EX-99 2 a05-13774_1ex99.htm EX-99

Exhibit 99

 

*coherent

 

PRESS RELEASE

Editorial Contact:

 

For Release:

Leen Simonet

 

IMMEDIATE

(408) 764-4161

 

July 28, 2005

 

 

No. 903

 

Coherent, Inc. Reports Third Quarter Results

 

Coherent, Inc. (Santa Clara, CA) (NASDAQ:COHR) today announced financial results for its third fiscal quarter ended July 2, 2005, with sales of $125.3 million and net income of $9.6 million ($0.31 per diluted share).   Net income included a charge of $1.6 million ($0.05 per diluted share) for in-process research and development (IPR&D) related to our purchase of TuiLaser AG of Munich, Germany on June 13, 2005; a $1.4 million ($0.05 per diluted share) tax benefit resulting from increased use of export tax incentives and R&D tax credits; and a $0.2 million ($0.01 per diluted share) favorable adjustment of a previously recognized restructuring charge.  Excluding the aforementioned items, non-GAAP earnings represent $0.30 per diluted share.

 

Sales and net income for the corresponding prior year quarter were $128.0 million and $4.7 million ($0.15 per diluted share), respectively.  Net income in the comparable prior year period included a gain of $0.7 million ($0.02 per diluted share) from the sale of certain technology.   In comparison, the immediately preceding quarter’s results were sales of $131.2 million and net income of $19.6 million ($0.63 per diluted share).   These results include a tax benefit from the reversal of a deferred tax valuation allowance of $9.6 million ($0.31 per diluted share) relating to our Lambda Physik segment and a favorable adjustment of $0.3 million ($0.01 per diluted share) related to our Lambda Physik segment’s previously communicated decision to discontinue future lithography investments.

 

Orders received during the quarter ended July 2, 2005 were $123.2 million, compared to $124.9 million in the same period last year, and $129.4 million in the immediately preceding quarter.  Backlog of $163.9 million at July 2, 2005 included backlog of $9.8 million from our acquisition of TuiLaser AG and compared to a backlog of $155.3 million at April 2, 2005.

 

John Ambroseo, Coherent’s President and Chief Executive Officer commented, “The team did a very good job executing against programs, which enabled us to meet our earnings commitment despite lower than expected revenues.  The biggest contribution to earnings came from an expansion in the Electro-Optic segment gross margin to 49%, which was fueled by initiatives to grow that segment’s margin by 200-400 basis points by November 2006.  Our backlog position and cash generation remain robust.  Cash from continuing operations was more than $24 million for the most recent quarter and is just shy of $73 million year-to-date, surpassing fiscal 2004’s full year total.”

 

Year-to-date sales of $382.5 million and net income of $34.6 million ($1.11 per diluted share) compared to the prior year period sales of  $361.7 million and net income of $8.0 million ($0.26 per diluted share).  Orders received for the nine month period ended July 2, 2005 were $381.1 million, compared to $389.1 million in orders received during the same period a year ago.

 

Electro-Optics segment sales of $101.2 million for the three months ended July 2, 2005 were 4% lower than sales during the comparable prior year period and three months ended April 2, 2005.  Incoming orders of $101.1 million decreased 2% from the third fiscal quarter of 2004, and represent an increase of 1% from orders received in the immediately preceding quarter.  Sales and incoming orders for the nine months ended July 2, 2005 were $307.5 million and $298.1 million, 2% higher and 7% lower, respectively, than during the same period a year ago.

 

Lambda Physik segment sales of $24.0 million for the three months ended July 2, 2005 represent an increase of 7% from the corresponding prior year period, and a 7% decrease from the immediately preceding quarter.  Incoming orders of $22.1 million for the third quarter of fiscal 2005 were 3% higher than the third fiscal quarter of 2004, and represent a 25% decline from orders received in the immediately preceding second fiscal quarter of 2005, due primarily to the timing of lithography service contracts and other customer orders.  Sales and incoming orders for the nine months ended July 2, 2005 were $75.0 million and $83.0 million, 22% and 19% higher, respectively, than the same period last year.

 


 

Ambroseo continued, “We are pleased to have completed the acquisition of TuiLaser AG and its Bavarian Photonics subsidiary.  The products and services offered by these two entities will help fortify our position in several areas including OEM medical, materials processing and microelectronics. In addition to contributing to our market/technology roadmaps, the acquisition also offers operational synergies, which will be realized in fiscal 2006.”

