<PAGE>
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 April 2, 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)
(408) 764-4000
(Registrant's telephone number, including area code)
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 May 3, 1994 was 10,156,780 shares.
<PAGE>
COHERENT, INC.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION:
Consolidated Condensed Statements of Income --
Three months and six months ended April 2, 1994
and March 27, 1993 3
Consolidated Condensed Balance Sheets --
April 2, 1994 and September 25, 1993 4
Consolidated Condensed Statements of Cash Flows --
Six months ended April 2, 1994 and March 27, 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
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PART I. FINANCIAL INFORMATION
COHERENT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
------------- ------------
APRIL 2, March 27, APRIL 2, MARCH 27,
1994 1993 1994 1993
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 55,215 $ 51,329 $ 102,241 $ 98,077
COST OF SALES 27,892 25,815 51,983 49,323
- - -----------------------------------------------------------------------------------------------------
GROSS PROFIT 27,323 25,514 50,258 48,754
- - -----------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Research and development 6,430 5,802 11,950 10,626
Selling, general and administrative 16,052 15,153 30,873 29,906
- - -----------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 22,482 20,955 42,823 40,532
- - -----------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 4,841 4,559 7,435 8,222
OTHER INCOME (EXPENSE):
Interest and dividend income 538 367 997 749
Interest expense (427) (425) (879) (872)
Foreign exchange gain (loss) 91 (18) (149) (58)
Other - net (45) 88 78 472
- - -----------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME, NET 157 12 47 291
- - -----------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 4,998 4,571 7,482 8,513
PROVISION FOR INCOME TAXES 2,042 1,682 3,097 3,144
- - -----------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 2,956 2,889 4,385 5,369
LOSS FROM DISCONTINUED OPERATIONS
(NET OF TAX BENEFIT OF $147 AND $669,
(RESPECTIVELY) (889) (1,542)
- - -----------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES 2,000 3,827
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES 5,637
- - -----------------------------------------------------------------------------------------------------
NET INCOME $ 2,956 $ 2,000 $ 4,385 $ 9,464
- - -----------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 10,289 9,971 10,274 9,892
- - -----------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------
COMMON AND COMMON EQUIVALENT
PER SHARE DATA:
INCOME FROM CONTINUING OPERATIONS $ .29 $ .29 $ .43 $ .54
LOSS FROM DISCONTINUED OPERATIONS (.09) (.15)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES .57
- - -----------------------------------------------------------------------------------------------------
NET INCOME $ .29 $ .20 $ .43 $ .96
- - -----------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
COHERENT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE PER SHARE)
<TABLE>
<CAPTION>
APRIL 2, SEPTEMBER 25,
1994 1993
- - ----------------------------------------------------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 26,524 $ 27,923
Short-term investments 14,376 9,195
Accounts receivable - net of allowances of
$3,145 in 1994 and $3,025 in 1993 45,392 43,806
Other receivables, net 6,463 7,215
Inventories 37,632 35,792
Prepaid expenses and other assets 4,884 7,070
Net assets of discontinued operations 137 137
Deferred tax assets 11,768 13,119
- - ----------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 147,176 144,257
- - ----------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT 79,341 72,582
ACCUMULATED DEPRECIATION AND AMORTIZATION (36,611) (33,976)
- - ----------------------------------------------------------------------------------------
Property and equipment - net 42,730 38,606
- - ----------------------------------------------------------------------------------------
GOODWILL - net of accumulated amortization of
$3,187 in 1994 and $4,434 in 1993 4,778 4,772
NET ASSETS OF DISCONTINUED OPERATIONS 1,839 1,916
OTHER ASSETS 3,252 4,245
- - ----------------------------------------------------------------------------------------
$199,775 $193,796
- - ----------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 4,764 $ 5,666
Current portion of long-term obligations 6,075 3,832
Accounts payable 6,210 7,041
Income taxes payable 422 1,355
Other current liabilities 37,317 38,068
- - ----------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 54,788 55,962
- - ----------------------------------------------------------------------------------------
LONG-TERM OBLIGATIONS 15,439 14,122
DEFERRED INCOME 1,558 1,340
