Uniphase to Acquire Philips Semiconductor Laser Business.

SAN JOSE, Calif.--(BUSINESS WIRE)--April 21, 1998--Uniphase Corporation (NASDAQ:UNPH) announced the signing of a letter of intent with Royal Philips Electronics of the Netherlands to acquire Philips Optoelectronics B.V., a Philips business unit based in Eindhoven, The Netherlands. Philips Optoelectronics designs, develops, manufactures and markets high performance semiconductor lasers, photodiodes and components for telecommunications, CATV, multimedia, and printing markets.

The letter of intent provides that the parties will now proceed with the negotiation of final agreements for an anticipated closing in June, 1998, subject to certain closing conditions including clearances under the Hart-Scott-Rodino Antitrust Improvements Act and other governmental approvals. The acquisition would be accounted for as a purchase and a significant portion of the purchase price would result in a charge by Uniphase for in-process R&D during the current quarter. Such a charge would cause the Company to report a net loss for the quarter and fiscal year ending June 30, 1998.

The letter of intent provides for Uniphase to acquire the entire Philips Optoelectronics business unit. Philips Optoelectronics manufactures several semiconductor laser products for telecommunications and other markets including products used in dense wavelength division multiplexing (DWDM). The Philips Optoelectronics unit has approximately 300 employees and will continue to operate in Eindhoven. In addition, a new 60,000 square foot semiconductor fabrication facility under construction in Eindhoven would be leased to Uniphase.

The Philips Optoelectronics research and development staff consists of approximately 50 employees, of whom 20 hold Ph.D. degrees in disciplines related to optoelectronics. The tangible and intangible assets of Philips Optoelectronics, including approximately 70 U.S. and European patents, will be included in the transaction.

"With this acquisition, Uniphase takes a major step towards achieving our goal of providing a complete solution to our customers in the telecommunications and CATV industries. These customers are seeking suppliers with broad component portfolios which can provide complete solutions for their most demanding applications," said Kevin Kalkhoven, Uniphase Chairman and Chief Executive Officer. "We believe that the business we are acquiring from Philips fits extremely well with Uniphase's existing optoelectronics product lines for the telecommunications and CATV markets. We also believe that Philips Optoelectronics products can provide not only near-term product revenue, but also a number of products under development could represent substantial opportunities for the future. In addition, we are looking forward to a long and mutually rewarding relationship with Philips, which will become a substantial Uniphase stockholder following the closing."

"Philips has made substantial investments in this business to achieve a leading technology position and market share in the rapidly expanding markets for high performance WDM lasers, electro-absorption modulators and optical amplifiers and modulators," said Willem Haverkamp, Director of Business Electronics at Philips. "We believe that our best opportunity to capitalize on this investment is to combine it with Uniphase's industry leading technologies and products and thereby provide a compelling line of advanced, integrated products for these rapidly growing markets."

Product Background

High capacity fiber optic networks require five major categories of components.

Semiconductor lasers are the light sources for the signals transmitted along the fiber at wavelengths of 1310nm or 1550nm. In addition, semiconductor pump lasers provide the energy for increasing transmission signal strength when used as part of an optical fiber amplifier.

Modulators impart the information to the laser signal being transmitted through the use of alternative modulation methods: direct, whereby the laser is switched on and off, and external, in which a continuous light beam from the laser is interrupted by a modulation material to create the light sequence necessary for the signal. For very long distances (more than 600 kilometers), WDM systems employ lithium niobate, and for shorter distances semiconductor lasers with integrated electro-absorption modulators are typically used.

Amplifiers boost the light signal to increase the distance the signal can travel. Two forms of amplification can be used - erbium-doped fiber amplifiers, pumped by 980nm and 1480nm lasers, and gallium arsenide semiconductor amplifiers.

Fiber technology ensures accurate and consistent wavelength spacing. In dense WDM systems the fiber technology of choice is fiber Bragg gratings.

