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What changed in COHERENT CORP.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COHERENT CORP.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+407 added−398 removedSource: 10-K (2024-08-16) vs 10-K (2023-08-18)

Top changes in COHERENT CORP.'s 2024 10-K

407 paragraphs added · 398 removed · 280 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

120 edited+40 added−54 removed43 unchanged
Biggest changeDuring the fiscal year ended June 30, 2023, we focused our R&D investments in the following areas: Networking Area of Development: Our R&D Investments: Photonics design Continue to develop and improve crystal materials, precision optical parts, and laser device components for photonics applications; develop new platforms and capabilities Datacom transceivers Continue cost reduction on 10G-100G products by leveraging our engineering resources and manufacturing scale; continue to develop high-end 200G/400G/800G/1.6T products, including RF and packaging designs; explore high-density, high-bandwidth co-packaged designs through silicon photonics; continue to develop vertically integrated designs, including with lasers and ICs Coherent optics and transceivers Drive further integration to reduce size and power consumption; increase bandwidth to enable 100G/200G/400G coherent transceivers; optimize product cost with new design architectures and more efficient manufacturing flow Integrated circuits Develop high-speed integrated circuits for coherent optical communications Pump lasers Continue to invest in our next-generation GaAs pump laser portfolio and flexible manufacturing footprint to address evolving terrestrial and undersea markets Develop InP growth and processing capability together with associated packaging technology for Raman amplification applications Optical amplifiers and subsystems Invest in and broaden the range of amplifiers and integrated subsystems, including ROADMs Optoelectronic chip hybrid integration platform (OCHIP) Develop wafer-scale assembly technologies and processes for integration of lasers, optics, and ICs Silicon photonics devices Develop silicon-based photonic ICs for coherent and direct-detection transceivers and co-packaging solutions WSS Develop LC and LCoS technologies and associated module designs for WSS; invest in manufacturing equipment, including the WSS automated assembly platform Optical monitoring Continue optical channel monitoring investment Develop OTDRs to monitor the health of the fiber plant Micro-optics manufacturing Shift toward smaller, more compact optics and automated assembly platforms and packages Invest in manufacturing equipment for computerized processes Materials Area of Development: Our R&D Investments: 20 High-power laser diodes Semiconductor lasers Devices for optical communications, sensing, and high-volume manufacturing Increase output power and reliability of edge-emitting laser diodes for fiber laser, optical communications, and sensing applications Develop high-power VCSELs, including multi-junction VCSELs for 3D sensing and consumer devices as well as next-generation, high-speed VCSELs for datacom applications Develop high-power and high-speed InP lasers, detectors, and components for applications in optical communications and sensing High-power beam delivery Develop multi-kW beam delivery systems and cables for welding and cutting CVD diamond technology Develop CVD diamond for EUV applications and as substrates for high-performance RF devices Broaden our portfolio beyond infrared window applications SiC technology SiC epitaxial wafers, devices, and modules Develop advanced SiC substrate growth technologies to support emerging markets in GaN RF and SiC power electronics Continuous improvement to maintain world-class, high-quality, large-diameter substrates and epitaxial wafers Develop SiC epitaxial wafers, SiC diodes and MOSFET devices, and SiC power modules Thermoelectric materials and devices Continue to develop leading Bi 2 Te 3 materials for thermoelectric cooling/heating Focus on thermoelectric power-generation capability in order to introduce new products Metal matrix composites and reaction-bonded ceramics Support industrial customers in developing application-specific material wear-out, light-weight high mechanical stability materials, and thermal-management solutions Fiber laser technologies Develop high-power fiber laser technologies for aerospace & defense and commercial applications High-speed ICs Develop high-performance analog TIAs, laser drivers, and clock and data-recovery retimer ICs Battery technology Develop technology for lithium-ion batteries and recycling processes Additive manufacturing Develop alloys and multibeam delivery systems for laser additive manufacturing Develop binder jet additive manufacturing for advanced ceramic components Lasers Area of Development: Our R&D Investments: Diode-pumped Solid-State Lasers Continue to develop solid-state lasers for industrial applications for materials processing, instrumentation, and scientific applications, including extension of wavelengths using nonlinear optics (harmonic generation), especially into the ultraviolet wavelength range.
Biggest changeIt also offers development opportunities to our employees. 18 During the fiscal year ended June 30, 2024, we focused our R&D investments in the following areas: Networking Area of Development: Our R&D Investments: Photonics design Continue to develop and improve crystal materials, precision optical parts, and laser device components for photonics applications; develop new platforms and capabilities Datacom transceivers Enhance high-end 800G/1.6T product development, including RF and packaging designs; explore high-density, high-bandwidth co-packaged designs with VCSELs and through silicon photonics-based designs; continue to develop vertically integrated designs, including with lasers and ICs; continue cost reduction on 400G/200G and 10G-100G products by leveraging our engineering resources and manufacturing scale Optical circuit switch (OCS) Develop the OCS product family for AI/ML and hyperscale data centers based on the digital liquid-crystal technology that underpins one of our WSS product lines Coherent optics and transceivers Drive further integration to reduce size and power consumption; increase bandwidth to enable 100G/200G/400G/800G coherent transceivers; optimize product cost with new design architectures and more efficient manufacturing flow Integrated circuits Develop high-speed integrated circuits for data communications and coherent optical communications Pump lasers Continue to invest in our next-generation GaAs pump laser portfolio and flexible manufacturing footprint to address evolving terrestrial and undersea markets Develop InP growth and processing capability together with associated packaging technology for Raman amplification applications Optical amplifiers and subsystems Invest in and broaden the range of amplifiers and integrated subsystems, including ROADMs Optoelectronic chip hybrid integration platform (OCHIP) Develop wafer-scale assembly technologies and processes for integration of lasers, optics, and ICs Silicon photonics devices Develop silicon-based photonic devices for coherent and direct-detection transceivers and co-packaging solutions Wavelength selective switches Develop LC and LCoS technologies and associated module designs for WSS; invest in manufacturing equipment, including the WSS automated assembly platform Optical monitoring Continue optical channel monitoring investment Develop OTDRs to monitor the health of the fiber plant Micro-optics manufacturing Shift toward smaller, more compact optics and automated assembly platforms and packages Invest in manufacturing equipment for computerized processes Materials Area of Development: Our R&D Investments: High-power laser diodes Semiconductor lasers Devices for optical communications, sensing, and high-volume manufacturing Increase output power and reliability of edge-emitting laser diodes for fiber laser, optical communications, and sensing applications Develop high-power VCSELs, including multi-junction VCSELs for 3D sensing and consumer devices as well as next-generation, high-speed VCSELs for datacom applications Develop high-power and high-speed InP lasers, detectors, and components for applications in optical communications and sensing 19 High-power beam delivery Develop multi-kW beam delivery systems and cables for welding and cutting CVD diamond technology Develop CVD diamond for EUV applications and as substrates for high-performance RF devices Broaden our portfolio beyond infrared window applications SiC technology SiC epitaxial wafers, devices, and modules Develop advanced SiC substrate growth technologies to support emerging markets in GaN RF and SiC power electronics Continuous improvement to maintain world-class, high-quality, large-diameter substrates and epitaxial wafers Develop SiC epitaxial wafers, SiC diodes and MOSFET devices, and SiC power modules Thermoelectric materials and devices Continue to develop leading Bi 2 Te 3 materials for thermoelectric cooling/heating Focus on thermoelectric power-generation capability in order to introduce new products Metal matrix composites and reaction-bonded ceramics Support industrial customers in developing application-specific material wear-out, lightweight high-mechanical-stability materials, and thermal-management solutions Fiber laser technologies Develop high-power fiber laser technologies for aerospace & defense and commercial applications High-speed ICs Develop high-performance analog TIAs, laser drivers, and clock and data-recovery retimer ICs Battery technology Develop technology for lithium-ion batteries and battery recycling processes Additive manufacturing Develop alloys and multibeam delivery systems for laser additive manufacturing Develop binder jet additive manufacturing for advanced ceramic components Lasers Area of Development: Our R&D Investments: Diode-pumped solid-state lasers Continue to develop solid-state lasers for industrial applications for materials processing, instrumentation, and scientific applications, including extension of wavelengths using nonlinear optics (harmonic generation), especially into the ultraviolet wavelength range Continuous-wave operation as well as pulsed systems with pulses in the range of 400 fs to 100 ns Ultrafast fiber lasers Continued development of industrial femtosecond fiber lasers with 50-200 μJ pulse energy, including UV generation, for semiconductor capital equipment and display manufacturing; power-scaling and wavelength range extension for low energy ( Femtosecond oscillators and amplifiers Continue to develop ultrafast laser systems for scientific applications based on Ti:sapphire and Yb-doped gain materials with sub-100-fs pulse duration Optically pumped semiconductor lasers (OPSLs) Continue to broaden the product portfolio of continuous-wave, visible, and ultraviolet OPSLs by offering new wavelengths, increasing the output power and further reducing the product footprint; this includes the development of single-frequency ultraviolet cw OPSL-based systems Semiconductor lasers Increase output power and reliability of GaAs- and InP-based edge-emitting semiconductor lasers (single emitters, bars, stacks, and fiber-coupled modules) for laser pumping, industrial, and defense applications Excimer lasers and excimer laser tools Continue to support existing excimer laser-based applications in display manufacturing, instrumentation, and materials processing.