DEFERRED TAX LIABILITIES 1,416 1,543
MINORITY INTEREST IN SUBSIDIARIES 4,031 3,806
STOCKHOLDERS' EQUITY:
Common stock, par value $.01
Authorized - 50,000 shares
Outstanding - 10,152 in 1994 and 9,617 in 1993 101 98
Additional paid-in capital 66,527 64,457
Notes receivable from stock sales (1,688) (1,310)
Retained earnings 57,087 52,702
Accumulated translation adjustment 516 1,076
- - ----------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 122,543 117,023
- - ----------------------------------------------------------------------------------------
$199,775 $193,796
- - ----------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
<PAGE>
COHERENT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED; IN THOUSANDS)
<TABLE>
<CAPTION>
SIX
MONTHS ENDED
-----------------------------
APRIL 2, MARCH 27,
1994 1993
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
OPERATING ACTIVITIES:
Net income $ 4,385 $ 9,464
Adjustments to reconcile to net cash
provided by operating activities:
Discontinued operations 1,542
Cumulative effect of change in accounting
for income taxes (5,637)
Changes in assets and liabilities 6,120 4,336
Other adjustments (2,865) 1,887
- - ----------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,640 11,592
- - ----------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of short-term investments (32,662) (34,868)
Proceeds from sales of short-term investments 27,481 31,295
Purchases of property and equipment - net (6,829) (8,566)
Purchase of Vinten Electro-Optics Ltd. (1,500)
Other - net (100) (1,229)
- - -----------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (13,610) (13,368)
- - ----------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Long-term debt borrowings 8,720 2,672
Long-term debt repayments (4,858) (1,247)
Notes payable borrowings 3,038 2,589
Notes payable repayments (3,938) (3,758)
Repayments of capital lease obligations (273) (248)
Sales of shares under employee benefit plans 1,570 1,056
- - ----------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,259 1,064
- - ----------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND EQUIVALENTS 312 (674)
- - ----------------------------------------------------------------------------------------
Net decrease in cash and equivalents (1,399) (1,386)
Cash and equivalents beginning of period 27,923 17,643
- - ----------------------------------------------------------------------------------------
CASH AND EQUIVALENTS END OF PERIOD $ 26,524 $ 16,257
- - ----------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
5
<PAGE>
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 reflected in the Company's annual report to
stockholders for the year ended September 25, 1993. All adjustments
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 when the
exercise price is less than the average market price for the period and
shares subscribed under the Employee Stock Purchase Plan.
No dividends were paid in fiscal 1994 or 1993.
3. Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories are as follows:
<TABLE>
<CAPTION>
April 2, September 25,
1994 1993
- - -------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Purchased parts and assemblies $10,856 $11,556
Work-in-process 13,868 12,859
Finished goods 12,908 11,377
- - -------------------------------------------------------------------------------
$37,632 $35,792
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
</TABLE>
4. Other current liabilities consist of the following:
<TABLE>
<CAPTION>
April 2, September 25,
1994 1993
- - -------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Accrued expenses $10,851 $11,930
Accrued payroll and benefits 9,835 9,288
Customer deposits 1,112 564
Reserve for warranty 5,284 5,814
Deferred service income 7,179 7,135
Discontinued operations 3,056 3,337
- - -------------------------------------------------------------------------------
Other current liabilities $37,317 $38,068
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
</TABLE>
5. In October 1993, the Company acquired the business and net assets of Vinten
Electro-Optics Ltd. (VEOL), a wholly-owned subsidiary of Vinten Group plc
located in Leicester, England, for approximately $1.5 million in cash. The
acquisition has been accounted for as a purchase and accordingly, the
Company has recorded approximately $0.3 million of goodwill which is being
amortized over five years. VEOL is a supplier of optical components and
windows for infra-red imaging systems built in Western Europe. The
subsidiary is operating as Coherent Optics
6
<PAGE>
Europe Ltd. (COEL) and had current quarter and year-to-date sales of
approximately $1.4 million and $2.6 million, respectively.
6. Effective February 2, 1994, the Company purchased its previously leased
optics facility located at 2301 Lindbergh Street, Auburn, California for
$3.7 million in cash.
