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): August 4, 2020

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 August 4, 2020, Coherent, Inc. (“Coherent”) issued a press release regarding its financial results for the fiscal quarter ended July 4, 2020. 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 August 4, 2020
104.0	Cover Page Interactive Data File (embedded within the inline XBRL document)

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: August 4, 2020
	By: /s/ Kevin Palatnik
	Kevin Palatnik
	Executive Vice President and
	Chief Financial Officer

EX-99.1

Exhibit 99.1

August 4, 2020

Press Release No. 1480

For Immediate Release:

Coherent, Inc. Reports Third Fiscal Quarter Results

SANTA CLARA, CA, August 4, 2020 -- 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 third fiscal quarter ended July 4, 2020.

FINANCIAL HIGHLIGHTS

	Three Months Ended						Nine Months Ended
	Jul. 4, 2020		Apr. 4, 2020		Jun. 29, 2019		Jul. 4, 2020		Jun. 29, 2019
GAAP Results
(in millions, except per share data)
Net sales	$	298.3	$	293.1	$	339.2	$	912.2	$	1,095.2
Net income (loss)	$	(8.7)	$	(418.9)	$	(3.1)	$	(421.8)	$	53.2
Diluted EPS	$	(0.36)	$	(17.39)	$	(0.13)	$	(17.52)	$	2.19
Non-GAAP Results
(in millions, except per share data)
Net income	$	12.6	$	14.8	$	32.1	$	48.1	$	122.4
Diluted EPS	$	0.52	$	0.61	$	1.33	$	1.99	$	5.03

THIRD FISCAL QUARTER DETAILS

For the third quarter of fiscal 2020, Coherent announced net sales of $298.3 million and net loss, on a U.S. generally accepted accounting principles (GAAP) basis, of $8.7 million, or $0.36 per diluted share

These results compare to 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 and net sales of $293.1 million and net loss of $418.9 million, or $17.39 per diluted share, for the second quarter of fiscal 2020. The net loss for the second quarter of fiscal 2020 includes $424.3 million, net of tax, in non-cash goodwill and other impairment charges, primarily related to the impairment of all goodwill and certain long-lived assets in our Industrial Lasers & Systems segment.

Non-GAAP net income for the third quarter of fiscal 2020 was $12.6 million, or $0.52 per diluted share. Non-GAAP net income for the third quarter of fiscal 2019 was $32.1 million, or $1.33 per diluted share. Non-GAAP net income for the second

Exhibit 99.1

quarter of fiscal 2020 was $14.8 million, or $0.61 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended July 4, 2020, April 4, 2020 and June 29, 2019 and nine months ended July 4, 2020 and June 29, 2019 appear in the financial statements portion of this release under the heading “Reconciliation of GAAP to Non-GAAP net income (loss).”

Effective September 29, 2019, Coherent adopted ASC 842 - Lease Accounting and applied the new guidance to all leases existing as of the date of adoption. Coherent reported results for the first, second and third quarters of fiscal 2020 that reflect the application of ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with its historical lease accounting.

“Our Q3 performance is encouraging, even though the current quarter was again impacted by COVID-19. We grew revenue sequentially, with Microelectronics more than overcompensating the headwinds in Material Processing and OEM components. Our focus on operational excellence and cash yielded promising initial results and positions us well for the quarters to come,” said Andy Mattes, Coherent President and CEO. “Every day I learn more about the breadth and depth of our company and I am proud to see how our employees are meeting the challenges of a very difficult macro environment.”

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						Nine Months Ended
	Jul. 4, 2020		Apr. 4, 2020		Jun. 29, 2019		Jul. 4, 2020		Jun. 29, 2019
Net sales	$	298,330	$	293,147	$	339,170	$	912,248	$	1,095,176
Cost of sales(A)(B)(C)(D)(E)	203,053		199,036		241,167		613,607		717,106
Gross profit	95,277		94,111		98,003		298,641		378,070
Operating expenses:
Research & development(A)(B)(E)	28,283		29,794		30,692		86,757		90,095
Selling, general & administrative(A)(B)(E)(F)	67,525		61,307		67,686		197,383		201,706
Goodwill and other impairment charges(G)	—		451,025		—		451,025		—
Amortization of intangible assets(C)	643		1,296		6,782		3,371		11,748
Total operating expenses	96,451		543,422		105,160		738,536		303,549
Income (loss) from operations	(1,174)		(449,311)		(7,157)		(439,895)		74,521
Other expense, net(B)(E)	(4,282)		(5,663)		(4,386)		(12,979)		(17,789)
Income (loss) before income taxes	(5,456)		(454,974)		(11,543)		(452,874)		56,732
Provision for (benefit from) income taxes (H)	3,252		(36,061)		(8,444)		(31,046)		3,531
Net income (loss)	$	(8,708)	$	(418,913)	$	(3,099)	$	(421,828)	$	53,201
Net income (loss) per share:
Basic	$	(0.36)	$	(17.39)	$	(0.13)	$	(17.52)	$	2.20
Diluted	$	(0.36)	$	(17.39)	$	(0.13)	$	(17.52)	$	2.19
Shares used in computations:
Basic	24,159		24,095		24,054		24,075		24,185
Diluted	24,159		24,095		24,054		24,075		24,333

