Coherent, Inc. Reports Second Fiscal Quarter Results

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Coherent, Inc.

Apr 26, 2012, 04:00 ET

SANTA CLARA, Calif., April 26, 2012 /PRNewswire/ -- Coherent, Inc. (NASDAQ, COHR), a world leader in providing photonics based solutions to the commercial and scientific research markets, today announced financial results for its second fiscal quarter ended March 31, 2012.

FINANCIAL HIGHLIGHTS

Three Months Ended

Six Months Ended

GAAP Results

(in millions except per share data)

Mar. 31,

Dec. 31,

April 2,

Mar. 31,

April 2,

2012

2011

2011

2012

2011

Bookings

$183.1

$201.8

$236.7

$385.0

$471.1

Net sales

$193.3

$190.8

$200.9

$384.1

$384.0

Net income

$16.2

$17.1

$23.7

$33.2

$42.8

Diluted EPS

$0.67

$0.71

$0.92

$1.38

$1.68











Non-GAAP Results

(in millions except per share data)

















Net income

$17.4

$19.7

$21.5

$37.1

$42.8

Diluted EPS

$0.73

$0.82

$0.83

$1.55

$1.68











SECOND FISCAL QUARTER DETAILS

For the second fiscal quarter ended March 31, 2012, Coherent announced net sales of $193.3 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $16.2 million, or $0.67 per diluted share.  These results compare to net sales of $200.9 million and net income of $23.7 million, or $0.92 per diluted share, for the second quarter of fiscal 2011.  Non-GAAP net income for the second quarter of fiscal 2012 was $17.4 million, or $0.73 per diluted share and excludes the release of tax reserves and related interest as a result of the closure of certain open state tax years.  Non-GAAP net income for the second quarter of fiscal 2011 was $21.5 million, or $0.83 per diluted share and excluded a gain of $6.1 million net of tax, or $0.24 per diluted share, primarily due to a currency translation benefit related to the dissolution of our Finland operations.  For a complete overview of the differences between GAAP and non-GAAP results, please see the reconciliation table included at the end of our release.

Net sales for the first quarter of fiscal 2012 were $190.8 million and net income, on a GAAP basis, was $17.1 million, or $0.71 per diluted share.  Non-GAAP net income for the first quarter of fiscal 2012 was $19.7 million, or $0.82 per diluted share.

Bookings received during the second fiscal quarter ended March 31, 2012 of $183.1 million decreased 22.6% from $236.7 million in the same fiscal quarter of the prior year and decreased by 9.3% compared to bookings of $201.8 million in the immediately preceding quarter.  The book-to-bill ratio was 0.95, resulting in backlog of $349.2 million at March 31, 2012, compared to a backlog of $365.5 million at December 31, 2011 and a backlog of $348.9 million at April 2, 2011.

"Materials processing orders strengthened in the second fiscal quarter, primarily due to demand recovery in China.  This was offset by order timing in both the scientific and FPD markets.  There are strong indications of bookings growth across most submarkets in the second half of fiscal 2012," said John Ambroseo, Coherent's President and Chief Executive Officer. "We also experienced higher than anticipated start-up and service costs for new products that negatively affected margins.  We project these costs to come down over the next few quarters," he added.

Coherent ended the quarter with cash and short term investments of $215.2 million, an increase of $12.1 million from cash and short term investments of $203.1 million at December 31, 2011.

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 either http://www.coherent.com/Investors/ or http://www.earnings.com. For those who are not able to listen to the live broadcast, the call will be archived for approximately three months on both web sites.  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

Six Months Ended

Mar. 31,

Dec. 31,

April 2,

Mar. 31,

April 2,

2012

2011

2011

2012

2011










Net sales

$193,284

$190,767

$200,880

$384,051

$383,991

Cost of sales (A) (B) (C)

115,636

110,408

112,111

226,044

212,828

Gross profit

77,648

80,359

88,769

158,007

171,163

Operating expenses:








Research & development (A) (B)

20,323

18,779

21,246

39,102

39,776

Selling, general & administrative (A) (B)

35,377

34,631

38,979

70,008

75,057

Intangibles amortization

1,611

1,636

2,257

3,247

4,352

Total operating expenses

57,311

55,046

62,482

112,357

119,185

Income from operations

20,337

25,313

26,287

45,650

51,978

Other income (expense), net (B) (C)

1,912

518

9,325

2,430

11,079

Income before income taxes

22,249

25,831

35,612

48,080

63,057

Provision for income taxes (D) (E)

