10-QPeriod: Q3 FY2001

COHERENT CORP. Quarterly Report for Q3 Ended Mar 31, 2001

Filed May 14, 2001For Securities:COHR

Summary

II-VI Incorporated (now Coherent Corp.) reported strong revenue growth for the nine months ended March 31, 2001, with total revenues reaching $90.98 million, a significant increase of 72% compared to the prior year. This growth was primarily driven by the acquisition of Laser Power Corporation and continued expansion in its Optical Components and Radiation Detectors segments. The company also saw substantial growth in order bookings, indicating positive future revenue potential. Despite the revenue surge, manufacturing gross margins declined from 43% to 38% year-over-year, attributed to the inclusion of Laser Power Corporation and the higher-margin eV PRODUCTS division. Selling, general, and administrative expenses also increased in absolute terms due to the acquisition, though they decreased as a percentage of revenue. A notable increase in interest expense was observed, a direct consequence of increased borrowings to finance the Laser Power acquisition. The company's liquidity appears sufficient, with operating cash flow and available credit lines expected to cover near-term obligations.

Key Highlights

  • 1Total revenues for the nine months ended March 31, 2001, surged by 72% to $90.98 million, compared to $52.85 million in the same period last year.
  • 2Order bookings increased significantly by 67% to $100.83 million for the nine months ended March 31, 2001, signaling strong future revenue potential.
  • 3The acquisition of Laser Power Corporation, completed in fiscal 2001, significantly contributed to revenue growth, particularly in the Optical Components segment.
  • 4Manufacturing gross margin decreased from 43% in the prior year's nine-month period to 38% for the period ended March 31, 2001.
  • 5Interest expense rose sharply from $258,000 to $1,831,000 for the nine months ended March 31, 2001, due to increased debt financing for the Laser Power acquisition.
  • 6The company's cash position decreased to $5.38 million at March 31, 2001, from $6.33 million at June 30, 2000, influenced by acquisition spending and capital expenditures.
  • 7Earnings per diluted share increased to $0.48 for the nine months ended March 31, 2001, from $0.42 in the prior year's comparable period.

Frequently Asked Questions

The primary driver of the significant revenue increase was the acquisition of Laser Power Corporation, which was completed in fiscal 2001 and whose results are now included in the consolidated financial statements. Continued expansion in the Optical Components and Radiation Detectors segments also contributed.

The decrease in manufacturing gross margin percentage from 43% to 38% is attributed to the inclusion of Laser Power Corporation, which has lower gross margins, and an increase in sales from the eV PRODUCTS division, which also has lower gross margins compared to other II-VI businesses.

The acquisition of Laser Power Corporation required significant borrowing, leading to an increase in long-term debt. This resulted in a substantial rise in interest expense, from $258,000 to $1,831,000 for the nine months ended March 31, 2001.

The company believes that internally generated funds, existing cash reserves, and available borrowing capacity are sufficient to meet its working capital needs, capital expenditures, and scheduled debt payments for fiscal 2001. Cash generated from operations and available credit lines are expected to support its financial obligations.