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

SANTA CLARA, Calif., May 3, 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 second fiscal quarter ended April 2, 2011.

FINANCIAL HIGHLIGHTS



Three Months Ended


Six Months Ended

GAAP Results

(in millions except per share data)

April 2,


Jan. 1,


April 3,


April 2,


April 3,

2011


2011


2010


2011


2010

Bookings

$236.7


$234.4


$164.5


$471.1


$322.9

Net sales

$200.9


$183.1


$149.2


$384.0


$272.0

Net income

$23.7


$19.1


$8.5


$42.8


$12.7

Diluted EPS

$0.92


$0.76


$0.34


$1.68


$0.51











Non-GAAP Results

(in millions except per share data)

















Net income

$21.5


$21.4


$11.3


$42.8


$16.4

Diluted EPS

$0.83


$0.85


$0.45


$1.68


$0.66




SECOND FISCAL QUARTER DETAILS

For the second fiscal quarter ended April 2, 2011, Coherent announced net sales of $200.9 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $23.7 million, or $0.92 per diluted share.  These results compare to net sales of $149.2 million and net income of $8.5 million, or $0.34 per diluted share, for the second quarter of fiscal 2010.  Non-GAAP net income for the second quarter of fiscal 2011 was $21.5 million, or $0.83 per diluted share and excludes a gain of $6.1 million net of tax, or $0.24 per diluted share, primarily due to a currency translation benefit related to the dissolution of our Finland operations.  Non-GAAP net income for the second quarter of fiscal 2010 was $11.3 million, or $0.45 per diluted share. For a complete overview of the differences between GAAP and non-GAAP results, please see the reconciliation table included at the end of our release.

Net sales for the first quarter of fiscal 2011 were $183.1 million and net income, on a GAAP basis, was $19.1 million, or $0.76 per diluted share.  Non-GAAP net income for the first quarter of fiscal 2011 was $21.4 million, or $0.85 per diluted share.  

Bookings received during the second fiscal quarter ended April 2, 2011 of $236.7 million increased 43.9% from $164.5 million in the same prior year period and increased by 1.0% compared to bookings of $234.4 million in the immediately preceding quarter.  The book-to-bill ratio was 1.18, resulting in backlog of $348.9 million at April 2, 2011 compared to a backlog of $308.9 million at January 1, 2011 and a backlog of $217.2 million at April 3, 2010.

As of April 2, 2011, year-to-date sales were $384.0 million and net profit was $42.8 million ($1.68 per diluted share) on a GAAP basis compared to the prior year period sales of $272.0 million and a net profit on a GAAP basis of $12.7 million ($0.51 per diluted share).   Bookings received for the six month period ended April 2, 2011 were $471.1 million, compared to $322.9 million in bookings received during the same period a year ago.

"Our record-setting bookings and revenue in the second quarter underscore the continuing strength in our commercial markets, especially in the microelectronics business.  Demand for lasers used in the packaging of smartphones and the production of flat panel displays remains very high.  We are expanding capacity and adding inventory to fulfill these orders for the balance of fiscal 2011 and into fiscal 2012," said John Ambroseo, Coherent's President and Chief Executive Officer.

Coherent ended the quarter with cash and short term investments of $270.6 million, a decrease of $26.0 million from cash and short term investments of $296.6 million at January 1, 2011, primarily due to the acquisition of Hypertronics' assets and the repurchase of 454,682 shares of its common stock.

"We continue to focus on design wins and fortifying our product portfolio.  We will be introducing several new additions to our solid-state, OPSL and laser tools product lines at upcoming tradeshows," Ambroseo added.  "With a record backlog of approximately $349 million and a solid business outlook, we are raising our fiscal 2011 revenue estimate to $790-805 million, which corresponds to 31-33% annual growth," he concluded.

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

Six Months Ended


April 2,


Jan. 1,


April 3,


April 2,


April 3,


2011


2011


2010


2011


2010











Net sales                         

$200,880


$183,111


$149,157


$383,991


$271,972

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

112,111


100,717


83,544


212,828


155,327

Gross profit                       

88,769


82,394


65,613


171,163


116,645

Operating expenses:










Research & development (A) (B) (D)  

21,246


18,530


19,488


39,776


34,898

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

38,979


36,078


31,164


75,057


59,143

Intangibles amortization             

2,257


2,095


1,956


4,352


3,917

Total operating expenses         

62,482


56,703


52,608


119,185


97,958

Income from operations               

26,287


25,691


13,005


51,978


18,687

Other income (expense), net (D) (E)     

9,325


1,754


1,492


11,079


2,284

Income before income taxes           

35,612


27,445


14,497


63,057


20,971

Provision for income taxes (F)         

