-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gN2sOoIaZoj/QGZM+uR1nGIATAUGhdrME5bAsswGV2IdlNCj1/1wbNBm/AfmP2EX vBEV9CjRhmjCRpu1qgfcDw== 0000912057-95-000329.txt : 19950515 0000912057-95-000329.hdr.sgml : 19950515 ACCESSION NUMBER: 0000912057-95-000329 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950206 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COHERENT INC CENTRAL INDEX KEY: 0000021510 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 941622541 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05255 FILM NUMBER: 95505676 BUSINESS ADDRESS: STREET 1: 5100 PATRICK HENRY DR CITY: SANTA CLARA STATE: CA ZIP: 95054 BUSINESS PHONE: 4087644000 MAIL ADDRESS: STREET 1: 5100 PATRICK HENRY DRIVE STREET 2: MAIL STOP P38 CITY: SANTA CLARA STATE: CA ZIP: 95054 FORMER COMPANY: FORMER CONFORMED NAME: COHERENT RADIATION DATE OF NAME CHANGE: 19770604 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number: 0-5255 COHERENT, INC. (Exact name of registrant as specified in its charter) Delaware 94-1622541 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5100 Patrick Henry Drive, Santa Clara, California 95054 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (408) 764-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__x___ No_____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes_____ No_____ APPLICABLE ONLY TO CORPORATE ISSUES: The number of shares outstanding of registrant's common stock, par value $.01 per share, at January 31, 1995 was 10,541,191 shares. COHERENT, INC. INDEX Page No. -------- Part I. Financial Information: Consolidated Condensed Statements of Income -- Three months ended December 31, 1994 and December 25, 1993 3 Consolidated Condensed Balance Sheets -- December 31, 1994 and October 1, 1994 4 Consolidated Condensed Statements of Cash Flows -- Three months ended December 31, 1994 and December 25, 1993 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information 12 Signatures 13 2 PART I. FINANCIAL INFORMATION COHERENT, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED ------------- DECEMBER 31, DECEMBER 25, 1994 1993 - ---------------------------------------------------------------------- NET SALES $58,583 $47,026 COST OF SALES 28,845 24,091 - ---------------------------------------------------------------------- GROSS PROFIT 29,738 22,935 - ---------------------------------------------------------------------- OPERATING EXPENSES: Research and development 6,668 5,520 Selling, general and administrative 17,571 14,821 - ---------------------------------------------------------------------- TOTAL OPERATING EXPENSES 24,239 20,341 - ---------------------------------------------------------------------- INCOME FROM OPERATIONS 5,499 2,594 OTHER INCOME (EXPENSE): Interest and dividend income 558 459 Interest expense (314) (452) Foreign exchange gain (loss) (95) (240) Other - net 58 123 - ---------------------------------------------------------------------- TOTAL OTHER INCOME (EXPENSE), NET 207 (110) - ---------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 5,706 2,484 PROVISION FOR INCOME TAXES 2,220 1,055 - ---------------------------------------------------------------------- NET INCOME $3,486 $1,429 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .33 $ .14 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 10,675 10,258 - ---------------------------------------------------------------------- - ----------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 3 COHERENT, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS, EXCEPT PAR VALUE PER SHARE)
DECEMBER 31, OCTOBER 1, 1994 1994 - ------------------------------------------------------------------------ ASSETS (Unaudited) CURRENT ASSETS: Cash and equivalents $12,940 $27,239 Short-term investments 22,647 16,534 Accounts receivable - net of allowances of $2,389 in 1995 and $2,384 in 1994 49,851 49,074 Inventories 41,687 38,829 Prepaid expenses and other assets 11,466 11,066 Deferred tax assets 13,091 13,527 - ------------------------------------------------------------------------ TOTAL CURRENT ASSETS 151,682 156,269 - ------------------------------------------------------------------------ PROPERTY AND EQUIPMENT 82,868 82,569 ACCUMULATED DEPRECIATION AND AMORTIZATION (40,605) (39,362) - ------------------------------------------------------------------------ Property and equipment - net 42,263 43,207 - ------------------------------------------------------------------------ GOODWILL - net of accumulated amortization of $3,652 in 1995 and $3,497 in 1994 