7. In February 1994, the Company acquired 37% ownership interest in Infrared
Fiber Systems, Inc. (IFS) located in Silver Spring, Maryland, for $0.4
million in cash and the guarantee of a $0.2 million bank note payable.
Coherent also obtained certain exclusive distribution rights to IFS's
patented fibers for erbium lasers. The consideration in excess of net book
value acquired ($0.5 million) has been associated with the rights and is
being amortized over a five year period.
8. Loss from discontinued operations of $0.9 million ($.09 per common share)
in the prior year's second quarter resulted from net sales of $3.7 million.
Loss from discontinued operations of $1.5 million ($.15 per common share)
in the prior year's six months ended March 27, 1993 resulted from net sales
of $7.2 million.
9. 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 condensed financial
position or results of operations.
For several years, agencies of the State of California have been conducting
an investigation of soil and groundwater contamination at and in the
vicinity of the Stanford Industrial Park in Palo Alto, California, where
the Company's Laser Group was formerly located. During fiscal 1989, the
Company, as expected, was named, along with several other companies, as a
respondent on a remedial action order issued by the California Department
of Toxic Substance Control for a Regional Area adjacent to Stanford
Industrial Park. The Responding Parties to the Regional Order (which
includes the Company) have submitted Remedial Investigation and Feasibility
Reports to the State of California. The Responding Parties have installed
one initial remedial system and construction of three additional initial
remedial systems is scheduled for completion in August 1994. The Company's
interim cost share of this Regional Investigation and Remedial Action was
$0.1 million in both the current quarter and the prior year's second
quarter, and $0.2 million for both the six months ended April 2, 1994 and
in the corresponding prior year six-month period.
The Company was also named, along with other parties, to a remedial action
order for the former 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. The Company incurred actual costs of $0.4 million
and $0.6 million in the current quarter and six months ended April 2, 1994,
respectively, relating to the Site Investigation and Remedial Action,
compared to $0.2 million and $0.3 million, in the corresponding prior year
periods. Management anticipates that past and future site costs will be
shared with the other parties currently named to the order.
Although the Company cannot presently estimate its ultimate liability
relating to the remediation of the soil and groundwater contamination
described above, preliminary management estimates anticipate such liability
to approximate $1.5 million, which is the amount the Company has accrued in
fiscal 1992 and 1993. Based on currently available information, the Company
believes 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
7
<PAGE>
the consolidated financial position or results of operations of the
Company.
10. In April 1994, the Company acquired the beam diagnostic product line of Big
Sky Laser Technologies, Inc. located in Bozeman, Montana, for $0.9 million,
and accordingly has recorded $0.5 million of goodwill which will be
amortized over three to five years. All related activities, including
sales, support, development and manufacturing will be moved to the
Company's facility in Auburn, California.
11. Certain amounts in the September 25, 1993 consolidated condensed balance
sheet have been reclassed to conform with the current year presentation.
8
<PAGE>
COHERENT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONSOLIDATED SUMMARY
The Company's net income for the current quarter and six months ended April
2, 1994 was $3.0 million ($.29 per common share) and $4.4 million ($.43 per
common share), respectively, compared to $2.0 million ($.20 per common share)
and $9.5 million ($.96 per common share), in the corresponding prior year
periods. Results for the prior year's six-month period include a one-time
favorable adjustment of $5.6 million ($.57 per common share) resulting from the
adoption of Statement of Financial Accounting Standards (SFAS) 109, "Accounting
for Income Taxes". Furthermore, results for the prior year's quarter and six
month periods reflect a $0.9 million loss ($.09 per common share) and a $1.5
million loss, ($.15 per common share), respectively, net of tax benefits, due to
the divestiture of the Industrial business segment in the quarter ended
September 1993. Income from continuing operations before income taxes increased
$0.4 million (9%) for the current quarter but decreased $1.0 million (12%) for
the six months ended April 2, 1994 compared to the same prior year periods. The
current quarter increase was primarily due to increased gross profits of $1.8
million from higher sales, partially offset by increased operating expenses of
$1.5 million. The year-to-date decrease was primarily due to increased gross
profits of $1.5 million offset by increased operating expenses of $2.3 million
and lower other income, net of $0.2 million. Additionally, the effective tax
rate for the six months ended April 2, 1994 increased to 41% compared to 37% for
the same prior year period due to a change in the distribution of earnings and
losses in different tax jurisdictions at different tax rates.
