The Leader in Photonics

Transcription

1 The Leader in Photonics

2 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 Form 10-K for the year ended September 29, 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 results of any revisions to these forwardlooking 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 Company s Form 10-K for the year ended September 29, 2007 and subsequent reports on Forms 10-K, 10-Q and 8-K, as applicable. Non-GAAP Measurement The Company s statements regarding its adjusted EBITDA percentage target, historical pro forma net income and pro forma EPS results and pro forma guidance are non-gaap financial measures. The most comparable GAAP measurement for adjusted EBITDA 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 certain other non-operating income and expense items. Historical pro forma net income, pro forma EPS and pro forma guidance excludes those items set forth on the applicable slide and you should refer to those slides and the reconciliation for further information. The elements of adjusted EBITDA and our pro forma guidance are subject to significant change by the 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 financial restatement and litigation costs and the effect of any compensation charges arising from future equity grants. P. 2

3 The Photonics Company Provider of Photonics Solutions Primarily Lasers for Commercial and Scientific Research Applications Founded in 1966 TTM Sales $616.2 Million TTM Orders $616.3 Million ~2,225 Employees Sales 32% U.S. and 68% International 411 Patents, 103 Pending Note: Photonics is the Merger of Lasers, Optics and Electronics Source: Company management as of 3/29/08. P. 3

4 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 P. 4

5 Market Leading Position with Multiple Growth Vectors P. 5 Welding, Joining Cutting, Drilling Micromat'l Processing Etching, Exposing Engraving, Marking Projecting Reading, Writing Measuring, Sensing Communicating Def/HS Heavy Mfg. Light Mfg. Telecomm Cons. Elec. Microelec Medical Science

6 Diversified Applications Microelectronics Applications TAM ~$1B, 5-year CAGR 10-15% Mask writing, semiconductor inspection, marking, flat panel display, solar and advanced packaging and interconnects OEM Components & Instrumentation* 29% Revenue Mix (TTM as of 6/28/08) Materials Processing 16% Materials Processing TAM ~$1.5B, 5-year CAGR 10-15% Marking, welding, engraving, cutting and drilling, textile manufacturing and rapid prototyping 20% Scientific Research & Gov. Programs 35% Microelectronics Scientific Research & Gov. Programs TAM ~$300M, 5-year CAGR flat to down Regenerative amplification, multiphoton excitation microscopy, spectroscopy Geographic Sales Distribution (TTM as of 6/28/08) OEM Components & Instrumentation* TAM ~$200M, 5-year CAGR 5-10% Microscopy, DNA sequencing, flow cytometry, drug discovery, refractive surgery, Raman spectroscopy, entertainment, laser projection and forensics Europe 29% 32% Asia Pacific 7% R.O.W. 32% United States *Graphic Arts and Display (GAD) have been merged into OEM Components and Instrumentation. P. 6

7 Product Development Principles 90% market-customer driven programs, 10% technology-driven Revenue, share and margin growth Key metrics Market-enabling reliability Market-enabling performance Total cost of ownership (application dependent) Platforms favored with 5-10 years of runway Increased CM content Depot repair/advanced replacement preferred P. 7

8 The Power of Platforms: Optically Pumped Semiconductor (OPS) Electrical Input: 40W-400W (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: >17,000 MTBF: >27,000 hours A Versatile & Revolutionary Technology P. 8

9 The Power of Platforms: Future Developments Microelectronics and materials processing represent the two largest core market growth opportunities for Coherent In September 2007, we announced that we would introduce at least two new platforms into these markets over the next months We introduced the E-400 in November 2007 and the Talisker laser system in April 2008 The key attributes of the new platforms are: Configurable packages to serve multiple customers/applications Modular design for performance and cost evolution Higher contract manufacturing/low cost region compatibility P. 9

10 Recent Product Introduction: Talisker A scalable high peak and average power picosecond fiber-based platform for material processing that combines minimum thermal damage and high throughput in the infrared, visible, or ultraviolet. Focused on reliability in rugged industrial environments oscillator built to Telcordia standards. Equipped with an internal web server targeted towards remote diagnostics and preventative maintenance. P. 10