6,094

8,780

11,889

14,874

20,221

Net income

$16,155

$17,051

$23,723

$33,206

$42,836










Net income per share:








Basic

$0.69

$0.73

$0.94

$1.41

$1.72

Diluted

$0.67

$0.71

$0.92

$1.38

$1.68










Shares used in computation:








Basic

23,521

23,462

25,246

23,491

24,967

Diluted

23,996

23,961

25,832

23,979

25,550












(A)   

Stock-related 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

Six Months Ended

Mar. 31,

Dec. 31,

April 2,

Mar. 31,

April 2,

2012

2011

2011

2012

2011

Cost of sales

$441

$369

$344

$810

$588

Research & development

431

393

363

824

700

Selling, general & administrative

3,288

3,260

2,454

6,548

4,796

Impact on income from operations

$4,160

$4,022

$3,161

$8,182

$6,084














For the quarters ended March 31, 2012, December 31, 2011, and April 2, 2011, the impact on net income, net of tax was $2,895 ($0.12 per diluted share), $2,694 ($0.11 per diluted share) and $2,312 ($0.09 per diluted share), respectively. For the six months ended March 31, 2012 and April 2, 2011, the impact on net income, net of tax was $5,589 ($0.23 per diluted share) and $4,560 ($0.18 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

Six Months Ended

Mar. 31,

Dec. 31,

April 2,

Mar. 31,

April 2,

2012

2011

2011

2012

2011

Cost of sales

$46

$4

$53

$50

$103

Research & development

213

19

211

232

406

Selling, general & administrative

1,439

116

1,621

1,555

3,116

Impact on income from operations

$1,698

$139

$1,885

$1,837

$3,625

For the quarters ended March 31, 2012, December 31, 2011 and April 2, 2011, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $1,541, expense of $54 and income of $3,117, respectively. For the six months ended March 31, 2012 and April 2, 2011, the impact on other income (expense) net was income of $1,487 and net income of $4,670, respectively.


(C)  

The three and six months ended April 2, 2011 include $5,918 ($6,113 net of tax ($0.24 per diluted share)) gain from the dissolution of our Finland operations, of which a charge of $593 is recorded in cost of sales and a benefit of $6,511 is recorded in other income (expense), net.


(D)

The three and six months ended March 31, 2012 include $1,647 ($0.07 per diluted share) release of tax reserves and related interest as a result of the closure of open tax years.


(E)

The three and six months ended April 2, 2011 include $1,549 ($0.06 per diluted share) increase in valuation allowances against deferred tax assets.


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



March 31,

2012

October 1,

2011

ASSETS


Current assets:


Cash, cash equivalents and short-term investments                               

$215,175

$220,203

Accounts receivable, net                                                                               

126,588

141,037

Inventories                                                                                                      

157,057

152,385

Prepaid expenses and other assets                                                              

81,148

67,021

Total current assets                                                                                    

579,968

580,646

Property and equipment, net                                                                           

114,439

104,504

Other assets                                                                                                         

153,614

158,116

Total assets                                                                                                 

$848,021

$843,266




LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:


Current portion of long-term obligations                                                   

$ 16

$ 15

Accounts payable                                                                                          

40,831

39,841

Other current liabilities                                                                                  

112,724

122,549

Total current liabilities                                                                               

153,571

162,405

Other long-term liabilities                                                                                  

57,605

62,860

Total stockholders' equity                                                                                

636,845

618,001

Total liabilities and stockholders' equity                                               

$848,021

$843,266

Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, net of tax):


Three Months Ended

Six Months Ended

Mar. 31,

2012

Dec.  31,

2011

April 2,

2011

Mar. 31,

2012

April 2,

2011

GAAP net income

$16,155

$17,051

$23,723

$33,206

$42,836

Stock-related compensation expense

2,895

2,694

2,312

5,589

4,560

Gain on Finland dissolution

--

--

(6,113)

--

(6,113)

One-time tax expense (release)

(1,647)

--

1,549

(1,647)

1,549

Non-GAAP net income

$17,403

$19,745

$21,471

$37,148

$42,832










Non-GAAP net income per diluted share

$  0.73

$  0.82

$  0.83

$  1.55

$  1.68

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 timing for bookings growth across our submarkets and the timing of a reduction in start-up and service costs. 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, our successful implementation of our customer design wins, our and our customers' exposure to risks associated with worldwide economic conditions and, 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 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, government economic policies in China and other regions of the world and other risks identified in the Company'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 a world leader in providing photonics based solutions to the commercial and scientific research markets and part of the Russell 2000. 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.

SOURCE Coherent, Inc.