UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 14, 2001
COHERENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1622541
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5100 PATRICK HENRY DRIVE, SANTA CLARA, CALIFORNIA 95054
(Address of principal executive offices) (Zip Code)
(408) 764-4000
(Registrant's telephone number, including area code)
[Not Applicable]
(Former Name or Former Address, if Changed Since Last Report.)
Item 2. Acquisition Or Disposition Of Assets
On April 30, 2001, Coherent, Inc. (Coherent, we or our) completed the sale of
the assets of the Coherent Medical segment (CMG) to ESC Medical Systems, Ltd.
(ESC) for consideration preliminarily valued at $236.0 million, consisting of
cash of $100.0 million, notes receivable of $12.9 million and 5,432,099 shares
of ESC common stock. The final consideration will be based on the amount of the
net assets as of the date of sale and the completion of the valuation of the ESC
common stock. The agreement provides for an adjustment to the notes received if
the actual net assets sold are more or less than a predetermined amount. In
addition, the agreement provides a future earnout payment of up to $25.0 million
based on the future sales of certain medical laser and light-based products. We
expect to record a resulting after-tax gain of approximately $60.0 to $80.0
million in the third quarter of fiscal 2001. The gain is subject to adjustment
based on the actual assets sold to ESC, actual transaction expenses incurred and
completion of the valuation of the ESC common stock received.
ESC is a publicly traded company with its common shares listed on the Nasdaq
National Market under the symbol "ESCM". ESCM's common stock closed at $26.94
per share on April 27, 2001.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information
(1) Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 2001.
(2) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended September 30, 2000.
(3) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended October 2, 1999.
(4) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended September 26, 1998.
(c) Exhibits.
Not applicable
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
COHERENT, INC.
Date: May 15, 2001 By: /s/ SCOTT H. MILLER
-----------------------------
Senior Vice President and
General Counsel
3
COHERENT, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet as of
March 31, 2001 and the unaudited pro forma condensed consolidated statements of
income for the years ended September 30, 2000, October 2, 1999 and September 26,
1998 give effect to the disposition of CMG. The unaudited pro forma condensed
consolidated balance sheet as of March 31, 2001 assumes that the disposition
took place as of March 31, 2001. The unaudited pro forma condensed consolidated
statements of income gives effect to the disposition as if it had occurred at
the beginning of the earliest period presented. A pro forma condensed
consolidated statement of income for the six months ended March 31, 2001 has not
been presented as the disposition is already reflected in the Quarterly Report
on Form 10-Q filed by the Company for the quarter ended March 31, 2001.
The unaudited pro forma condensed consolidated balance sheet and statements of
income are presented for information purposes only and are not necessarily
indicative of the financial position or the results of operations that would
have been obtained had the disposition actually occurred as of the dates assumed
nor is it necessarily indicative of the financial position or future results of
operations. The pro forma adjustments are based upon information and assumptions
available at the time of the filing of this document. The pro forma condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and related notes thereto of the Company
contained in its Annual Report on Form 10-K for the year ended September 30,
2000 and the condensed consolidated financial statements in its Quarterly Report
on Form 10-Q for the quarter ended March 31, 2001.
4
COHERENT, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2001
(Unaudited; in thousands)
Coherent Pro Forma Coherent
Historical Adjustments Pro Forma
----------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 84,458 $ 89,968 (1) $176,122
1,696 (2)
Short-term investments 118,511 118,511
Accounts receivable 86,576 86,576
Inventories 100,652 100,652
Prepaid expenses and other assets 14,055 14,055
Net current assets of discontinued
operations 70,882 (52,018) (2)
(18,864) (3)
Deferred tax assets 20,984 20,984
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 496,118 20,782 516,900
----------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT 213,359 213,359
ACCUMULATED DEPRECIATION AND
AMORTIZATION (75,145) (75,145)
----------------------------------------------------------------------------------------------------------
Property and equipment, net 138,214 138,214
----------------------------------------------------------------------------------------------------------
GOODWILL 16,269 16,269
NET NON-CURRENT ASSETS OF DISCONTINUED
OPERATIONS 49,354 (49,354) (2)
OTHER ASSETS 70,897 136,000 (4) 206,897
----------------------------------------------------------------------------------------------------------
$770,852 $107,428 $878,280
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 21,699 $ 21,699
Current portion of long-term
obligations 7,685 7,685
Accounts payable 27,887 27,887
Other current liabilities 75,570 25,917 (3) 101,487
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 132,841 25,917 158,758
----------------------------------------------------------------------------------------------------------
LONG-TERM OBLIGATIONS 67,327 67,327
OTHER LONG-TERM LIABILITIES 23,516 23,516
MINORITY INTEREST IN SUBSIDIARIES 51,857 51,857
STOCKHOLDERS' EQUITY 495,311 (10,032) (1) 576,822
(44,781) (3)
136,324 (5)
----------------------------------------------------------------------------------------------------------
$770,852 $107,428 $878,280
==========================================================================================================
SEE ACCOMPANYING NOTES DESCRIBING PRO FORMA ADJUSTMENTS.
