EX-99.1 2 q416earningsreleaseexhibit.htm PRESS RELEASE EXHIBIT Exhibit



Exhibit 99.1


coherentlogoa09.jpg
 
 
PRESS RELEASE
Editorial Contact:
 
For Release:
Kevin Palatnik
 
IMMEDIATE
(408) 764-4110
 
November 2, 2016
 
 
No. 1395


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

SANTA CLARA, CA, November 2, 2016 -- Coherent, Inc. (NASDAQ, COHR), a world leader in providing lasers and laser-based technology for scientific, commercial and industrial customers, today announced financial results for its fourth fiscal quarter and fiscal year ended October 1, 2016.

FINANCIAL HIGHLIGHTS

 
Three Months Ended

Year Ended
 
Oct. 1, 2016

July 2, 2016

Oct. 3, 2015

Oct. 1, 2016

Oct. 3, 2015
GAAP Results
 
 
 
 
 
 
 
 
 
(in millions except per share data)
 
 
 
 
 
 
 
 
Net sales
$
248.5

 
$
218.8

 
$
209.6

 
$
857.4

 
$
802.5

Net income
$
30.8

 
$
18.7

 
$
27.3

 
$
87.5

 
$
76.4

Diluted EPS
$
1.25

 
$
0.76

 
$
1.10

 
$
3.58

 
$
3.06

 
 
 
 
 
 
 
 
 
 
Non-GAAP Results
 
 
 
 
 
 
 
 
 
(in millions except per share data)
 
 
 
 
 
 
 
 
Net income
$
40.5

 
$
26.2

 
$
31.2

 
$
115.9

 
$
97.1

Diluted EPS
$
1.65

 
$
1.07

 
$
1.25

 
$
4.75

 
$
3.89



FOURTH FISCAL QUARTER AND FISCAL YEAR DETAILS

For the fourth fiscal quarter ended October 1, 2016, Coherent announced net sales of $248.5 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $30.8 million, or $1.25 per diluted share. These results compare to net sales of $209.6 million and net income of $27.3 million, or $1.10 per diluted share, for the fourth quarter of fiscal 2015.

Non-GAAP net income for the fourth quarter of fiscal 2016 was $40.5 million, or $1.65 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2015 was $31.2 million, or $1.25 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended October 1, 2016, July 2, 2016 and October 3, 2015, and for the fiscal years ended October 1, 2016 and October 3, 2015 appear in the financial statements portion of this release under the heading “Reconciliation of GAAP to Non-GAAP net income."

Net sales for the third quarter of fiscal 2016 were $218.8 million and net income, on a GAAP basis, was $18.7 million, or $0.76 per diluted share. Non-GAAP net income for the third quarter of fiscal 2016 was $26.2 million, or $1.07 per diluted share.

Ending backlog expected to ship in the next 12 months was $605.3 million at October 1, 2016, compared to a backlog of $564.5 million at July 2, 2016 and a backlog of $309.5 million at October 3, 2015.




Exhibit 99.1



For the fiscal year ended October 1, 2016, Coherent posted net sales of $857.4 million and net income of $87.5 million, or $3.58 per diluted share, on a GAAP basis compared to the prior year net sales of $802.5 million and net income on a GAAP basis of $76.4 million, or $3.06 per diluted share. For the fiscal year ended October 1, 2016, Coherent posted net income on a non-GAAP basis of $115.9 million, or $4.75 per diluted share, compared to the prior year net income on a non-GAAP basis of $97.1 million, or $3.89 per diluted share.

As previously announced, on March 16, 2016, Coherent entered into a definitive agreement to acquire Rofin-Sinar Technologies, Inc. ("Rofin"), one of the world's leading developers and manufacturers of high-performance industrial laser sources and laser-based solutions and components. The acquisition will be an all-cash transaction at a price of $32.50 per share of Rofin common stock for a total approximate offer value of $942 million before fees and transaction costs. Pending completion of certain administrative matters, Coherent expects to close its acquisition of Rofin within the first few weeks of November, 2016.

“Coherent had a very strong fourth fiscal quarter that capped a record setting year.  Mix and volume were favorably aligned, especially within our FPD business, enabling us to handily exceed the high end of our long-term EBITDA goals.  Record backlog and a strong order pipeline have us very well positioned for fiscal 2017,” said John Ambroseo, Coherent’s President and CEO.  “We are also pleased to have received clearance from the European Commission to complete the acquisition of Rofin conditional on the divestment of Rofin’s low-power CO2 business in Hull, England.” Ambroseo added.

Coherent ended the year with cash, cash equivalents and short term investments of $400.0 million, an increase of $26.4 million from cash, cash equivalents and short term investments of $373.6 million at July 2, 2016.

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 http://www.coherent.com/Investors/. 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 website. A transcript of management’s prepared remarks can be found at http://www.coherent.com/Investors/.