General Description of Business We develop, manufacture, and market engineered materials, optoelectronic components and devices, optical and laser subsystems and systems for use in the industrial, communications, electronics, and instrumentation markets. We use advanced engineered materials growth technologies and proprietary high-precision fabrication, microassembly, optical thin-film coating, and electronic integration to manufacture complex optoelectronic devices and modules.
General Description of Business We develop, manufacture, and market engineered materials, optoelectronic components and devices, and optical and laser systems and subsystems for use in the industrial, communications, electronics, and instrumentation markets. We use advanced engineered materials growth technologies and proprietary high-precision fabrication, microassembly, optical thin-film coating, and electronic integration to manufacture complex optoelectronic devices and modules.
It is our highest priority to keep our employees, customers, and suppliers safe, as the health and safety of our workforce is paramount to the success of our business. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented.
It is our highest priority to keep our employees, customers, and suppliers safe, as the health and safety of our workforce is paramount to the success of our business. We provide our employees upfront and ongoing training to ensure that safety policies and procedures are effectively communicated and implemented.
However, in the Lasers segment, we currently purchase several key components and materials, including exotic materials, crystals and optics, used in the manufacture of our products from sole source or limited source suppliers. We also purchase assemblies and turnkey solutions from contract manufacturers based on our proprietary designs.
However, in the Lasers segment, we currently purchase several key components and materials used in the manufacture of our products, including exotic materials, crystals, and optics, from sole-source or limited-source suppliers. We also purchase assemblies and turnkey solutions from contract manufacturers, based on our proprietary designs.
We rely on our own production and design capability to manufacture and specify certain strategic components, crystals, fibers, semiconductor lasers, lasers and laser-based systems. The continued high quality of and access to these raw materials are critical to the stability and predictability of our manufacturing yields.
We rely on our own production and design capability to manufacture and specify certain strategic components, crystals, fibers, semiconductor lasers, and laser-based systems. The continued high quality of and access to these raw materials are critical to the stability and predictability of our manufacturing yields.
These products rely on advanced components such as semiconductor lasers and photodetectors, in conjunction with integrated circuits and novel optoelectronic packaging to provide a cost-effective means for transmitting and receiving digital signals over fiber-optic cable at speeds ranging from less than 1 Gbps to more than 800 Gbps, over distances of less than 10 meters to more than 5,000 kilometers, using a wide range of network protocols and physical configurations.
These products rely on advanced components, such as semiconductor lasers and photodetectors, in conjunction with integrated circuits and novel optoelectronic packaging to provide a cost-effective means for transmitting and receiving digital signals over fiber-optic cable at speeds ranging from less than 1 Gbps to more than 800 Gbps, and over distances of less than 10 meters to more than 5,000 kilometers, using a wide range of network protocols and physical configurations.
For Level 1 links greater than 100 m, and for telecom access (2 – 10 km), electro-absorption modulated lasers, or EMLs, may be used. We manufacture 100G/lane EMLs to support 400G and 800G transceivers, such as our EML-based 800G DR8 transceiver. We introduced our 200G/lane EML in 2022.
For Level 1 links greater than 100 m, and for telecom access (2-10 km), electro-absorption modulated lasers, or EMLs, may be used. We manufacture 100G/lane EMLs to support 400G and 800G transceivers, such as our EML-based 800G DR8 transceiver, and we introduced our 200G/lane EML in 2022.
Our U.S. production and R&D operations are located in Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Massachusetts, Michigan, Mississippi, New Jersey, New York, Ohio, Oregon, Pennsylvania, and Texas, and our non-U.S. production and R&D operations are based in Australia, China, Finland, Germany, India, Malaysia, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, the United Kingdom, and Vietnam.
Our U.S. production and R&D operations are located in California, Colorado, Connecticut, Delaware, Florida, Illinois, Massachusetts, Michigan, Mississippi, New Jersey, New York, Ohio, Oregon, Pennsylvania, and Texas, and our non-U.S. production and R&D operations are based in Australia, China, Finland, Germany, India, Malaysia, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, the United Kingdom, and Vietnam.
Our product offerings include edge-emitters and VCSELs that are capable of providing a wide range of peak powers for direct illumination and imaging for short- and long-range LiDAR solutions. Emission and return windows on LiDAR systems are available in ultrahard bulk materials such as SiC and diamond, and with optical coatings that are water-shedding and oil-resistant.
Our product offerings include edge-emitters and VCSELs that are capable of providing a wide range of wavelengths and peak powers for direct illumination and imaging in short- and long-range LiDAR solutions. Emission and return windows on LiDAR systems are available in ultrahard bulk materials such as SiC and diamond, and with optical coatings that are water-shedding and oil-resistant.
Our thermoelectric coolers are qualified to automotive standards and enable LiDAR systems to operate with optimal performance and efficiency. 15 New generations of vehicles will be equipped with a greater number of sensors that can monitor a driver’s alertness and let occupants interact with the console using touch sensing or gesture recognition.
Our thermoelectric coolers are qualified to automotive standards and enable LiDAR systems to operate with optimal performance and efficiency. New generations of vehicles will be equipped with a greater number of sensors that can monitor a driver’s alertness and let occupants interact with the console using touch sensing or gesture recognition.
With our strategic focus on fast-growing and sustainable markets, we pursue our mission of enabling the world to be safer, healthier, closer, and more efficient, and strive to attain our vision of a world transformed through innovations vital to a better life today and the sustainability of future generations. Acquisition and Background of Coherent, Inc. The acquisition of Coherent, Inc.
With our strategic focus on fast-growing and sustainable markets, we pursue our mission of enabling the world to be safer, healthier, closer, and more efficient, and strive to attain our vision of a world transformed through innovations vital to a better life today and the sustainability of future generations. 6 Acquisition and Background of Coherent, Inc.
We supply a broad range of materials, components, and subsystems that enable many functions within these fiber lasers, from the laser chips that generate the input optical power to the beam delivery systems that direct the output optical power to the target. The same set of Coherent products is at the core of existing and emerging direct-diode laser systems.
We supply a broad range of materials, and components that enable many functions within these fiber lasers, from the laser chips that generate the input optical power to the beam delivery systems that direct the output optical power to the target. The same set of Coherent products is at the core of existing and emerging direct-diode laser systems.
These transceivers are protocol-agnostic, meaning the same transceiver hardware can support Ethernet and InfiniBand, as well as proprietary protocols for AI and ML such as NVIDIA’s NVLink. Over the years, we have made strategic investments that give us a unique level of vertical integration.
These transceivers are protocol-agnostic, meaning the same transceiver hardware can support Ethernet and InfiniBand, as well as proprietary protocols for AI and ML such as NVIDIA’s NVLink. 14 Over the years, we have made strategic investments that give us a unique level of vertical integration.
We are a global technology leader in optical communications, providing materials, subcomponents, components, modules, and subsystems to optical component and module manufacturers, networking equipment manufacturers, datacenter operators, and telecom service providers. We design products that meet the increasing demands for network bandwidth and data storage.
We are a global technology leader in optical communications, providing materials, subcomponents, components, modules, and subsystems to optical component and module manufacturers, networking equipment manufacturers, datacenter operators, enterprises, and telecom service providers. We design products that meet the increasing demands for network bandwidth and data storage.
