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Coherent, Inc. Reports First Fiscal Quarter Results
Record Bookings, Revenue and Operating Profit

SANTA CLARA, Calif., Jan. 27, 2011 /PRNewswire/ -- 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 first fiscal quarter ended January 1, 2011.

FINANCIAL HIGHLIGHTS


Three Months Ended


GAAP Results

(in millions except per share data)

Jan. 1,


Oct. 2,


Jan. 2,


2011


2010


2010


Bookings

$234.4


$192.5


$158.4


Net sales

$183.1


$166.4


$122.8


Net income

$19.1


$9.9


$4.2


Diluted EPS

$0.76


$0.39


$0.17









Non-GAAP Results

(in millions except per share data)











Net income

$21.4


$14.9


$5.1


Diluted EPS

$0.85


$0.59


$0.21





FIRST FISCAL QUARTER DETAILS

For the first fiscal quarter ended January 1, 2011, Coherent announced net sales of $183.1 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $19.1 million, or $0.76 per diluted share.  These results compare to net sales of $122.8 million and net income of $4.2 million, or $0.17 per diluted share, for the first quarter of fiscal 2010.  Non-GAAP net income for the first quarter of fiscal 2011 was $21.4 million, or $0.85 per diluted share, and non-GAAP net income for the first quarter of fiscal 2010 was $5.1 million, or $0.21 per diluted share. Please see the reconciliation of GAAP to non-GAAP results included at the end of our release.

Net sales for the fourth quarter of fiscal 2010 were $166.4 million and net income, on a GAAP basis, was $9.9 million, or $0.39 per diluted share.  Non-GAAP net income for the fourth quarter of fiscal 2010 was $14.9 million, or $0.59 per diluted share.  

Bookings received during the three months ended January 1, 2011 of $234.4 million increased 48.0% from $158.4 million in the same prior year period and increased by 21.8% compared to bookings of $192.5 million in the immediately preceding quarter.  The book-to-bill ratio was 1.28, resulting in backlog of $308.9 million at January 1, 2011 compared to a backlog of $262.0 million at October 2, 2010 and a backlog of $202.8 million at January 2, 2010.

"We continue to see strength in our markets as evidenced by record sales and bookings.  We are also realizing the benefits of our prior restructuring efforts, which combined with higher revenues and favorable mix led to record operating profit," said John Ambroseo, Coherent's President and Chief Executive Officer.  "Positive news continues to flow in the second fiscal quarter.  We have just received another substantial order for $32 million for lasers used in OLED and LCD manufacturing.  These systems are scheduled for delivery through the end of the calendar year. The combined impact of record orders, record backlog and the completion of the Hypertronics transaction result in a higher revenue outlook for fiscal 2011 of $760-$780 million," he added.

Coherent ended the quarter with cash and short term investments of $296.6 million, an increase of $33.8 million from cash and short term investments of $262.8 million at October 2, 2010.  

"In addition to the record performance on the income statement, we have done an outstanding job managing working capital and ended the first quarter with approximately $297 million in cash and cash investments.  We plan to deploy some of this cash on targeted acquisitions.  We have also received approval from our Board to repurchase up to $75 million in common stock over the next twelve months," 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 able 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


January 1,


October 2,


January 2,


2011


2010


2010







Net sales

$183,111


$166,398


$122,815

Cost of sales (A) (B) (D)

100,717


96,579


71,783

Gross profit

82,394


69,819


51,032

Operating expenses:






Research & development (A) (B) (D)

18,530


19,192


15,410

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

36,078


32,848


27,979

Intangibles amortization

2,095


2,044


1,961

Total operating expenses

56,703


54,084


45,350

Income from operations

25,691


15,735


5,682

Other income (expense), net(D)

1,754


(1,000)


792

Income before income taxes

27,445


14,735


6,474

Provision for income taxes

8,332


4,882


2,295

Net income

$19,113


$9,853


$4,179







Net income per share:






Basic

$0.77


$0.40


$0.17

Diluted

$0.76


$0.39


$0.17







Shares used in computation:






Basic

24,688


24,677


24,469

Diluted

25,268


25,240


24,678




(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


Jan. 1,


Oct. 2,


Jan. 2,


2011


2010


2010

Cost of sales

$244


$241


$219

Research & development

337


311


273

Selling, general & administrative

2,342


1,500


1,670

Impact on income from operations

$2,923


$2,052


$2,162


For the quarters ended January 1, 2011, October 2, 2010, and January 2, 2010, the impact on net income, net of tax was $2,248 ($0.09 per diluted sha re), $1,864 ($0.07 per diluted share) and $1,519 ($0.06 per diluted share), respectively.




(B)

Restructuring costs included in operating results are summarized below:




Restructuring costs

Three Months Ended


Jan. 1,


Oct. 2,


Jan. 2,


2011


2010


2010

Cost of sales

$-


$3,453


$309

Research & development

-


282


409

Selling, general & administrative

-


861


518

Impact on income (loss) from operations

$-


$4,596


$1,236


Restructuring costs for the quarter ended January 1, 2011 were not material to our results of operations and have not been broken out here or in our non-GAAP reconciliation. For the quarters ended October 2, 2010 and January 2, 2010, the impact on net income, net of tax was $3,209 ($0.13 per diluted share) and $813 ($0.03 per diluted share), respectively.




(C)

The quarter 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.  

(D)

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


Jan. 1,


Oct. 2,


Jan. 2,


2011


2010


2010

Cost of sales

$50


$ -


$32

Research & development

195


15


132

Selling, general & administrative

1,495


68


1,114

Impact on income from operations

$1,740


$83


$1,278


For the quarters ended January 1, 2011, October 2, 2010 and January 2, 2010, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $1,553, expense of $74 and income of $1,063, respectively.



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


January 1,

2011


October 2,

2010

ASSETS




Current assets:




Cash, cash equivalents and short-term investments

$296,574


$262,771

Restricted cash

625


625

Accounts receivable, net

107,938


110,211

Inventories

121,210


113,858

Prepaid expenses and other assets

66,874


55,052

Total current assets

593,221


542,517

Property and equipment, net

88,343


90,339

Other assets

158,393


170,248

Total assets

$839,957


$803,104





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term obligations

$         16


$         18

Accounts payable

40,869


39,737

Other current liabilities

99,649


92,165

Total current liabilities

140,534


131,920

Other long-term liabilities

80,447


79,721

Total stockholders' equity

618,976


591,463

Total liabilities and stockholders' equity

$839,957


$803,104




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


Three Months Ended


January 1,

2011


October 2,

2010


January 2,

2010


GAAP net income

$19,113


$9,853


$4,179


Stock-related compensation expense

2,248


1,864


1,519


Restructuring costs

--


3,209


813


Stock option investigation and litigation benefit

--


--


(1,438)


Non-GAAP net income

$21,361


$14,926


$5,073









Non-GAAP net income per diluted share

$  0.85


$  0.59


$  0.21





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 our fiscal 2011 revenue outlook, the strength of our markets and our plans for future acquisitions. 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 identify and then negotiate, sign and close any potential acquisition, 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

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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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