4,809 4,964 OTHER ASSETS 9,972 6,540 - ------------------------------------------------------------------------ $208,726 $210,980 - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings $3,345 $4,361 Current portion of long-term obligations 4,591 4,708 Accounts payable 8,802 8,012 Income taxes payable 445 3,809 Other current liabilities 38,362 37,669 - ------------------------------------------------------------------------ TOTAL CURRENT LIABILITIES 55,545 58,559 - ------------------------------------------------------------------------ LONG-TERM OBLIGATIONS 7,975 8,865 OTHER LONG-TERM LIABILITIES 4,943 6,003 MINORITY INTEREST IN SUBSIDIARIES 1,734 4,089 STOCKHOLDERS' EQUITY: Common stock, par value $.01 Authorized - 50,000 shares Outstanding - 10,494 in 1995 and 10,338 in 1994 104 103 Additional paid-in capital 70,422 68,646 Unrealized gain on short-term investments 314 Notes receivable from stock sales (2,256) (1,981) Retained earnings 67,643 64,157 Accumulated translation adjustment 2,302 2,539 - ------------------------------------------------------------------------ TOTAL STOCKHOLDERS' EQUITY 138,529 133,464 - ------------------------------------------------------------------------ $208,726 $210,980 - ------------------------------------------------------------------------ - ------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 4 COHERENT, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED; IN THOUSANDS)
THREE MONTHS ENDED ------------- DECEMBER 31, DECEMBER 25, 1994 1993 - ------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND EQUIVALENTS OPERATING ACTIVITIES: Net income $ 3,486 $1,429 Adjustments to reconcile to net cash used for operating activities: Purchases of short-term investments (26,699) (23,416) Proceeds from sales of short-term investments 20,900 15,081 Changes in assets and liabilities (1,912) 2,895 Other adjustments (4,451) (1,082) - ------------------------------------------------------------------------------- NET CASH USED FOR OPERATING ACTIVITIES (8,676) (5,093) - ------------------------------------------------------------------------------- INVESTING ACTIVITIES: Purchases of property and equipment - net (867) (846) Purchase of asset held for investment (4,312) Purchase of Vinten Electro-Optics Ltd. (1,500) Other - net (171) 123 - ------------------------------------------------------------------------------- NET CASH USED FOR INVESTING ACTIVITIES (5,350) (2,223) - ------------------------------------------------------------------------------- FINANCING ACTIVITIES: Long-term debt borrowings 3 Long-term debt repayments (844) (2,151) Notes payable borrowings 1,683 1,382 Notes payable repayments (2,649) (2,670) Repayments of capital lease obligations (151) (134) Sales of shares under employee benefit plans 1,374 1,355 Other 51 - ------------------------------------------------------------------------------- NET CASH USED FOR FINANCING ACTIVITIES (536) (2,215) - ------------------------------------------------------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND EQUIVALENTS 263 548 - ------------------------------------------------------------------------------- Net decrease in cash and equivalents (14,299) (8,983) Cash and equivalents beginning of period 27,239 27,923 - ------------------------------------------------------------------------------- CASH AND EQUIVALENTS END OF PERIOD $12,940 $18,940 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
See Notes to Consolidated Condensed Financial Statements. 5 COHERENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles, consistent with those used to prepare the Company's annual report to stockholders for the fiscal year ended October 1, 1994. All adjustments, in the opinion of management, necessary for a fair presentation have been made which comprise only normal, recurring adjustments; however, interim results of operations are not necessarily indicative of results to be expected for the year. 2. Net income per share is based upon the weighted average number of common shares outstanding during the period including dilutive common share equivalents and shares issuable under the Productivity Incentive Plan. Common share equivalents represent outstanding stock options and shares subscribed under the Employee Stock Purchase Plan. No dividends were paid in fiscal 1995 or 1994. 3. In December 1994, the Company purchased its former Porter Drive facility in the Stanford Industrial Park for $4.3 million. The Company's intentions are to refurbish the building for future resale or lease. 4. Balance Sheet Detail: Inventories are stated at the lower of cost (first-in, first-out) or market. Inventories are as follows:
DECEMBER 31, OCTOBER 1, 1994 1994 ------------------------------------------------------------ (IN THOUSANDS) Purchased parts and assemblies $ 13,939 $ 12,020 Work-in-process 14,336 14,714 Finished goods 13,412 12,095 ------------------------------------------------------------ Net inventories $ 41,687 $ 38,829 ------------------------------------------------------------ ------------------------------------------------------------
Prepaid expenses and other assets consists of the following:
DECEMBER 31, OCTOBER 1, 1994 1994 ------------------------------------------------------------ (IN THOUSANDS) Prepaid income taxes $ 4,459 $ 4,686 Prepaid expenses and other 4,286 3,553 Notes receivable from Transfer Technology Group plc 2,721 2,827 ------------------------------------------------------------ Prepaid expenses and other assets $11,466 $11,066 ------------------------------------------------------------ ------------------------------------------------------------
6 Other assets consist of the following:
DECEMBER 31, OCTOBER 1, 1994 1994 ------------------------------------------------------------------- (IN THOUSANDS) Assets held for sale $1,544 $1,544 Assets held for investment (Note 3) 4,528 216 Other assets 3,900 4,780 ------------------------------------------------------------------- Other assets $9,972 $6,540 ------------------------------------------------------------------- -------------------------------------------------------------------
Other current liabilities consist of the following:
DECEMBER 31, OCTOBER 1, 1994 1994 ------------------------------------------------------------------- (IN THOUSANDS) Accrued expenses and other $12,699 $10,924 Accrued payroll and benefits 10,904 12,407 Deferred service income 7,452 7,359 Reserve for warranty 5,712 5,418 Environmental remediation costs 1,026 1,062 Discontinued operations 569 499 ------------------------------------------------------------------- Other current liabilities $38,362 $37,669 ------------------------------------------------------------------- -------------------------------------------------------------------
Other long-term liabilities consist of the following:
DECEMBER 31, OCTOBER 1, 1994 1994 ------------------------------------------------------------------- (IN THOUSANDS) Environmental remediation costs $ 1,992 $ 2,573 Deferred tax liabilities 1,501 1,952 Deferred income 1,450 1,478 ------------------------------------------------------------------- Other long-term liabilities $ 4,943 $ 6,003 ------------------------------------------------------------------- -------------------------------------------------------------------
5. Certain claims and lawsuits arising in the ordinary course of business have been filed or are pending against the Company. In the opinion of management, all such matters have been adequately provided for, are without merit, or are of such kind that if disposed of unfavorably, would not have a material adverse effect on the Company's consolidated financial position or results of operations. The Company, along with several other companies, has been named as a party to a remedial action order issued by the California Department of Toxic Substance Control relating to soil and groundwater contamination at and in the vicinity of the Stanford Industrial Park in Palo Alto, California, where the Porter Drive facility is located. The responding parties to the Regional Order (including the Company) have completed Remedial Investigation and Feasibility Reports, which were approved by the State of California. The responding parties have installed one remedial system and the construction of three additional remedial systems was completed in December 1994. The Company has reached agreement with responding parties on final cost sharing. 