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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-25688
SDL, INC.
-----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE 77-0331449
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
80 ROSE ORCHARD WAY, SAN JOSE, CALIFORNIA 95134
----------------------------------------- ---------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (408) 943-9411
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
------------------- ------------------------------------
None N/A
Securities registered pursuant to Common Stock,
Section 12(g) of the Act: $0.001 par value
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements included or incorporated by reference in Part III of this Form 10-K/A
or any amendments to this Form 10-K/A. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based on the closing sale price of the Common Stock on March 15,
1996, as reported by Nasdaq was $157,242,518. Shares of Common Stock held by
each officer and director and by each person who owns 5% or more of the
outstanding Common Stock have been excluded from this computation in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not a conclusive determination for other purposes.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of March 15, 1996 the registrant had outstanding 7,270,686 shares of Common
Stock.
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EXPLANATORY NOTE
----------------
The undersigned Registrant hereby amends, as and to the extent set forth below,
the following items of its Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 filed on March 29, 1996 pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934:
PART III
* Item 10 - Directors and Executive Officers of the Registrant
* Item 11 - Executive Compensation
* Item 12 - Security Ownership of Certain Beneficial Owners and Management
* Item 13 - Certain Relationships and Related Transactions
* These items provide information required by the referenced Items of Form
10-K which information was previously provided by the Company to its
stockholders as part of its definitive proxy materials dated April 12, 1996 for
the annual meeting of stockholders held on May 13, 1996 but which information
was not physically included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 filed on March 29, 1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company and their ages as of the
date of this Report are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Donald R. Scifres........... 49 Chairman of the Board, Chief Executive
Officer and President
John P. Melton.............. 60 Vice President, Business Operations,
Secretary and Director
Gregory C. Lindholm......... 45 Vice President, Finance, Chief Financial
Officer and Treasurer
Richard R. Craig............ 40 Vice President, Communications Business
Unit
John G. Endriz.............. 54 Vice President, Engineering
David S. Evans.............. 61 Vice President, Marketing & Sales
Elizabeth A. Gurklys........ 35 Vice President, Human Resources
Thomas L. Koch.............. 40 Vice President, Research & Development
Hsing H. Kung*.............. 51 Vice President, Manufacturing
David F. Welch.............. 35 Vice President, Business Development
Keith B. Geeslin (1)........ 43 Director
Anthony B. Holbrook (1) 56 Director
Mark B. Myers (2)........... 57 Director
Frederic N. Schwettmann (2). 56 Director
</TABLE>
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
* Resigned effective May 31, 1996.
Dr. Scifres has been President, Chief Executive Officer and a member of the
Board of Directors of the Company since its inception in June 1983. In
connection with a recapitalization of the Company in 1992 (the
Recapitalization), Dr. Scifres became Chairman of the Board. Upon completing his
Ph.D. in 1972, Dr. Scifres joined Xerox Palo Alto Research Center. Dr. Scifres
earned a bachelor's degree in electrical engineering from Purdue University in
1968, and a master's degree and doctorate in electrical engineering from the
University of Illinois in 1970 and 1972, respectively. Dr. Scifres is a Fellow
of the Institute of Electrical and Electronic Engineers and the Optical Society
of America, holds over 100 U.S. patents and has won several industry awards,
including awards for commercialization of semiconductor OEIC and laser
technology.
Mr. Melton joined the Company as a consultant in 1987 and became Manager,
Business Operations of the Company in 1988. In connection with the
Recapitalization, Mr. Melton's title was changed to Vice President, Business
Operations
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and Mr. Melton became a Director of the Company. Mr. Melton is also Chairman of
SDL Optics. Mr. Melton earned a bachelor's degree in chemistry from the
University of Oklahoma in 1958, and an M.B.A. degree from Stanford University in
1963.
Mr. Lindholm joined the Company in September 1985 as Controller and Treasurer.
