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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-32068
PROSPECTUS
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SDL, INC.
4,337,961 SHARES OF COMMON STOCK
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347,961 shares of our common stock have been issued to former
stockholders of Queensgate Instruments Limited ("Queensgate") and an additional
aggregate maximum of up to 3,990,000 shares of our common stock may be issued in
the future, pursuant to an earn out, to former stockholders and former
optionholders of Queensgate as payment for the acquisition by us of all of the
outstanding equity interests of Queensgate in March, 2000. The shares of our
common stock which may be issued in the future will, if issued, be in payment of
the Company's obligations under an earn-out provision in connection with the
acquisition of all of the outstanding equity interests of Queensgate. Some of
these holders may wish to sell shares of our common stock in the future, and
this prospectus allows them to do so. We will not receive any of the proceeds
from any sale of shares by these holders, but we have agreed to bear the
expenses of registration of the shares by this prospectus. Share numbers in this
prospectus are included on a post-split basis to reflect our 2-for-1 stock split
being effected in the form of a 100% stock dividend payable on March 13, 2000 to
holders of record of our stock on February 29, 2000.
Our stock is listed on the Nasdaq National Market under the symbol SDLI.
The last sale price of our common stock on the Nasdaq National Market on
March 17, 2000 was $216.875 per share.
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INVESTING IN THE COMMON STOCK INVOLVES A HIGH LEVEL OF INVESTMENT RISK. SEE
"RISK FACTORS" INCORPORATED BY REFERENCE ON PAGE 5 OF THIS PROSPECTUS
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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.
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March 20, 2000
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TABLE OF CONTENTS
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Page
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Available Information......................................................2
Incorporation of Certain Documents by Reference............................3
The Company................................................................5
Use of Proceeds............................................................5
Risk Factors...............................................................5
Selling Stockholders.......................................................7
Plan of Distribution.......................................................8
Experts...................................................................10
Legal Matters.............................................................10
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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 the Company or the selling stockholders. 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 the
affairs of SDL, Inc. since the date hereof or since the date of any documents
incorporated herein 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.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance with
the Act we file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). These 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 ours, that file
electronically with the Commission. In addition, the 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, as amended (the
"Securities Act"), with respect to the shares being offered by this prospectus.
This prospectus does not contain all of the information set forth in this
registration statement, some portions of which have been omitted as permitted by
the rules and regulations of the Commission. Statements contained in this
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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 of these statements is qualified in all respects by this reference and the
exhibits and schedules thereto. For further information regarding us and the
shares being 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
- SDL's Annual Reports on Form 10-K and Form 10-K/A for the year ended
January 1, 1999;
- SDL's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
- SDL's Definitive Proxy Statement dated April 9, 1999, filed in
connection with SDL's 1999 Annual Meeting of Stockholders held on May
13, 1999;
- SDL's Definitive Proxy Statement dated January 21, 2000, filed in
connection with SDL's Special Meeting of Stockholders held on February
28, 2000;
- SDL's Current Reports on Form 8-K each dated as of May 18, 1999 and
filed with the SEC on June 2, 1999 and June 29, 1999;
- SDL's Current Report on Form 8-K dated as of September 21, 1999 and
filed with the SEC on September 23, 1999;
- the description of SDL's common stock contained in SDL's Registration
Statement on Form 8-A filed on March 31, 1995 under Section 12 of the
Exchange Act; and
- the description of SDL's preferred stock rights contained in SDL's
Registration Statement on Form 8-A filed on November 7, 1997 under
Section 12 of the Exchange Act, including SDL's Registration Statement
on Form 8-A/A filed on March 19, 1999 updating such description.
Each document we file pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this prospectus and to be part hereof from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein (or in the applicable prospectus supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
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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 herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
prospectus is delivered upon written or oral request. Requests should be
directed to Michael L. Foster, Vice President - Finance, SDL, Inc., 80 Rose
Orchard Way, San Jose, California 95134-1365, telephone number: (408) 943-4344.