Exhibit 99.1


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

 
 
Three Months Ended
 
Year Ended
 
 
Oct. 1, 2016

July 2, 2016

Oct. 3, 2015

Oct. 1, 2016

Oct. 3, 2015
 
 
 
 
 
 
 
 
 
 
 
Net Sales
$
248,461

$
218,767

$
209,622

$
857,385

$
802,460

Cost of sales(A)(B)(E)(G)(H)
 
134,125

 
124,208

 
118,628

 
475,993

 
467,061

Gross profit
 
114,336

 
94,559

 
90,994

 
381,392

 
335,399

Operating expenses:
 


 


 


 


 


Research & development(A)(B) 
 
20,265

 
21,441

 
19,988

 
81,801

 
81,455

Selling, general & administrative(A)(B)(F)
 
45,168

 
46,256

 
36,052

 
169,138

 
149,829

Gain from business combination (C)
 
—

 
—

 
(1,316
)
 
—

 
(1,316
)
Impairment of investment (D) 
 
—

 
—

 
—

 
—

 
2,017

Amortization of intangible assets(E) 
 
864

 
574

 
658

 
2,839

 
2,667

Total operating expenses
 
66,297

 
68,271

 
55,382

 
253,778

 
234,652

Income from operations
 
48,039

 
26,288

 
35,612

 
127,614

 
100,747

Other income (expense), net(B)(J)
 
(3,568
)
 
852

 
(1,876
)
 
(4,718
)
 
(1,179
)
Income before income taxes
 
44,471

 
27,140

 
33,736

 
122,896

 
99,568

Provision for income taxes (I)
 
13,686

 
8,490

 
6,434

 
35,394

 
23,159

Net income
$
30,785

$
18,650

$
27,302

$
87,502

$
76,409

 
 


 


 


 


 


Net income per share:
 


 


 


 


 


Basic
$
1.27

$
0.77

$
1.11

$
3.62

$
3.09

Diluted
$
1.25

$
0.76

$
1.10

$
3.58

$
3.06

 
 


 


 


 


 


Shares used in computations:
 


 
 

 


 


 


Basic
 
24,244

 
24,192

 
24,632

 
24,142

 
24,754

Diluted
 
24,582

 
24,467

 
24,914

 
24,415

 
24,992



(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
 
 
Oct. 1, 2016

July 2, 2016

Oct. 3, 2015

Oct. 1, 2016

Oct. 3, 2015
Cost of sales
$
682

$
677

$
593

$
2,558

$
2,530

Research & development
 
622

 
610

 
531

 
2,268

 
1,946

Selling, general & administrative
 
4,032

 
4,402

 
3,371

 
15,331

 
13,756

Impact on income from operations
$
5,336

$
5,689

$
4,495

$
20,157

$
18,232


For the quarters ended Oct. 1, 2016, July 2, 2016 and Oct. 3, 2015, the impact on net income, net of tax was $3,890 ($0.16 per diluted share), $4,101 ($0.17 per diluted share) and $3,253 ($0.13 per diluted share), respectively. For the years ended Oct. 1, 2016 and Oct. 3, 2015, the impact on net income, net of tax was $15,261 ($0.63 per diluted share) and $13,985 ($0.56 per diluted share), respectively.





Exhibit 99.1


(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
 
 
Oct. 1, 2016

July 2, 2016

Oct. 3, 2015

Oct. 1, 2016

Oct. 3, 2015
Cost of sales
$
43

$
69

$
(55
)
$
78

$
(13
)
Research & development
 
167

 
330

 
(236
)
 
333

 
(52
)
Selling, general & administrative
 
883

 
1,619

 
(1,301
)
 
1,719

 
(100
)
Impact on income from operations
$
1,093

$
2,018

$
(1,592
)
$
2,130

$
(165
)

For the quarters ended Oct. 1, 2016, July 2, 2016 and Oct. 3, 2015, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $1,007, income of $1,867 and expense of $1,467, respectively. For the years ended Oct. 1, 2016 and Oct. 3, 2015, the impact on other income (expense) net from gain or losses on deferred compensation plan assets was income of $1,988 and expense of $95, respectively.

(C)
For the quarter and year ended Oct. 3, 2015, the gain from business combination was $1,316 ($0.05 per diluted share).

(D)
For year ended Oct. 3, 2015, the impairment of our investment in SiOnyx, Inc., a private corporation, was $2,017 ($1,274 net of tax ($0.05 per diluted share)).

(E)
For the quarters ended Oct. 1, 2016, July 2, 2016 and Oct. 3, 2015, the impact of amortization of intangible expense was $2,249 ($1,554 net of tax ($0.06 per diluted share)), $2,032 ($1,400 net of tax ($0.06 per diluted share)) and $2,068 ($1,643 net of tax ($0.07 per diluted share)), respectively. For the years ended Oct. 1, 2016 and Oct. 3, 2015, the impact of amortization of intangible expense was $8,450 ($5,824 net of tax ($0.24 per diluted share)) and $8,244 ($6,222 net of tax ($0.25 per diluted share)), respectively.