11,889


8,332


6,017


20,221


8,312

Net income                         

$23,723


$19,113


$8,480


$42,836


$12,659











Net income per share:










Basic                           

$0.94


$0.77


$0.34


$1.72


$0.51

Diluted                          

$0.92


$0.76


$0.34


$1.68


$0.51











Shares used in computation:










Basic                           

25,246


24,688


24,704


24,967


24,587

Diluted                          

25,832


25,268


24,996


25,550


24,837




(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

Six Months Ended


April 2,


Jan. 1,


April 3,


April 2,


April 3,


2011


2011


2010


2011


2010

Cost of sales

$344


$244


$256


$588


$475

Research & development

363


337


280


700


553

Selling, general & administrative

2,454


2,342


1,514


4,796


3,184

Impact on income from operations

$3,161


$2,923


$2,050


$6,084


$4,212




For the quarters ended April 2, 2011, January 1, 2011, and April 3, 2010, the impact on net income, net of tax was $2,312 ($0.09 per diluted share), $2,248 ($0.09 per diluted share) and $1,873 ($0.07 per diluted share), respectively. For the six months ended April 2, 2011 and April 3, 2010, the impact on net income, net of tax was $4,560 ($0.18 per diluted share) and $3,392 ($0.14 per diluted share), respectively.



(B) Restructuring costs included in operating results are summarized below:




Restructuring costs

Three Months Ended

Six Months Ended


April 2,


Jan. 1,


April 3,


April 2,


April 3,


2011


2011


2010


2011


2010

Cost of sales

$-


$ -


$707


$ -


$1,016

Research & development

-


-


168


-


577

Selling, general & administrative

-


-


685


-


1,203

Impact on income from operations

$-


$-


$1,560


$-


$2,796




Restructuring costs for the quarters ended April 2, 2011 and 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 six months ended April 3, 2010, the impact on net income, net of tax was $1,791 ($0.07 per diluted share).



(C) The six months ended April 3, 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

Six Months Ended


April 2,


Jan. 1,


April 3,


April 2,


April 3,


2011


2011


2010


2011


2010

Cost of sales

$53


$ 50


$4


$103


$36

Research & development

211


195


30


406


162

Selling, general & administrative

1,621


1,495


204


3,116


1,318

Impact on income from operations

$1,885


$1,740


$238


$3,625


$1,516




For the quarters ended April 2, 2011, January 1, 2011 and April 3, 2010, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $3,117, income of $1,553 and income of $97 respectively. For the six months ended April 2, 2011 and April 3, 2010, the impact on other income (expense) net was income of $4,670 and net income of $1,160, respectively.



(E) The three and six months ended April 2, 2011 includes $5,918 ($6,113 net of tax ($0.24 per diluted share)) gain from the dissolution of our Finland operations, of which a charge of $593 is recorded in cost of sales and a benefit of $6,511 is recorded in other income (expense), net.



(F) The three and six months ended April 2, 2011 includes a $1,549 ($0.06 per diluted share) increase in valuation allowances against deferred tax assets.



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



April 2,

2011


October 2,

2010

ASSETS




Current assets:




Cash, cash equivalents and short-term investments                 

$270,623


$262,771

Restricted cash                                              

625


625

Accounts receivable, net                                       

134,121


110,211

Inventories                                                 

139,219


113,858

Prepaid expenses and other assets                              

74,794


55,052

Total current assets                                         

619,382


542,517

Property and equipment, net                                      

98,069


90,339

Other assets                                                  

170,371


170,248

Total assets                                               

$887,822


$803,104





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term obligations                           

$ 15


$ 18

Accounts payable                                            

47,119


39,737

Other current liabilities                                         

125,366


92,165

Total current liabilities                                       

172,500


131,920

Other long-term liabilities                                         

78,590


79,721

Total stockholders' equity                                        

636,732


591,463

Total liabilities and stockholders' equity                         

$887,822


$803,104




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



Three Months Ended

Six Months Ended


April 2,
2011


Jan. 1,

2011


April 3,
2010


April 2,

2011


April 3,

2010

GAAP net income              

$23,723


$19,113


$8,480


$42,836


$12,659

Stock option investigation and litigation expense (benefit)

--


--


--


--


(1,438)

Stock-related compensation expense

2,312


2,248


1,873


4,560


3,392

Gain on Finland dissolution       

(6,113)


--


--


(6,113)


--

One-time tax expense           

1,549


--


--


1,549


--

Restructuring costs             

--


--


978


--


1,791

Non-GAAP net income          

$21,471


$21,361


$11,331


$42,832


$16,404











Non-GAAP net income per diluted share

$  0.83


$  0.85


$  0.45


$  1.68


$  0.66




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, demand for our products, the timing of fulfillment of orders and the introduction of new products. 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, continued availability of products and materials from our suppliers, 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, +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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