In connection with the Recapitalization, Mr. Lindholm's title was changed to
Vice President, Finance and Chief Financial Officer. Mr. Lindholm received a
B.A. degree in business administration from California State University,
Fullerton in 1975.
Dr. Craig joined the Company in September 1989 as Senior Staff Engineer in the
Engineering Department. He was appointed Communications Business Unit Director
upon creation of the unit in August 1994, and became Vice President,
Communications Business Unit in March 1995. Dr. Craig is also the President of
SDL Optics. Dr. Craig received a B.S. degree in physics from the University of
California, Berkeley in 1978 and a Ph.D. in electrical engineering from the
University of California, Los Angeles in 1985.
Dr. Endriz joined the Company in February 1988 as Engineering Manager. In
connection with the Recapitalization, Dr. Endriz's title was changed to Vice
President, Engineering. Dr. Endriz received an M.S. degree in electrical
engineering from the Massachusetts Institute of Technology in 1965 and a Ph.D.
in electrical engineering from Stanford University in 1970.
Mr. Evans joined the Company in June 1984 as Manager, Marketing and Sales. In
connection with the Recapitalization, Mr. Evans' title was changed to Vice
President, Marketing and Sales. Prior to joining the Company, Mr. Evans was
employed by Spectra-Physics from 1966 to 1984, serving as International Sales
Manager, responsible for worldwide sales and support activities for Spectra-
Physics' Laser Products Division.
Ms. Gurklys initially joined the Company in April 1990 as Human Resources
Representative. From March 1995 to June 1995, she was Human Resources Manager
of Quasar Engineering, Inc., an architectural design company. In July 1995, Ms.
Gurklys rejoined the Company as Director of Human Resources and became Vice
President, Human Resources in January 1996. Ms. Gurklys received a B.A. degree
in administrative studies from York University in 1989.
Dr. Koch joined the Company in February 1996 as Vice President of Research &
Development. From October 1989 to January 1996, he managed the research in
optoelectronic technology at Lucent Technologies, Inc., formerly AT&T Bell
Laboratories-Telecommunications. Dr. Koch received a B.A. degree in physics
from Princeton University in 1977 and a Ph.D. in applied physics from The
California Institute of Technology in 1982. Dr. Koch has received industry
awards for development of optical communication related technologies.
Dr. Kung joined the Company in October 1983 as Manufacturing Manager. In
connection with the Recapitalization, Dr. Kung's title was changed to Vice
President, Manufacturing. Dr. Kung received a B.S. degree in electrical
engineering from Chen Kung University in Taiwan in 1966, an M.S. degree from the
University of Texas in 1969, a Ph.D. in electrical engineering from the
University of California-Berkeley in 1974 and an M.B.A. from the University of
Santa Clara in 1978.
Dr. Welch joined the Company in January 1985 as a member of the technical
staff. In January 1991, he became Manager of the Research Department. In
connection with the Recapitalization, Dr. Welch's title was changed to Vice
President, Research & Development. Dr. Welch's title has recently changed to
Vice President--Business Development. Dr. Welch received a B.S. degree in
electrical engineering from the University of Delaware in 1981 and a Ph.D. in
electrical engineering from Cornell University in 1985. Dr. Welch recently
received the Outstanding Young Scientist Award from the Optical Society of
America in 1994 for his contributions to the commercialization of semiconductor
OEICs and lasers.
Mr. Geeslin has been a Director of the Company since July 1992. Mr. Geeslin is
Senior Vice President of The Sprout Group, where he has been employed since
1984. In addition, he is a direct or indirect general or limited partner of a
series of investment funds associated with The Sprout Group, a division of DLJ
Capital Corporation, a subsidiary of Donaldson, Lufkin & Jenrette, Inc. Mr.
Geeslin is also a director of Actel Corporation, Norand Corporation and several
privately held companies. Mr. Geeslin received a B.S.E.E. degree from Stanford
University in 1975, an M.A. degree in Philosophy,
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Politics and Economics from Oxford in 1977, and an M.S. degree in Engineering-
Economic Systems from Stanford in 1978.