(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						Nine Months Ended
	Jul. 4, 2020		Apr. 4, 2020		Jun. 29, 2019		Jul. 4, 2020		Jun. 29, 2019
Cost of sales	$	1,237	$	1,011	$	1,231	$	3,430	$	3,640
Research & development	1,469		894		794		2,924		2,227
Selling, general & administrative	11,680		6,993		7,630		24,722		20,668
Impact on income (loss) from operations	$	14,386	$	8,898	$	9,655	$	31,076	$	26,535

For the fiscal quarters ended July 4, 2020, April 4, 2020 and June 29, 2019, the impact on net income (loss), net of tax was $12,834 ($0.53 per diluted share), $7,892 ($0.33 per diluted share) and $8,243 ($0.34 per diluted share), respectively. For the nine months ended July 4, 2020 and June 29, 2019, the impact on net income (loss), net of tax was $27,662($1.14 per diluted share) and $22,429 ($0.92 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:

Exhibit 99.1

Deferred compensation expense (benefit)	Three Months Ended						Nine Months Ended
	Jul. 4, 2020		Apr. 4, 2020		Jun. 29, 2019		Jul. 4, 2020		Jun. 29, 2019
Cost of sales	$	14	$	(5)	$	(19)	$	122	$	(52)
Research & development	72		(213)		(24)		102		(192)
Selling, general & administrative	353		(1,176)		87		976		(470)
Impact on income (loss) from operations	$	439	$	(1,394)	$	44	$	1,200	$	(714)

For the fiscal quarters ended July 4, 2020, April 4, 2020 and June 29, 2019, the impact on other expense, net from gains or losses on deferred compensation plan assets was income of $687, expense of $1,364 and income of $12, respectively. For the nine months ended July 4, 2020 and June 29, 2019, the impact on other expense, net from gains or losses on deferred compensation plan assets was income of $1,616 and expense of $811, respectively.

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

Amortization of intangibles	Three Months Ended						Nine Months Ended
	Jul. 4, 2020		Apr. 4, 2020		Jun. 29, 2019		Jul. 4, 2020		Jun. 29, 2019
Cost of sales	$	2,304	$	10,611	$	11,844	$	23,795	$	35,977
Amortization of intangible assets	643		1,296		6,782		3,371		11,748
Impact on income (loss) from operations	$	2,947	$	11,907	$	18,626	$	27,166	$	47,725

For the fiscal quarters ended July 4, 2020, April 4, 2020 and June 29, 2019, the impact on net income (loss), net of tax was $2,139 ($0.09 per diluted share), $8,660 ($0.36 per diluted share), and $13,278 ($0.55 per diluted share), respectively. For the nine months ended July 4, 2020 and June 29, 2019, the impact on net income (loss), net of tax was $19,741 ($0.81 per diluted share) and $34,118 ($1.40 per diluted share), respectively.

(D)For the nine months ended June 29, 2019, the impact of inventory step-up costs related to acquisitions was $456 ($353 net of tax ($0.01 per diluted share)).

(E)For the fiscal quarters ended July 4, 2020, April 4, 2020 and June 29, 2019, the impact of restructuring charges was $518 ($397 net of tax ($0.02 per diluted share)), $1,079 ($798 net of tax ($0.03 per diluted share)), and $21,273 ($14,771 net of tax ($0.61 per diluted share)), respectively. For the nine months ended July 4, 2020 and June 29, 2019, the impact of restructuring charges was $2,530 ($1,861 net of tax ($0.08 per diluted share)) and $22,629 ($15,890 net of tax ($0.65 per diluted share)), respectively.