All prior year amounts have been adjusted to reflect the discontinued
operations of the Company's Industrial segment.
RESULTS OF OPERATIONS
NET SALES AND GROSS PROFITS
CONSOLIDATED
The Company's sales for the second quarter of fiscal 1994 increased $3.9
million (8%) from the prior year's second quarter. For the six months ended
April 2, 1994, sales increased $4.2 million (4%) from the same period a year
ago. During the quarter, sales increased in both the Medical and Electro-Optical
business segments. Year-to-date, sales increased primarily in the Electro-
Optical business segment.
The gross profit rate decreased to 49% for the current quarter and six
months ended April 2, 1994 compared to 50% for the same prior year periods.
These decreases resulted from a shift in sales mix to lower margin products.
ELECTRO-OPTICAL
Electro-Optical net sales increased $1.7 million (6%) and $3.3 million (6%)
for the second quarter and six months ended April 2, 1994, respectively,
compared to the corresponding prior year periods. The first quarter purchase by
Coherent Auburn Group of Vinten Electro-Optics Ltd. (VEOL) in Leicester,
England, resulted in sales increases of $1.4 million and $2.6 million for the
second quarter and six months ended April 2, 1994, respectively. The current
quarter and year-to-date sales increases were also due to higher optics sales
volumes in Coherent's Auburn Group exclusive of the first quarter purchase of
VEOL.
The gross profit rate decreased to 49% during the current quarter from 50%
for the same period
9
<PAGE>
last year but increased to 50% from 49% for the six months ended April 2, 1994
compared to the same period one year ago. The current quarter decrease resulted
primarily from a shift in sales mix to lower margin products. The year-to-date
increase resulted primarily from improved first quarter margins at the Auburn
site of the Coherent Auburn Group.
MEDICAL
Medical net sales increased $2.2 million (10%) and $0.9 million (2%) for
the second quarter and six months ended April 2, 1994, respectively, compared to
the corresponding prior year periods. International sales represented most of
the increases which were primarily due to investments in new territories and new
product approvals in Germany. Softness in the domestic market, we believe,
resulted from lower sales volumes as customers deferred capital purchases due to
the uncertainty of anticipated healthcare changes under the Clinton
Administration.
The gross profit rate increased to 50% during the current quarter from 49%
one year ago but decreased to 48% from 50% for the six months ended April 2,
1994 compared to the same period last year. The current quarter increase
resulted primarily from a shift in sales mix to higher margin products. Lower
warranty costs also contributed to the improvement. The year-to-date decrease
was primarily due to lower margins on existing Surgical products and higher
start-up costs associated with new product introductions in the first quarter
ended December 25, 1993.
OPERATING EXPENSES
<TABLE>
<CAPTION>
Second Quarter First Half
1994 1993 1994 1993
-----------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Research & development $ 6,430 $ 5,802 $11,950 $10,626
Selling, general & administrative 16,052 15,153 30,873 29,906
- - -------------------------------------------------------------------------------
Total operating expenses $22,482 $20,955 $42,823 $40,532
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
</TABLE>
Total operating expenses increased $1.5 million (7%) and $2.3 million (6%)
for the current quarter and six months ended April 2, 1994, respectively,
compared to the same periods a year ago. These increases resulted primarily from
higher research and development (R&D) expenses of $0.6 million (11%) and $1.3
million (12%) for the current quarter and year-to-date, respectively, and higher
selling, general and administrative (SG&A) expenses of $0.9 million (6%) and
$1.0 million (3%) for the current quarter and year-to-date, respectively,
compared to the same periods a year ago. As a percentage of sales, total
operating expenses remained at 41% for the current quarter and increased to 42%
for the six months ended April 2, 1994, compared to 41% for the same period a
year ago.
