do not have long-term or volume purchase agreements with any of
these suppliers (other than for our passive products supplier described in this
paragraph), and these components may not in the future be available in the
quantities required by us, if at all.
WE MAY BECOME SUBJECT TO COLLECTIVE BARGAINING AGREEMENTS
Our employees who are employed at manufacturing facilities located in North
America are not bound by or party to any collective bargaining agreements with
us. These employees may become bound by or party to one or more collective
bargaining agreements with us in the future. Certain of our employees outside of
North America, particularly in The Netherlands and Germany, are subject to
collective bargaining agreements. If, in the future, any such employees become
bound by or party to any collective bargaining agreements, then our related
costs and our flexibility with respect to managing our business operations
involving such employees may be materially adversely affected.
ANY FAILURE TO REMAIN COMPETITIVE IN OUR INDUSTRY WOULD IMPAIR OUR OPERATING
RESULTS
If Our Business Operations are Insufficient to Remain Competitive in Our
Industry, Our Operating Results Could Suffer
The telecommunications and laser subsystems markets in which we sell our
products are highly competitive. In each of the markets we serve, we face
intense competition from established competitors. Many of these competitors have
substantially greater financial, engineering, manufacturing, marketing, service
and support resources than do we and may have substantially greater name
recognition, manufacturing expertise and capability and longer standing customer
relationships than do we. To remain competitive, we believe we must maintain a
substantial investment in research and development, marketing, and customer
service and support. We may not compete successfully in all or some of our
markets in the future, and we may not have sufficient resources to continue to
make such investments, or we may not make the technological advances necessary
to maintain our competitive position so that our products will receive market
acceptance. In addition, technological changes or development efforts by our
competitors may render our products or technologies obsolete or uncompetitive.
See "Our Business -- Competition."
Fiberoptic Component Average Selling Prices Are Declining
Prices for telecommunications fiberoptic components are generally declining
due to, among other things, increased competition and greater unit volumes as
telecommunications service providers continue to deploy fiberoptic networks.
Uniphase and JDS FITEL have in
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the past and we may in the future experience substantial period to period
fluctuations in average selling prices. We anticipate that average selling
prices will decrease in the future in response to product introductions by
competitors and us or to other factors, including price pressures from
significant customers. Therefore, we must continue to (1) timely develop and
introduce new products that incorporate features that can be sold at higher
selling prices and (2) reduce our manufacturing costs. Failure to achieve any or
all of the foregoing could cause our net sales and gross margins to decline,
which may have a material adverse effect on our business, financial condition
and operating results.
If We Fail to Successfully Develop and Market Solid State Lasers to Replace the
Declining Markets for Our Gas Lasers, Our Operating Results Could Suffer
The market for gas lasers is mature and expected to decline as customers
replace conventional lasers, including gas lasers, with solid state lasers.
Solid state lasers are currently expected to be the primary commercial laser
technology in the future. Consequently, Uniphase has devoted substantial
resources to developing and commercializing its solid state laser products. We
believe that some companies are further advanced than us in solid state laser
development and are competing with us for many of the same opportunities. To be
competitive in our laser markets, we believe continued manufacturing cost
reductions and enhanced performance of our laser products will be required on a
continuing basis as these markets further mature. However, our solid state laser
products may not be competitive with products of other companies as to cost or
performance in the future.
If We Fail to Attract and Retain Key Personnel, Our Business Could Suffer
Our future depends, in part, on our ability to attract and retain certain
key personnel. In particular, our research and development efforts depend on
hiring and retaining qualified engineers. Competition for highly skilled
engineers is extremely intense, and we are currently experiencing difficulty in
identifying and hiring certain qualified engineers in many areas of our
business. We may not be able to hire and retain such personnel at compensation
levels consistent with our existing compensation and salary structure. Our
future also depends on the continued contributions of our executive officers and
other key management and technical personnel, each of whom would be difficult to
replace. Uncertainty resulting from the JDS FITEL merger could further adversely
affect our ability to retain key employees. We do not maintain a key person life
insurance policy on our Chief Executive Officer, our Chief Operating Officer or
any other officer. The loss of the services of one or more of our executive
officers or key personnel or the inability to continue to attract qualified
personnel could delay product development cycles or otherwise have a material
adverse effect on our business, financial condition and operating results.