The GaN and InP technological platform, which are within the core competencies of Coherent, are key materials also for future 6G high-efficiency power amplifiers and low-noise amplifiers, enabling the best power performance in their respective frequency ranges. Instrumentation Market Group • Life Sciences Market Vertical.
The GaN and InP technological platform, which are within the core competencies of Coherent, are key materials also for future 6G high-efficiency power amplifiers and low-noise amplifiers, enabling the best power performance in their respective frequency ranges. Instrumentation Market Group 16 • Life Sciences Market Vertical.
Generally speaking, interconnects in the AI/ML fabric portion of the network (Level 0) 14 are less than 50 m, interconnects connecting ToR switches to spine switches (Level 1) are up to 500 m, and interconnects connecting switches to routers or routers to routers (Telecom Access) are between 2 and 10 km.
Generally speaking, interconnects in the AI/ML fabric portion of the network (Level 0) are less than 50 m, interconnects connecting ToR switches to spine switches (Level 1) are up to 500 m, and interconnects connecting switches to routers or routers to routers (telecom access) are between 2 km and 10 km.
Looking forward, we continue to advance the state of the art in SiC substrates, with a strong technology portfolio of 30 active patents using highly differentiated and proprietary manufacturing platforms and technologies including crystal growth, substrate fabrication, and polishing.
Looking forward, we continue to advance the state of the art in SiC substrates, with a strong technology portfolio of over 30 active patents using highly differentiated and proprietary manufacturing platforms and technologies including crystal growth, substrate fabrication, and polishing.
We have experienced employees on-site at each of our manufacturing locations who are tasked with environmental, health, and personal safety education and compliance. We customize our policies to the local requirements and circumstances of each plant. • Talent Acquisition, Development, and Training .
We have experienced employees on-site at each of our manufacturing locations who are tasked with environmental, health, and safety education and compliance. We customize our policies to the local requirements and circumstances of each plant. • Talent Acquisition, Development, and Training .
Julie Sheridan Eng was appointed Chief Technology Officer of the Company in October 2022. Prior to becoming CTO, Dr. Eng, 56, served as Senior Vice President and General Manager of the Company’s Optoelectronic Devices and Modules Business Unit. Dr.
Julie Sheridan Eng was appointed Chief Technology Officer of the Company in October 2022. Prior to becoming CTO, Dr. Eng served as Senior Vice President and General Manager of the Company’s Optoelectronic Devices and Modules Business Unit. Dr.
Manufacturing Processes Our success in developing and manufacturing many of our products depends on our ability to manufacture and tailor the optical and physical properties of technically challenging materials, components, and photonics-based solutions across a broad array of industries.
Manufacturing Processes Our success in developing and manufacturing many of our products depends on our ability to tailor the optical and physical properties of technically challenging materials, components, and photonics-based solutions across a broad array of industries.
Information Regarding Reporting Segments and Foreign Operations In connection with the acquisition of Coherent, Inc., effective July 1, 2022, the Company realigned its organizational structure into three reporting segments for the purpose of making operational decisions and assessing financial performance: (i) Materials, which previously was referred to as our Compound Semiconductors segment; (ii) Networking, which previously was referred to as our Photonic Solutions segment; and (iii) Lasers segment.
Information Regarding Reporting Segments and Foreign Operations In connection with the acquisition of Coherent, Inc., effective July 1, 2022, the Company realigned its organizational structure into three reporting segments for the purpose of making operational decisions and assessing financial performance: (i) Networking, previously referred to as our Photonic Solutions segment; (ii) Materials, previously referred to as our Compound Semiconductors segment; and (iii) Lasers.
Ours lasers are displacing conventional technology because they can do the job faster, yield higher quality, provide overall economic benefits, and enable next generation applications. Our network of worldwide manufacturing sites allows us to manufacture our products in regions that provide cost-effective and risk-management advantages. We employ numerous advanced manufacturing technologies and systems at our manufacturing facilities.
Our lasers are displacing conventional technologies because they can do the job faster, yield higher quality, provide overall economic benefits, and enable next-generation applications. Our network of worldwide manufacturing sites allows us to manufacture our products in regions that provide cost-effective and risk-management advantages. We employ numerous advanced manufacturing technologies and systems at our manufacturing facilities.
Our optical communications products can be divided into two main groups, optical transmission and optical transport. Our optical transmission products consist primarily of transmitters, receivers (as stand-alone parts or combined in different integrated solutions), transceivers, transponders, and active optical cables, which provide the fundamental optical-electrical, or optoelectronic, interface for interconnecting the electronic equipment used in networks.
Our Telecom optical communications products can be divided into two main groups: optical transmission and optical transport. Our optical transmission products consist primarily of transmitters, receivers (as stand-alone parts or combined in different integrated solutions), transceivers, transponders, and active optical cables, which provide the fundamental optoelectronic interface for interconnecting the electronic equipment used in networks.
Therefore, 3D sensing applications created the need to scale up manufacturing to 6-inch wafer processing. Today, Coherent is one of the very few vertically integrated 6-inch VCSEL manufacturers with a proven track record in high-volume manufacturing of high-reliability, large multi-emitter VCSEL dies designed for 3D sensing.
Therefore, 3D sensing applications created the need to scale up manufacturing to 6-inch wafer processing. Today, Coherent is one of the very few vertically integrated 6-inch VCSEL manufacturers with a proven track record in high-volume manufacturing of high-reliability, large multi-emitter VCSEL arrays designed for 3D sensing.
Coherent’s Aerospace & Defense (A&D) Division maintains separate business development, IT infrastructure, accounting, finance, engineering, and manufacturing facilities in the United States with strictly controlled access; they are dedicated to our U.S. government-supported contracts. • Semiconductor Capital Equipment Market Vertical.
Coherent’s Aerospace & Defense division maintains separate business development, IT infrastructure, accounting, finance, engineering, and manufacturing facilities in the United States with strictly controlled access; they are dedicated to our U.S. government-supported contracts. • Semiconductor Capital Equipment Market Vertical.
Effective July 1, 2022, the Company reports financial information for these three segments. Financial data regarding our revenues, results of operations, reporting segments, and international sales for the three years ended June 30, 2023, are set forth in the Consolidated Statements of Earnings (Loss) and in Note 14.
Effective July 1, 2022, the Company reports financial information for these three segments. Financial data regarding our revenues, results of operations, reporting segments, and international sales for the three years ended June 30, 2024, are set forth in the Consolidated Statements of Earnings (Loss) and in Note 14.
In areas of high bandwidth demand, 5G antennas with beamforming technology utilizing multiple devices per antenna are expected to be densely deployed, increasing the demand for GaN-on-SiC power amplifiers by approximately an order of magnitude or more versus 4G antennas.
In areas of high bandwidth demand, 5G antennas with beamforming technology using multiple devices per antenna are expected to be densely deployed, increasing the demand for GaN-on-SiC power amplifiers by approximately an order of magnitude or more versus 4G antennas.
We not only design and manufacture our transceivers internally, we also design and manufacture many of the components including lasers, detectors, and passive optics. When designing a new transceiver that requires a new component, we either source that component from one of our valued development partners, or we design and manufacture it internally.
We not only design and manufacture our transceivers internally, but we also design and manufacture many of the components, including lasers, detectors, ICs, and passive optics. When designing a new transceiver that requires a new component, we either source that component from one of our valued development partners, or we design and manufacture it internally.