Mr. Holbrook has been a Director of the Company since December 1995. Mr.
Holbrook has served as a director and Vice Chairman of Advanced Micro Devices
since August 1994. Mr. Holbrook joined AMD in 1973 as managing director of
computer interface and linear circuits. He served in a number of executive
capacities and in 1982 was named Executive Vice President and Chief Operating
Officer. In 1986, Mr. Holbrook was appointed President and Chief Operating
Officer, positions he held until May 1, 1989, at which time he was named Chief
Technical Officer. Mr. Holbrook retired in August 1994. Prior to joining AMD,
Mr. Holbrook held engineering management positions with Fairchild Semiconductor
and Computer Micro Technology Corporation.
Dr. Myers has been a Director of the Company since December 1992. Dr. Myers is
Senior Vice President, Corporate Research and Technology of Xerox Corporation,
responsible for worldwide research and technology. Since joining Xerox in 1964,
Dr. Myers has held several research and engineering positions. He was named Vice
President and Manager of the Webster Research Center in 1984. He was elected
Corporate Vice President in May 1989 and was named to his current position in
February 1992. Dr. Myers earned a B.S. degree in geology and physics from
Earlham College, Richmond, Indiana, in 1960 and a Ph.D. in material sciences
from Pennsylvania State University in 1964.
Dr. Schwettmann was appointed a member of the Board in October 1994. Dr.
Schwettmann has served as President, Chief Operating Officer and Director of
Read-Rite Corporation since May 1993. Dr. Schwettmann has held positions as
Chairman of the Advisory Committee for Integrated Systems at Stanford
University, member of the Board of the Applied Technology Institute for
Microelectronics and member of the Board of SEMATECH. He currently serves on the
Board of Actel Corporation. Prior to joining Read-Rite, Dr. Schwettmann worked
with Hewlett-Packard Company from 1976 to 1993, his most recent position being
Vice President and General Manager of the Circuit Technology Group. Dr.
Schwettmann received his B.Ch.E. degree from The City College of New York in
1961, his M.Ch.E. degree from New York University in 1964, and his Ph.D.Ch.E.
degree from The City University of New York in 1969.
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ITEM 11. EXECUTIVE COMPENSATION
Compensation Tables
The following tables set forth certain information concerning compensation
of and stock options held by the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------------------------------- ----------------------
Other Annual Securities
Name and Principal Position Year Salary($) Bonus($)(1) Compensation(2) Underlying Options
- --------------------------- ---- --------- ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Donald R. Scifres...................... 1995 $199,938 $136,283 $8,450 408,469
Chairman of the Board, 1994 188,005 92,361 6,285 --
Chief Executive Officer and President 1993 179,082 13,665 6,266 --
John P. Melton......................... 1995 $131,646 $ 44,148 $3,048 68,205
Vice President, Business 1994 116,910 29,648 2,346 --
Operations, Secretary and Director 1993 106,977 5,438 2,361 --
David S. Evans......................... 1995 $131,486 $ 41,666 $4,098 114,704
Vice President, Marketing & Sales 1994 129,574 25,379 2,325 --
1993 128,112 6,246 2,215 --
John G. Endriz......................... 1995 $130,156 $ 38,106 $2,775 50,150
Vice President, Engineering 1994 124,545 28,004 2,355 --
1993 119,076 12,058 2,280 --
Hsing H. Kung.......................... 1995 $128,898 $ 27,851 $4,245 67,992
Vice President, Manufacturing 1994 124,983 24,879 3,125 --
1993 120,496 6,093 3,011 __
</TABLE>
(1) Includes bonus amounts in the year earned, rather than in the year in which
each such bonus amount was paid or is to be paid.
