8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): November 5, 2019

COHERENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-33962	94-1622541
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification Number)

5100 Patrick Henry Drive

Santa Clara, CA 95054

(Address of principal executive offices, including zip code)

(408) 764-4000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	COHR	The NASDAQ Stock Market LLC
		Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02.     Results of Operations and Financial Condition

On November 5, 2019, Coherent, Inc. (“Coherent”) issued a press release regarding its financial results for the fiscal quarter and year ended September 28, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.

NON-GAAP FINANCIAL MEASURES: Coherent utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. Coherent considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. Ongoing operations are the ongoing revenue and expenses of the business, excluding certain costs and expenses that Coherent does not anticipate to recur on a quarterly basis or which do not reflect ongoing operations. While Coherent uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Coherent does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, Coherent believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. In assessing the overall health of its business, Coherent excluded items in the following general categories described below:

Net income and net income per diluted share.  Coherent has excluded certain recurring and non-recurring items in order to enhance investors’ understanding of its ongoing operations and to compare these results across multiple fiscal periods, particularly where a one-time event may have an impact in one fiscal quarter and not another.

Each of the non-GAAP financial measures described above should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in Coherent’s financial results for the foreseeable future. In addition, other companies, including other companies in Coherent’s industry, may calculate non-GAAP financial measures differently than Coherent does, limiting their usefulness as a comparative tool.

ITEM 9.01.    Financial Statements and Exhibits

(d)    Exhibits

Exhibit No.	Description
99.1	Press Release Dated November 5, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	COHERENT, INC.
Date: November 5, 2019
	By: /s/ Kevin Palatnik
	Kevin Palatnik
	Executive Vice President and
	Chief Financial Officer

EX-99.1

Exhibit 99.1

November 5, 2019

Press Release No. 1463

For Immediate Release:

Coherent, Inc. Reports Fourth Fiscal Quarter and Year-End Results

SANTA CLARA, CA, November 5, 2019 -- Coherent, Inc. (NASDAQ, COHR), one of the world’s leading providers of lasers, laser-based technologies and laser-based system solutions in a broad range of scientific, commercial and industrial applications, today announced financial results for its fourth fiscal quarter and fiscal year ended September 28, 2019.

FINANCIAL HIGHLIGHTS

	Three Months Ended							Year Ended
	Sep. 28, 2019		Jun. 29, 2019			Sep. 29, 2018		Sep. 28, 2019		Sep. 29, 2018
GAAP Results
(in millions except per share data)
Net sales	$	335.5	$	339.2		$	461.5	$	1,430.6	$	1,902.6
Net income (loss)	$	0.6	$	(3.1	)	$	73.2	$	53.8	$	247.4
Diluted EPS	$	0.03	$	(0.13	)	$	2.99	$	2.22	$	9.95
Non-GAAP Results
(in millions except per share data)
Net income	$	21.4	$	32.1		$	78.8	$	143.8	$	338.9
Diluted EPS	$	0.89	$	1.33		$	3.22	$	5.92	$	13.64

FOURTH FISCAL QUARTER AND FISCAL YEAR DETAILS

For the fourth fiscal quarter ended September 28, 2019, Coherent announced net sales of $335.5 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $0.6 million, or $0.03 per diluted share.

These results compare to net sales of $461.5 million and net income of $73.2 million, or $2.99 per diluted share, for the fourth quarter of fiscal 2018, and net sales of $339.2 million and net loss of $(3.1) million, or $(0.13) per diluted share, for the third quarter of fiscal 2019.

Non-GAAP net income for the fourth quarter of fiscal 2019 was $21.4 million, or $0.89 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2018 was $78.8 million, or $3.22 per diluted share. Non-GAAP net income for the third quarter of fiscal 2019 was $32.1 million, or $1.33 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended September 28, 2019, June 29, 2019 and September 29, 2018 and for the fiscal years ended September 28, 2019 and September 29, 2018 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income".

