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Coherent, Inc. Reports Third Fiscal Quarter Results

SANTA CLARA, Calif., July 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 third fiscal quarter ended July 2, 2011.

FINANCIAL HIGHLIGHTS



Three Months Ended


Nine Months Ended

GAAP Results

(in millions except per share data)

July 2,


April 2,


July 3,


July 2,


July 3,



2011


2011


2010


2011


2010


Bookings           

$228.5


$236.7


$180.6


$699.6


$503.5


Net sales           

$210.9


$200.9


$166.7


$594.9


$438.7


Net income           

$19.0


$23.7


$14.4


$61.9


$27.1


Diluted EPS          

$0.74


$0.92


$0.57


$2.42


$1.08













Non-GAAP Results

( in millions except per share data)




















Net income           

$21.1


$21.5


$16.8


$64.0


$33.2


Diluted EPS          

$0.83


$0.83


$0.66


$2.50


$1.33





THIRD FISCAL QUARTER DETAILS

For the third fiscal quarter ended July 2, 2011, Coherent announced net sales of $210.9 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $19.0 million, or $0.74 per diluted share.  These results compare to net sales of $166.7 million and net income of $14.4 million, or $0.57 per diluted share, for the third quarter of fiscal 2010.  Non-GAAP net income for the third quarter of fiscal 2011 was $21.1 million, or $0.83 per diluted share.  Non-GAAP net income for the third quarter of fiscal 2010 was $16.8 million, or $0.66 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 second quarter of fiscal 2011 were $200.9 million and net income, on a GAAP basis, was $23.7 million, or $0.92 per diluted share.  Non-GAAP net income for the second quarter of fiscal 2011 was $21.5 million, or $0.83 per diluted share.  

Bookings received during the third fiscal quarter ended July 2, 2011 of $228.5 million increased 26.5% from $180.6 million in the same prior year period and decreased by 3.5% compared to bookings of $236.7 million in the immediately preceding quarter.  The book-to-bill ratio was 1.08, resulting in backlog of $368.7 million at July 2, 2011 compared to a backlog of $348.9 million at April 2, 2011 and a backlog of $230.2 million at July 3, 2010.

As of July 2, 2011, year-to-date sales were $594.9 million and net profit was $61.9 million ($2.42 per diluted share) on a GAAP basis compared to the prior year period sales of $438.7 million and a net profit on a GAAP basis of $27.1 million ($1.08 per diluted share).   Bookings received for the nine month period ended July 2, 2011 were $699.6 million, compared to $503.5 million in bookings received during the same period a year ago.

"Our third quarter yielded solid operating results and higher sequential orders in the materials processing, instrumentation and scientific markets.  While orders in microelectronics were lower following a record-setting second quarter, we did receive the largest order in the company's history for approximately $77 million for current and next-generation excimer lasers to be used in flat panel display manufacturing.  We booked $22 million of this order in the third quarter.  The remainder will be booked over the next two quarters," said John Ambroseo, Coherent's President and Chief Executive Officer.  "Fulfillment of these FPD orders and the subsequent service revenues requires capacity expansion.  We are investing $25 million to add production space in Gottingen and establish an excimer tube refurbishment facility in Korea," he added.

Coherent ended the quarter with cash and short term investments of $267.4 million, a decrease of $3.2 million from cash and short term investments of $270.6 million at April 2, 2011. During the quarter, we repurchased 285,600 shares of common stock.

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

Nine Months Ended


July 2,


April 2,


July 3,


July 2,


July 3,


2011


2011


2010


2011


2010











Net sales                         

$210,882


$200,880


$166,697


$594,873


$438,669

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

120,720


112,111


92,350


333,548


247,677

Gross profit                       

90,162


88,769


74,347


261,325


190,992

Operating expenses:










Research & development (A) (B) (D)  

21,738


21,246


18,264


61,514


53,162

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

37,983


38,979


31,584


113,040


90,727

Intangibles amortization             

1,851


2,257


2,041


6,203


5,958

Total operating expenses         

61,572


62,482


51,889


180,757


149,847

Income from operations               

28,590


26,287


22,458


80,568


41,145

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

766


9,325


(185)


11,845


2,099

Income before income taxes           

29,356


35,612


22,273


92,413


43,244

Provision for income taxes (F)         

10,334


11,889


7,869


30,555


16,181

Net income                         

$19,022


$23,723


$14,404


$61,858


$27,063











Net income per share:










Basic                           

$0.76


$0.94


$0.58


$2.47


$1.09

Diluted                          

$0.74


$0.92


$0.57


$2.42


$1.08











Shares used in computation:










Basic                           

25,066


25,246


25,022


25,000


24,732

Diluted                          

25,587


25,832


25,438


25,562


25,037




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


Stock-related compensation expense

Three Months Ended

Nine Months Ended


July 2,


April 2,


July 3,


July 2,


July 3,


2011


2011


2010


2011


2010

Cost of sales           

$369


$344


$233


$957


$708

Research & development  

384


363


309


1,084


862

Selling, general & administrative

2,686


2,454


1,650


7,482


4,834

Impact on income from operations

$3,439


$3,161


$2,192


$9,523


$6,404




For the quarters ended July 2, 2011, April 2, 2011, and July 3, 2010, the impact on net income, net of tax was $2,112 ($0.08 per diluted share), $2,312 ($0.09 per diluted share) and $1,590 ($0.06 per diluted share), respectively. For the nine months ended July 2, 2011 and July 3, 2010, the impact on net income, net of tax was $6,672 ($0.26 per diluted share) and $4,982 ($0.19 per diluted share), respectively.

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


Restructuring costs

Three Months Ended

Nine Months Ended


July 2,


April 2,


July 3,


July 2,


July 3,


2011


2011


2010


2011


2010

Cost of sales              

$-


$ -


$549


$ -


$1,565

Research & development     

-


-


135


-


712

Selling, general & administrative

-


-


526


-


1,729

Impact on income from operations

$-


$-


$1,210


$-


$4,006




Restructuring costs for the quarters ended July 2, 2011 and April 2, 2011 and the nine months ended July 2, 2011 were not material to our results of operations and have not been broken out here or in our non-GAAP reconciliation. For the three and nine months ended July 3, 2010, the impact on net income, net of tax was $786 ($0.03 per diluted share) and $2,577 ($0.10 per diluted share), respectively.

(C) The nine months ended July 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

Nine Months Ended


July 2,


April 2,


July 3,


July 2,


July 3,


2011


2011


2010


2011


2010

Cost of sales

$13


$53


$(1)


$116


$35

Research & development    

80


211


7


486


169

Selling, general & administrative

488


1,621


(38)


3,604


1,280

Impact on income from operations

$581


$1,885


$(32)


$4,206


$1,484




For the quarters ended July 2, 2011, April 2, 2011 and July 3, 2010, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $216, income of $3,117 and expense of $341, respectively. For the nine months ended July 2, 2011 and July 3, 2010, the impact on other income (expense) net was income of $4,886 and net income of $819, respectively.

(E) The nine months ended July 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 nine months ended July 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):  



July 2,

2011


October 2,

2010

ASSETS




Current assets:




Cash, cash equivalents and short-term investments     

$267,439


$262,771

Restricted cash                                 

-


625

Accounts receivable, net                          

143,400


110,211

Inventories                                     

149,465


113,858

Prepaid expenses and other assets                 

84,466


55,052

Total current assets                            

644,770


542,517

Property and equipment, net                          

103,249


90,339

Other assets                                      

172,374


170,248

Total assets                                   

$920,393


$803,104





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term obligations               

$ 14


$ 18

Accounts payable                               

45,287


39,737

Other current liabilities                             

130,559


92,165

Total current liabilities                           

175,860


131,920

Other long-term liabilities                             

82,093


79,721

Total stockholders' equity                            

662,440


591,463

Total liabilities and stockholders' equity             

$920,393


$803,104




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



Three Months Ended

Nine Months Ended


July 2, 2011


April 2, 2011


July 3, 2010


July 2,

2011


July 3,

2010

GAAP net income       

$19,022


$23,723


$14,404


$61,858


$27,063

Stock option investigation and litigation expense (benefit)

--


--


--


--


(1,438)

Stock-related compensation expense

2,112


2,312


1,590


6,672


4,982

Gain on Finland dissolution

--


(6,113)


--


(6,113)


--

One-time tax expense    

--


1,549


--


1,549


--

Restructuring costs     

--


--


786


--


2,577

Non-GAAP net income   

$21,134


$21,471


$16,780


$63,966


$33,184











Non-GAAP net income per diluted share

$  0.83


$  0.83


$  0.66


$  2.50


$  1.33




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 the timing of booking of orders, timing, amount and use of capital investments. 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 conditions, the ability of our customers to forecast their own end markets, our ability to accurately forecast future periods, customer acceptance and adoption of our new product offerings, 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, 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, for Coherent, Inc.

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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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