OUR PARTICIPATION IN INTERNATIONAL MARKETS CREATES RISKS TO OUR BUSINESS NOT
FACED BY COMPANIES THAT SELL THEIR PRODUCTS IN THE UNITED STATES
International sales are subject to inherent risks, including:
- unexpected changes in regulatory requirements,
- tariffs and other trade barriers,
- political and economic instability in foreign markets,
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- difficulties in staffing and management,
- integration of foreign operations,
- longer payment cycles,
- greater difficulty in accounts receivable collection,
- currency fluctuations, and
- potentially adverse tax consequences.
International sales accounted for approximately 38.7%, 30.6% and 25.1% of
Uniphase's net sales in fiscal years 1998, 1997 and 1996, respectively.
International sales (excluding sales to the U.S.) accounted for approximately
24.5%, 20.2% and 31.8% of JDS FITEL's net sales in fiscal years 1998, 1997 and
1996, respectively. We expect that international sales will continue to account
for a significant portion of our net sales. We may continue to expand our
operations outside of the United States and to enter additional international
markets, both of which will require significant management attention and
financial resources.
Since a significant portion of our foreign sales are denominated in U.S.
dollars, our products may also become less price competitive in countries in
which local currencies decline in value relative to the U.S. dollar. Our
business and operating results may also be materially and adversely affected by
lower sales levels that typically occur during the summer months in Europe and
certain other overseas markets. Furthermore, the sales of many of our OEM
customers depend on international sales and consequently further exposes us to
the risks associated with such international sales.
THE YEAR 2000 PROBLEM MAY DISRUPT OUR AND OUR CUSTOMERS' AND SUPPLIERS'
BUSINESSES
We are aware of the risks associated with the operation of information
technology and non-information technology systems as the Year 2000 approaches.
The problem is pervasive and complex and may affect many information technology
and non-information technology systems. The Year 2000 problem results from the
rollover of the two digit year value from "99" to "00." Systems that do not
properly recognize such date-sensitive information could generate erroneous data
or fail. In addition to our own systems, we rely on external systems of our
customers, suppliers, creditors, financial organizations, utilities providers
and government entities, both domestic and international (which we collectively
refer to as "third parties"). Consequently, we could be affected by disruptions
in the operations of third parties with which we interact. Furthermore, as
customers expend resources to correct their own systems, they may reduce their
purchasing frequency and volume of our products.
We are using both internal and external resources to assess:
- our state of readiness (including the readiness of third parties with
which we interact) concerning the Year 2000 problem,
- our costs to correct material Year 2000 problems related to our internal
information technology and non-information technology systems,
- the known risks related to any failure to correct any Year 2000 problems
we identify, and
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- the contingency plan, if any, that we should adopt should any identified
Year 2000 problems not be corrected.
To date, we have incurred costs not exceeding $2 million to upgrade our
information technology and non-information technology systems to, among other
things, make such systems Year 2000 compliant. We continue to evaluate the
estimated costs associated with the efforts to prepare for Year 2000 based on
actual experience. While the efforts will involve additional costs, we believe,
based on (1) available information, (2) amounts spent to date and (3) the fact
that our information technology and non-information technology systems depend on
third-party software which, we believe, has been or is being updated to address
the Year 2000 problem, that we will manage our total Year 2000 transition
without any material adverse effect on our business operations, financial
condition, products or financial prospects. The actual outcomes and results
could be affected by future factors including, but not limited to:
- the continued availability of skilled personnel,
- cost control,
- the ability to locate and remediate software code problems,
- critical suppliers and subcontractors meeting their Year 2000 compliance
commitments, and
- timely actions by customers.
