Transcript Slide 1
The Leader in Photonics Superior Reliability & Performance Forward-Looking Statements & Non-GAAP Measurement Forward-Looking Statements The statements in this presentation that relate to future plans, events or performance are forward-looking statements that involve risks and uncertainties, including risks associated with business and economic conditions, customer and/or supplier contract cancellations, manufacturing risks, competitive factors, successful introductions of new products, uncertainties pertaining to customer orders, demand for products and services, growth and development of markets for the Company's products and services, and other risks identified in our filings made with the Securities and Exchange Commission, including, most recently, our Registration Statement on Form S-3. 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 release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are encouraged to refer to the risk disclosures described in the the Company’s registration statement on Form S-3 filed with the SEC on October 10, 2006 and reports on Forms 10-K, 10-Q and 8-K, as applicable. Non-GAAP Measurement The Company’s statement regarding its adjusted EBITDA percentage target is a non-GAAP financial measure. The most comparable GAAP measurement is net income, which is not currently accessible on a forward-looking basis. Adjusted EBITDA reflects earnings before interest, taxes, depreciation, amortization, stock compensation expenses and other non-operating income and expense items. These items, which are required to determine GAAP net income, are subject to significant change by end of fiscal 2010, given the impact of potential acquisitions, tax rate changes and other operational factors which will heavily impact these items and are also impacted by the Company’s historical stock option investigation and the effect of any compensation charges arising from future equity grants. Superior Reliability & Performance October 2007 P. 2 The Photonics Company Superior Reliability & Performance October 2007 P. 3 The Photonics Company Provider of Photonics* Solutions - Primarily Lasers - for Commercial and Scientific Research Applications Founded in 1966 Sales $600.4 Million (ttm) Orders $579.4 Million (ttm) ~2400 Employees Sales 31% U.S.; 69% International (ttm) As of 6/30/07 *Photonics is the Merger of Lasers, Optics and Electronics Superior Reliability & Performance October 2007 P. 4 Comparison of Cumulative Ten-Year Sales Return Indexed $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 1996 1997 1998 1999 2000 Non-diode Lasers 2001 Global Semi 2002 2003 Global GDP Coherent 2004 2005 2006 Sources: Coherent, LFW, Deere & Co., SEMI, IMF-World Economic Outlook Database Superior Reliability & Performance October 2007 P. 5 Our Strategy and Objectives Leverage the depth & breadth of our technology portfolio to optimize growth and performance Create new markets through internal and independent application development Continue to lead the revolution in commercial lasers Complement internal product/market development through acquisitions Deliver superior financial performance through EBITDA expansion and continued strong cash flows Superior Reliability & Performance October 2007 P. 6 Competitive Landscape: Lasers and Electro-optic Components (non-telecom and consumer electronics) $3 Billion Global Market Coherent 20% ~$600 million ~200 additional companies 44% $1.3 billion IPG 5% ~$150 million SP 6% ~$160 million JDSU Excel 3% 4% ~$100 million ~$125 million Cymer 18% ~$544 million Public data and Company estimates Superior Reliability & Performance October 2007 P. 7 2006 Industry Map ($3B minus telecom, CE) W Cu t S f/H . e fg D M . fg vy a M t m He gh m i o L . lec ec l e E T s. lec n e o o C l icr ica M d e M S ce Superior Reliability & Performance tin ing ,J oin D ing o Et ril m lin ch at g 'l P ing En r , o gr Ex ce av p ss Pr os ing ing oje ing , c M t Re in ar g kin ad in g g, M ea W su rit in rin Co g g ,S m m en un sin ica g tin g M icr n cie eld g, October 2007 P. 8 Geographic Sales Distribution $600.4 Million (ttm as of 6/30/07) Europe 29% United States 31% 34% 6% Asia Pacific R.O.W. Superior Reliability & Performance October 2007 P. 9 Order Mix $579.4 Million (ttm as of 6/30/07) Materials Processing 16% OEM Components & Instrumentation 26% 35% Microelectronics 20% Scientific Research & Gov. Programs Superior Reliability & Performance 3% Graphic Arts & Display October 2007 P. 10 Microelectronics Flat Panel