Announces Conclusion of Special Committee's Investigation of Stock Option
Practices
SANTA CLARA, Calif., July 26 /PRNewswire-FirstCall/ -- Coherent, Inc.
(Nasdaq: COHR) today announced unaudited selected financial results for its
third fiscal quarter 2007 ended June 30, 2007.
Net sales for the third quarter of fiscal 2007 totaled $142.6 million,
a decrease of 4.6% compared to $149.5 million reported in the third quarter
of fiscal 2006 and a sequential decrease of 6.3% as compared to $152.1
million in the second quarter of fiscal 2007.
Orders received during the quarter ended June 30, 2007 of $138.6
million decreased 9.4% from the same prior year period and decreased 8.7%
compared to the immediately preceding second quarter of fiscal 2007,
resulting in a book to bill ratio of 0.97. Backlog was $184.6 million at
June 30, 2007 compared to a backlog of $189.3 million at March 31, 2007 and
$199.1 million at July 1, 2006.
At June 30, 2007, Coherent's cash, cash equivalents and short-term
investments totaled $516.3 million representing a decrease of $10.7 million
compared to the prior quarter ended March 31, 2007, primarily as a result
of the acquisition of Nuvonyx, Inc. for approximately $14 million on April
20, 2007.
"While most of our end markets remained healthy, order and sales
push-outs for products used in flat panel display (FPD) manufacturing
depressed our third quarter bookings and sales. The delays appear to be
part of a broader slowdown in this market rather than competitive
pressures. We expect the FPD space to begin its recovery later this
calendar year," said John Ambroseo, Coherent's President and Chief
Executive Officer.
Ambroseo continued, "Our new direct diode systems business (formerly
Nuvonyx) posted $4.4 million in bookings during the third fiscal quarter.
These results surpassed our expectations and validate our belief that the
combination of design simplicity and lower cost of ownership offered by
direct diode platforms offer customers compelling benefits. We look forward
to growing this business along with the rest of our portfolio."
Coherent Announces Conclusion of Special Committee's Investigation of Stock
Option Practices
Coherent also announced today that a special committee of its Board of
Directors (the "Special Committee") has completed an extensive
investigation over the Company's historical stock option practices.
As previously announced on November 11, 2006, a Special Committee was
established by Coherent's Board of Directors to conduct an independent
investigation relating to the Company's historical stock option practices.
The Company requested the independent review following an internal review
of its historical stock option practices, which was a voluntary review
initiated in light of news of the option practices of numerous companies
across several industries. The Special Committee, comprised of three
independent members of Coherent's Board of Directors, retained independent
outside counsel and forensic accountants to assist in conducting the
investigation.
Together with its independent counsel, the Special Committee conducted
an extensive review of historical stock option practices including all
awards made by the Company between January 1, 1995 and September 30, 2006,
(the "Relevant Period") that included the review of over one million
documents and over 30 interviews of current and former employees, directors
and advisors.
The Special Committee concluded that there was no intentional
wrongdoing by the Company's current directors, its Chief Executive Officer,
John Ambroseo, or its Chief Financial Officer, Helene Simonet. The Special
Committee continues to have the utmost confidence in the integrity and
leadership of Mr. Ambroseo and Ms. Simonet and believes that they are the
appropriate people to lead the Company going forward.
The Special Committee and the Company's management, with the assistance
of independent legal and forensic accounting experts, have determined that
incorrect measurement dates for a significant number of stock option awards
during the Relevant Period were used. The Special Committee concluded that
at varying times during the Relevant Period the use of incorrect
measurement dates resulted from a number of factors, including delays in
the approval of the awards, retroactive selection of grant dates, the
absence of definitive documentation, modification of previously awarded
grants, and other process-related issues. The Company is diligently working
to determine the impact of the incorrect measurement dates and currently
believes it will be required to record additional compensation expenses
which may require the Company to restate a number of its financial
statements during the Relevant Period. The Company believes that these
expenses will be non-cash charges. Additionally, the Company has not yet
determined the tax consequences that may result from these matters or
whether tax consequences will give rise to monetary liabilities which may
have to be satisfied in any future period. The Company will provide further
information upon conclusion of its analysis and determination of the
related accounting as soon as reasonably practicable. (Please refer to the
important disclosures which follow under the heading "Safe Harbor.")
