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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 8, 2000
SDL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
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0-25688 77-0331449
(Commission File Number) (I.R.S. employer identification No.)
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80 ROSE ORCHARD WAY
SAN JOSE, CA 95134
(Address of principal executive offices)
(408) 943-9411
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 8, 2000, SDL, Inc., a Delaware corporation ("SDL") acquired all of
the outstanding share capital of Queensgate Instruments Limited ("Queensgate")
pursuant to a Share Purchase Agreement (the "Agreement") dated March 8, 2000
among SDL and the shareholders and optionholders of Queensgate. Queensgate is
located in Bracknell, United Kingdom and manufactures optical network monitoring
modules for long-haul terrestrial fiber optic transmissions systems. The
Agreement calls for the payment by SDL to the shareholders and optionholders of
Queensgate of consideration of up to $210 million consisting of an initial
payment of $3 million cash and $57 million of SDL Common Stock, valued at SDL's
average closing price for the 20 trading days ended February 28, 2000. The
Agreement also calls for contingent future payments of up to $150 million based
on Queensgate's pretax profits in 2000 and 2001. The outstanding options held by
Queensgate employees to purchase Queensgate stock have been assumed by SDL under
SDL's stock option plan. The SDL Common Stock to be received by the Queensgate
securityholders is quoted on the Nasdaq National Market.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The audited financial statements of Queensgate will be filed by
amendment to this Form 8-K on or before the date 75 days following the March 8,
2000 closing of the acquisition of all of the capital stock of Queensgate.
(b) Pro Forma Financial Information.
The unaudited pro forma financial information required by this Item
7(b) will be filed by amendment to this Form 8-K on or before the date 75 days
following the March 8, 2000 closing of the acquisition of all of the capital
stock of Queensgate.
(c) Exhibits.
The Exhibit Index appearing on page 4 is incorporated herein by
reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SDL, INC.
(The Registrant)
By: \s\ MICHAEL L. FOSTER
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Michael L. Foster
Chief Financial Officer
Dated: March 21, 2000
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EXHIBIT INDEX
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Exhibit
Number Description
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2.1(1) Share Purchase Agreement dated March 8, 2000 for the acquisition of all of the share
capital of Queensgate Instruments Limited
99.1 Press Release dated March 8, 2000
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(1) Schedules and exhibits have been omitted but will be furnished to the
Securities and Exchange Commission upon request.
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EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
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Contacts: FINANCIAL RELATIONS BOARD
SDL, INC. Lisa Horn Chainey (general info)
Donald R. Scifres, Chairman and CEO Susan Katz (investor contact)
Michael L. Foster, VP Finance and CFO Scott Marx (media)
(408) 943-9411 (415) 986-1591
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SDL, INC. ANNOUNCES THE ACQUISITION OF
QUEENSGATE INSTRUMENTS, LIMITED
EXPANDS SDL'S DWDM OFFERINGS TO NETWORK MONITORING MODULES
SAN JOSE, CALIFORNIA - MARCH 8, 2000 - SDL, Inc. (Nasdaq: SDLI) announced
today the acquisition of Queensgate Instruments, Limited. The agreement calls
for payments of up to $210 million consisting of initial payments of $3 million
of cash and $57 million of SDL stock valued at the average closing price for the
20 trading days ending February 28, 2000, and contingent payments of up to $150
million based on Queensgate's pretax profits in 2000 and 2001. Queensgate, a
privately held company located in Bracknell, U.K., is a leading manufacturer of
optical network monitoring modules for long haul terrestrial fiber optic
transmission systems. Optical network monitoring is expected to be a rapid
growth market in the future as fiber optic networks move towards higher channel
counts, dynamic adding and dropping of wavelength channels and, ultimately, all
optical networks.
The contingent consideration of up to $150 million, which would be paid in
SDL shares, is based on the amount by which Queensgate's pretax profit in the
period from closing until December 31, 2001 exceeds threshold levels. Queensgate
will continue to operate as a wholly owned subsidiary of SDL, Inc. In calendar
year 1999, Queensgate reported revenues of approximately $9 million and has
about 110 employees. Ken Reay, CEO and co-founder of Queensgate, will continue
with SDL as the Managing Director of the SDL subsidiary and report to Greg
Dougherty, chief operating officer of SDL.
"The acquisition of Queensgate demonstrates our strategy to diversify our
product lines by adding even more leading edge technologies," said Donald R.
Scifres, CEO and chairman of SDL, Inc. "Optical Network monitoring is expected
to be a critical function within future optical transmission systems. The move
to higher channel count, narrower channel spacing and greater optical
transparency in the transmission system is creating a rapid movement from
electronic monitoring to optical monitoring. Queensgate's optical network
monitoring business grew by more than 70% in 1999. Queensgate's solution to
optical network monitoring employs what we believe to be the best tunable filter
technology presently available. With their tunable filter technology, customers
can monitor up to 256 channels on 50 GHz spacings across the entire C and L
band. We are very excited about the combination of our companies and our
technologies as it will further expand our product offerings to our optical
networking customers."
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Ken Reay, CEO of Queensgate added, "By combining with SDL, we are teaming
with a market leader which has the financial and marketing resources we need to
fully exploit Queensgate's opportunity in optical network monitoring. We believe
these opportunities are large. Our network monitoring modules allow the
measurement of power in each channel, enabling our customers to dynamically
control amplifier gain and/or transmitter power. This capability enhances the
bandwidth and distance capabilities of each fiber system. By adding Queensgate's
line of network monitoring modules and its technology leadership in tunable
filters, SDL is able to offer a more complete set of solutions to the
customers."
ABOUT QUEENSGATE
Queensgate is a leading supplier of embedded optical network monitoring
products. Their products are used to monitor the power and performance of dense
wavelength division multiplexed systems. The core of their optical technology is
a precision tunable filter based on nanopositioning technology. Queensgate's
customers are the major telecommunications systems manufacturers worldwide where
their products are integrated into high channel count fiber optic transmission
systems.
ABOUT SDL
SDL's 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. They enable customers to meet the bandwidth needs
of increasing Internet, data, video and voice traffic by expanding their fiber
optic communications networks much more quickly and efficiently than would be
possible using conventional electronic and optical technologies. SDL's optical
products also serve a variety of non-communications applications, including
materials processing and printing. Additional information about SDL, Inc. is
available on the Internet at www.sdli.com.
Statements in this press release which are not historical including statements
regarding SDL's or management's intentions, hopes, beliefs, expectations,
representations, projections, plans or predictions of the future are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements include statements regarding the
furthering of the leading positions of SDL and Queensgate, the expected rapid
growth of the optical network monitoring market and its critical nature, the
enabling of SDL to provide expanded product offerings to meet DWDM customers
demand, the ability of the merged companies to successfully integrate and expand
their product lines, customer base and manufacturing capability and offer the
highest performance network monitoring modules and fully exploit expected large
growth opportunities in network monitoring, and the company's expectation to
retain Queensgate's managing director. It is important ot note that the
Company's actual results could differ materially from those in any such
forward-looking statements. Factors that could cause actual results to differ
materially include delay or failure to successfully incorporate the acquired
business, an inability to retain Queensgate's managing director, risks related
to uncertainties in or failure to meet customer product specifications and
market requirements, an inability to expand the company's product lines and
customer base, inability to develop new network monitoring products in a timely
manner, and the risk factors listed from time to time in the Company's SEC
reports including but not limited to, the annual report on Form 10-K and 10-K/A
for the year ended January 1, 1999, and the quarterly reports on Form 10-Q for
the quarters ended March 31, June 30 and September 30, 1999.
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