We are working with our software system suppliers and believe that certain
of these systems are currently not Year 2000 compliant. We have targeted
September 30, 1999 as the date by which these systems shall be Year 2000
compliant. In any event, however, we anticipate that such systems will be
corrected for the Year 2000 problem prior to December 31, 1999. We are working
with those third parties to identify any Year 2000 problems affecting such third
parties that could have a material adverse affect on our business, financial
condition or results of operations. However, it would be impracticable for us to
attempt to address all potential Year 2000 problems of third parties that have
been or may in the future be identified. Specifically, Year 2000 problems have
arisen or may arise regarding the information technology and non-information
technology systems of third parties having widespread national and international
interactions with persons and entities generally (for example, certain
information technology and non-information technology systems of governmental
agencies, utilities and information and financial networks) that, if
uncorrected, could have a material adverse impact on our business, financial
condition or results of operations. We are still assessing the effect the Year
2000 problem will have on our suppliers and, at this time, cannot determine such
impact. However, we have identified alternative suppliers and, in the event that
any significant supplier suffers unresolved material Year 2000 problems, we
believe that we would only experience short term disruptions in supply, not
exceeding 90 days, while such supplier is replaced.
IF WE HAVE INSUFFICIENT PROPRIETARY RIGHTS OR IF WE FAIL TO PROTECT THOSE WE
HAVE, OUR BUSINESS WOULD BE MATERIALLY IMPAIRED
We May Not Obtain the Intellectual Property Rights We Require
The telecommunications and laser markets in which we sell our products
experience frequent litigation regarding patent and other intellectual property
rights. Numerous
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patents in these industries are held by others, including academic institutions
and our competitors. In the past, Uniphase and JDS FITEL have acquired and in
the future we may seek to acquire license rights to these or other patents or
other intellectual property to the extent necessary for our business. Unless we
are able to obtain such licenses on commercially reasonable terms, patents or
other intellectual property held by others could inhibit our development of new
products for our markets. While in the past licenses generally have been
available to Uniphase and JDS FITEL where third-party technology was necessary
or useful for the development or production their products, in the future
licenses to third-party technology may not be available on commercially
reasonable terms, if at all. Generally, a license, if granted, includes payments
by us of up-front fees, ongoing royalties or a combination thereof. Such royalty
or other terms could have a significant adverse impact on our operating results.
We are a licensee of a number of third party technologies and intellectual
property rights and are required to pay royalties to these third party licensors
on certain of our telecommunications products and laser subsystems.
Our Products May Infringe the Property Rights of Others
The industry in which we operate experiences periodic claims of patent
infringement or other intellectual property rights. In this regard, third
parties may in the future assert claims against us concerning our existing
products or with respect to future products under development by us. Any
litigation to determine the validity of any third-party claims could result in
significant expense to us and divert the efforts of our technical and management
personnel, whether or not we are successful in such litigation. If we are
unsuccessful in any such litigation, we could be required to expend significant
resources to develop non-infringing technology or to obtain licenses to the
technology that is the subject of the litigation. We may not be successful in
such development or such licenses may not be available to us. Without such a
license, we could be enjoined from future sales of the infringing product or
products.
Our Intellectual Property Rights May Not Be Adequately Protected
Our future depends in part upon our intellectual property, including trade
secrets, know-how and continuing technological innovation. We currently hold
approximately 150 U.S. patents on products or processes and corresponding
foreign patents and have applications for certain patents currently pending. The
steps taken by us to protect our intellectual property may not adequately
prevent misappropriation or ensure that others will not develop competitive
technologies or products. Other companies may be investigating or developing
other technologies that are similar to ours. It is possible that patents may not
be issued from any application pending or filed by us and, if patents do issue,
the claims allowed may not be sufficiently broad to deter or prohibit others
from marketing similar products. Any patents issued to us may be challenged,
invalidated or circumvented. Further, the rights under our patents may not
provide a competitive advantage to us. In addition, the laws of certain
territories in which our products are or may be developed, manufactured or sold,
including Asia, Europe or Latin America, may not protect our products and
intellectual property rights to the same extent as the laws of the United
States.