The increases in R&D expenses were primarily due to higher costs related to
more product introductions planned during the next several quarters compared to
the same period last year, the current year establishment of a new clinical
research department in the Coherent Medical Group and the acquisition of VEOL.
The increases in SG&A expenses were primarily due to increased sales
expense in the Coherent Medical Group resulting from increased international
headcount and higher travel expenses. Administrative expense also increased at
the Corporate group due to the non-recurrence of the 1993 recovery of a bad
debt.
OTHER INCOME (EXPENSE)
Other income, net, increased $0.1 million during the current quarter but
decreased $0.2 million for the six months ended April 2, 1994 compared to the
same periods last year. The current quarter
10
<PAGE>
increase was primarily due to higher interest income of $0.2 million and higher
foreign exchange gains of $0.1 million partially offset by lower other income
net, of $0.1 million, primarily due to higher net losses on sales of
investments. The year-to-date decrease was primarily due to lower other income,
net, of $0.4 million primarily due to the 1993 gain on the investment in Palomar
Medical and higher foreign exchange losses of $0.1 million, partially offset by
higher interest income of $0.3 million.
INCOME TAXES
The Company's effective tax rate for the six months ended April 2, 1994 was
41% compared to 37% for the same period a year ago. The Company's fiscal 1993
and 1994 effective tax rates differ from the statutory rates primarily because
profitable operations for foreign subsidiaries are taxed at rates different from
that of the U.S. rate. 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 $40.9 million. Additional sources of liquidity are the
Company's multi-currency line of credit and bank credit facilities totaling
$17.8 million. As of April 2, 1994, the Company had $14.9 million unused and
available under these credit facilities. In conjunction with such credit
facilities and a letter of guarantee on revenue bonds from financial
institutions, the Company is required to meet certain restrictive covenants.
These covenants require the Company to achieve certain financial ratios,
maintain prescribed levels of working capital and tangible net worth, achieve
specific operating and net income performance levels, and restrict payment of
dividends. The Company also has equipment financing arrangements that are
payable over five years with varying interest rates.
CHANGES IN FINANCIAL CONDITION
Cash and equivalents decreased by $1.4 million (5%) year-to-date.
Operations and changes in exchange rates generated $7.6 million and $0.3
million, respectively. Financing activities generated $4.3 million; borrowings
provided $11.8 million and sales of shares under employee benefit plans,
including tax benefits, provided $1.6 million, partially offset by debt
repayments of $9.1 million. Investing activities used $13.6 million; $5.2
million, net, was used to purchase short-term investments, $6.8 million, net,
was used to acquire property and equipment, $1.5 million was used to acquire
VEOL and other investing activities used $0.1 million.
Prepaid expenses and other assets decreased $2.2 million (31%) from
September 25, 1993 as the Company had prepaid taxes at September 25, 1993 which
were used for current year estimated tax payments.
Property and equipment, net increased $4.1 million (11%) from September 25,
1993, primarily due to the current quarter purchase of the Company's previously
leased optics facility located at 2301 Lindbergh Street, Auburn, California.
Current portion of long-term obligations increased $2.2 million (59%) from
September 25, 1993 primarily due to the financing of the purchase of the optics
facility.
11
<PAGE>
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
On March 31, 1994, the Annual Meeting of Shareholders of Coherent,
Inc. was held in Santa Clara, California.
The following individuals were elected to the Board of Directors of
Coherent, Inc.:
James L. Hobart Charles W. Cantoni
Henry E. Gauthier Frank P. Carrubba
Thomas Sloan Nelsen
Other matters voted upon at the meeting and the number of affirmative
and negative votes cast with respect to each such matter were as
follows:
Affirmative Negative
Votes Votes
--------------------------
1. Ratification of the appointment of 8,581,406 30,113
Deloitte & Touche as independent
public accountants for the 1994
fiscal year.
ITEM 5. Other.
N/A
ITEM 6. Exhibits and Reports on Form 8-K.
N/A
12
<PAGE>
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: May 5, 1994 By: ROBERT J. QUILLINAN
---------------------------------
Robert J. Quillinan
Vice President and Chief Financial Officer
13