7 The Company was also named, along with other parties, to a remedial action order for the Porter Drive facility site itself in Stanford Industrial Park. The State of California has approved the Remedial Investigation and Feasibility Study Reports prepared by the Company for this site. The Company has been operating remedial systems at the site to remove subsurface chemicals since April 1992. The Company has submitted a draft Remedial Action Plan to the State of California which defines the supplemental systems needed to complete remedial work. Management believes that the Company's probable, nondiscounted net liability at December 31, 1994 for remaining costs associated with the above environmental matters is $1.5 million which has been previously accrued. This amount consists of total estimated probable costs of $3.5 million ($1.0 million included in other current liabilities and $2.0 million included in other long-term liabilities) reduced by estimated minimum probable recoveries of $1.5 million included in other assets from other parties named to the order. Based on currently available information, the Company believes that costs in excess of amounts accrued, if any, relating to the investigation and remedial action which may be required by the agencies of the State of California, will not have a material adverse effect on the consolidated financial position or results of operations of the Company. 6. Certain prior year amounts have been reclassified to conform with the current quarter presentation. 8 COHERENT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONSOLIDATED SUMMARY The Company's pretax income during the current quarter increased $3.2 million (130%) to $5.7 million from $2.5 million in the prior year's first quarter. Current quarter net income increased $2.1 million (144%) to $3.5 million ($.33 per share) from $1.4 million ($.14 per share) one year ago. This increase in net income was primarily due to higher sales volumes, a higher gross profit percentage, and a lower effective tax rate. The current quarter effective tax rate was 39% compared to 42% in the prior year's first quarter. RESULTS OF OPERATIONS NET SALES AND GROSS PROFITS Consolidated During the first quarter of fiscal 1995, the Company's net sales increased $11.6 million (25%) to $58.6 million from $47.0 million in the prior year's first quarter. Sales increased in the Electro-Optical business segment by $3.8 million while sales in the Medical business segment increased $7.8 million. International sales were 51% of net sales for the current quarter compared to 49% in the prior year's first quarter. The gross profit rate increased to 51% in the current quarter from 49% one year ago primarily due to higher sales volumes of higher margin products in the Medical segment. Electro-Optical Electro-Optical net sales increased $3.8 million (13%) from the same period a year ago. The increases of $2.2 million and $1.6 million, respectively, in domestic and international sales were primarily due to higher sales volumes as a result of new product introductions. Domestically, the increase was also due to sales resulting from the April 1994 purchase of the beam diagnostic product line from Big Sky Laser Technologies, Inc. by our Coherent Auburn Group. Internationally, the higher sales volumes were realized primarily in the United Kingdom and Japan. The gross profit rate was 51% for both the current quarter and the prior year's first quarter. Medical Medical net sales for the current quarter increased $7.8 million (43%) from the same period a year ago. Domestic sales increased $4.3 million while international sales increased $3.5 million from the same period a year ago. The increases were primarily due to higher sales volumes as a result of new applications for the Company's products in urology and aesthetic surgery, sales of the Novus-Registered Trademark- Omni-TM- photocoagulator product line, and increased sales of disposable products. The gross profit rate increased in the current quarter to 51% from 46% in the same period a year ago. This increase was primarily due to higher sales volumes of higher margin products such as the Novus Omni and VersaPulse-Registered Trademark- Select-TM- and due to manufacturing efficiencies achieved as a result of the higher output. 9 OPERATING EXPENSES
First Quarter 1995 1994 --------------------- (IN THOUSANDS) Research & development $ 6,668 $ 5,520 Selling, general & administrative 17,571 14,821 - ------------------------------------------------------------ Total operating expenses $ 24,239 $ 20,341 - ------------------------------------------------------------ - ------------------------------------------------------------