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IF WE FAIL TO SUCCESSFULLY MANAGE OUR EXPOSURE TO THE WORLDWIDE FINANCIAL
MARKETS, OUR OPERATING RESULTS COULD SUFFER
We are exposed to financial market risks, including changes in interest
rates, foreign currency exchange rates and marketable equity security prices. We
utilize derivative financial instruments to mitigate these risks. We do not use
derivative financial instruments for speculative or trading purposes. The
primary objective of our investment activities is to preserve principal while at
the same time maximizing yields without significantly increasing risk. To
achieve this objective, a majority of our marketable investments are floating
rate and municipal bonds, auction instruments and money market instruments
denominated in U.S. dollars. We hedge currency risks of investments denominated
in foreign currencies with forward currency contracts. Gains and losses on these
foreign currency investments are generally offset by corresponding gains and
losses on the related hedging instruments, resulting in negligible net exposure
to us. A substantial portion of our revenue, expense and capital purchasing
activities are transacted in U.S. dollars. However, we do enter into these
transactions in other currencies, primarily Canadian and European currencies. To
protect against reductions in value and the volatility of future cash flows
caused by changes in foreign exchange rates, we have established hedging
programs. Currency forward contracts are utilized in these hedging programs. Our
hedging programs reduce, but do not always entirely eliminate, the impact of
foreign currency exchange rate movements. Actual results on our financial
position may differ materially.
IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL AT THE TIMES, IN THE AMOUNTS AND UPON
THE TERMS REQUIRED, OUR BUSINESS COULD SUFFER
We are devoting substantial resources for new facilities and equipment to
the production of source lasers, fiber Bragg gratings and modules used in
telecommunications and for the development of new solid state lasers. Although
we believe existing cash balances, cash flow from operations and available lines
of credit, together with proceeds from this offering and the concurrent offering
of exchangeable shares, will be sufficient to meet our capital requirements at
least for the next 12 months, we may be required to seek additional equity or
debt financing to compete effectively in these markets. We cannot precisely
determine the timing and amount of such capital requirements and will depend on
several factors, including our acquisitions and the demand for our products and
products under development. Such additional financing may not be available when
needed, or, if available, may not be on terms satisfactory to us.
OUR CURRENTLY OUTSTANDING PREFERRED STOCK AND OUR ABILITY TO ISSUE ADDITIONAL
PREFERRED STOCK COULD IMPAIR THE RIGHTS OF OUR COMMON STOCKHOLDERS
Our Board of Directors has the authority to issue up to 799,999 shares of
undesignated preferred stock and to determine the powers, preferences and rights
and the qualifications, limitations or restrictions granted to or imposed upon
any wholly unissued shares of undesignated preferred stock and to fix the number
of shares constituting any series and the designation of such series, without
the consent of our stockholders. The preferred stock could be issued with
voting, liquidation, dividend and other rights superior to those of the holders
of common stock. The issuance of preferred stock under certain circumstances
could have the effect of delaying, deferring or preventing a change in control.
Each outstanding share of our common stock includes one right. Each right
entitles the registered holder, subject to the terms of the Rights Agreement, to
purchase from us one unit, equal to one one-thousandth of a share of Series B
Preferred Stock, at a purchase price of $135 per unit, subject to adjustment,
for each share of common stock held by the holder. The rights are attached to
all certificates representing outstanding shares of our common stock, and no
separate rights
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certificates have been distributed. The purchase price is payable in cash or by
certified or bank check or money order payable to our order. The description and
terms of the rights are set forth in a Rights Agreement between us and American
Stock Transfer & Trust Company, as Rights Agent, dated as of June 22, 1998, as
amended from time to time.