11 Recent Product Introduction: Talisker - Effect of Pulse Duration P. 11

12 Recent Product Introduction: DIAMOND E-400 Target markets include cutting, marking, glass processing and converting First pulsed sealed off CO 2 laser with 400W average and >1kW peak power Integrated but detachable RF Power Supply Outstanding Mode Quality (M2 <1.2) Focused on Reliability Excellent cost of ownership Equipped with on board Diagnostics / Control targeted towards preventive maintenance P. 12

13 E-400 Total Operating Cost Analysis 300% 250% K-250-OEM E-400 K-500-OEM 300 W Competition 600 W Competition 200% 150% 100% 50% Higher COO in first 3 years than K250 and 300W Competition due to purge, higher energy consumption laser & chiller 0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 P. 13

14 Optics Outsourcing/Exit of Auburn (CA) Facility We are outsourcing optics manufacturing to privately-held Research Electro-Optics (REO) of Boulder, Colorado Decision was based upon technical and financial competitiveness in the optics market Other functions (C&C, IT, etc.) are being relocated to other Coherent locations or outsourced We will retain a R&D cell that will be located at our Santa Clara facility Expect to exit the Auburn campus no later than March 31, 2009 Estimated costs are $7 million, projected run rate savings of $3.5 to $4.5 million per year P. 14

15 Attractive Financial Profile Solid Revenue Growth ($ millions) $700.0 $600.0 $500.0 $400.0 $397.3 $406.2 $495.0 CAGR 8.6% $516.3 $584.7 $601.2 $300.0 $200.0 $100.0 $ - - FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 EBITDA targets of 19-23% exiting fiscal year 2010 Material cost reductions Expanded use of contract manufacturers Flexible and cost-effective platform designs Continued yield and reliability improvements P. 15

16 Attractive Financial Profile Powerful Cash Generation ($ millions) $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 $388 $362 $293 $218 $185 $197 $143 FY'04 FY'05 FY'06 FY'07 Q1'08 Q2'08 Q3'08 Cash Balance (Net of Debt) Result of Dutch Tender Offer Acquired ~8 million shares at $28.50 per share or $227.5M Represents ~ 25% of outstanding shares Note: Excluding Restricted Cash P. 16

17 Q3 Fiscal 2008 Financials (Pro Forma) Q3 08 Q2 08 Q3 07 Orders $ $ $ Sales $ $ $ Gross Profit 45.3% 43.5% 40.4% Period Expenses $ 55.5 $ 52.3 $ 55.9 Net Income $ 12.7 $ 12.8 $ 4.8 EPS $ 0.53 $ 0.40 $ 0.15 Backlog $ $ $ Note: Pro Forma results exclude stock related compensation charges, IPR&D costs, exceptional items such as restructuring costs and historical financial restatement and litigation costs, and one time tax expenses. Refer to the reconciliation of GAAP to Pro Forma net income table. P. 17

18 Reconciliation GAAP to Pro Forma Net Income Q3 08 Q2 08 Q3 07 GAAP net income (loss) $8,402 $6,125 ($763) GAAP net income per diluted share $0.35 $0.19 ($0.02) Stock option investigation and related restatement of financial statements, and litigation expenses 935 1,528 1,775 Stock-related compensation expense 2,031 3,734 1,558 In-process research & development 0 0 2,200 Restructuring costs 1, One-time tax expense 0 1,394 0 Pro Forma net income $12,742 $12,781 $4,770 Pro Forma net income per diluted share $0.53 $0.40 $0.15 P. 18

19 The Market Leading Photonics Platform An Established History of Market and Technology Leadership Highly Diversified Markets and Products Multiple Growth Vectors Across Key Markets Exceptional Cash Flow and EBITDA Expansion with Opportunities For Continued Growth P. 19

20 9/2/2008 P. 20