The Special Committee has also concluded that it will make further
recommendations to the Board of Directors regarding remediation of the
Company's equity grant administration practices. The Special Committee's
recommendations include incorporating certain measures that have previously
been adopted by the Board. These recommendations include:
-- Establishing scheduled dates for the granting of equity-based awards;
-- Requiring verifiable evidence of the date of approval for all equity
awards;
-- Requiring Compensation Committee approval for all equity awards to
Section 16 officers and other identified individuals and for annual
employee grants.
As also previously announced on December 14, 2006, the Securities and
Exchange Commission (the "SEC") had earlier notified the Company that it is
conducting an informal inquiry into the Company's equity compensation grant
practices. The Company continues to cooperate fully with the SEC in this
informal inquiry. In addition, as previously disclosed, Nasdaq initially
informed the Company on December 19, 2006 that its securities would be
delisted due to the Company's delay in filing its Form 10-K for the fiscal
year ended September 30, 2006 unless the Company requested a hearing in
accordance with applicable Nasdaq Marketplace Rules. The Company
subsequently requested and was granted a hearing before the Nasdaq Listing
Qualifications Panel ("Panel") on February 15, 2007 to request an extension
for continued listing on the Nasdaq Global Select Market, which extension
was granted by the Panel on April 3, 2007. Following the hearing, the
Nasdaq Listing and Hearing Review Council ("Listing Council") called the
Panel's April 3, 2007 decision for review and determined to stay any
decision to suspend the Company's securities pending further action by the
Listing Council. While the Company remains optimistic, there can be no
assurance that the Listing Council will grant an extension for continued
listing. Shares of Coherent common stock will continue trading on the
Nasdaq pending the Listing Council's decision.
Coherent's conference call scheduled for 1:30 p.m. PT today will
include discussions relative to the current selected financial information
and some comments regarding forward looking guidance on future operating
performance.
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 future plans, events or
performance, including statements regarding the recovery of the FPD space
later this calendar year, the growth of our direct diode system business
and the rest of our portfolio, the recording of additional compensation
expenses, the non-cash charge nature of the expenses, the making of
recommendations regarding remediation, and the granting of any extension
for the continued listing of the Company's shares, are forward-looking
statements. 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 general market and business
conditions, the successful integration of the Nuvonyx acquisition, currency
adjustments, contract cancellations, customer payments and acceptance of
our products, manufacturing risks, competitive factors, and uncertainties
pertaining to customer orders, demand for products and services,
development of markets for the Company's products and services, the final
conclusions of the special committee concerning matters relating to the
Company's stock option grant measurement dates, the determination and
analysis of appropriate accounting treatment of new measurement dates and
the resulting expense calculations, the ultimate determination of the
Listing Council, and other risks identified in the Company's SEC filings.
Actual results, events and performance may differ materially. 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. As noted above, a special committee of the board of
directors has reported on its independent review regarding the Company's
historical stock option practices. In addition, the review and possible
conclusions and other actions/measures taken or required as a result of the
review may have an impact on the amount and timing of previously awarded
stock-based compensation and other additional expenses to be recorded;
accounting adjustments to the Company's financial statements for the
periods in question; the Company's ability to file required reports with
the SEC on a timely basis; the Company's ability to meet the requirements
of the Nasdaq Stock Market for continued listing of its shares; potential
claims and proceedings relating to such matters, including shareholder
litigation and action by the SEC and/or other governmental agencies; and
negative tax or other implications for the Company resulting from any
accounting adjustments or other factors.
Readers are encouraged to refer to the risk disclosures described in
the Company's Registration Statement on Form S-3 (as amended and filed with
the SEC on October 4, 2006) and the reports on Forms 10-K, 10-Q and 8-K, as
applicable and as filed from time-to-time by the Company.
Founded in 1966, Coherent, Inc. is a Standard & Poor's SmallCap 600
Company and a world leader in providing photonics based solutions to the
commercial and scientific research markets. 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.
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Related links:
http://www.coherent.com
CONTACT:
Leen Simonet of Coherent, Inc.,
+1-408-764-4161
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