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THE COMPANY
SDL designs, manufactures and markets semiconductor lasers, fiber optic
related products and optoelectronic systems. Since 1996, the Company strategy
has strongly focused on providing solutions for optical communications. The
Company's optical communications products power the transmission of data, voice
and Internet information over fiber optic networks to meet the needs of
telecommunications, dense wavelength division multiplexing (DWDM), cable
television and satellite communications applications. The demand for DWDM
solutions accelerated significantly in 1999 due to the technology's unique
ability to expand network bandwidth and provide much faster transmission of
data, voice and video signals. With the qualification of the Company's new wafer
fabrication facility in the first half of 1998 and expansion of yields and
assembly and test capacity in 1999, the Company was able to successfully ramp
capacity and achieve significant revenue growth. Revenue from fiber optic
communications products increased by 179 percent in 1999 compared to 1998.
Revenue from SDL products were also able to capture a strong position in the
undersea fiber optic communications market, where Company revenue increased
from less than 1 percent total revenue in 1998 to 30 percent of total revenue in
the fourth quarter of 1999. SDL's optical products also serve a wide variety of
non-communications applications, including materials processing, printing,
medical and scientific instrumentation.
We were incorporated in California on March 29,1983 and in Delaware on
November 16, 1992. We were known as Spectra Diode Laboratories, Inc. until we
changed our name to SDL, Inc. in April 1993. References to "SDL" or the
"Company" refer to SDL, Inc., our subsidiaries and predecessor entities acquired
in previous acquisitions. Our headquarters are located at 80 Rose Orchard Way,
San Jose, California, 95134-1365, and our telephone number is (408) 943-9411.
USE OF PROCEEDS
All of the shares being offered under this prospectus are offered by the
Selling Stockholders, and we will not receive any of the proceeds from the sale
of the shares. This registration statement is intended to satisfy certain of our
obligations under a Share Purchase Agreement and Registration Rights Agreement
with the holders of all of the equity interests in Queensgate. Under that
agreement, we have agreed to pay expenses of registration of these shares under
United States federal and state securities laws.
RISK FACTORS
You should carefully consider the risk factors set forth in our reports
filed with the SEC which are incorporated by reference herein, in evaluating an
investment in the common stock. This prospectus and our documents filed with the
SEC and incorporated by reference herein include "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements in or incorporated by reference in this prospectus,
other than statements of historical fact, are "forward-looking statements" for
purposes of these provisions, including any statements of the plans and
objectives for future operations and any statement of assumptions underlying any
of the foregoing. In some cases, forward-looking statements can be identified by
the use of terminology such as "may," "will," "expects," "plans," "anticipates,"
"estimates," "potential," or "continue," or the negative thereof or other
comparable terminology. Our actual results could differ materially from these
projected or assumed in these forward-looking statements because of
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risks and uncertainties, including risks and uncertainties described in the risk
factors incorporated by reference in this prospectus. We assume no obligation to
update any such forward-looking statement or reason why actual results might
differ.
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SELLING STOCKHOLDERS
The following table provides the names of and the numbers of shares of
common stock beneficially owned by each Selling Stockholder, the number of
shares of common stock which may be issued to each Selling Stockholder in
satisfaction of the Company's obligations under the earn-out provisions of the
Share Purchase Agreement between the Company and the Selling Stockholders and
the number of shares of common stock beneficially owned by each Selling
Stockholder upon completion of the offering or offerings pursuant to 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. Under some circumstances, the respective
donees, pledgees and transferees or other successors in interest of the Selling
Stockholders may also sell the shares listed below as being held by the Selling
Stockholders. No Selling Stockholder beneficially owns one percent or greater of
the Company's outstanding common stock. All share numbers set forth in the table
are included on a post-split basis to reflect our 2-for-1 stock split being
effected in the form of a 100% stock dividend payable on March 13, 2000 to
stockholders of record on February 29, 2000.