Each of these business units develops and markets products as described below. 10 Networking Business Unit Our Products Telecommunications • Products and solutions that enable high-bit-rate interconnects for communications and cloud service providers, including in terrestrial and undersea fiber-optic transmission Datacom Transceivers • Pluggable transceivers for Ethernet and Fibre Channel applications in cloud, hyperscale and enterprise datacenter applications, including AI/ML Advanced Optics • Fiber optics and precision optics used in projection displays; crystal materials and components for optical communications; high-power UV, visible, and NIR optics for industrial lasers; filters and assemblies for life sciences as well as for sensors, instrumentation, and semiconductor equipment Materials Business Unit Our Products Engineered Materials & Laser Optics • Laser optics and accessories for CO 2 lasers • High-power fiber and direct-diode laser optics • Infrared thermal imaging optics and assemblies • Polycrystalline materials production including ZnSe, ZnS, and CVD diamond • Thermoelectric components, subassemblies, and systems • Specialty refining, recycling, and materials-recovery services for high-purity rare metals such as selenium and tellurium, as well as related chemical products such as tellurium dioxide • Advanced ceramic and metal-matrix composite products Laser Components & Subsystems • High-power semiconductor lasers and laser bars • Laser heads and modules, Q-switched laser modules, high-power uncooled pump laser modules, laser systems for superhard materials processing • Laser processing heads and beam delivery systems for laser materials processing with industrial lasers • High-power fiber lasers for materials processing • EELs, VCSELs, and detectors • High-power pumps for amplifiers • Precision optical assemblies, infrared optics, thin-film coatings, and optical materials • Optical solutions for critical and complex design, engineering, and production challenges in aerospace & defense New Ventures & Wide-Bandgap Electronics Technologies • SiC and semiconductor materials for high-frequency and high-power electronic devices Optoelectronic Devices & Modules • VCSELs for sensing • EELs and detectors • Integrated circuits for transceivers 11 Lasers Business Unit Our Products Excimer Lasers • High pulse energy UV gas and solid-state lasers from 193 nm to 355 nm • Advanced UV optical systems, line beams, and mask-based imaging systems Solid-State Lasers North America • Ultrafast lasers from UV to IR wavelengths • High pulse energy UV nanosecond lasers • Low-power continuous-wave lasers and systems • Miniature low-power continuous-wave lasers and systems • High-power ultrafast amplifiers • Continuous-wave UV gas lasers Solid-State Lasers Europe • Ultrafast lasers from UV to IR wavelengths • High pulse energy UV nanosecond lasers • Miniature low-power continuous-wave lasers from UV to IR wavelengths Laser Systems • Subsystems incorporating various lasers, optics, beam manipulation, monitoring, and control electronics • Standard systems incorporating standard subsystems in a complete mechanical housing, sold to the end user CO 2 Lasers • kW class continuous-wave gas IR lasers • 50 W to 1 kW continuous-wave and pulse gas IR lasers Aerospace & Defense • Specialty polishing and coating of optics, optical systems, and assemblies requiring high complexity and precision at dimensions of up to 2 meters • Specialty lasers and laser systems • Specialty crystals • Specialty diode lasers Markets Our market-focused businesses are currently organized by technologies and products.
Networking Business Unit Our Products Telecommunications • Products and solutions that enable high-bit-rate interconnects for communications and cloud service providers, including in terrestrial and undersea fiber-optic transmission Datacom Transceivers • Pluggable transceivers for Ethernet and Fibre Channel applications in cloud, hyperscale, and enterprise datacenter applications, including AI/ML Advanced Optics • Fiber optics and precision optics used in projection displays; crystal materials and components for optical communications; high-power UV, visible, and NIR optics for industrial lasers; filters and assemblies for life sciences as well as for sensors, instrumentation, and semiconductor equipment 10 Materials Business Unit Our Products Engineered Materials & Laser Optics • Laser optics and accessories for CO 2 lasers • High-power fiber and direct-diode laser optics • Infrared thermal imaging optics and assemblies • Polycrystalline materials production including ZnSe, ZnS, and CVD diamond • Thermoelectric components, subassemblies, and systems • Specialty refining, recycling, and materials-recovery services for high-purity rare metals such as selenium and tellurium, as well as related chemical products such as tellurium dioxide • Advanced ceramic and metal-matrix composite products Laser Devices & Systems • High-power semiconductor lasers and laser bars • Laser heads and modules, Q-switched laser modules, high-power uncooled pump laser modules, laser systems for superhard materials processing • Laser processing heads and beam delivery systems for laser materials processing with industrial lasers • High-power fiber lasers for materials processing • EELs, VCSELs, and detectors • High-power pumps for amplifiers • Precision optical assemblies, infrared optics, thin-film coatings, and optical materials • Optical solutions for critical and complex design, engineering, and production challenges in aerospace & defense Wide-Bandgap Electronics • SiC and semiconductor materials for high-frequency and high-power electronic devices Optoelectronic Devices & Modules • VCSELs for sensing • EELs and detectors • Integrated circuits for transceivers 11 Lasers Business Unit Our Products Excimer Lasers • High-pulse-energy UV gas and solid-state lasers from 193 nm to 355 nm • Advanced UV optical systems, line beams, and mask-based imaging systems Solid-State Lasers - North America • Ultrafast lasers from UV to IR wavelengths • High-pulse-energy UV nanosecond lasers • Low-power continuous-wave lasers and systems • Miniature low-power continuous-wave lasers and systems • High-power ultrafast amplifiers • Continuous-wave UV gas lasers Solid-State Lasers - Europe • Ultrafast lasers from UV to IR wavelengths • High-pulse-energy UV nanosecond lasers • Miniature low-power continuous-wave lasers and systems Laser Systems • Subsystems incorporating various lasers, optics, beam manipulation, monitoring, and control electronics • Standard systems incorporating standard subsystems in a complete mechanical housing, sold to the end user CO 2 Lasers • Kilowatt-class continuous-wave gas IR lasers • 50 W to 1 kW continuous-wave and pulse gas IR lasers Aerospace & Defense • Specialty polishing and coating of optics, optical systems, and assemblies requiring high complexity and precision at dimensions of up to 2 meters • Specialty lasers, laser systems, crystals, and diode lasers Markets Our market-focused businesses are currently organized by technologies and products and report based on the following markets: industrial, communications, electronics, and instrumentation.
The following defined terms are used in this Annual Report on Form 10-K: artificial intelligence (AI); bismuth telluride (Bi 2 Te 3 ); cadmium telluride (CdTe); carbon dioxide (CO 2 ); chemical vapor deposition (CVD) of materials including diamond; continuous wave (CW); datacenter interconnect (DCI); dense wavelength division multiplexing (DWDM); diversity, equity, and inclusion (DEI); edge-emitting lasers (EELs); extreme-ultraviolet (EUV) lithography; fifth-generation (5G) wireless; fourth-generation (4G) wireless; gallium arsenide (GaAs); gallium antimonide (GaSb), gallium nitride (GaN); Geostationary Operational Environment Satellite Program (GOES); gigabit per second (Gbps); high-definition multimedia interface (HDMI); high-electron-mobility transistor (HEMT); high-energy laser (HEL); indium phosphide (InP); infrared (IR); integrated circuit (IC); intellectual property (IP); kilowatt (kW); light detection and ranging (LiDAR); liquid crystal (LC); liquid crystal on silicon (LCoS); machine learning (ML); metal-oxide-semiconductor field-effect transistor (MOSFET); millimeters (mm); nanometers (nm); near-infrared (NIR); optical channel monitor (OCM); optoelectronic chip hybrid integration platform (OCHIP); original equipment manufacturer (OEM); optical time-domain reflectometer (OTDR); polymerase chain reaction (PCR); radio frequency (RF); reconfigurable optical add/drop multiplexer (ROADM); research and development (R&D); silicon carbide (SiC); terabit per second (Tbps); three-dimensional (3D); ultraviolet (UV); vertical-cavity surface-emitting laser (VCSEL); virtual reality (VR); wavelength division multiplexing (WDM); wavelength selective switching (WSS); zinc selenide (ZnSe); and zinc sulfide (ZnS).
The following defined terms are used in this Annual Report on Form 10-K: artificial intelligence (AI); bismuth telluride (Bi 2 Te 3 ); cadmium telluride (CdTe); carbon dioxide (CO 2 ); chemical vapor deposition (CVD) of materials including diamond; continuous wave (CW); datacenter interconnect (DCI); dense wavelength division multiplexing (DWDM); diversity, equity, and inclusion (DEI); edge-emitting lasers (EELs); environmental, social, and governance (ESG); extreme-ultraviolet (EUV) lithography; fifth-generation (5G) wireless; fourth-generation (4G) wireless; gallium arsenide (GaAs); gallium antimonide (GaSb), gallium nitride (GaN); Geostationary Operational Environment Satellite Program (GOES); gigabit per second (Gbps); high-definition multimedia interface (HDMI); high-electron-mobility transistor (HEMT); indium phosphide (InP); infrared (IR); integrated circuit (IC); intellectual property (IP); kilowatt (kW); light detection and ranging (LiDAR); liquid crystal (LC); liquid crystal on silicon (LCoS); machine learning (ML); metal-oxide-semiconductor field-effect transistor (MOSFET); millimeters (mm); nanometers (nm); near-infrared (NIR); optical channel monitor (OCM); optoelectronic chip hybrid integration platform (OCHIP); original equipment manufacturer (OEM); optical time-domain reflectometer (OTDR); radio frequency (RF); reconfigurable optical add/drop multiplexer (ROADM); research and development (R&D); silicon carbide (SiC); terabit per second (Tbps); three-dimensional (3D); ultraviolet (UV); vertical-cavity surface-emitting laser (VCSEL); virtual reality (VR); wavelength selective switching (WSS); zinc selenide (ZnSe); and zinc sulfide (ZnS).