Certain provisions contained in the rights plan, and in the equivalent
rights plan JDS Uniphase Canada Ltd. has adopted with respect to the
Exchangeable Shares, may have the effect of discouraging a third party from
making an acquisition proposal for us and may thereby inhibit a change in
control. For example, such provisions may deter tender offers for shares of
common stock or Exchangeable Shares which offers may be attractive to the
stockholders, or deter purchases of large blocks of common stock or Exchangeable
Shares, thereby limiting the opportunity for stockholders to receive a premium
for their shares of common stock or Exchangeable Shares over the then-prevailing
market prices.
WE HAVE A SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE
Based on shares outstanding as of July 9, 1999, we will have 161,207,666
shares of our common stock (including shares of our common stock issuable upon
exchange of the outstanding Exchangeable Shares, including Exchangeable Shares
issued in the concurrent offering (see "Concurrent Offering of Exchangeable
Shares")) outstanding upon completion of this offering. Subject to the lock-up
agreements noted below, other than for shares held by certain of our largest
stockholders, virtually all of these outstanding shares will be available for
immediate resale without restriction following the completion of this offering.
For a period of 90 days from the date of this prospectus, executive officers,
directors and stockholders holding a total of approximately 48.9 million shares
of common stock and Exchangeable Shares (inclusive of shares issuable under
options exercisable within 60 days) have agreed not to sell or otherwise dispose
of any of those shares without the prior written consent of Banc of America
Securities LLC, Deutsche Bank Securities Inc. and CIBC World Markets Inc. In
addition, upon completion of the offering, and based on options outstanding as
of July 9, 1999, there will be outstanding options to purchase a total of
approximately 29.6 million shares of our common stock under our stock option
plans, many of which options are currently exercisable. Sales of substantial
amounts of these shares in the public market or the prospect of such sales could
adversely affect the market price of our common stock and the market price of
the Exchangeable Shares. See "Principal and Selling Stockholders" and
"Underwriting."
CERTAIN ANTI-TAKEOVER PROVISIONS CONTAINED IN OUR CHARTER AND UNDER DELAWARE LAW
COULD IMPAIR A TAKEOVER ATTEMPT
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law prohibiting, under certain circumstances, publicly-held Delaware
corporations from engaging in business combinations with certain stockholders
for a specified period of time without the approval of the holders of
substantially all of its outstanding voting stock. Such provisions could delay
or impede the removal of incumbent directors and could make more difficult a
merger, tender offer or proxy contest involving us, even if such events could be
beneficial, in the short term, to the interests of the stockholders. In
addition, such provisions could limit the price that certain investors might be
willing to pay in the future for shares of our common stock. Our Certificate of
Incorporation and Bylaws contain provisions relating to the limitations of
liability and indemnification of our directors and officers, dividing our Board
of Directors into three classes of directors serving three-year terms and
providing that our stockholders can take action only at a duly called annual or
special meeting of stockholders. These provisions also may have the effect of
deterring hostile takeovers or delaying changes in control or management of us.
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USE OF PROCEEDS
Because the shares of our common stock offered hereunder will be issued upon
exchange of the exchangeable shares of our subsidiary JDS Uniphase Canada Ltd.,
none of which will be held by us, we will receive no proceeds upon the sale of
such common stock.
PLAN OF DISTRIBUTION
Concurrently with this offering, we are offering in an underwritten public
offering up to 10,000,000 shares of our common stock, of which a portion may
be offered by our subsidiary, JDS Uniphase Canada Ltd., as exchangeable shares
of its capital stock. The exchangeable shares of JDS Uniphase Canada Ltd. may
be exchanged on a one-for-one basis for shares of our common stock, which
shares are being registered by this prospectus. We have agreed to bear the
expenses of registration of the shares in this prospectus.
