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Coherent, Inc. Reports Fourth Fiscal Quarter Results Including Record Bookings and Backlog

SANTA CLARA, Calif., Nov. 4, 2010 /PRNewswire-FirstCall/ -- Coherent, Inc. (Nasdaq: COHR), a world leader in providing photonics based solutions to the commercial and scientific research markets, today announced financial results for its fourth fiscal quarter ended October 2, 2010.

FINANCIAL HIGHLIGHTS



Three Months Ended


Year Ended

GAAP Results

(in millions except per share data)

Oct. 2,


July 3,


Oct. 3,


Oct. 2,


Oct. 3,

2010


2010


2009


2010


2009

Bookings

$192.5


$180.6


$133.4


$696.0


$419.2

Net sales

$166.4


$166.7


$107.6


$605.1


$435.9

Net income (loss)

$9.9


$14.4


$(4.5)


$36.9


$(35.3)

Diluted EPS

$0.39


$0.57


$(0.18)


$1.47


$(1.45)











Non-GAAP Results










(in millions except per share data)










Net income (loss)

$14.9


$16.8


$(0.9)


$48.1


$5.8

Diluted EPS

$0.59


$0.66


$(0.04)


$1.92


$0.24




FOURTH FISCAL QUARTER DETAILS

"Momentum continues to build in our business as evidenced by another round of record-setting orders.  Demand was led by flat panel display applications for LCD annealing systems and light guide panel manufacturing used in LED-based displays.  We also had a very strong quarter within our scientific business with record orders for Chameleon™ lasers used in biological imaging and for amplifiers favored in basic research," said John Ambroseo, Coherent's President and CEO.  "While our fourth fiscal quarter results were negatively impacted by two vendor component issues that are now behind us, we believe the current momentum will be sustained into fiscal 2011 such that the combination of our record backlog and future order stream should support organic, year-over-year revenue growth of 15-20%," he added.

For the fourth fiscal quarter ended October 2, 2010, Coherent announced net sales of $166.4 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $9.9 million ($0.39 per diluted share).  These results compare to net sales of $107.6 million and net loss of $4.5 million, or $0.18 per share, for the fourth quarter of fiscal 2009.  Non-GAAP net income for the fourth quarter of fiscal 2010 was $14.9 million, or $0.59 per diluted share, and non-GAAP net loss for the fourth quarter of fiscal 2009 was $0.9 million, or $0.04 per share. Please see the reconciliation of GAAP to non-GAAP results included at the end of our release.

Net sales for the third quarter of fiscal 2010 were $166.7 million and net income, on a GAAP basis, was $14.4 million ($0.57 per diluted share).  Non-GAAP net income for the third quarter of fiscal 2010 was $16.8 million, or $0.66 per diluted share.

Bookings received during the three months ended October 2, 2010 of $192.5 million increased 44.3% from $133.4 million in the same prior year period and increased by 6.6% compared to bookings of $180.6 million in the immediately preceding quarter.  The book-to-bill ratio was 1.16, resulting in backlog of $262.0 million at October 2, 2010 compared to a backlog of $230.2 million at July 3, 2010 and a backlog of $164.3 million at October 3, 2009.

For the fiscal year ended October 2, 2010, Coherent posted net sales of $605.1 million and net profit of $36.9 million ($1.47 per diluted share) on a GAAP basis compared to the prior year sales of $435.9 million and a net loss on a GAAP basis of $35.3 million ($1.45 per share).  Bookings received for the fiscal year ended October 2, 2010 were $696.0 million, compared to $419.2 million in bookings received during fiscal 2009.

Coherent ended the quarter with cash and short term investments of $262.8 million, an increase of $8.8 million from cash and short term investments of $254.0 million at July 3, 2010.   For the quarter ended October 2, 2010, we repurchased and retired 718,919 shares of outstanding common stock for a total of $26.6 million, excluding expenses.  For the fiscal year ended October 2, 2010, we repurchased and retired 1,195,829 shares of outstanding common stock for a total of $43.3 million, excluding expenses.

"As part of our strategy to increase our market share and customer support in Asia as well as our continuing efforts to manage costs, we have entered into a definitive agreement to acquire the business assets of privately-held Hypertronics in an all cash transaction.  A designer and manufacturer of laser-based tools for flat panel, storage, semiconductor and biomedical applications, Hypertronics has an engineering and integration center in Singapore and a low cost manufacturing hub in Penang, Malaysia.  These operations will serve as a nucleus for laser manufacturing and repair in Asia, thereby enhancing our industry leading service support.  We intend to also increase our global sourcing initiative through the establishment of an international procurement office," Ambroseo said.

CONFERENCE CALL REMINDER

The Company will host a conference call today to discuss its financial results at 1:30 P.M. Pacific (4:30 P.M. Eastern). A listen-only broadcast of the conference call can be accessed on the Company's website at either http://www.coherent.com/Investors/ or http://www.earnings.com. For those who are not available to listen to the live broadcast, the call will be archived for approximately three months on both web sites.  A transcript of management's prepared remarks can be found at http://www.coherent.com/Investors/.