Exhibit 99.1

For the fiscal year ended September 28, 2019, Coherent posted net sales of $1,430.6 million and net income on a GAAP basis of $53.8 million, or $2.22 per diluted share, compared to the prior year net sales of $1,902.6 million and net income on a GAAP basis of $247.4 million, or $9.95 per diluted share. For the fiscal year ended September 28, 2019, Coherent posted net income on a non-GAAP basis of $143.8 million, or $5.92 per diluted share, compared to the prior year net income on a non-GAAP basis of $338.9 million, or $13.64 per diluted share.

“We had mixed market results in our fourth fiscal quarter.  We took another step forward in the display market with the receipt of an order covering a new OLED fab with deliveries scheduled for the current fiscal year.  Our semicap business outperformed the market in fiscal 2019 and we expect it to do the same in fiscal 2020.  The instrumentation business capped off a record year and prospects look encouraging on a go-forward basis,” said John Ambroseo, Coherent’s President and Chief Executive Officer.  “The book-to-bill for materials processing market was positive in the fourth quarter, but a number of factors continue to weigh on the market including weak PMIs, a struggling auto market and continuing price pressure.  The market will eventually right itself, but we expect it to be a slow and steady recovery rather than a revenue snapback.  We’re taking the opportunity to enhance our product portfolio via R&D investments and improve operational efficiency through our previously announced cost reduction programs, which are proceeding as originally outlined,” he added.

CONFERENCE CALL REMINDER

Coherent 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 and a transcript of management's prepared remarks can be accessed on the investor relations page of the company's website at investors.coherent.com. 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 investor relations page.

Exhibit 99.1

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

		Three Months Ended									Year Ended
		Sep. 28, 2019			Jun. 29, 2019			Sep. 29, 2018			Sep. 28, 2019			Sep. 29, 2018
Net sales	$	335,464		$	339,170		$	461,548		$	1,430,640		$	1,902,573
Cost of sales(A)(B)(D)(F)(G)		227,069			241,167			271,646			944,175			1,071,882
Gross profit		108,395			98,003			189,902			486,465			830,691
Operating expenses:
Research & development(A)(B)(G)		27,258			30,692			32,108			117,353			132,586
Selling, general & administrative(A)(B)(E)(G)		70,551			67,686			72,758			272,257			293,632
Other impairment charges(C)		—			—			—			—			766
Amortization of intangible assets(D)		2,012			6,782			2,527			13,760			10,690
Total operating expenses		99,821			105,160			107,393			403,370			437,674
Income (loss) from operations		8,574			(7,157	)		82,509			83,095			393,017
Other income (expense), net(B)(G)		(5,258	)		(4,386	)		(5,827	)		(23,047	)		(31,462	)
Income (loss) from continuing operations, before income taxes		3,316			(11,543	)		76,682			60,048			361,555
Provision (benefit) for income taxes(H)		2,692			(8,444	)		3,497			6,223			114,195
Net income (loss) from continuing operations		624			(3,099	)		73,185			53,825			247,360
Loss from discontinued operations, net of income taxes		—			—			—			—			(2	)
Net income (loss)	$	624		$	(3,099	)	$	73,185		$	53,825		$	247,358
Net income (loss) per share:
Basic earnings per share	$	0.03		$	(0.13	)	$	3.02		$	2.23		$	10.07
Diluted earnings per share	$	0.03		$	(0.13	)	$	2.99		$	2.22		$	9.95
Shares used in computations:
Basic		23,919			24,054			24,236			24,118			24,572
Diluted		24,118			24,054			24,490			24,279			24,851

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

Stock-based compensation expense		Three Months Ended						Year Ended
		Sep. 28, 2019		Jun. 29, 2019		Sep. 29, 2018		Sep. 28, 2019		Sep. 29, 2018
Cost of sales	$	1,240	$	1,231	$	1,229	$	4,880	$	4,403
Research & development		763		794		869		2,990		3,247
Selling, general & administrative		7,928		7,630		6,571		28,596		25,088
Impact on income (loss) from operations	$	9,931	$	9,655	$	8,669	$	36,466	$	32,738