These include integrated circuits, digital signal processors, mechanical housings, and optical components, and we commonly refer to them as raw materials. Raw materials or sub-components required in the manufacturing process are generally available from several sources.
These include integrated circuits, digital signal processors, mechanical housings, and optical components, and we commonly refer to them as raw materials. Raw materials or subcomponents required in the manufacturing process are generally available from several sources.
We also make our corporate governance documents available on our website, including the Company’s Code of Ethical Business Conduct, Governance Guidelines, and the charters for our board committees. All such documents are located on the Investors page of our website and are available free of charge. 25
We also make our corporate governance documents available on our website, including the Company’s Code of Ethical Business Conduct, Governance Guidelines, and the charters for our board committees. All such documents are located on the Investors page of our website and are available free of charge. 23
GaN-on-SiC RF power amplifiers have superior performance, compared with devices based on silicon, over a wide spectrum of 5G operating frequencies in the gigahertz range, including in the millimeter-wave bands. We are a market leader in the technology development and large-volume manufacturing of 100 mm and 150 mm semi-insulating SiC substrates.
GaN-on-SiC RF power amplifiers have superior performance, compared with devices based on silicon, over a wide spectrum of 5G operating frequencies in the gigahertz range, including in the millimeter-wave bands. We are a market leader in the technology development and large-volume manufacturing of 100 mm, 150 mm, and the industry’s first 200 mm semi-insulating SiC substrates.
We provide all employees the chance to learn and develop critical skills, and we strive to attract, motivate, and retain our talent. Our Leadership Academy offers global leadership development programs for our people leaders to build their leadership capabilities.
We provide all employees the chance to learn and develop critical skills, and we strive to attract, motivate, and retain our talent. Our Leadership Academy offers global development programs for our people leaders to enhance their capabilities.
Eng received her PhD and M.S. in electrical Engineering from Stanford, and an M.S. and B.A. from Bryn Mawr College (summa cum laude) and a B.S., with honors from the California Institute of Technology (Caltech).
Eng received her PhD and M.S. in electrical Engineering from Stanford, and an M.S. and B.A. from Bryn Mawr College (summa cum laude) and a B.S., with honors from the California Institute of Technology (Caltech). In 2022, Dr.
With the addition of nano-machined single-crystal silicon and grating technologies, together with Coherent’s advanced HEL coating capabilities, we enable advanced spectral beam combining and novel microstructured surface capabilities, which are highly valued within the aerospace & defense industry. Our advanced missile warning, electro-optical targeting, and imaging systems are deployed on virtually every U.S. fixed-wing and rotary platform.
With the addition of nanomachined single-crystal silicon and grating technologies, together with Coherent’s advanced coating capabilities, we enable advanced spectral beam combining and novel microstructured surface capabilities, which are highly valued within the Aerospace & Defense industry. Our advanced missile warning, electro-optical targeting, and imaging systems are deployed on virtually every U.S. fixed-wing and rotary platform.
Beyond lasers, we have deep expertise in ceramics and metal matrix composites that semiconductor equipment manufacturers depend on to achieve state-of-the-art semiconductor manufacturing throughput, enabled by the exceptional mechanical and thermal properties of these materials. • Display Market Vertical. We have achieved breakthrough laser innovations essential to manufacture displays for phones, tablets, computers, and televisions.
Beyond lasers, we have decades of experience and expertise in ceramics and metal-matrix composites that semiconductor equipment manufacturers depend on to achieve state-of-the-art semiconductor manufacturing throughput, enabled by the exceptional mechanical and thermal properties of these materials. • Display Capital Equipment Market Vertical. We have achieved breakthrough laser innovations essential to manufacture displays for phones, tablets, computers, and televisions.
Backlog We define our backlog as bookings that have not been converted to revenues by the end of the reporting period. As of June 30, 2023, our backlog was approximately $2.7 billion, compared with approximately $2.3 billion as of June 30, 2022. Global Operations Coherent is headquartered in Saxonburg, Pennsylvania, USA, with R&D, manufacturing, and sales facilities worldwide.
Backlog We define our backlog as bookings that have not been converted to revenues by the end of the reporting period. As of June 30, 2024, our backlog was approximately $2.6 billion, compared with approximately $2.7 billion as of June 30, 2023. Global Operations Coherent is headquartered in Saxonburg, Pennsylvania, USA, with R&D, manufacturing, and sales facilities worldwide.
This expertise in VCSEL technology has been leveraged for the growing 3D sensing market. 3D sensing was the first application to drive the demand for relatively large two-dimensional VCSEL arrays. A typical design for 3D sensing requires tens or hundreds of VCSELs per chip in order to scale up the optical power required for, for example, face recognition.
This expertise in VCSEL technology has been leveraged for the growing sensing market. 3D sensing was the first application to drive the demand for relatively large two-dimensional VCSEL arrays. A typical design for 3D sensing requires tens or hundreds of VCSELs per chip in order to scale up the optical power required for applications such as face recognition.
Our demonstration of the world’s first prototype 200 mm semi-insulating SiC substrates will enable the RF power amplifier market to continue to scale, increasingly replacing functions performed by devices based on silicon and enabling new applications.
Our introduction of the world’s first 200 mm semi-insulating SiC substrates will enable the RF power amplifier market to continue to scale, increasingly replacing functions performed by devices based on silicon and enabling new applications.
The following are among our top competitors (in alphabetic order): • Broadcom Corporation • IDEX Corporation • InnoLight Technology (Suzhou) Ltd. • IPG Photonics, Inc. • Lumentum Operations LLC • MKS Instruments, Inc. • Molex, LLC • O-Net Technologies (Shenzhen) Group Co., Ltd. • Trumpf GmbH + Co.
The following are among our top competitors (in alphabetic order): • Broadcom Corporation • IDEX Corporation • InnoLight Technology Corp. • IPG Photonics, Inc. • Lumentum Operations LLC • MKS Instruments, Inc. • Molex, LLC • O-Net Technologies (Shenzhen) Group Co., Ltd. • Sony Group Corporation • Trumpf GmbH + Co.
In the mobile wireless market, we are a global leader in the strategic supply chain for materials and devices utilized in the latest 4G and 5G base station infrastructure.
In the mobile wireless market, we are a global leader in the strategic supply chain for materials and devices used in the latest 4G, 5G, and 6G base station infrastructure.
There are also many options in terms of pulsed output versus continuous wave, pulse duration, output power, beam dimensions, etc., which are application specific. Manufacturing products for use across the electromagnetic spectrum requires the capability to repeatedly manufacture products with high yields to atomic tolerances. We continuously update our comprehensive quality management systems that feature manufacturing quality best practices.
There are also many options in terms of pulsed output versus continuous wave, pulse duration, output power, beam dimensions, etc., that are application-specific. Developing products for use across the electromagnetic spectrum requires the ability to repeatedly manufacture components with high yields to atomic tolerances. We continually update our comprehensive quality management systems that feature manufacturing best practices.
We generate almost all of our revenues, earnings, and cash flows from developing, manufacturing, and marketing a broad portfolio of products and services for our end markets. We also generate revenue, earnings, and cash flows from government-funded research and development contracts relating to the development and manufacture of new technologies, materials, and products.
We generate almost all of our revenues, earnings, and cash flows from developing, manufacturing, and marketing a broad portfolio of products and services for our end markets. We also generate revenues, earnings, and cash flows from externally funded R&D contracts relating to the development and manufacture of new technologies, materials, and products.
Joseph’s University, and an MBA from Stanford University. Christopher Koeppen joined the Company in 2011 following the acquisition of Aegis Lightwave, Inc., where he served as General Manager, Aegis-NJ. He was named General Manager of the Agile Network Products Division in 2012 and Director of Corporate Strategic Technology Planning in 2015.
