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Coherent, Inc. Reports Third Fiscal Quarter Results

SANTA CLARA, Calif., July 27, 2016 /PRNewswire/ -- Coherent, Inc. (NASDAQ: COHR), a world leader in providing lasers and laser-based technology for scientific, commercial and industrial customers, today announced financial results for its third fiscal quarter ended July 2, 2016.

Coherent Logo (PRNewsFoto/Coherent, Inc.)

 

FINANCIAL HIGHLIGHTS



Three Months Ended


Nine Months Ended


July 2, 2016


April 2, 2016


July 4, 2015


July 2, 2016


July 4, 2015

GAAP Results










(in millions except per share data)










Net sales

$

218.8



$

199.9



$

188.5



$

608.9



$

592.8


Net income

$

18.7



$

17.8



$

13.3



$

56.7



$

49.1


Diluted EPS

$

0.76



$

0.73



$

0.53



$

2.33



$

1.96












Non-GAAP Results










(in millions except per share data)









Net income

$

26.2



$

25.3



$

20.6



$

75.4



$

65.9


Diluted EPS

$

1.07



$

1.04



$

0.82



$

3.10



$

2.63


 

THIRD FISCAL QUARTER DETAILS

For the third fiscal quarter ended July 2, 2016, Coherent announced net sales of $218.8 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $18.7 million, or $0.76 per diluted share.  These results compare to net sales of $188.5 million and net income of $13.3 million, or $0.53 per diluted share, for the third quarter of fiscal 2015.

Non-GAAP net income for the third quarter of fiscal 2016 was $26.2 million, or $1.07 per diluted share.  Non-GAAP net income for the third quarter of fiscal 2015 was $20.6 million, or $0.82 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended July 2, 2016, April 2, 2016 and July 4, 2015 and the nine months ended July 2, 2016 and July 4, 2015 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income."

Net sales for the second quarter of fiscal 2016 were $199.9 million and net income, on a GAAP basis, was $17.8 million, or $0.73 per diluted share. Non-GAAP net income for the second quarter of fiscal 2016 was $25.3 million, or $1.04 per diluted share.

Ending backlog expected to ship in the next 12 months was $564.5 million at July 2, 2016, compared to a backlog of $469.3 million at April 2, 2016 and a backlog of $305.2 million at July 4, 2015.

As previously announced, on March 16, 2016, we entered into a definitive agreement to acquire Rofin-Sinar Technologies, Inc. ("Rofin"), one of the world's leading developers and manufacturers of high-performance industrial laser sources and laser-based solutions and components. The acquisition will be an all-cash transaction at a price of $32.50 per share of Rofin common stock for a total approximate offer value of $942 million before fees and transaction costs. The completion of the acquisition is subject to customary closing conditions, including regulatory approvals.

"Demand remained very strong in the third quarter following a record-setting second quarter.  As expected, we received significant orders for flat panel annealing lasers including a single order in excess of $100 million.  Orders for other FPD processes including film cutting and laser lift-off have also begun to flow.  Collectively, these orders demonstrate the value that Coherent is delivering to the FPD industry.  We are also very encouraged by continued strength in bioinstrumentation and materials processing.  Our OBIS™ portfolio and subsystem solutions have enabled global market share gains in research and clinical flow cytometry.  We have also captured several wins with our ultraviolet and ultrafast industrial lasers for metal and non-metal processing," said John Ambroseo, Coherent's President and Chief Executive Officer.  "We are making steady progress in the acquisition of Rofin-Sinar including clearance by U.S. regulators and approval by Rofin's shareholders.  The European regulatory process is underway and being handled at the European Commission. We continue to expect the transaction to close in the fourth calendar quarter of 2016 as previously announced," Ambroseo added.

Coherent ended the quarter with cash, cash equivalents and short term investments of $373.6 million, an increase of $12.6 million from cash, cash equivalents and short term investments of $361.1 million at April 2, 2016.