5
COHERENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 2000
(Unaudited; in thousands, except per share data)
Coherent Pro Forma Coherent
Historical Adjustments Pro Forma
----------------------------------------------------------------------------------------------------------
NET SALES $568,272 $(184,289) (6) $383,983
COST OF SALES 290,055 (82,356) (6) 207,699
----------------------------------------------------------------------------------------------------------
GROSS PROFIT 278,217 (101,933) 176,284
----------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Research and development 57,436 (16,775) (6) 40,661
Selling, general and administrative 155,626 (66,227) (6) 89,399
Intangibles amortization 8,937 (5,908) (6) 3,029
----------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 221,999 (88,910) 133,089
----------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 56,218 (13,023) 43,195
OTHER INCOME (EXPENSE):
Gain on issuance of stock by subsidiary 55,148 55,148
Interest and dividend income 5,968 (80) (6) 5,888
Interest expense (6,295) 89 (6) (6,206)
Other - net 1,379 (582) (6) 797
----------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) 56,200 (573) 55,627
----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 112,418 (13,596) 98,822
PROVISION FOR INCOME TAXES 40,527 (4,883) (6) 35,644
----------------------------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 71,891 (8,713) 63,178
MINORITY INTEREST IN SUBSIDIARIES EARNINGS (1,954) (1,954)
----------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $ 69,937 $ (8,713) $ 61,224
==========================================================================================================
INCOME FROM CONTINUING OPERATIONS PER SHARE:
Basic $ 2.77 $ 2.42
Diluted $ 2.56 $ 2.24
==========================================================================================================
SHARES USED IN COMPUTATION:
Basic 25,252 25,252
Diluted 27,319 27,319
==========================================================================================================
SEE ACCOMPANYING NOTES DESCRIBING PRO FORMA ADJUSTMENTS.
6
COHERENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED OCTOBER 2, 1999
(Unaudited; in thousands, except per share data)
Coherent Pro Forma Coherent
Historical Adjustments Pro Forma
----------------------------------------------------------------------------------------------------------
NET SALES $468,869 $(148,389) (6) $320,480
COST OF SALES 250,194 (69,771) (6) 180,423
----------------------------------------------------------------------------------------------------------
GROSS PROFIT 218,675 (78,618) 140,057
----------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Research and development 46,759 (14,661) (6) 32,098
In-process research and development 16,000 (12,000) (6) 4,000
Selling, general and administrative 132,138 (56,147) (6) 75,991
Intangibles amortization 5,701 (3,551) (6) 2,150
----------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 200,598 (86,359) 114,239
----------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 18,077 7,741 25,818
OTHER INCOME (EXPENSE):
Interest and dividend income 3,042 (364) (6) 2,678
Interest expense (3,755) 28 (6) (3,727)
Other - net (16) 59 (6) 43
----------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) (729) (277) (1,006)
----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 17,348 7,464 24,812
PROVISION FOR INCOME TAXES 4,389 3,076 (6) 7,465
----------------------------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 12,959 4,388 17,347
MINORITY INTEREST IN SUBSIDIARIES EARNINGS (1,118) (1,118)
----------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $ 11,841 $ 4,388 $ 16,229
==========================================================================================================
INCOME FROM CONTINUING OPERATIONS PER SHARE:
Basic $ 0.49 $ 0.68
Diluted $ 0.48 $ 0.66
==========================================================================================================
SHARES USED IN COMPUTATION:
Basic 23,957 23,957
Diluted 24,633 24,633
==========================================================================================================
SEE ACCOMPANYING NOTES DESCRIBING PRO FORMA ADJUSTMENTS.