Christopher Koeppen joined the Company in 2011 following the acquisition of Aegis Lightwave, Inc., where he served as General Manager, Aegis-NJ. He was named General Manager of the Agile Network Products Division in 2012 and Director of Corporate Strategic Technology Planning in 2015.
The website address is intended to be an inactive textual reference only. None of the information on, or accessible through, Coherent’s website is part of this Annual Report on Form 10-K, nor is it incorporated herein by reference. Sources of Supply In our production processes, we use numerous optical, electrical, and mechanical parts that are sourced from third-party suppliers.
None of the information on, or accessible through, Coherent’s website is part of this Annual Report on Form 10-K, nor is it incorporated herein by reference. Sources of Supply In our production processes, we use numerous optical, electrical, and mechanical parts that are sourced from third-party suppliers.
Our 100G/lane VCSELs are in production to support 400G and 800G transceivers.We are working on 200G/lane VCSELs, which will require significant changes in the VCSEL device design and fabrication. For Level 1 switching for distances greater than can be supported by VCSELs, and for telecom access, single-mode devices are used. These devices are made from InP materials.
We are working on 200G/lane VCSELs, which will require significant changes in the VCSEL device design and fabrication. For Level 1 switching for distances greater than can be supported by VCSELs, and for telecom access, single-mode devices are used. These devices are made from InP materials.
Bashaw holds a J.D. from the University of Pittsburgh School of Law, from which he graduated cum laude and at which he was the editor-in-chief of the University of Pittsburgh Journal of Law and Commerce. He holds a B.S. in Logistics from the Pennsylvania State University.
Bashaw holds a J.D. from the University of Pittsburgh School of Law, from which he graduated cum laude and at which he was the editor-in-chief of the University of Pittsburgh Journal of Law and Commerce.
Coherent’s broad portfolio of coated optics and crystal materials serves all of these growing laser markets. 12 • Aerospace & Defense Market Vertical. Coherent’s aerospace & defense solutions enable mission-critical capabilities for applications in HELs; contested space; and intelligence, surveillance, and reconnaissance.
Coherent’s broad portfolio of coated optics and crystal materials serves all of the mentioned growing laser markets. 12 • Aerospace & Defense Market Vertical. Coherent’s Aerospace & Defense solutions enable mission-critical capabilities for applications in high-energy lasers; contested space; and intelligence, surveillance, and reconnaissance.
Coherent has multiple InP fabs in the U.S. and Europe. For Level 1 link distances greater than 100 m, silicon photonics-based transceivers may be used. All silicon photonics products, including some of our own, need an InP CW laser to generate the light.
Coherent has multiple InP fabs in the U.S. and Europe; two of them are moving to 6-inch wafer capability. For Level 1 link distances greater than 100 m, transceivers based on silicon photonics may be used. All silicon photonics products, including some of our own, need an InP CW laser to generate the light.
Our vertically integrated and market-leading ZnSe optics and components, due to their inherent low loss at around the 10-micron wavelength, have enabled high-power CO 2 laser systems for many decades and remain critical to the steady stream of new deployments as well as to continued operation, serving as replacement optics for the installed base of CO 2 lasers.
Our vertically integrated and market-leading ZnSe optics and components, due to their inherent low loss at around the 10-micron wavelength, have enabled high-power CO 2 laser systems for many decades and remain critical as replacement optics for the large installed base of CO 2 lasers.
Due to its very high mechanical and thermal performance characteristics, our reaction-bonded SiC is used in structural support systems that are integral to EUV lithography optics to meet critical requirements for optical system stability.
Due to its very high mechanical and thermal performance characteristics, our reaction-bonded SiC is used in structural support systems that are integral to EUV lithography optics to meet critical requirements for optical system stability. Coherent lasers are widely used in both front-end and back-end applications.
We compete, in part, on our core competencies from materials to systems, our differentiated products and service, and the sustainability of our competitive advantages. We also compete by leveraging our intellectual property, ability to scale, product quality, on-time delivery, and technical support.
Competition Coherent is a global leader in many of its product families. We compete, in part, on our core competencies from materials to systems, our differentiated products and service, and the sustainability of our competitive advantages. We also compete by leveraging our intellectual property, ability to scale, product quality, on-time delivery, and technical support.
Our laser solutions can improve precision, combining high-spatial precision and selectivity for advanced display production; they can increase productivity, offering fast, large-area processing for current and future-generation modules and panels; and they can maximize yield, maintaining superior yield along the process chain from backplane to individual display. Communications Market Group • Telecom Market Vertical.
Our excimer laser solutions can improve precision, combining high-spatial precision and selectivity for advanced display production; increase productivity, offering fast, large-area processing for current and future-generation modules and panels; and maximize yield and maintain it along the process chain from backplane to individual display.
We have on-site solar systems at several facilities that further contribute to our renewable energy efforts. We participate in Apple’s Supplier Clean Energy Program, and all of our Apple production is powered by 100% renewable electricity sources. Our team also works to minimize energy usage, water usage, other raw materials usage, and waste generation.
We have on-site solar systems at several facilities that further contribute to our renewable energy efforts. We participate in Apple’s Supplier Clean Energy Program, and all of our Apple production is powered by 100% renewable electricity sources.
Today, more than 50% of Coherent’s datacom revenue is generated by 200G and higher data-rate transceivers. Driven by the demands of growing AI/ML adoption, 800G transceivers are shipping in production and we expect the first 1.6T transceivers will ship in the next few years.
Today, more than 50% of Coherent’s datacom revenue is generated by 200G and higher data-rate transceivers. Driven by the demands of growing AI/ML adoption, 800G transceivers are shipping in production and we expect the first 1.6T transceiver samples will be shipped later this calendar year.
Coherent’s optical communications products and technologies enable next-generation high-speed optical transmission systems, networks, and datacenter solutions necessary to meet the accelerating global bandwidth demand. 13 Demand for our products is largely driven by the continually growing need for additional network bandwidth created by the ongoing proliferation of data and video traffic from video conferencing for work, school, and leisure; video downloads and streaming; live TV; social networking; online gaming; file sharing; enterprise IP/internet traffic; cloud computing; datacenter virtualization; and, more recently, the new optical connectivity needed to support AI/ML algorithms.
Demand for our products is largely driven by the continually growing need for additional network bandwidth created by the ongoing proliferation of data and video traffic from video conferencing for work, school, and leisure; video downloads and streaming; live TV; social networking; online gaming; file sharing; enterprise IP/internet traffic; cloud computing; datacenter virtualization; and the new optical connectivity needed to support AI/ML.
We do business with a number of customers in the aerospace & defense industry, who in turn generally contract with a governmental entity, typically a U.S. government agency. We had one customer who contributed more than 10% of revenue during fiscal 2023.
As of June 30, 2024, we employed approximately 624 individuals in sales, marketing, and support. We do business with a number of customers in the aerospace & defense industry, who in turn generally contract with a governmental entity, typically a U.S. government agency. We had one customer who contributed more than 10% of revenue during fiscal 2024.
Number of employees Percent of total Manufacturing 21,818 82% Research and development 2,426 9% Sales, general and administrative 2,378 9% Total: 26,622 100% We believe that our efforts in managing our workforce have been effective, as evidenced by a strong culture and a good relationship between the Company and our employees. • Our People .
Number of employees Percent of total Manufacturing 21,645 83% Research and development 2,268 9% Sales, general and administrative 2,244 8% Total: 26,157 100% We believe that our efforts in managing our workforce have been effective, as evidenced by a strong culture and a good relationship between the Company and our employees. • Occupational Health and Safety .
The LRO continues to orbit the moon and provide rich information for future lunar landing sites. The LRO camera and its more advanced derivatives are the basis for many advanced space imaging applications being pursued by our customers.
The LRO continues to orbit the moon and provide rich information for future lunar landing sites. The LRO camera and its more advanced derivatives are the basis for many advanced space imaging applications being pursued by our customers. Our advanced imaging lenses and windows ensure that our customers’ vehicles are able to safely and accurately dock with the Space Station.
Tuition reimbursement and funding for growth and development is also built into the annual budget to ensure that Coherent has the skilled workforce we need. Our global internship programs also welcome a new talent pipeline. In fiscal 2023, we pledged $1.3 million to fund STEM educational and research programs in 2023. • Total Rewards .