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 http://www.coherent.com/Investors/. For those who are not able to listen to the live broadcast, the call will be archived for approximately three months on the Company's website.  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, 2016


April 2, 2016


July 4, 2015


July 2, 2016


July 4, 2015











Net Sales

$

218,767



$

199,882



$

188,502



$

608,924



$

592,838


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

124,208



111,283



109,720



341,868



348,433


Gross profit

94,559



88,599



78,782



267,056



244,405


Operating expenses:










Research & development (A)(B)

21,441



20,955



21,270



61,536



61,467


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

46,256



40,940



36,154



123,970



113,777


Impairment of investment (C)





2,017





2,017


  Amortization of intangible assets (D)

 

574



700



647



1,975



2,009


   Total operating expenses

68,271



62,595



60,088



187,481



179,270


Income from operations

26,288



26,004



18,694



79,575



65,135


Other income (expense), net (B)

852



(1,780)



(608)



(1,150)



697


Income before income taxes

27,140



24,224



18,086



78,425



65,832


Provision for income taxes (G)

8,490



6,443



4,822



21,708



16,725


Net income

$

18,650



$

17,781



$

13,264



$

56,717



$

49,107












Net income per share:










Basic

$

0.77



$

0.74



$

0.54



$

2.35



$

1.98


Diluted

$

0.76



$

0.73



$

0.53



$

2.33



$

1.96












Shares used in computations:










Basic

24,192



24,137



24,737



24,108



24,794


Diluted

24,467



24,362



24,972



24,355



25,018


 

(A) 

Stock-based 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, 2016

April 2, 2016

July 4, 2015


July 2, 2016

July 4, 2015

Cost of sales

$

677


$

594


$

664



$

1,876


$

1,937


Research & development

610


610


529



1,646


1,415


Selling, general & administrative

4,402


4,183


3,372



11,299


10,385


Impact on income from operations

$

5,689


$

5,387


$

4,565



$

14,821


$

13,737


 


For the quarters ended July 2, 2016, April 2, 2016 and July 4, 2015, the impact on net income, net of tax was $4,101 ($0.17 per diluted share), $3,876 ($0.16 per diluted share) and $3,293 ($0.13 per diluted share), respectively. For the nine months ended July 2, 2016 and July 4, 2015, the impact on net income, net of tax was $11,371 ($0.47 per diluted share) and $10,732 ($0.43 per diluted share), respectively.



(B)  

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, 2016

April 2, 2016

July 4, 2015


July 2, 2016

July 4, 2015

Cost of sales

$

69


$

(67)


$

8



$

35


$

43


Research & development

330


(296)


24



166


184


Selling, general & administrative

1,619


(1,485)


174



836


1,200


Impact on income from operations

$

2,018


$

(1,848)


$

206



$

1,037


$

1,427


 


For the quarters ended July 2, 2016, April 2, 2016 and July 4, 2015, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $1,867, expense of $1,819 and income of $200, respectively. For the nine months ended July 2, 2016 and July 4, 2015, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $981 and $1,373, respectively.



(C)   

For the quarter ended July 4, 2015, the impairment of our investment in SiOnyx, Inc., a private corporation, was $2,017 ($1,274 net of tax ($0.05 per diluted share)).



(D) 

For the quarters ended July 2, 2016, April 2, 2016 and July 4, 2015, the impact of amortization of intangible expense was $2,032 ($1,400 net of tax ($0.06 per diluted share)), $2,077 ($1,422 net of tax ($0.06 per diluted share)) and $1,960 ($1,432 net of tax ($0.06 per diluted share)), respectively. For the nine months ended July 2, 2016 and July 4, 2015, the impact of amortization of intangible expense was $6,201 ($4,270 net of tax ($0.18 per diluted share)) and $6,176 ($4,579 net of tax ($0.18 per diluted share)), respectively. 