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BENEFICIAL
BENEFICIAL OWNERSHIP PRIOR
OWNERSHIP TO OFFERING
PRIOR TO RESULTING FROM TOTAL
OFFERING ISSUANCE OF POTENTIAL
RESULTING MAXIMUM NUMBER BENEFICIAL BENEFICIAL
FROM ISSUANCE OF SHARES OWNERSHIP OWNERSHIP
OF SHARES ON PURSUANT TO THE PRIOR TO AFTER THE
MARCH 6, 2000 EARN-OUT OFFERING OFFERING
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STOCKHOLDERS:
3i Group plc (1).................... 126,470 857,414 983,884 0
Paul David Atherton................. 64,068 861,334 925,402 0
John Edward Herrin.................. 5,908 79,436 85,344 0
Thomas Rudolph Hicks................ 62,801 844,308 907,109 0
Newrick Kenneth Reay................ 64,068 861,334 925,402 0
James Ring.......................... 11,817 158,872 170,689 0
Phyllis Ring........................ 11,817 158,872 170,689 0
John Whiteley Ward.................. 1,012 13,604 14,616 0
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Total Stockholders Shares..... 347,961 3,835,174 4,183,135 0
OPTIONHOLDERS: 0
Christopher M. Shannon.............. -- 45,340 45,340 0
Ivor E. Thomas...................... -- 38,530 38,530 0
John H. Spensley.................... -- 9,028 9,028 0
Adrian G. Meldrum................... -- 4,514 4,514 0
David R. Jones...................... -- 6,748 6,748 0
Kent H. Wardley..................... -- 22,630 22,630 0
John E. Herrin...................... -- 3,388 3,388 0
John W. Ward........................ -- 3,388 3,388 0
Terrance C. Dines................... -- 3,388 3,388 0
Sean D. Staines..................... -- 2,234 2,234 0
Colin M. Chambers................... -- 2,234 2,234 0
Samuel Salloum...................... -- 2,234 2,234 0
Malachy McConnell................... -- 2,234 2,234 0
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Phil Rhead.......................... -- 2,234 2,234 0
Jayesh Patel........................ -- 2,234 2,234 0
Krzystof Pietraszewski.............. -- 2,234 2,234 0
Keith Gambles....................... -- 2,234 2,234 0
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Total Optionholders Shares...... -- 154,826 154,826 0
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Total of Stockholders
and Optionholders Shares.... 347,961 3,990,000 4,337,961 0
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(1) The Selling Stockholder is a public company.
None of the Selling Stockholders has had any material relationship with
us or our affiliates within the past three years. All of the shares of common
stock set forth above were "restricted securities" under the Securities Act
prior to this registration.
We agreed with the Selling Stockholders to file the registration
statement to register the resale of the shares. We agreed to prepare and file
all necessary amendments and supplements to the registration statement to keep
it effective until such time as all of the securities covered by this
registration statement may be freely sold by the Selling Stockholders without
registration pursuant to Rule 144(k) of the Securities Act assuming none of the
Selling Stockholders is an affiliate of SDL.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
holders of up to an aggregate maximum of 4,337,961 shares (adjusted for the
2-for-1 stock split payable on March 13, 2000) of our common stock. These shares
have been issued or may be issued in the future pursuant to an earn-out in
connection with the Share Purchase Agreement between SDL and the holders of all
of the equity interests in Queensgate. This prospectus has been prepared in
connection with registering these shares to allow for sales of these shares by
the applicable Selling Stockholders to the public as required by the terms of
the Share Purchase Agreement and a related Registration Rights Agreement. We
have registered the shares for sale pursuant to the terms of the Share Purchase
Agreement and the Registration Rights Agreement, but registration of these
shares does not necessarily mean that any of these shares will be offered and
sold by the holders thereof pursuant to this prospectus.
We will not receive any proceeds from this offering. The shares may be
sold from time to time to purchasers directly by any of the Selling
Stockholders, or under some circumstances, donees, pledgees, transferees or
other successors in interest ("Transferees") thereof. Alternatively, the Selling
Stockholders, or Transferees thereof, 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 thereof, and/or the
purchasers of the shares for whom they may act as agent. The Selling
Stockholders, or Transferees thereof, and any dealers or agents that participate
in the distribution of the shares may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of the shares by them
and any commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act of 1933.
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The Selling Stockholders are subject to the provisions of the Exchange
Act and the rules under it relating to stock manipulation, particularly
Regulation M. They are not to engage in any transaction in violation of these
provisions.
