SANTA CLARA, CA, January 29, 2014 -- 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 first fiscal quarter ended December 28, 2013.

FINANCIAL HIGHLIGHTS

Three Months Ended

Dec. 28,
2013

Sept. 28,
2013

Dec. 29,
2012

GAAP Results

(in millions except per share data)

Bookings

$

201.5

$

200.3

$

176.0

Net sales

$

193.6

$

213.1

$

183.2

Net income

$

11.7

$

20.5

$

14.2

Diluted EPS

$

0.47

$

0.83

$

0.58

Non-GAAP Results

(in millions except per share data)

Net income

$

17.1

$

25.6

$

18.6

Diluted EPS

$

0.68

$

1.03

$

0.77

FIRST FISCAL QUARTER DETAILS

For the first fiscal quarter ended December 28, 2013, Coherent announced net sales of $193.6 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $11.7 million, or $0.47 per diluted share.  These results compare to net sales of $183.2 million and net income of $14.2 million, or $0.58 per diluted share, for the first quarter of fiscal 2013.

Non-GAAP net income for the first quarter of fiscal 2014 was $17.1 million, or $0.68 per diluted share.  Non-GAAP net income for the first quarter of fiscal 2013 was $18.6 million, or $0.77 per diluted share. Beginning in the second quarter of fiscal 2013, the company revised its presentation of non-GAAP net income and non-GAAP diluted EPS for all periods presented to exclude the effect of intangibles amortization and inventory step up costs. For a complete overview of the differences between GAAP and non-GAAP results, please see the reconciliation table included at the end of this release.

Net sales for the fourth quarter of fiscal 2013 were $213.1 million and net income, on a GAAP basis, was $20.5 million, or $0.83 per diluted share. Non-GAAP net income for fourth quarter of fiscal 2013 was $25.6 million, or $1.03 per diluted share.

Bookings received during the first fiscal quarter ended December 28, 2013 of $201.5 million increased 14.5% from $176.0 million in the same prior year period and increased by 0.6% compared to bookings of $200.3 million in the immediately preceding quarter.  The book-to-bill ratio was 1.04, and ending backlog expected to ship in the next 12 months was $285.9 million at December 28, 2013, compared to a backlog of $285.8 million at September 28, 2013 and a backlog of $348.1 million at December 29, 2012.

"Despite first quarter sales and income that were below our expectations due in large part to unexpected softness in the advanced packaging market, recent bookings suggest the long-term outlook remains positive.   First quarter orders in components and instrumentation were very strong for clinical applications in bioinstrumentation and cataract and LASIK in ophthalmology.  Scientific bookings improved as did U.S. market sentiment as funding was restored following the Ryan-Murray budget deal.   In the materials processing market, demand for high power fiber and carbon dioxide lasers helped set a new first quarter bookings record, "said John Ambroseo, Coherent's President and CEO.  "In the beginning of our second quarter, Coherent received record orders of $101.4 million for FPD annealing lasers.  The orders included a number of Vyper™/Linebeam 750 laser systems as well as several units of a higher-performance system derived from our Linebeam 1300 product.  These advanced systems have an average selling price of $20 million and first deliveries will occur in fiscal 2015.  The overall strength of the commercial business should allow us to expand our gross margin and sustain solid cash generation," Ambroseo concluded.

Coherent ended the quarter with cash, cash equivalents and short term investments of $273.7 million, an increase of $23.6 million from cash, cash equivalents and short term investments of $250.1 million at September 28, 2013.

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

Dec. 28,
2013

Sept. 28,
2013

Dec. 29,
2012

Net Sales

$

193,556

$

213,141

$

183,202

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

116,010

128,100

105,567

Gross profit

77,546

85,041

77,635

Operating expenses:

      Research & development (A)(B)

20,937

21,556

19,301

Selling, general & administrative (A)(B)

39,891

36,437

36,982

Intangibles amortization (C)

934

988

854

Total operating expenses

61,762

58,981

57,137

Income from operations

15,784

26,060

20,498

Other income (expense), net (B)

(220)

(308)

(1,437)

Income before income taxes

15,564

25,752

19,061

Provision for income taxes

3,861

5,237

4,908

Net income

$

11,703

$

20,515

$

14,153

Net income per share:

   Basic

$

0.48

$

0.84

$

0.60

   Diluted

$

0.47

$

0.83

$

0.58

Shares used in computations:

   Basic

24,542

24,385

23,770

   Diluted

24,915

24,836

24,222

(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

Dec. 28,
2013

Sept. 28,
2013

Dec. 29,
2012

Cost of sales

$

538

$

546

$

435

Research & development

522

454

476

Selling, general & administrative

3,808

3,615

4,083

Impact on income from operations

$

4,868

$

4,615

$

4,994

For the quarters ended December 28, 2013, September 28, 2013 and December 29, 2012, the impact on net income, net of tax was $3,529 ($0.14 per diluted share), $3,146 ($0.13 per diluted share) and $3,511 ($0.14 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

Dec. 28,
2013

Sept. 28,
2013

Dec. 29,
2012

Cost of sales

$

68

$

3

$

14

Research & development

296

3

62

Selling, general & administrative

1,823

(22)

426

Impact on income from operations

$

2,187

$

(16)

$

502

For the quarters ended December 28, 2013, September 28, 2013 and December 29, 2012, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $1,877, expense of $163 and income of $294, respectively.

(C) For the quarters ended December 28, 2013,  September 28, 2013 and December 29, 2012, the impact of amortization of intangibles expense was $2,445 ($1,823 net of tax ($0.07 per diluted share)), $2,454 ($1,912 net of tax ($0.08 per diluted share)) and $1,181 ($867 net of tax ($0.04 per diluted share)).

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

Dec. 28,
2013

Sept. 28,
2013

ASSETS

Current assets:

   Cash, cash equivalents and short-term investments

$

273,677

$

250,110

   Accounts receivable, net

115,680

136,759

   Inventories

170,958

168,067

   Prepaid expenses and other assets

73,061

74,290

      Total current assets

633,376

629,226

Property and equipment, net

114,405

114,333

Other assets

224,239

222,919

      Total assets

$

972,020

$

966,478

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

   Current portion of long-term obligations

$

-

$

2

   Accounts payable

30,689

36,565

   Other current liabilities

100,612

109,261

      Total current liabilities

131,301

145,828

Other long-term liabilities

65,211

62,132

Total stockholders' equity

775,508

758,518

      Total liabilities and stockholders' equity

$

972,020

$

966,478

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

Three Months Ended

Dec. 28,
2013

Sept. 28,
2013

Dec. 29,
2012

GAAP net income

$

11,703

$

20,515

$

14,153

Stock-related compensation expense

3,529

3,146

3,511

Intangibles amortization

1,823

1,912

867

Inventory step-up

-

-

64

Non-GAAP net income

$

17,055

$

25,573

$

18,595

Non-GAAP net income per diluted share

$

0.68

$

1.03

$

0.77

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 Company's long-term outlook, the timing for deliveries of the Company's products and the Company's ability to expand gross margin and sustain cash generation. 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, growth in demand for the Company's ELA products, the worldwide demand for flat panel displays, the demand for and use of short-pulse lasers in commercial applications, our successful implementation of our customer design wins, our and our customers' exposure to risks associated with worldwide economic conditions, the mix and pricing of our products, our ability to control expenses,  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 and other risks identified in the Co

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