Summarized statement of operations information is as follows (unaudited, in thousands except per share data):



Three Months Ended

Year Ended


October 2,


July 3,


October 3,


October 2,


October 3,


2010


2010


2009


2010


2009











Net sales                       

$166,398


$166,697


$107,593


$605,067


$435,882

Cost of sales (A) (B) (E)           

96,579


92,350


70,093


344,256


274,772

Gross profit                     

69,819


74,347


37,500


260,811


161,110

Operating expenses:










Research & development (A) (B) (E)

19,192


18,264


15,500


72,354


61,417

Selling, general & administrative (A) (B) (C) (E)

32,848


31,584


27,285


123,575


108,098

Impairment of goodwill (D)        

-


-


-


-


19,286

Intangibles amortization           

2,044


2,041


1,722


8,002


7,466

Total operating expenses       

54,084


51,889


44,507


203,931


196,267

Income (loss) from operations       

15,735


22,458


(7,007)


56,880


(35,157)

Other income (expense), net (E)     

(1,000)


(185)


1,803


1,099


(698)

Income (loss) before income taxes   

14,735


22,273


(5,204)


57,979


(35,855)

Provision for (benefit from) income taxes (F)

4,882


7,869


(709)


21,063


(536)

Net income (loss)                 

$9,853


$14,404


$(4,495)


$36,916


$(35,319)











Net income (loss) per share:










Basic                         

$0.40


$0.58


$(0.18)


$1.49


$(1.45)

Diluted                        

$0.39


$0.57


$(0.18)


$1.47


$(1.45)











Shares used in computation:










Basic                         

24,677


25,022


24,390


24,718


24,281

Diluted                        

25,240


25,438


24,390


25,091


24,281



(A)

Stock-related compensation expense included in operating results is summarized below (all footnote amounts are unaudited, in thousands):




Stock-related compensation expense

Three Months Ended

Year Ended


Oct. 2,


July 3,


Oct. 3,


Oct. 2,


Oct. 3,


2010


2010


2009


2010


2009

Cost of sales                

$241


$233


$93


$949


$753

Research & development       

311


309


250


1,174


933

Selling, general & administrative 

1,500


1,650


940


6,333


5,199

Impact on income (loss) from operations

$2,052


$2,192


$1,283


$8,456


$6,885





For the quarters ended October 2, 2010, July 3, 2010, and October 3, 2009, the impact on net income (loss), net of tax was $1,864 ($0.07 per diluted share), $1,590 ($0.06 per diluted share) and $1,308 ($0.05 per share), respectively. For the fiscal years ended October 2, 2010 and October 3, 2009, the impact on net income (loss), net of tax was $6,846 ($0.27 per diluted share) and $5,801 ($0.24 per share), respectively.



(B)

Restructuring costs included in operating results are summarized below:




Restructuring costs

Three Months Ended

Year Ended


Oct. 2,


July 3,


Oct. 3,


Oct. 2,


Oct. 3,


2010


2010


2009


2010


2009

Cost of sales

$3,453


$549


$743


$5,018


$9,539

Research & development

282


135


519


994


2,608

Selling, general & administrative

861


526


412


2,590


3,522

Impact on income (loss) from operations

$4,596


$1,210


$1,674


$8,602


$15,669





For the quarters ended October 2, 2010, July 3, 2010 and October 3, 2009, the impact on net income (loss), net of tax was $3,209 ($0.13 per diluted share), $786 ($0.03 per diluted share) and $1,054 ($0.04 per share), respectively. For the fiscal years ended October 2, 2010 and October 3, 2009, the impact on net income (loss), net of tax was $5,786 ($0.23 per diluted share) and $11,484 ($0.47 per share), respectively.


(C)

The quarter ended October 3, 2009 includes $192 ($121 net of tax ($0.00 per share)) of costs related to litigation resulting from our internal stock option investigation. The fiscal year ended October 2, 2010 includes $2,185 ($1,438 net of tax ($0.06 per diluted share)) net receipt from the settlement of litigation resulting from our internal stock option investigation.  The fiscal year ended October 3, 2009 includes $1,140 ($820 net of tax ($0.03 per share)) of costs related to litigation resulting from our internal stock option investigation.


(D)

The fiscal year ended October 3, 2009 includes a $19,286 ($0.79 per diluted share) non-cash charge for the impairment of all of the goodwill of our Commercial Lasers and Components segment.