Display Capital Equipment TFT-LCD, PDP & Next Generation Fabs Enabling Manufacture of High End Displays (Low Temperature Polycrystalline Si-TFTs) Color Filter Processing Driving Next Generation Technology for Thin Flexible Displays (OLEDs) Printed Circuit Board & Packaging Equipment Transitioning from Conventional Tools to Improve Yields and Reduce Feature Sizes Laser Microvia Drilling Laser Direct Imaging Solar Cell Manufacturing Semiconductor Capital Equipment Primarily 193 nm and Below and 300 mm Fabs Metrology/Inspection Tools Photomask Tools Superior Reliability & Performance October 2007 P. 11 OEM Components & Instrumentation OEM Components Enabling Laser Components to Industries such as Medical,Thermal Imaging, and Defense Leading Supplier of Excimer Lasers to OEM System Integrators for Ophthalmic Surgery Bioinstrumentation Market Proteomics, Genomics and Drug Discovery New Architectures with Ultimate Goal of Portable Diagnostic Tools Superior Reliability & Performance October 2007 P. 12 Materials Processing Miniaturization and Yields are Major Drivers Cutting and Welding Processing of Plastics Marking and Coding Cladding and Hardening Superior Reliability & Performance October 2007 P. 13 Graphic Arts & Display Conversion to Digital Work Flow Paradigm and “Green” (i.e., Environmental) Motivation Computer-to-Plate Digital Offset Presses Large Format Projection & Digital Media Laser TV and Consumer Electronics– Non-exclusive license to Osram Superior Reliability & Performance October 2007 P. 14 Scientific Research & Government Programs Scientific Laser Market University, Industrial and Government Laboratories Incubating Many Emerging Applications and Technologies Establishing Customer Relationships and Brand Equity Superior Reliability & Performance October 2007 P. 15 Technology Superior Reliability & Performance October 2007 P. 16 Optically Pumped Semiconductor (OPS): The Power of Platforms Electrical Input: 40W400W (up to10X more efficient than other laser sources) Output Power: 10 mW-10W Output Wavelengths: 460 nm-1060 nm Characteristics: Reliable, Efficient, Compact, Air-Cooled Units Shipped to Date: >10,000 MTBF: >27,000 hours A Versatile & Revolutionary Technology Superior Reliability & Performance October 2007 P. 17 The Power of Platforms: Future Developments Microelectronics and materials processing represent the two largest core market growth opportunities for Coherent Over the next 12-18 months, we plan to introduce at least two new platforms into these markets The key attributes are: Configurable packages to serve multiple customers/applications Modular design for performance and cost evolution – estimate up to 10 years of runway Higher contract manufacturing/low cost region compatibility Superior Reliability & Performance October 2007 P. 18 Financial Priorities and Progress Superior Reliability & Performance October 2007 P. 19 Sales, Bookings & Backlog ($M) $700 $600 $500 $400 $300 $200 $100 $0 2002 Sales 2003 2004 Backlog 2005 2006 Bookings TTM'07* *Trailing Twelve Months as of 6/30/07 As of 6/30/07 Superior Reliability & Performance October 2007 P. 20 Cash Net of Debt ($M) $600.00 $500.00 $400.00 $300.00 $200.00 Convertible debt of $200M was repaid in August 2007 at par plus accumulated interest $100.00 $0.00 2002 2003 Cash & S-T Investments As of 6/30/07 Superior Reliability & Performance 2004 2005 Debt 2006 Q3'07 Cash Net of Debt October 2007 P. 21 Financial Priorities and Progress Special Committee concluded its voluntary review of historical stock option practices Announced restatement range of $22-28 million Significant majority of charges stem from the period of 1995-2001 More than half the charge is from 2000 Superior Reliability & Performance October 2007 P. 22 Financial Priorities and Progress EBITDA targets of 19-23% exiting fiscal year 2010 Material cost reductions, expanded use of contract manufacturers, SG&A leverage, introduction of more flexible and cost-effective platform designs and continued yield and reliability improvements Continued emphasis on capital structure Choices under consideration include accretive acquisitions and a share repurchase program Superior Reliability & Performance October 2007 P. 23 Why Coherent Photonics is the enabling solution; Coherent is the enabling provider Coherent is the Photonics Leader with multiple growth opportunities in existing and emerging markets Coherent has a track record of innovation, execution and financial strength Superior Reliability & Performance October 2007 P. 24