Tuition reimbursement and funding for growth and development are also built into the annual budget to ensure that Coherent has the skilled workforce we need. Our global internship programs also welcome a new talent pipeline. • Total Rewards.
Within the life sciences end market, we focus on analytical instrumentation that integrates light- and/or thermal-management solutions. We segment this market into three application areas (biotechnology, medical laser, and scientific) and deliver targeted and unique product portfolios for each segment. We vertically integrate from the component level to more complex subassemblies and even full systems.
Within the life sciences end market, we focus on instrumentation that integrates light- and/or thermal-management solutions. We segment this market into three application areas (biotechnology, analytical, and medical) and deliver targeted and unique product portfolios for each segment.
Fiber lasers that operate at about the 1-micron wavelength in pulsed or continuous mode have taken a central role in many industrial applications, especially for metal cutting and welding along with precision machining such as marking and microdrilling.
Fiber lasers that operate at about the 1-micron wavelength in pulsed or continuous mode have taken a central role in many industrial applications, especially for cutting, welding and marking of both metals and plastics.
VCSELs are generally the lowest-cost, lowest-power consumption solution, and are the lasers of choice for less than 100 m connections. Coherent has multiple 6” GaAs VCSEL fabs in the U.S. and Europe.
VCSELs are generally the lowest-cost, lowest-power-consumption solution, and are the lasers of choice for connections of less than 100 m. Coherent has multiple 6-inch GaAs VCSEL fabs in the U.S. and Europe. Our 100G/lane VCSELs are in production to support 400G and 800G transceivers.
Previously, he was the Chief Technology Officer of the Company and the President of the Laser Solutions Segment. Dr. Barbarossa was employed at Avanex Corporation from 2000 through 2009, serving in various executive positions in product development and general management, ultimately serving as the President and Chief Executive Officer. When Avanex merged with Bookham Technology, forming Oclaro, Inc. ,Dr.
Barbarossa was employed at Avanex Corporation from 2000 through 2009, serving in various executive positions in product development and general management, ultimately serving as the President and Chief Executive Officer. When Avanex merged with Bookham Technology, forming Oclaro, Inc., Dr. Barbarossa became a member of the Board of Directors of Oclaro and served as such from 2009 to 2012.
In Coherent’s Senior Leadership Team (“SLT”), which consists of directors and above, there are 65 females and 483 males. The SLT meets quarterly to discuss strategy, business trends, company operations, financials, and people programs. Our global footprint is diverse, with approximately 17,900 employees in the Asia-Pacific region, 3,900 in Europe, and 5,200 in the Americas.
In Coherent’s Global Leadership Team (“GLT”), which consists of directors and above, there are 65 females, 487 males, and 1 undisclosed. The GLT meets quarterly to discuss strategy, business trends, company operations, financials, and people programs. Our global footprint is diverse, with approximately 18,078 employees in the Asia-Pacific region, 3,690 in Europe, and 4,389 in the Americas.
Sobey announced his plan to retire from the Company effective September 1, 2023. 24 Availability of Information Our internet address is www.coherent.com. Information contained on our website is not part of, and should not be construed as being incorporated by reference into, this Annual Report on Form 10-K.
Availability of Information Our internet address is www.coherent.com. Information contained on our website is not part of, and should not be construed as being incorporated by reference into, this Annual Report on Form 10-K.
Our VCSELs have been used in consumer products such as computer mice and mobile phones for many years. Our VCSELs are also widely deployed in datacenters and HDMI optical cables as well as in vehicle steering wheels.
Our VCSEL products leverage our world-class 6-inch GaAs platform, combining our epitaxial wafer growth and wafer fabrication capabilities. Our VCSELs have been used in consumer products such as computer mice and mobile phones for many years. Our VCSELs are also widely deployed in datacenters and HDMI optical cables as well as in vehicle steering wheels.
In this role, he was primarily responsible for the Company’s M&A and integration work. Prior to joining the Company, Mr. Bashaw was a senior partner at the law firm of Sherrard, German & Kelly, P.C. in Pittsburgh, Pennsylvania, where his areas of expertise were corporate law, mergers and acquisitions, and technology planning. Mr.
Bashaw was a senior partner at the law firm of Sherrard, German & Kelly, P.C. in Pittsburgh, Pennsylvania, where his areas of expertise were corporate law, mergers and acquisitions, and technology planning. Mr.
These lasers enable optical signal transmission, reception, and amplification in terrestrial and submarine communications networks; high-bit-rate server connectivity between and within datacenters; optical communications network monitoring; materials processing; and fast and accurate measurements in biomedical instruments and sensing in consumer electronics.
These lasers enable optical signal transmission, reception, and amplification in terrestrial and submarine communications networks, high-bit-rate server connectivity between and within datacenters, optical communications network monitoring, materials processing, fast and accurate measurements in biomedical instruments, and precision sensing in consumer electronics. We are a major supplier of silicon carbide substrates for the power electronics and the wireless mobile markets.
We offer a full range of substrate diameters, including the world’s first 200 mm substrate. Our industry-leading semiconductor lasers, optics, and materials can be leveraged for LiDAR systems embedded in advanced driver-assistance systems (ADAS) for autonomous vehicles. LiDAR sensors enable ADAS to perform functions such as emergency braking and adaptive cruise control.
Our industry-leading semiconductor lasers, optics, and materials can be leveraged for LiDAR systems embedded in advanced driver-assistance systems (ADAS) for autonomous vehicles. LiDAR sensors enable ADAS to perform functions such as emergency braking, distance warning, and adaptive cruise control.
This program pairs C-suite leaders with mentees from underrepresented and diverse populations working at the director and vice president levels to take part in a range of professional development activities focused on accelerating the development of diverse senior leaders through mentoring circles.
This program pairs C-suite leaders with mentees from underrepresented and diverse populations working at the director and vice president levels to take part in a range of professional development activities focused on accelerating the development of diverse senior leaders through mentoring circles. • Globally, approximately 45% of the workforce is female, with 11,890 females, 14,166 males and 101 undisclosed as of June 30, 2024.
Our products are deployed in a variety of market verticals, including (i) precision manufacturing; (ii) semiconductor capital equipment; (iii) display capital equipment; (iv) aerospace & defense; (v) telecommunication networks; (vi) data communication networks; (vii) consumer electronics; (viii) automotive; (ix) life sciences; and (x) scientific instruments.
Our products are deployed in a variety of market verticals, including precision manufacturing, aerospace & defense, semiconductor capital equipment, display capital equipment, telecommunication (telecom) networks, data communication (datacom) networks, consumer electronics, automotive, wireless, life sciences, and scientific research.
Coherent’s semiconductor laser bars and stacks are used in applications such as hair and wrinkle removal. Crystals and laser cavities, along with custom-designed lens assemblies, are used for ophthalmic, dental, and dermatological surgeries.
Coherent’s semiconductor laser bars and stacks are used in applications such as hair and wrinkle removal, and femtosecond lasers combined with excimer lasers are used for common procedures like LASIK. Crystals and laser cavities, along with custom-designed lens assemblies, are used for ophthalmic, dental, and dermatological surgeries. CO 2 lasers are specifically used in hard- and soft-tissue dental procedures.
The Lasers segment’s lasers and optics products serve industrial customers in semiconductor and display capital equipment, precision manufacturing, and aerospace & defense, as well as instrumentation customers in life sciences and scientific devices.
For the full fiscal year 2023, Coherent, Inc., was included in the combined company and renamed as the Lasers segment. The Lasers segment’s lasers and optics products serve industrial customers in semiconductor and display capital equipment, precision manufacturing, and aerospace & defense, as well as instrumentation customers in life sciences and scientific devices.
Department of Commerce, Bureau of Industry and Security, which among other things impose licensing requirements on certain dual-use goods, technology, and software; and • The regulations administered by the U.S.
Department of Commerce, Bureau of Industry and Security, which among other things impose licensing requirements on certain dual-use goods, technology, and software; and • The regulations administered by the U.S. Department of the Treasury, Office of Foreign Assets Control, implementing economic sanctions against designated countries, governments, and persons based on U.S. foreign policy and national security considerations.
Our customer base includes original equipment manufacturers; laser end users; system integrators of high-power lasers; manufacturers of equipment and devices for the industrial, communications, electronics, and instrumentation markets; U.S. government prime contractors; and various U.S. government agencies. Through R&D investments and our strategic acquisitions, we have expanded our portfolio of materials and product platforms.