Receivers using gallium indium arsenide photodiodes ensure quality reception of the signal at its destination.

Uniphase currently provides the majority of the world's volume of 980nm semiconductor laser pumps and lithium niobate modulators and the Company is establishing production of fiber Bragg gratings. With the addition of the Philips Optoelectronics product lines the Company's product portfolio would include all of the components described above. The Philips Optoelectronics portfolio includes 1550nm, 1310nm and 1480nm lasers, electro absorption modulators, semiconductor optical amplifiers and receivers. In addition, the Philips Optoelectronics unit manufactures visible light lasers for markets served by the Uniphase Lasers Division.

Philips Optoelectronics History and Capabilities

Philips commenced research in gallium aluminum arsenide lasers at the Philips Research Laboratories in Eindhoven in 1971. By 1978, development of semiconductor lasers for optical disk systems was underway. In 1980, Philips commenced telecommunications laser research on 1310nm lasers, and began manufacturing these devices for commercial use in 1985.

In 1992, Philips Optoelectronics became the supplier of high-speed telecommunication lasers for the world's first commercial 2.5 gigabits/second SDH systems at the Barcelona Olympic Games.

Philips Optoelectronics research into semiconductor optical amplifiers resulted in its being awarded the Photonics Circle of Excellence Award in 1996. Today Philips Optoelectronics is a leading supplier of laser technology to both the telecommunications and CATV markets and is regarded as one of the leading laser research organizations in the world.

Philips Optoelectronics Manufacturing Capabilities

-- Integrated semiconductor wafer fabrication facility using MOVPE 

process technology, with a new wafer fabrication facility under

construction

-- Packaging assembly lines and testing facilities

-- ISO9001 qualified since 1994

-- Advanced logistics: flexible handling of full DWDM range

-- World Class Manufacturing

Uniphase Corporation is an optoelectronics company that designs, develops, manufactures and markets fiber optic telecommunications components and modules, laser subsystems and laser-based semiconductor wafer defect examination and analysis equipment. The Company's telecommunications subsidiaries design, develop, manufacture and market semiconductor lasers, high-speed external modulators and transmitters for fiber optic networks in the long-haul telecommunications and cable television industries.

The Company's laser division designs, develops, manufactures and markets laser subsystems for a broad range of OEM applications which include biotechnology, industrial process control and measurement, graphics and printing, and semiconductor equipment. The Company's Ultrapointe subsidiary designs and markets advanced laser-based systems for semiconductor wafer defect examination and analysis.

Uniphase employs approximately 700 people worldwide and has its headquarters in San Jose, Calif. Its stock is traded on the Nasdaq National Market under the symbol UNPH. The Uniphase website address is www.uniphase.com.

Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies, with sales of over US$ 39 billion in 1997. It is a global leader in color television sets, lighting, home telephony products, electric shavers, and recorded music (Polygram). Its 264,700 employees in more than 60 countries are active in the areas of semiconductors and components, consumer products, professional products and systems, lighting and software and services. Philips is quoted on the NYSE, London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at www.news.philips.com

The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements include, but are not limited to, statements regarding Uniphase's expectations, anticipations, hopes, beliefs, intentions or strategies regarding the future, the terms of the proposed Philips acquisition and the possible benefits to Uniphase as a result of that acquisition. Actual results could differ materially from those projected in any forward-looking statements as a result of a number of factors, including those detailed in the "Risk Factors" as set forth from time to time in the Uniphase Reports on Form 10-K, 10-Q and Annual Reports to Stockholders. The forward-looking statements are made as of the date hereof and Uniphase assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ materially from those projected in the forward-looking statements.

CONTACT: Uniphase

Kevin N. Kalkhoven, Chairman and CEO, 408/434-1800

or

Anthony R. Muller, Senior VP and CFO, 408/570-2065

or

Philips Media Relations

Jeremy Cohen, 31 20 597 7213