(2) Represents matching contributions paid by the Company under the Company's
401(k) plan. For Dr. Scifres only, also includes reimbursement of certain
expenses as specified in his Employment Agreement, including tax
preparation, legal expenses, physical exam and additional life insurance.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of
Securities % of Total Potential Realizable Value at
Underlying Options to Exercise Assumed Annual Rates of Stock
Options Employees in Price Per Expiration Price Appreciation for
Name Granted(1) Fiscal Year Share Date Option Term
---- ---------- ------------ --------- ---------- ------------------------------
5% 10%
-------- --------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Scifres.......... 36,550 8.3% $16.00 3/16/05 $161,569 $357,026
John P. Melton............. 13,600 3.1% $16.00 3/16/05 $ 60,119 $132,847
David S. Evans............. 9,600 2.2% $16.00 3/16/05 $ 42,437 $ 93,774
John G. Endriz............. 11,600 2.6% $16.00 3/16/05 $ 51,278 $113,311
Hsing H. Kung.............. 9,600 2.2% $16.00 3/16/05 $ 42,437 $ 93,774
</TABLE>
(1) Each of these options vest over four years at a rate of one-fourth of the
shares subject to the option per year and have a ten-year term.
5
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Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
($) Fiscal Year End (#)(2) Fiscal Year End($)(3)(4)
Shares Acquired Realized(1) ------------------------- -------------------------
Name on Exercise (#) (%) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Donald R. Scifres............ 42,245 $1,341,093 371,919 / 36,550 $8,734,629 / $292,400
John P. Melton............... 41,333 $1,212,315 54,605 / 13,600 $1,282,415 / $108,800
David S. Evans............... -- -- 105,104 / 9,600 $2,456,899 / $ 76,800
John G. Endriz............... 109,679 $1,858,629 38,550 / 11,600 $ 888,930 / $ 92,800
Hsing H. Kung................ -- -- 58,392 / 9,600 $1,371,354 / $ 76,800
</TABLE>
- -----------------------
(1) The value realized upon the exercise of stock options represents the
positive spread between the exercise price of stock options and the last
reported sale price per share for the Company's Common Stock on the
exercise date.
(2) The number of shares underlying exercisable options which are not subject
to repurchase by the Company is 293,417, 38,650, 85,819, 12,262 and 46,596
for Dr. Scifres, Mr. Melton, Mr. Evans, Dr. Endriz and Dr. Kung,
respectively.
(3) The value of "in-the-money" stock options represents the positive spread
between the exercise price of options and the last reported sale price per
share for the Company's Common Stock on December 31, 1995.
(4) The value of shares underlying exercisable options which are not subject to
repurchase by the Company is $6,890,986, $907,707, $2,015,485, $287,977 and
$1,094,321 for Dr. Scifres, Mr. Melton, Mr. Evans, Dr. Endriz and Dr.
Kung, respectively.
6
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of March 29,
1996 by (a) each stockholder known by the Company to be the beneficial owner of
more than five percent of the Company's Common Stock, (b) each director of the
Company, (c) each Named Executive Officer who beneficially owns shares and (d)
all executive officers and directors who beneficially own shares, as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage of Shares
Name of Beneficial Owner Beneficially Owned Beneficially Owned
- ----------------------- ------------------ --------------------
<S> <C> <C>
Donald R. Scifres (2) 831,800 11.0%
Keystone Small Growth Fund 500,000 6.9%
ML Venture Partners II 379,155 5.2%
JP Morgan & Co., Inc. 373,870 5.1%
Keith B. Geeslin(2) 183,904 2.5%
Hsing H. Kung(2) 175,955 2.4%
David S. Evans (2) 157,518 2.1%
John P. Melton(2) 110,684 1.5%
John G. Endriz(2) 58,524 *
Mark B. Myers(2) 5,525 *
Frederic N. Schwettmann(2) 2,691 *
Anthony B. Holbrook(2) -- *
All executive officers and directors as
a group (13 persons)(2) 1,770,755 22.4%
</TABLE>
- ---------------------------
* Less than one percent.
(1) Percent beneficially named is based on approximately 7,271,774 total shares
of Common Stock outstanding as of March 29, 1996.