 


 

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

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

July 2,
2005

 

April 2,
2005

 

July 3,
2004
(restated)

 

July 2,
2005

 

July 3,
2004 (A)
(restated)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (B)

 

$

125,269

 

$

131,175

 

$

127,951

 

$

382,466

 

$

361,710

 

Cost of sales (C)

 

68,589

 

72,688

 

72,972

 

215,763

 

213,891

 

Gross profit

 

56,680

 

58,487

 

54,979

 

166,703

 

147,819

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research & development (C)

 

13,882

 

14,175

 

15,519

 

42,358

 

46,229

 

In-process research & development

 

1,577

 

—

 

—

 

1,577

 

—

 

Selling, general & administrative (C)

 

28,855

 

28,765

 

28,720

 

85,991

 

85,688

 

Restructuring, impairment and other charges

 

(360

)

(40

)

18

 

(100

)

255

 

Intangibles amortization

 

1,674

 

1,528

 

1,504

 

4,695

 

5,203

 

Total operating expenses

 

45,628

 

44,428

 

45,761

 

134,521

 

137,375

 

Income from operations

 

11,052

 

14,059

 

9,218

 

32,182

 

10,444

 

Other income, net (C)  (D)

 

724

 

790

 

17

 

2,421

 

2,690

 

Income from continuing operations before income taxes and minority interest

 

11,776

 

14,849

 

9,235

 

34,603

 

13,134

 

Provision (benefit) for income taxes (E)

 

2,131

 

(4,728

)

4,222

 

173

 

5,581

 

Income from continuing operations before minority interest

 

9,645

 

19,577

 

5,013

 

34,430

 

7,553

 

Minority interest (B) (C)

 

—

 

—

 

(269

)

180

 

209

 

Income from continuing operations

 

9,645

 

19,577

 

4,744

 

34,610

 

7,762

 

Income from discontinued operations

 

—

 

—

 

—

 

—

 

218

 

Net income

 

$

9,645

 

$

19,577

 

$

4,744

 

$

34,610

 

$

7,980

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.31

 

$

0.63

 

$

0.15

 

$

1.11

 

$

0.25

 

Income from discontinued operations, net of income taxes

 

—

 

—

 

—

 

—

 

0.01

 

Net income

 

$

0.31

 

$

0.63

 

$

0.15

 

$

1.11

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computation:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

30,856

 

30,628

 

30,243

 

30,655

 

30,122

 

Diluted

 

31,454

 

31,112

 

30,620

 

31,133

 

30,502

 

 

(A)  The nine months ended July 3, 2004 represents a 40-week period.

 

(B)  The quarter ended July 3, 2004 includes $2,181 of net sales from an entity consolidated under FIN 46R.   Additionally, this entity’s net income of $380 for the quarter ended July 3, 2004 was eliminated through minority interest.

 

(C)  The quarter ended April 2, 2005, includes a $323 ($0.01 per diluted share) reduction in charges to research and development associated with our previously communicated decision to discontinue future product development and investments in the semiconductor lithography market within our Lambda Physik subsidiary.   The quarter ended January 1, 2005 includes a charge of $3,061 (net of minority interest of $137 ($0.10 per diluted share)) associated with our decision to discontinue future product development and investments in the semiconductor lithography market within our Lambda Physik subsidiary.  As a result, cost of sales includes $2,257; research & development includes $267; selling, general and administrative includes $137 and other income (expense), net includes $214 for the nine months ended July 2, 2005.

 

(D)  The quarter ended July 3, 2004 includes a $1,200 ($663 after-tax ($0.02 per diluted share)) gain on the sale of certain technology.

 

(E)   The quarter ended July 2, 2005, includes a tax benefit for increased use of export tax incentives and R&D tax credits.  The quarter ended April 2, 2005, includes a tax benefit for the reversal of a deferred tax valuation allowance of $9,571 ($0.31 per diluted share) related to our Lambda Physik segment.  The quarter ended January 1, 2005 includes a tax benefit of  $479 ($0.02 per diluted share) related to federal tax law changes enacted in the first quarter of fiscal 2005.

