SANTA CLARA, Calif., July 30 /PRNewswire-FirstCall/ -- Coherent, Inc. (Nasdaq: COHR) today announced financial results for its third fiscal quarter ended June 28, 2008, posting net sales of $157.0 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $8.4 million or $0.35 per diluted share compared to net sales of $142.6 million and a net loss of $0.8 million or ($0.02) per diluted share for the third quarter of fiscal 2007.

Net income for the third quarter of fiscal 2008 included an after tax charge of $0.9 million related to litigation resulting from our internal stock option investigation ($0.04 per diluted share), after tax stock-related compensation expense of $2.0 million ($0.08 per diluted share) and restructuring expense of $1.4 million, net of tax ($0.06 per diluted share). Excluding these charges, non-GAAP net income was $12.7 million or $0.53 per diluted share. Net income for the third quarter of fiscal 2007 included an after tax charge of $1.8 million ($0.06 per diluted share) of internal stock option investigation costs, $1.6 million of stock-related compensation expense, net of tax ($0.05 per diluted share) and $2.2 million of in-process research and development, net of tax ($0.07 per diluted share). Excluding these charges, non-GAAP net income for the third quarter of fiscal 2007 was $4.8 million or $0.15 per diluted share.

In comparison, net sales for the second quarter of fiscal 2008 were $155.9 million and net income, on a GAAP basis, was $6.1 million ($0.19 per diluted share). Net income for the second quarter of fiscal 2008 included an after tax charge of $1.5 million related to our restatement of financial statements and litigation resulting from our internal stock option investigation ($0.05 per diluted share), after tax stock-related compensation expense of $3.7 million ($0.12 per diluted share) and a one-time tax expense in connection with a dividend from one of our European subsidiaries of $1.4 million ($0.04 per diluted share). Excluding these charges, non-GAAP net income for the second quarter of fiscal 2008 was $12.8 million or $0.40 per diluted share.

Orders received during the three months ended June 28, 2008 of $149.1 million increased 7.1% from the same prior year period and increased by 0.3% compared to orders received in the immediately preceding quarter. The book-to-bill ratio was 0.95, resulting in backlog of $188.6 million at June 28, 2008 compared to a backlog of $199.3 million at March 29, 2008 and a backlog of $184.9 million at June 30, 2007.

For the nine-month period ended June 28, 2008, Coherent posted net sales of $457.3 million and net income of $19.3 million ($0.66 per diluted share) compared to the prior year period sales of $442.2 million and net income of $17.3 million ($0.54 per diluted share). Orders received for the nine month period ended June 28, 2008 were $452.5 million, compared to $427.3 million in orders received during the same period a year ago.

'Coherent delivered solid results for the third quarter. In particular, gross margin, EBITDA and EPS all showed progress towards our long-term goals. We anticipate that these trends will continue in the fourth fiscal quarter,' said John Ambroseo, Coherent's President and CEO. 'We are also encouraged by

a very strong bookings performance in microelectronics and we believe we are well positioned for market share gains,' Ambroseo added.

At June 28, 2008, Coherent's cash, cash equivalents and short term investments totaled $197.7 million, representing a decrease of $164.1 million compared to September 29, 2007. The decrease includes the use of approximately $228 million for the repurchase of Coherent common stock under the previously announced tender offer ended March 19, 2008.