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INTERESTS OF NAMED EXPERTS
Michael C. Philips, a partner with Morrison & Foerster LLP, our counsel, also
serves as a Senior Vice President and General Counsel of JDS Uniphase.
LEGAL OPINIONS
The validity of the issuance of the shares of common stock offered pursuant to
this prospectus will be passed upon for JDS Uniphase by Morrison & Foerster,
LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Uniphase Corporation appearing in
Uniphase Corporation's Current Report on Form 8-K/A dated April 28, 1999, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Philips Optoelectronics, a Division of Koninklijke
Philips Electronics N.V. included in its Amendment No. 2 to the Current Report
on Form 8-K/A dated August 25, 1998, have been audited by Ernst & Young
Accountants, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such financial statements are
incorporated by reference in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The consolidated financial statements of JDS FITEL appearing in Uniphase
Corporation's definitive proxy statement on Form 14-A dated June 2, 1999, have
been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by JDS Uniphase under the Securities
Exchange Act of 1934 with the Commission and are incorporated into this
prospectus by reference:
a. Uniphase's Annual Report on Form 10-K for the year ended June 30,
1998;
b. Uniphase's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1998, December 31, 1998 and March 31, 1999;
c. Uniphase's Quarterly Reports on Form 10-Q/A for the quarters ended
September 30, 1998 and December 31, 1998;
d. Uniphase's Report on Form 8-K/A dated as of August 24, 1998;
e. Uniphase's Report on Form 8-K/A dated as of August 25, 1998;
f. Uniphase's Report on Form 8-K dated as of January 7, 1999;
g. Uniphase's Report on Form 8-K/A dated as of April 28, 1999;
h. JDS Uniphase's Report on Form 8-K dated as of July 9, 1999;
i. Uniphase's definitive Proxy Statement on Form 14-A filed on June 2,
1999; and
j. The description of Uniphase's common stock contained in
Uniphase's Registration Statement on Form 8-A filed with the
Commission on November 15, 1993.
Each document filed by JDS Uniphase pursuant to sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 subsequent to the date of this
prospectus and prior to the termination of the offering made by this prospectus
shall be deemed to be incorporated by reference into this prospectus and to be
part of this prospectus from the filing date of such documents. Any statement
contained in this prospectus or in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained into this prospectus (or in the applicable prospectus supplement) or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference into this prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
Copies of all documents which are incorporated into this prospectus by reference
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents) will be provided
without charge to each person, including any beneficial owner, to whom this
prospectus is delivered upon written or oral request. Please direct requests to
the corporate secretary at JDS Uniphase's corporate headquarters at 163
Baypointe Parkway, San Jose, California 95134 or by telephone at (408) 434-1800.
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WHERE YOU MAY FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act
of 1934, and accordingly we file reports, proxy statements and other information
with the Securities and Exchange Commission. Such reports, proxy statements and
other information filed can be inspected and copied at the Commission's Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C., 20549, and at the
following regional offices of the Commission: Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a web site
(http://www.sec.gov) containing reports, proxy and information statements and
other information of registrants, including us, that file electronically with
the Commission. In addition, our common stock is listed on the Nasdaq National
Market and similar information concerning us can be inspected and copied at the
offices of the National Association of Securities Dealers, Inc., 9513 Key West
Avenue, Rockville, Maryland 20850.
We have filed with the Commission a registration statement on Form S-3 (of which
this prospectus is a part) under the Securities Act of 1933, with respect to the
shares offered by this prospectus. This prospectus does not contain all of the
information set forth in the registration statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding us and the shares offered by this prospectus, reference is hereby made
to the registration statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this prospectus in
connection with the offer described in this prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by us. Neither the delivery of this prospectus nor any sale made
under this prospectus shall under any circumstances create any implication that
there has been no change in our affairs since the date of this prospectus or
since the date of any documents incorporated into this prospectus by reference.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the securities to which it relates, or an
offer or solicitation in any state to any person to whom it is unlawful to make
such offer in such state.
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