 


 

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

 

 

 

Jul. 2,
2005

 

Oct. 2,
2004 (A)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash, cash equivalents and short-term investments

 

$

209,595

 

$

170,734

 

Restricted cash, cash equivalents and short-term investments (B)

 

15,466

 

15,343

 

Accounts receivable, net

 

81,529

 

96,825

 

Inventories

 

113,593

 

104,698

 

Prepaid expenses and other assets

 

65,139

 

62,572

 

Total current assets

 

485,322

 

450,172

 

Property and equipment, net

 

156,627

 

166,054

 

Restricted cash, cash equivalents and short-term investments (B)

 

1,224

 

23,580

 

Other assets

 

144,564

 

117,520

 

Total assets

 

$

787,737

 

$

757,326

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term obligations

 

$

12,980

 

$

13,700

 

Accounts payable

 

19,457

 

17,648

 

Other current liabilities

 

75,846

 

73,181

 

Total current liabilities

 

108,283

 

104,529

 

Long-term obligations

 

614

 

14,215

 

Other long-term liabilities

 

51,309

 

54,530

 

Total stockholders’ equity

 

627,531

 

584,052

 

Total liabilities and stockholders’ equity

 

$

787,737

 

$

757,326

 

 

(A)    Derived from audited financial statements for the year ended October 2, 2004, as restated to reflect the correct accounting for the Company’s deferred compensation plans.

 

(B)    Represents cash, cash equivalents and short-term investments at July 2, 2005 restricted under the Star Medical notes payable arrangement ($15,178), for close out costs associated with the purchase of the remaining outstanding shares of Lambda Physik AG ($1,224) and other ($288).

 


 

Reconciliation of GAAP to Non-GAAP summarized statement of operations (unaudited, in thousands, after-tax and net of minority interest):

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

July 2,
2005

 

April 2,
2005

 

July 3,
2004

 

July 2,
2005

 

July 3,
2004

 

GAAP net income

 

$

9,645

 

$

19,577

 

$

4,744

 

$

34,610

 

$

7,980

 

In-process research and development

 

1,577

 

—

 

—

 

1,577

 

—

 

Tax benefit for increased use of export tax incentives and R&D tax credits

 

(1,430

)

—

 

—

 

(1,430

)

—

 

Reversal of deferred tax valuation allowance

 

—

 

(9,571

)

—

 

(9,571

)

—

 

Charges associated with discontinuing future product development and investments in the semiconductor lithography market

 

—

 

(323

)

—

 

2,738

 

—

 

Tax benefit related to federal tax law changes

 

—

 

—

 

—

 

(479

)

—

 

Sale of technology

 

—

 

—

 

(663

)

—

 

(663

)

Restructuring, impairment and other charges

 

(216

)

—

 

—

 

(216

)

142

 

Discontinued operations

 

—

 

—

 

—

 

—

 

(218

)

Non-GAAP net income

 

$

9,576

 

$

9,683

 

$

4,081

 

$

27,229

 

$

7,241

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per diluted share

 

$

0.30

 

$

0.31

 

$

0.13

 

$

0.87

 

$

0.24

 

 

The Company’s conference call scheduled for 1:30 p.m. PDT today will include discussions relative to the current quarter results and some comments regarding forward looking guidance on future operating performance.

 

The statements in this press release that relate to future plans, events or performance, including statements such as the program to grow Electro-Optics gross margins 200-400 basis points by November 2006; and the products and services offered by TUI Laser AG and Bavarian Photonics will fortify our position in several areas including OEM medical, materials processing and microelectronics, and in addition to contributing to our market/technology roadmaps, the acquisition also offers operational synergies, which will be realized in fiscal 2006, are forward-looking statements.  Factors that could cause actual results to differ materially include risks and uncertainties, including risks associated to currency adjustments, contract cancellations, manufacturing risks, competitive factors, and uncertainties pertaining to customer orders, demand for products and services, and development of markets for the Company’s products and services and other risks identified in the Company’s SEC filings.  Actual results, events and performance may differ materially.  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.

 

The Company may provide non-GAAP financial measures (as defined by the SEC in Regulation G) in our earnings conference call and in any other Company presentations during the quarter.  Non-GAAP financial measures are intended to supplement the user’s overall understanding of the Company’s current financial performance and its future prospects. Any non-GAAP financial measures are not intended to replace the Company’s GAAP results.  The Company’s intention is to include the most directly comparable GAAP financial measures and a reconciliation of the differences between each non-GAAP financial measure used and the most directly comparable GAAP financial measure.

 

Readers are encouraged to refer to the risk disclosures described in the Company’s reports on Forms 10-K, 10-Q and 8K, as applicable.

 

Founded in 1966, Coherent, Inc. is a Standard & Poor’s SmallCap 600 company and a world leader in providing photonics based solutions to the commercial and scientific research markets. 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.

 

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