Total operating expenses increased $3.9 million (19%) in the quarter ended December 31, 1994 compared to the prior year's first quarter. This increase resulted primarily from an increase in research and development (R&D) expenses of $1.1 million (21%) and an increase in selling, general and administrative (SG&A) expenses of $2.8 million (19%). However, as a percentage of sales, total operating expenses have decreased to 41% in the current quarter compared to 43% one year ago. R&D expenses increased $1.1 million (21%) in the current quarter to $6.6 million from $5.5 million compared to the same period a year ago. Most of the increase occurred in the Medical business segment primarily due to higher costs associated with an increased level of products in clinical trials, higher costs associated with increased efforts to develop dermatology, cosmetic and urology products and increased efforts in fiber development. SG&A expenses increased $2.8 million (19%) in the current quarter to $17.6 million from $14.8 million compared to the same period a year ago. This increase was primarily due to increased sales and marketing expenses in the Medical business segment due to a higher level of promotion and trade show activity particularly for Urology and Cosmetic Surgery, and due to increased costs associated with the higher sales volumes, and additional headcount. The SG&A increase was also due in part to the current quarter write-down of an investment in a corporation in which Coherent is a minority shareholder. OTHER INCOME (EXPENSE) Other income (expense), net, increased $0.3 million for the current quarter to net other income of $0.2 million compared to net other expense of $0.1 million for the same period a year ago. This increase was primarily due to higher interest income of $0.1 million on higher average cash and investments, lower interest expense of $0.1 million due to lower average debt balances and lower foreign exchange losses of $0.1 million due to the effects of hedging activity. INCOME TAXES The Company's effective tax rate for the three months ended December 31, 1994 was 39% compared to 42% for the same quarter a year ago. The Company's fiscal 1994 and 1995 effective tax rates differ from the statutory rates primarily because of state taxes and differing tax rates incurred by foreign subsidiaries. The effective tax rate is based on projected annual results by taxing jurisdiction and can change should the Company not achieve these projected results. FINANCIAL CONDITION Liquidity and Capital Resources The Company's primary sources of liquidity are cash, cash equivalents and short-term investments of $35.6 million. Additional sources of liquidity are the Company's multi-currency line of credit and bank credit facilities totaling $20.6 million. As of December 31, 1994, the Company had $19.0 million unused and available under these credit facilities. 10 Changes in Financial Condition Cash and cash equivalents decreased $14.3 million (52%) year-to-date. Operations and changes in exchange rates used $8.4 million; short-term investments increased $6.1 million. Investing activities used $5.4 million; $5.2 million was used to acquire property and equipment (net of proceeds from dispositions of property and equipment), including $4.3 million used to acquire assets held for investment. Financing activities used $0.5 million; increased repayments on borrowings, net used $1.9 million partially offset by sales of shares under employee benefit plans (including tax benefits), net, which generated $1.4 million. Income taxes payable decreased $3.4 million (88%) from October 1, 1994 as the Company had prepaid taxes at October 1, 1994 which were used for current year estimated tax payments. Minority interest in subsidiaries decreased $2.4 million (58%) from October 1, 1994 due to the dividend of retained earnings from Lambda Physik GmbH to Coherent GmbH and due to a change in accounting for an investment from the consolidation method to the equity method as a result of a decrease in the Company's ownership percentage. 11 COHERENT, INC. PART II. OTHER INFORMATION ITEM 1. Material developments in connection with legal proceedings. N/A ITEM 2. Material modification of rights of registrant's securities. N/A ITEM 3. Defaults on senior securities. N/A ITEM 4. Submission of matters to a vote of security holders. N/A ITEM 5. Other. N/A ITEM 6. Exhibits and Reports on Form 8-K. Exhibit 27 "Financial Data Schedules" included herewith. 12 COHERENT, INC. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. COHERENT, INC. (Registrant) Date: February 6, 1995 By: /s/ ROBERT J QUILLINAN ---------------------- Robert J. Quillinan Vice President and Chief Financial Officer 13 EX-27 2 EXHIBIT 27
5 1,000 3-MOS SEP-30-1995 OCT-02-1994 DEC-31-1994 12,940 22,647 57,936 3,184 41,687 151,682 82,868 40,605 208,726 55,545 7,975 104 0 0 138,425 208,726 58,583 58,583 28,845 28,845 24,239 0 314 5,706 2,220 3,486 0 0 0 3,486 .33 .32
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