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

                          Three Months Ended              Nine Months Ended
                    June 28,    March 29,     June 30,     June 28,   June 30,
                     2008         2008          2007         2008       2007
    Net sales       $157,024     $155,942     $142,608    $457,262   $442,233
    Cost of
     sales(A)(B)      87,765       88,818      85,470     260,385     258,651
    Gross profit      69,259       67,124      57,138     196,877     183,582
    Operating
     expenses:
      Research &
       development
       (A)(B)         19,076       19,428      19,337      56,823      56,543
      In-process
       research and
       development         -            -       2,200           -       2,200
      Selling,
       general &
       administrative
       (A)(B)(C)      39,480       37,384      39,095     115,682     109,718
      Restructuring,
       impairment
       and other
       charges             -            -           -           -         248
      Intangibles
       amortization    2,165        2,229       2,085       6,600       5,978
        Total
         operating
         expenses     60,721       59,041      62,717     179,105     174,687
    Income (loss)
     from operations   8,538        8,083      (5,579)     17,772       8,895
    Other income, net  2,779        4,263       6,017      12,923      16,387
    Income before
     income taxes     11,317       12,346         438      30,695      25,282
    Provision for
     income taxes(D)   2,915        6,221       1,201      11,439       8,005
    Net income
     (loss)           $8,402       $6,125        (763)    $19,256     $17,277
    Net income (loss)
     per share:
      Basic            $0.36        $0.20      ($0.02)      $0.67       $0.55
      Diluted          $0.35        $0.19      ($0.02)      $0.66       $0.54
    Shares used in
     computation:
      Basic           23,514       31,394      31,417      28,775      31,391
      Diluted         24,110       31,874      31,417      29,314      32,045
    (A) The quarter ended June 28, 2008 includes $3,320 ($2,031 net of tax
        ($0.08 per diluted share)) of stock-related compensation expense.
        Pretax stock-related compensation expense is recorded in the statement
        lines as follows: $484 to cost of sales; $561 to research and
        development; and $2,275 to selling, general and administrative. The
        quarter ended March 29, 2008 includes $4,949 ($3,734 net of tax ($0.12
        per diluted share)) of stock-related compensation expense. Pretax
        stock-related compensation expense is recorded in the statement lines
        as follows: $759 to cost of sales; $808 to research and development;
        and $3,382 to selling, general and administrative. The quarter ended
        June 30, 2007 includes $2,037 ($1,558 net of tax ($0.05 per diluted
        share)) of stock-related compensation expense.  Pretax stock-related
        compensation expense is recorded in the statement lines as follows:
        $405 to cost of sales; $408 to research and development; and $1,224 to
        selling, general and administrative. The nine months ended June 28,
        2008 includes $10,974 ($7,698 net of tax ($0.26 per diluted share)) of
        stock-related compensation expense.  Pretax stock-related
        compensation expense is recorded in the statement lines as follows:
        $1,629 to cost of sales; $1,688 to research and development; and
        $7,657 to selling, general and administrative.  The nine months ended
        June 30, 2007 includes $9,284 ($6,232 net of tax ($0.19 per diluted
        share)) of stock-related compensation expense.  Pretax stock-related
        compensation expense is recorded in the statement lines as follows:
        $1,509 to cost of sales; $1,707 to research and development; and
        $6,068 to selling, general and administrative.
    (B) The quarter ended June 28, 2008 includes $2,202 ($1,374 net of tax
        ($0.06 per diluted share)) of restructuring costs primarily related to
        the exit of our Auburn, California facility.  Pretax restructuring
        costs are recorded in the statement lines as follows: $1,328 to cost
        of sales; $273 to research and development; and $601 to selling,
        general and administrative.  The effect of such restructuring charges
        for the nine months ended June 28, 2008 was $0.05 per diluted share.
    (C) The quarter ended June 28, 2008 includes $1,533 ($935 net of tax
        ($0.04 per diluted share)) of costs related to litigation resulting
        from our internal stock option investigation.  The quarter ended March
        29, 2008 includes $2,505 ($1,528 net of tax ($0.05 per diluted share))
        of costs related to our restatement of financial statements and
        litigation resulting from our internal stock option investigation.
        The quarter ended June 30, 2007 includes $2,958 ($1,775 net of tax
        ($0.06 per diluted share)) of costs related to our internal stock
        option investigation.  The nine months ended June 28, 2008 includes
        $8,787 ($5,313 net of tax ($0.18 per diluted share)) of costs related
        to our restatement of financial statements and litigation resulting
        from our internal stock option investigation.  The nine months ended
        June 30, 2007 includes $8,946 ($5,368 net of tax ($0.17 per diluted
        share)) of costs related to our internal stock option investigation.
    (D) During the quarter ended March 29, 2008, the Company incurred a tax
        charge of $1,394 ($0.04 per diluted share) in connection with a
        dividend from one of our European subsidiaries. For the nine months
        ended June 28, 2008 the effect of the tax charge was $0.05 per diluted
        share.

    Summarized balance sheet information is as follows (unaudited, in
thousands):
                                                     June 28,        Sept. 29,
                               ASSETS                  2008            2007
    Current assets:
      Cash, cash equivalents and short-term
       investments                                    $197,717       $361,823
      Restricted cash (A)                                2,755          2,460
      Accounts receivable, net                         110,371        102,314
      Inventories                                      123,444        112,893
      Prepaid expenses and other assets                 97,680         86,088
        Total current assets                           531,967        665,578
    Property and equipment, net                        105,873        104,305
    Other assets                                       198,273        177,717
        Total assets                                  $836,113       $947,600
          LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Short-term borrowings                               $366           $ --
      Current portion of long-term obligations               9              9
      Accounts payable                                  29,377         27,849
      Other current liabilities                        111,784        100,887
        Total current liabilities                      141,536        128,745
    Other long-term liabilities                         95,718         47,869
    Total stockholders' equity                         598,859        770,986
        Total liabilities and
         stockholders' equity                         $836,113       $947,600
    (A) Represents cash for remaining close out costs associated with our
        purchase of the remaining outstanding shares of Lambda Physik AG.

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

                          Three Months Ended            Nine Months Ended
                     June 28,   March 29,   June 30,    June 28,    June 30,
                      2008        2008        2007       2008         2007
    GAAP net
     income (loss)   $8,402      $6,125      $(763)    $19,256      $17,277
    Stock option
     investigation
     and related
     restatement of
     financial
     statements,
     and litigation
     expenses           935       1,528      1,775       5,313        5,368
    Stock-related
     compensation
     expense          2,031       3,734      1,558       7,698        6,232
    In-process
     research and
     development         --          --       2,200         --        2,200
    Restructuring
     costs            1,374          --          --      1,374           --
    One-time tax
     expense
     (benefit)           --       1,394          --      1,394       (2,147)
    Non-GAAP
     net income     $12,742     $12,781      $4,770    $35,035      $28,930
    Non-GAAP
     net income
     per diluted
     share            $0.53       $0.40       $0.15     $ 1.20        $0.90

The Company's conference call scheduled for 1:30 p.m. PT today will include discussions relative to the current quarter results and some comments regarding forward looking guidance on future operating performance. Readers are encouraged to refer to the risk disclosures 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.

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 our anticipation that the trend of progress towards our long term goals will continue in the fourth fiscal quarter and any future market share gains. 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 quarterly and annual fluctuations in our net sales and operating results, our exposure to risks associated with worldwide economic slowdowns, our ability to increase our sales volumes and decrease our costs, the impact that our operations and potential acquisitions will have on interest, taxes, depreciation and amortization measurements, changes to the Company's tax rate as a result of government action, customer acceptance and adoption of our new product offerings, our ability to successfully achieve the benefits from the outsourcing of our optics manufacturing, and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk disclosures 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.