(F)
The quarter ended Oct. 1, 2016 and July 2, 2016 included $3,177 ($2,077 net of tax ($0.08 per diluted share)) and $3,050 ($2,012 net of tax ($0.08 per diluted share)), respectively, of costs related to the recently announced agreement to acquire Rofin. The year ended Oct.1, 2016 included $9,811 ($6,353 net of tax ($0.26 per diluted share)) of costs related to the recently announced agreement to acquire Rofin.

(G)
For the quarter and year ended Oct. 3, 2015, the impact of inventory step-up costs related to acquisitions was $579 ($366 net of tax ($0.01 per diluted share)).

(H)
For the year ended Oct. 3, 2015, the impact of an accrual related to an ongoing customs audit was $1,315 ($1,289 net of tax ($0.05 per diluted share)).

(I)
The years ended Oct. 1, 2016 and Oct. 3, 2015 included $1,221 ($0.05 per diluted share) and $1,118 ($0.04 per diluted share) non-recurring tax benefit from the renewal of the R&D tax credit for fiscal 2015 and fiscal 2014, respectively.

(J)
For the quarter and year ended Oct. 1, 2016, the loss on our hedge of the Barclays debt commitment was $2,234 ($1,413 net of tax ($0.06 per diluted share)) and interest expense on the Barclays debt commitment was $1,089 ($754 net of tax ($0.03 per diluted share)).












Exhibit 99.1



Summarized balance sheet information is as follows (unaudited, in thousands):
 
 
Oct. 1, 2016
 
Oct. 3, 2015
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash, cash equivalents and short-term investments
$
399,953

$
325,515

Accounts receivable, net
 
165,715

 
142,260

Inventories
 
212,898

 
156,614

Prepaid expenses and other assets
 
37,073

 
28,294

Total current assets
 
815,639

 
652,683

Property and equipment, net
 
127,443

 
102,445

Other assets
 
218,066

 
213,819

Total assets
$
1,161,148

$
968,947

 
 


 


LIABILITIES AND STOCKHOLDERS' EQUITY
 


 


Current liabilities:
 
 

 
 

Short-term borrowings
$
20,000

$
—

Accounts payable
 
45,182

 
33,379

Other current liabilities
 
136,312

 
89,211

Total current liabilities
 
201,494

 
122,590

Other long-term liabilities
 
48,826

 
49,939

Total stockholders’ equity
 
910,828

 
796,418

Total liabilities and stockholders’ equity
$
1,161,148

$
968,947

Certain reclassifications have been made to prior year amounts to conform to the current year’s presentation.


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

 
 
Three Months Ended
 
Year Ended
 
 
Oct. 1, 2016
 
July 2, 2016
 
Oct. 3, 2015
 
Oct. 1, 2016

Oct. 3, 2015
GAAP net income
$
30,785

$
18,650

$
27,302

$
87,502

$
76,409

Stock-based compensation expense
 
3,890

 
4,101

 
3,253

 
15,261

 
13,985

Amortization of intangible assets
 
1,554

 
1,400

 
1,643

 
5,824

 
6,222

Customs audit
 
—

 
—

 
—

 
—

 
1,289

Non-recurring tax benefit
 
—

 
—

 
—

 
(1,221
)
 
(1,118
)
Impairment of investment
 
—

 
—

 
—

 
—

 
1,274

Acquisition-related costs
 
2,077

 
2,012

 
—

 
6,353

 
—

Interest expense on Barclays debt commitment

 
754

 
—

 
—

 
754

 
—

Loss on hedge of Barclays debt commitment

 
1,413

 
—

 
—

 
1,413

 
—

Gain from business combination
 
—

 
—

 
(1,316
)
 
—

 
(1,316
)
Inventory step-up on acquisition
 
—

 
—

 
366

 
—

 
366

Non-GAAP net income
$
40,473

$
26,163

$
31,248

$
115,886

$
97,111

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net income per diluted share
$
1.65

$
1.07

$
1.25

$
4.75

$
3.89








Exhibit 99.1








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 position of the Company for 2017 and the timing of the closing of the Rofin merger. 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, growth in demand for our products, the worldwide demand for flat panel displays, the demand for and use of the Company’s products in commercial applications, 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, customer acceptance and adoption of our new product offerings, 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 product offerings, worldwide government economic policies, the risk the merger with Rofin may not be completed in a timely manner or at all, the failure to satisfy the conditions to consummation of the merger, the occurrence of any event, change or circumstance that could give rise to termination of the merger agreement, the effect of the announcement of the merger on business relationships, operating result and business generally, challenges and costs of closing, integrating and achieving anticipated synergies, the risk that the proposed merger disrupts current plans and operations and potential employee retention difficulties, risks related to diverting management’s attention from ongoing business operations, the outcome of any legal proceedings that may be instituted related to the merger agreement, and other risks identified in the Company’s and Rofin’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.































Exhibit 99.1


Founded in 1966, Coherent, Inc. is one of the world’s leading providers of lasers and laser-based technology for scientific, commercial and industrial customers. Our common stock is listed on the Nasdaq Global Select Market and is part of the Russell 2000 and Standard & Poor’s SmallCap 600 Index. For more information about Coherent, visit the Company's Web site 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