(E)

Changes in deferred compensation plan liabilities are included in cost of sales and operating expenses while gains and losses on deferred compensation plan assets are included in other income (expense) net.  Deferred compensation expense (benefit) included in operating results is summarized below:




Deferred compensation expense (benefit)

Three Months Ended


Year  Ended


Oct. 2,


July 3,


Oct. 3,


Oct. 2,


Oct. 3,


2010


2010


2009


2010


2009

Cost of sales                

$ -


$(1)


$43


$34


$(98)

Research & development       

15


7


182


183


(593)

Selling, general & administrative 

68


(38)


1,476


1,349


(2,877)

Impact on income (loss) from operations

$83


$(32)


$1,701


$1,566


$(3,568)





For the quarters ended October 2, 2010, July 3, 2010 and October 3, 2009, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was expense of $74, expense of $341 and income of $1,435, respectively. For the fiscal years ended October 2, 2010 and October 3, 2009, the impact on other income (expense) net was income of $745 and expense of $4,326, respectively.


(F)

The quarter ended October 3, 2009 includes a $1,111 ($0.05 per share) increase in valuation allowances against deferred tax assets.  The fiscal year ended October 3, 2009 includes a tax charge of $2,666 ($0.11 per share) resulting from a recently enacted change in state tax law and a $1,111 ($0.05 per share) increase in valuation allowances against deferred tax assets.



Summarized balance sheet information is as follows (unaudited, in thousands):



October 2,

2010


October 3,

2009

ASSETS




Current assets:




Cash, cash equivalents and short-term investments                            

$262,771


$243,635

Restricted cash                                                         

625


-

Accounts receivable, net                                                 

110,211


74,235

Inventories                                                             

113,858


97,767

Prepaid expenses and other assets                                         

55,052


67,133

Total current assets                                                   

542,517


482,770

Property and equipment, net                                                 

90,339


98,792

Other assets                                                             

170,248


172,042

Total assets                                                         

$803,104


$753,604





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term obligations                                      

$         18


$        9

Accounts payable                                                       

39,737


21,639

Other current liabilities                                                   

92,165


64,694

Total current liabilities                                                  

131,920


86,342

Other long-term liabilities                                                    

79,721


91,691

Total stockholders' equity                                                   

591,463


575,571

Total liabilities and stockholders' equity                                     

$803,104


$753,604




Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, net of tax):



Three Months Ended

Year Ended


October 2,

2010


July 3,

2010


October 3,

2009


October 2,

2010


October 3,

2009

GAAP net income (loss)

$9,853


$14,404


$(4,495)


$36,916


$(35,319)

Stock-related compensation expense

1,864


1,590


1,308


6,846


5,801

Restructuring costs

3,209


786


1,054


5,786


11,484

Stock option investigation and litigation expense (benefit)

--


--


121


(1,438)


820

Impairment of goodwill

--


--


--


--


19,286

One-time tax expense

--


--


1,111


--


3,777

Non-GAAP net income (loss)

$14,926


$16,780


$(901)


$48,110


$5,849











Non-GAAP net income (loss) per diluted share

$  0.59


$  0.66


$  (0.04)


$  1.92


$  0.24




Note: Pro forma EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock compensation expenses, restructuring and acquisition charges and certain other non-operating income and expense items.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements, as defined under the Federal securities laws. These forward-looking statements include the statements in this press release that relate to year over year revenue growth and our global sourcing initiative. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.  Factors that could cause actual results to differ materially include risks and uncertainties, including, but not limited to, risks associated with any general market recovery, our successful implementation of our customer design wins, our and our customers' exposure to risks associated with worldwide economic slowdowns, the ability of our customers to forecast their own end markets, our ability to increase our sales volumes, our ability to accurately forecast future periods, customer acceptance and adoption of our new product offerings, level of government spending and continued purchases of our existing and new products and services, our ability to timely ship our products and our customers' ability to accept such shipments, our ability to have our customers qualify our product offerings, our ability to successfully integrate the acquired business assets and to expand our operations in Singapore and other risks identified in the Company's SEC filings.  Readers are encouraged to refer to the risk disclosures and critical accounting policies and estimates described in the Company's reports on Forms 10-K, 10-Q and 8-K, as applicable and as filed from time-to-time by the Company.  Actual results, events and performance may differ materially from those presented herein.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation to update these forward-looking statements as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Founded in 1966, Coherent, Inc. is a world leader in providing photonics based solutions to the commercial and scientific research markets and part of the Russell 2000. Please direct any questions to Leen Simonet, Chief Financial Officer at 408-764-4161. For more information about Coherent, visit the Company's Web site at http://www.coherent.com/ for product and financial updates.

SOURCE Coherent, Inc.

For further information: Leen Simonet of Coherent, Inc., +1-408-764-4161

Please Read Before Continuing

Risk factors: Except for the historical information contained here, many of the matters discussed in this Web site are forward-looking statements, based on expectations at the time they were made, that involve risks and uncertainties that could cause our results to differ materially from those expressed or implied by such statements. These risks are detailed in the “Factors That May Affect Future Results” section of our latest 10-K or 10-Q filing. Coherent assumes no obligation to update these forward-looking statements.


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