(E)    

The quarter ended July 2, 2016 and April 2, 2016 included $3,050 ($2,012 net of tax ($0.08 per diluted share)) and $3,584 ($2,264 net of tax ($0.09 per diluted share)) of costs related to the recently announced agreement to acquire Rofin. The nine month period ended July 2, 2016 included $6,634 ($4,276 net of tax ($0.18 per diluted share)) of costs related to the recently announced agreement to acquire Rofin.



(F)   

For the quarter ended July 4, 2015, the impact of an accrual related to an ongoing customs audit was $1,315 ($1,289 net of tax ($0.05 per diluted share)).



(G)  

The nine months ended July 2, 2016 and July 4, 2015 included $1,221 ($0.05 per diluted share) and $1,118 ($0.04 per diluted share) non-recurring tax benefit from the renewal of the R&D tax credit for fiscal 2015 and fiscal 2014.

 

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






July 2, 2016


October 3, 2015

ASSETS




Current assets:




Cash, cash equivalents and short-term investments

$

373,612



$

325,515


Accounts receivable, net

150,184



142,260


Inventories

200,171



156,614


Prepaid expenses and other assets

36,349



28,294


   Total current assets

760,316



652,683


Property and equipment, net

111,738



102,445


Other assets

210,256



213,819


   Total assets

$

1,082,310



$

968,947






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Short-term borrowings

$

20,000



$


Accounts payable

44,182



33,379


Other current liabilities

102,197



89,211


   Total current liabilities

166,379



122,590


Other long-term liabilities

44,985



49,939


Total stockholders' equity

870,946



796,418


   Total liabilities and stockholders' equity

$

1,082,310



$

968,947



Certain reclassifications have been made to prior year amounts to conform to the current year's presentation.

 

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






Three Months Ended


Nine Months Ended


July 2, 2016

April 2, 2016

July 4, 2015


July 2, 2016

July 4, 2015

GAAP net income

$

18,650


$

17,781


$

13,264



$

56,717


$

49,107


Stock-based compensation expense

4,101


3,876


3,293



11,371


10,732


Amortization of intangible assets

1,400


1,422


1,432



4,270


4,579


Acquisition-related costs

2,012


2,264




4,276



Customs audit



1,289




1,289


Non-recurring tax credit





(1,221)


(1,118)


Impairment of investment



1,274




1,274


Non-GAAP net income

$

26,163


$

25,343


$

20,552



$

75,413


$

65,863


Non-GAAP net income per diluted share

$

1.07


$

1.04


$

0.82



$

3.10


$

2.63


 

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 strength in bioinstrumentation and materials processing, and  the timing of the closing of the Rofin merger. 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, growth in demand for our products, the worldwide demand for flat panel displays, the demand for and use of the Company's products in commercial applications, our successful implementation of our customer design wins, our and our customers' exposure to risks associated with worldwide economic conditions, our customers' ability to cancel long-term purchase orders, 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 timely 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, worldwide government economic policies, the risk the merger with Rofin may not be completed in a timely manner or at all, the failure to satisfy the conditions to consummation of the merger, the occurrence of any event, change or circumstance that could give rise to termination of the merger agreement, the effect of the announcement of the merger on business relationships, operating result and business generally, challenges and costs of closing, integrating and achieving anticipated synergies, the risk that the proposed merger disrupts current plans and operations and potential employee retention difficulties, risks related to diverting management's attention from ongoing business operations, the outcome of any legal proceedings that may be instituted related to the merger agreement, and other risks identified in the Company's and Rofin'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 one of the world's leading providers of lasers and laser-based technology for scientific, commercial and industrial customers. Our common stock is listed on the Nasdaq Global Select Market and is part of the Russell 2000 and Standard & Poor's SmallCap 600 Index. For more information about Coherent, visit the Company's Web site at www.coherent.com for product and financial updates.

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SOURCE Coherent, Inc.

For further information: Kevin Palatnik, (408) 764-4110

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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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