7
COHERENT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 26, 1998
(Unaudited; in thousands, except per share data)
Coherent Pro Forma Coherent
Historical Adjustments Pro Forma
----------------------------------------------------------------------------------------------------------
NET SALES $410,449 $(137,024) (6) $273,425
COST OF SALES 213,953 (61,562) (6) 152,391
----------------------------------------------------------------------------------------------------------
GROSS PROFIT 196,496 (75,462) 121,034
----------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Research and development 44,534 (15,427) (6) 29,107
Selling, general and administrative 123,186 (56,577) (6) 66,609
Intangibles amortization 4,644 (2,183) (6) 2,461
----------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 172,364 (74,187) 98,177
----------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 24,132 (1,275) 22,857
OTHER INCOME (EXPENSES):
Interest and dividend income 1,274 (223) (6) 1,051
Interest expense (1,236) 27 (6) (1,209)
Other - net 443 (267) (6) 176
----------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) 481 (463) 18
----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 24,613 (1,738) 22,875
PROVISION FOR INCOME TAXES 4,894 (158) (6) 4,736
----------------------------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 19,719 (1,580) 18,139
MINORITY INTEREST IN SUBSIDIARIES EARNINGS (908) (908)
----------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $ 18,811 $ (1,580) $ 17,231
==========================================================================================================
INCOME FROM CONTINUING OPERATIONS PER SHARE:
Basic $ 0.80 $ 0.74
Dilutive $ 0.79 $ 0.73
==========================================================================================================
SHARES USED IN COMPUTATION:
Basic 23,374 23,374
Diluted 23,749 23,749
==========================================================================================================
SEE ACCOMPANYING NOTES DESCRIBING PRO FORMA ADJUSTMENTS.
8
COHERENT, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(1) Represents estimated net cash proceeds from the disposition of CMG,
calculated as follows:
Cash purchase price $100,000
Less: estimated related cash expenses (10,032)
--------
Net cash proceeds $ 89,968
========
(2) Represents adjustments to remove the net current and non-current assets of
discontinued operations as of March 31, 2001 and the reclassification of
cash of $1,696 not sold to ESC, which is included in net current assets of
discontinued operations.
(3) Represents the estimated provision for income taxes of $44,781 on the
preliminary estimated pre-tax gain of $113,715 as of March 31, 2001
resulting from the CMG sale to ESC. Such provision consists of (i) a
current income tax liability of $25,917 and utilization of $18,864 of
deferred income tax assets included as a component of net current assets of
discontinued operations as of March 31, 2001.
(4) Represents the preliminary estimated value of 5,432,099 shares of ESC common
stock and $12,900 note receivable as follows:
Shares of ESC common stock $124,390
Note receivable 11,610
---------
$136,000
=========
The value of the ESC common stock is subject to adjustment for the
completion of the valuation of the stock. The amount of the note receivable
is subject to adjustment if the actual net assets sold as of April 30, 2001
are more or less than a predetermined amount.
(5) Amount represents the difference between the consideration received (cash,
ESC common stock and note receivable) and the net assets of discontinued
operations as of March 31, 2001(excluding cash and deferred income tax
assets). This amount differs from the estimated gain on disposition as of
March 31, 2001 of $68,935 by (i) the amount of estimated cash expenses of
$10,032, (ii) $12,576 of stock compensation expense relating to
acceleration of vesting of stock options of certain employees of CMG and
(iii) the estimated provision for income taxes of $44,781 on the
preliminary estimated pre-tax gain of $113,715. The determination of such
gain based on account balances as of March 31, 2001 is preliminary as it is
(i) subject to finalization of post-closing purchase price adjustment
provisions of the asset purchase agreement, (ii) is subject to finalization
of estimated related expenses incurred in connection with the CMG Sale as
discussed in (1) above, and (iii) is subject to finalization of the
valuation of the ESC stock received, and as such, the gain is not
necessarily indicative of the gain that will actually be recognized for the
CMG Sale.
(6) To eliminate the results of discontinued operations assuming the sale of
CMG to ESC occurred at the beginning of the earliest period presented.
Sales and cost of sales amounts have been adjusted to include the sales and
related cost of sales from continuing operations of the Company to CMG.
After completion of the sale of CMG to ESC, the Company will supply ESC
with certain components used in CMG products. Historically, these sales of
$22,175, $15,221 and $19,110 in the years ended September 30, 2000, October
2, 1999, and September 26, 1998, respectively, were recorded as
intercompany transactions and, therefore, were eliminated in consolidation
in the Company's historical financial statements.
9