(2) Includes options, both vested and which will become vested, or for which
the Company's repurchase option will lapse, during the sixty day period
following March 29, 1996, in the following amounts: Dr. Scifres, 303,524
shares; Mr. Geeslin, 2,266 shares; Dr. Kung, 56,670 shares; Mr. Evans,
103,140 shares; Mr. Melton, 37,427 shares; Dr. Endriz, 28,600 shares; Dr.
Myers, 5,525 shares; Dr. Schwettmann, 2,691 shares; Mr. Holbrook, 0 shares;
and all executive officers, directors and nominees for director as a group,
628,095 shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SALES TO AND AGREEMENTS WITH XEROX
During 1995 and the three months ended March 29, 1996, the Company sold
$66,500 and $3,000, respectively, of products to Xerox Corporation ("Xerox").
Mark B. Myers, a Director of the Company, is a Senior Vice President of Xerox.
The Company believes that these sales were made on terms no less favorable to
the Company than would have been obtained from unaffiliated third parties.
In October 1992, the Company entered into an agreement with Xerox to
perform certain research and development regarding semiconductor laser arrays.
The research and development is funded by NIST in the aggregate amount of
$8,919,000, scheduled to be paid over five years, with matching funds scheduled
to be contributed by the Company and Xerox in the aggregate amount of $3,147,000
and $6,152,00, respectively, over the same period, subject to specified
adjustments in the event NIST reduces funding. The Company and Xerox will
jointly own the technology conceived and reduced to practice, developed or
authored under the agreement, and each party will have certain exclusive rights
to such technology for use in its
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specified field. The Company and Xerox will license to each other certain other
technologies related to such technology. In July 1992, the Company entered into
a related one-year cooperative agreement, subsequently renewed in November 1993
and renewed for two years in November 1994, with Xerox and NIST pursuant to
which the parties agreed to the conduct of and funding for the aforementioned
research.
As part of the agreement relating to its formation, the Company entered
into a technology agreement with Spectra-Physics, Inc. ("Spectra-Physics") and
Xerox (the "Technology Agreement"), pursuant to which Xerox granted the Company
certain rights to certain technical information and patents held or developed by
Xerox prior to September 30, 1989. In March 1995, SDL agreed to a limited
transfer of technology, as provided in the Technology Agreement, intended only
for Xerox' internal research and development, laser printing, image projection
and other activities in the document processing field. Spectra-Physics has
filed suit against the Company alleging, among other things, that Spectra-
Physics and Opto Power have rights to Company patented and non-patented
technology developed through at least June 1993. As part of this suit, Xerox
has also sued the Company.
In May 1995, the Company, Xerox and several other parties created a
consortium to research and develop laser diodes that emit blue light. The
project is funded by ARPA in the aggregate amount of $4,136,000, scheduled to be
paid over two years, with matching funds schedules to be contributed by the
Company and Xerox in the aggregate amount of $979,000 and $846,000,
respectively, over the same period. The consortium members shall retain the
entire right, title and interest throughout the world to each subject invention.
All principal members of the consortium, including the Company and Xerox, agreed
to provide cross licenses to the other principal members on all patents which
may issue for any invention developed under the agreement.
SALES TO READ-RITE CORPORATION
During 1995 the Company sold $383,500 of products to Read-Rite Corporation.
No products were sold to Read-Rite Corporation during the three months ended
March 29, 1996. Frederic N. Schwettmann, a Director of the Company, is
President, Chief Operating Officer and a Director of Read-Rite Corporation. The
Company believes that these sales were made on terms no less favorable to the
Company than could have been obtained from unaffiliated third parties.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to
Form 10-K filed on Form 10-K/A to be signed on its behalf by the undersigned,
thereunto duly authorized.
SDL, INC.
Date: June 12, 1996 By /s/ Gregory C. Lindholm
_________________________________________
Gregory C. Lindholm
Vice President, Finance and Chief Financial
Officer
8