Exhibit 99.1

For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact on net income (loss), net of tax was $9,091 ($0.38 per diluted share), $8,243 ($0.34 per diluted share) and $7,414 ($0.30 per diluted share), respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact on net income, net of tax was $31,520 ($1.30 per diluted share) and $27,665 ($1.11 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							Year Ended
		Sep. 28, 2019		Jun. 29, 2019			Sep. 29, 2018		Sep. 28, 2019		Sep. 29, 2018
Cost of sales	$	80	$	(19	)	$	34	$	27	$	151
Research & development		234		(24	)		303		42		836
Selling, general & administrative		1,889		87			1,579		1,419		4,222
Impact on income (loss) from operations	$	2,203	$	44		$	1,916	$	1,488	$	5,209

For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact on other income net from gains or losses on deferred compensation plan assets was income of $2,146, $12 and $1,957, respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact on other income net from gain or losses on deferred compensation plan assets was income of $1,335 and $5,047, respectively.

(C) For the fiscal year ended Sep. 29, 2018, other impairment charges were $766 ($766 net of tax ($0.03 per diluted share)).

(D) Amortization of intangibles is included in cost of sales and operating expenses as summarized below:

Amortization of intangibles		Three Months Ended						Year Ended
		Sep. 28, 2019		Jun. 29, 2019		Sep. 29, 2018		Sep. 28, 2019		Sep. 29, 2018
Cost of sales	$	11,723	$	11,844		11,874	$	47,700		49,349
Amortization of intangible assets		2,012		6,782		2,527		13,760		10,690
Impact on income (loss) from operations	$	13,735	$	18,626	$	14,401	$	61,460	$	60,039

For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact on net income (loss), net of tax was $9,832 net of tax ($0.41 per diluted share), $13,278 net of tax ($0.55 per diluted share) and $10,220 net of tax ($0.42 per diluted share), respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact on net income, net of tax was $43,950 net of tax ($1.81 per diluted share) and $42,783 net of tax ($1.72 per diluted share), respectively.

(E) For the fiscal quarter and year ended Sep. 29, 2018, the impact of costs related to acquisitions included $206 ($206 net of tax ($0.01 per diluted share)) and $735 ($735 net of tax ($0.03 per diluted share)) of costs related to acquisitions, respectively.

(F) For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact of purchase accounting step-up costs related to acquisitions was $456 ($353 net of tax ($0.01 per diluted share)) and $803 ($574 net of tax ($0.02 per diluted share)), respectively.

(G) For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact of restructuring charges was $92 ($131 net of tax ($0.00 per diluted share)), $21,273 ($14,771 net of tax ($0.61 per diluted share)) and $871 ($632 net of tax ($0.02 per diluted share)), respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the

Exhibit 99.1

impact of restructuring charges was $22,721 ($16,021 net of tax ($0.66 per diluted share)) and $3,949 ($2,907 net of tax ($0.12 per diluted share)), respectively.

(H) The fiscal quarters ended Sep. 28, 2019 and Sep. 29, 2018 included non-recurring income tax net expense of $1,720 ($0.07 per diluted share) and non-recurring income tax net benefit of $12,836 ($0.52 per diluted share), respectively. The fiscal years ended Sep. 28, 2019 and Sep. 29, 2018 included non-recurring income tax net expense of $1,720 ($0.06 per diluted share) and $28,909 ($1.17 per diluted share), respectively. The fiscal quarters ended Sep. 28, 2019 and June 29, 2019 included a benefit of $36 ($0.00 per diluted share) and a charge of $4 ($0.00 per diluted share) of excess tax charges (benefits) for employee stock-based compensation, respectively. The fiscal years ended Sep. 28, 2019 and Sep. 29, 2018 included $2,507 ($0.10 per diluted share) and $12,754 ($0.51 per diluted share) of excess tax benefits for employee stock-based compensation, respectively.