The Selling Stockholders may sell their shares directly to purchasers or
may use broker-dealers or agents to sell their shares. Broker-dealers or agents
who sell the shares may receive compensation in the form of commissions from the
Selling Stockholders or they may receive compensation from purchasers of the
shares for whom they acted as agents or to whom they sold the shares as
principal, or both. The compensation as to a particular broker-dealer or agent
will not be in excess of eight percent (8%) of the selling price of the shares
sold by the particular broker-dealer or agent. The Selling Stockholders and any
broker-dealers or agents that participate in the sale of their common stock may
be deemed to be "underwriters" within the meaning of the Securities Act. Any
commissions or profits received by these broker-dealers or agents on any resale
of the shares may be underwriting discounts and commissions under the Securities
Act of 1933, as amended. Selling Stockholders who are "underwriters" within the
meaning of the Securities Act, will be subject to the prospectus delivery
requirements of the Securities Act.
We will pay all fees and expenses incurred in connection with preparing
and filing this prospectus and any prospectus supplement and the registration
statement and any amendments thereto. The Selling Stockholders will pay any
brokerage commissions and similar selling expenses, if any, attributable in
connection with the sale of the shares of common stock.
We have agreed to keep the registration statement, of which this
prospectus and any subsequent prospectus supplements constitute a part,
effective until all of the securities covered by this registration statement may
be freely sold by the Selling Stockholders without registration pursuant to Rule
144(k) of the Securities Act, assuming none of the Selling Stockholders is an
affiliate of SDL. There can be no assurance that the Selling Stockholders will
sell all or any of the shares of common stock offered hereby.
Under the securities laws of certain states, the securities may be sold
in such states only through registered or licensed brokers or dealers.
Selling Stockholders may also resell all or a portion of their
securities in open market transactions in reliance upon Rule 144 under the
Securities Act. However, to do so, they must meet the criteria and conform to
the requirements of that Rule. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144A of the Securities Act,
as amended, may be sold under Rule 144A rather than pursuant to this prospectus.
A Selling Stockholder may not sell any common stock covered by the registration
statement by means other than as described in this prospectus.
We have entered into a Registration Rights Agreement for the benefit of
the Selling Stockholders to register their common stock under applicable United
States federal and state securities laws under various circumstances and at
various times. Pursuant to this Registration Rights Agreement, we have agreed to
indemnify the Selling Stockholders, and the Selling Stockholders have agreed to
indemnify us, for certain liabilities under the Securities Act and the Exchange
Act.
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If required, at a time a particular offer of the shares is made, a
prospectus supplement, will be distributed that will set forth the name and
names of any dealers or agents and any commissions and other terms constituting
compensation from the Selling Stockholders, or transferees thereof, and any
other required information. The shares may be sold from time to time at varying
prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed 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.
The shares may also be sold in one or more of the following
transactions: (a) block transactions (which may involve crosses) in which a
broker-dealer may sell all or a portion of such stock as agent but may position
and resell all or a portion of the block as principal to facilitate the
transaction; (b) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to a prospectus supplement; (c)
ordinary brokerage transactions and transactions in which any such broker-dealer
solicits purchasers; (d) sales "at the market" to or through a market maker or
into an existing trading market, on an exchange or otherwise, for such shares;
and (e) sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers. In effecting sales,
broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate.
EXPERTS
The consolidated financial statements of SDL, Inc. incorporated by
reference in SDL, Inc.'s Annual Report (Form 10-K/A) for the year ended January
1, 1999, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon incorporated by reference therein and incorporated
herein by reference. The supplemental consolidated financial statements of SDL,
Inc. appearing in SDL, Inc.'s Current Report on Form 8-K dated May 18, 1999 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report included therein and incorporated by reference elsewhere herein, which is
based in part on the report of Arthur Andersen, independent auditors. Such
consolidated financial statements and supplemental consolidated financial
statements referred to above are incorporated herein by reference in reliance
upon such reports given on the authority of such firms as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
pursuant to this prospectus is being passed upon for the Company by Morrison &
Foerster LLP, Palo Alto, California.
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