(F)For the three and nine months ended July 4, 2020, selling, general & administrative expense includes an accelerated compensation charge for our former CEO of $941 ($732 net of tax ($0.03 per diluted share). For the nine months ended July 4, 2020, selling, general & administrative expense includes a legal settlement related to an asset recovery of $1,365 ($1,106 net of tax ($0.05 per diluted share)). For the three and nine months ended June 29, 2019, selling, general & administrative expense includes a legal settlement related to an asset recovery of $1,337 ($1,083 net of tax ($0.04 per diluted share)), respectively.

(G)For the fiscal quarter ended April 4, 2020, goodwill and other impairment charges included a $327,203 ($327,203 net of tax ($13.58 per diluted share)) charge for impairment of goodwill, a $121,350 ($94,651 net of tax ($3.92 per diluted share)) charge for impairment of long-lived assets and a $2,472 ($2,472 net of tax ($0.10 per diluted share)) charge for impairment of an investment. For the nine months ended July 4, 2020, goodwill and other impairment charges included a $327,203 ($327,203 net of tax ($13.63 per diluted share)) charge for impairment of goodwill, a $121,350 ($94,651 net of tax ($3.91 per diluted share)) charge for impairment of long-lived assets and a $2,472 ($2,472 net of tax ($0.10 per diluted share)) charge for impairment of an investment.

Exhibit 99.1

(H)The fiscal quarter ended July 4, 2020 included a non-recurring income tax chargeof $5,261 ($0.21 per diluted share) and the fiscal quarter ended April 4, 2020 included non-recurring income tax net benefitof $7,612 ($0.31 per diluted share). The fiscal quarters ended July 4, 2020, April 4, 2020 and June 29, 2019 included a benefit of $51 ($0.00 per diluted share), a benefit of $314 ($0.01 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 nine months ended July 4, 2020 included non-recurring income tax net benefitof $2,202 ($0.09 per diluted share). The nine months ended July 4, 2020 and June 29, 2019 included $1,079 ($0.05 per diluted share) and $2,471 ($0.10 per diluted share) of excess tax benefits for employee stock-based compensation, respectively.

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

	Jul. 4, 2020		Sep. 28, 2019
ASSETS
Current assets:
Cash, cash equivalents, restricted cash and short-term investments	$	421,626	$	306,745
Accounts receivable, net	197,757		267,553
Inventories	448,972		442,530
Prepaid expenses and other assets	90,237		77,993
Total current assets	1,158,592		1,094,821
Property and equipment, net	251,453		323,434
Other assets	360,080		664,914
Total assets	$	1,770,125	$	2,083,169
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings	$	16,554	$	14,863
Accounts payable	68,484		51,531
Other current liabilities	178,479		173,920
Total current liabilities	263,517		240,314
Long-term liabilities	613,102		558,119
Total stockholders’ equity	893,506		1,284,736
Total liabilities and stockholders’ equity	$	1,770,125	$	2,083,169

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

	Three Months Ended						Nine Months Ended
	Jul. 4, 2020		Apr. 4, 2020		Jun. 29, 2019		Jul. 4, 2020		Jun. 29, 2019
GAAP net income (loss)	$	(8,708)	$	(418,913)	$	(3,099)	$	(421,828)	$	53,201
Stock-based compensation expense	12,834		7,892		8,243		27,662		22,429
Amortization of intangible assets	2,139		8,660		13,278		19,741		34,118
Restructuring charges and other	1,129		798		14,771		2,593		15,890
Non-recurring tax expense (benefit)	5,261		(7,612)		—		(2,202)		—
Tax charge (benefit) from stock-based compensation expense	(51)		(314)		4		(1,079)		(2,471)
Goodwill and other impairment/asset charges (recoveries)	—		424,326		(1,083)		423,220		(1,083)
Purchase accounting step-up	—		—		—		—		353
Non-GAAP net income	$	12,604	$	14,837	$	32,114	$	48,107	$	122,437
Non-GAAP net income per diluted share	$	0.52	$	0.61	$	1.33	$	1.99	$	5.03

Exhibit 99.1

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 confidence in the Company’s business outlook. 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 the recovery of global and regional economies from the negative effects of COVID-19 and related private and public sector measures; the impact of COVID-19 related matters on our business; global demand, 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; 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 manage our expanded operations; our ability to successfully transfer the manufacturing of our High Power Fiber Lasers and related business and operations between facilities; 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 efficiencies; 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.

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	Aug. 04, 2020
Entity Registrant Name	COHERENT, INC
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Entity Tax Identification Number	94-1622541
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Entity Information [Line Items]
Security Exchange Name	NASDAQ
NASDAQ/NGS (GLOBAL SELECT MARKET)
Entity Information [Line Items]
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