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

		Sep. 28, 2019		Sep. 29, 2018
ASSETS
Current assets:
Cash, cash equivalents, restricted cash and short-term investments	$	306,745	$	311,473
Accounts receivable, net		267,553		355,208
Inventories		442,530		486,741
Prepaid expenses and other assets		77,993		85,080
Total current assets		1,094,821		1,238,502
Property and equipment, net		323,434		311,793
Other assets		664,914		709,674
Total assets	$	2,083,169	$	2,259,969
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings	$	14,863	$	5,072
Accounts payable		51,531		70,292
Other current liabilities		173,920		297,474
Total current liabilities		240,314		372,838
Other long-term liabilities		558,119		572,667
Total stockholders’ equity		1,284,736		1,314,464
Total liabilities and stockholders’ equity	$	2,083,169	$	2,259,969

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

Exhibit 99.1

		Three Months Ended									Year Ended
		Sep. 28, 2019			Jun. 29, 2019			Sep. 29, 2018			Sep. 28, 2019			Sep. 29, 2018
GAAP net income (loss) from continuing operations	$	624		$	(3,099	)	$	73,185		$	53,825		$	247,360
Stock-based compensation expense		9,091			8,243			7,414			31,520			27,665
Amortization of intangible assets		9,832			13,278			10,220			43,950			42,783
Restructuring charges		131			14,771			632			16,021			2,907
Non-recurring tax expense (benefit)		1,720			—			(12,836	)		1,720			28,909
Tax charge (benefit) from stock-based compensation expense		(36	)		4			—			(2,507	)		(12,754	)
Other impairment/asset charges (recoveries)		—			(1,083	)		—			(1,083	)		766
Acquisition-related costs		—			—			206			—			735
Purchase accounting step-up		—			—			—			353			574
Non-GAAP net income	$	21,362		$	32,114		$	78,821		$	143,799		$	338,945
Non-GAAP net income per diluted share	$	0.89		$	1.33		$	3.22		$	5.92		$	13.64

RISKS AND UNCERTAINTIES

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 order deliveries scheduled in the company’s display market; the company’s expected fiscal 2020 performance in its semicap business relative to the market; future prospects for the company’s instrumentation business; factors weighing on the materials processing market, including weak PMIs, a struggling auto market and continuing price pressure; the possibility of the materials processing market improving in the future and the pace at which such recovery would occur; possible enhancements to the company’s product portfolio through its R&D investments; and progress on the company’s previously announced cost reduction programs, including the possibility of achieving improved operational efficiency. 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. Coherent and its business, including the aforementioned forward-looking statements, are subject to risks and uncertainties, including, but not limited to, risks associated with growth in demand for our products, customer acceptance and adoption of our products, the worldwide demand for flat panel displays and adoption of OLED for mobile displays, the pricing and availability of OLED displays, the demand for and use of our products in commercial applications, our ability to generate sufficient cash to fund capital spending or debt repayment, our successful implementation of our customer design wins, our and our customers’ exposure to risks associated with worldwide economic conditions, in particular in China and the Eurozone, 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, 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 products, worldwide government economic policies, including trade relations between the United States and China, our ability to integrate the business of Rofin and other acquisitions successfully, manage our expanded operations and achieve anticipated synergies, our ability to successfully manage our planned site consolidation projects and other cost reduction programs and to achieve the related anticipated savings and improved operational efficiency, and other risks identified in Coherent’s SEC filings. Readers are encouraged to refer to the risk disclosures and critical accounting policies described in Coherent’s Forms 10-K, 10-Q and 8-K, including the risks identified in today's financial press release, as applicable and as filed from time-to-time.

Exhibit 99.1

Founded in 1966, Coherent, Inc. is one of the world’s leading providers of lasers, laser-based technologies and laser-based system solutions in a broad range of scientific, commercial and industrial customers. Our common stock is listed on the Nasdaq Global Select Market and is part of the Russell 1000 and Standard & Poor’s MidCap 400 Index. For more information about Coherent, visit the company's website at www.coherent.com for product and financial updates.

5100 Patrick Henry Dr. . P. O. Box 54980, Santa Clara, California 95056–0980 . Telephone (408) 764-4000

XML

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Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Nov. 05, 2019
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Security Exchange Name	NASDAQ
NASDAQ/NGS (GLOBAL SELECT MARKET)
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