Our customer base includes original equipment manufacturers, laser end users, system integrators of high-power lasers, and manufacturers of equipment and devices for our end markets. Through R&D investments and our strategic acquisitions, we have expanded our portfolio of materials and product platforms. We have a strong core competency in bulk and epitaxial crystal growth.
Our market-leading 980 nm pump lasers are the key enablers of our erbium-doped fiber amplifiers, which boost the power of optical signals in fiber-optic cables at intervals spanning 80 kilometers, typically, to allow high-speed signals to be transmitted over longer distances.
Our optical transport products are at the core of both terrestrial and undersea optical networks, as well as emerging space optical communications connections. Our market-leading 980 nm pump lasers are the key enablers of our erbium-doped fiber amplifiers, which boost the power of optical signals in fiber-optic cables to allow high-speed signals to be transmitted over long distances.
We are a major supplier of silicon carbide substrates for the power electronics market and for the wireless mobile market. 6 We continue to improve our operational capabilities, develop next-generation products, and invest in new technology platforms to drive growth in the short and the long term.
We continue to improve our operational capabilities, develop next-generation products, and invest in new technology platforms to drive growth in the short and the long term.
We aggressively pursue process and product patents in certain areas of our businesses and in certain jurisdictions across the globe. We have entered into selective intellectual property licensing agreements. We have confidentiality and noncompetition agreements with certain personnel. We require our U.S. employees to sign a confidentiality and noncompetition agreement upon commencement of their employment with us.
We have entered into selective intellectual property licensing agreements. We have confidentiality and noncompetition agreements with certain personnel. We require our U.S. employees to sign a confidentiality and noncompetition agreement upon commencement of their employment with us. As of June 30, 2024, we had a total of approximately 3,100 patents globally.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur competitive position may still require significant investments. 26 We continuously monitor the marketplace for strategic opportunities, and our business strategy includes expanding our product lines and markets through both internal product development and acquisitions. Consequently, we expect to continue to consider strategic acquisition of businesses, products, or technologies complementary to our business.
Biggest changeThe occurrence of any one or more of the foregoing factors could have a material adverse effect on our business, results of operations, or financial condition. Our competitive position may require significant investments. 24 We continuously monitor the marketplace for strategic opportunities, and our business strategy includes expanding our product lines and markets through both internal product development and acquisitions.
As governments increase interest rate benchmarks to combat inflation, our borrowing costs increase. Although we may take measures to mitigate the impact of this inflation through pricing actions, efficiency gains and interest rate hedging, if these measures are not effective our business, results of operations, financial position and liquidity could be materially adversely affected.
As governments increase interest rate benchmarks to combat inflation, our borrowing costs increase. Although we may take measures to mitigate the impact of this inflation through pricing actions, efficiency gains and interest rate hedging, if these measures are not effective to our business, results of operations, financial position and liquidity could be materially adversely affected.
The market prices of our securities could fluctuate significantly for many reasons, including the following: • future announcements by or concerning us or our competitors; • the overall performance of equity markets; • the trading volume of our securities; • additions or changes to our Board of Directors, management, or key personnel; • regulatory actions (including, but not limited to, developments in international trade policy) and enforcement actions bearing on manufacturing, development, marketing, or sales; • the commencement or outcome of litigation; • reports and recommendations of analysts and whether or not we meet the milestones, metrics, and other expectations set forth in such reports; • gaining or losing large customers; • the introduction of new products or services and market acceptance of such products or services; • fluctuations in demand for our products or downturns in the industries that we serve, particularly the continued build-out of the capacity for the manufacture of OLED and the increased use of the installed base of our products in such manufacturing; • the impact of any public health crisis on our business, financial condition, results of operations, or prospects or those of our customers and suppliers; • the acquisition or loss of significant manufacturers, distributors, or suppliers or an inability to obtain sufficient quantities of materials needed to provide our services; • the issuance of common stock or other securities (including shares of common stock issued upon conversion of any shares of Series B Preferred Stock); 41 • incurrence of indebtedness; • quarterly variations in operating results; • our ability to accurately forecast future performance; • business acquisitions or divestitures; • fluctuations in the economy, political events, or general market conditions; and • changes in our operating industry generally.
The market prices of our securities could fluctuate significantly for many reasons, including the following: • future announcements by or concerning us or our competitors; • the overall performance of equity markets; • the trading volume of our securities; • additions or changes to our Board of Directors, management, or key personnel; • regulatory actions (including, but not limited to, developments in international trade policy) and enforcement actions bearing on manufacturing, development, marketing, or sales; • the commencement or outcome of litigation; • reports and recommendations of analysts and whether or not we meet the milestones, metrics, and other expectations set forth in such reports; • gaining or losing large customers; • the introduction of new products or services and market acceptance of such products or services; • fluctuations in demand for our products or downturns in the industries that we serve, particularly the continued build-out of the capacity for the manufacture of OLED and the increased use of the installed base of our products in such manufacturing; • the impact of any public health crisis on our business, financial condition, results of operations, or prospects or those of our customers and suppliers; • the acquisition or loss of significant manufacturers, distributors, or suppliers or an inability to obtain sufficient quantities of materials needed to provide our services; • the issuance of common stock or other securities (including shares of common stock issued upon conversion of any shares of Series B Preferred Stock); • incurrence of indebtedness; • quarterly variations in operating results; • our ability to accurately forecast future performance; • business acquisitions or divestitures; • fluctuations in the economy, political events, or general market conditions; and • changes in our operating industry generally.
Potential impacts on our operations include: • significant reductions in demand for one or more of our products or a curtailment to one or more of our product lines caused by, among other things, any temporary inability of our customers to purchase and utilize our products in next-stage manufacturing due to shutdown orders or financial hardship; 31 • workforce constraints triggered by any applicable shutdown orders or stay-at-home polices; • disruptions to our third-party manufacturing and raw materials supply arrangements caused by constraints over our suppliers’ workforce capacity, financial, or operational difficulties; • disruption in our own ability to produce and ship products, including components we use in the production of other products; • heightened risk and uncertainty regarding the loss or disruption of essential third-party service providers, including transportation services, contract manufacturing, marketing, and distribution services; • requirements to comply with governmental and regulatory responses such as quarantines, import/export restrictions, price controls, or other governmental or regulatory actions, including closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our workforce’s ability to travel or perform necessary business functions, or otherwise impact our suppliers or customers, which could adversely impact our operating results; and • increased operating expenses and potentially reduced efficiency of operations.
Potential impacts on our operations include: • significant reductions in demand for one or more of our products or a curtailment to one or more of our product lines caused by, among other things, any temporary inability of our customers to purchase and utilize our products in next-stage manufacturing due to shutdown orders or financial hardship; • workforce constraints triggered by any applicable shutdown orders or stay-at-home polices; • disruptions to our third-party manufacturing and raw materials supply arrangements caused by constraints over our suppliers’ workforce capacity, financial, or operational difficulties; • disruption in our own ability to produce and ship products, including components we use in the production of other products; • heightened risk and uncertainty regarding the loss or disruption of essential third-party service providers, including transportation services, contract manufacturing, marketing, and distribution services; • requirements to comply with governmental and regulatory responses such as quarantines, import/export restrictions, price controls, or other governmental or regulatory actions, including closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our workforce’s ability to travel or perform necessary business functions, or otherwise impact our suppliers or customers, which could adversely impact our operating results; and • increased operating expenses and potentially reduced efficiency of operations.
Additionally, we are subject to the passage of and changes in the interpretation of regulation by U.S. government entities at the federal, state, and local levels and by non-U.S. agencies, including, but not limited to, the following: • We are required to comply with import laws and export control and economic sanctions laws, which may affect our ability to enter into or complete transactions with certain customers, business partners, and other persons.
We are subject to the passage of and changes in the interpretation of regulation by U.S. government entities at the federal, state, and local levels and by non-U.S. agencies, including, but not limited to, the following: • We are required to comply with import laws and export control and economic sanctions laws, which may affect our ability to enter into or complete transactions with certain customers, business partners, and other persons.
These risk factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K, because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. The following discussion is not an all-inclusive listing of risks, although we believe these are the material risks that we face.
These risk factors should be considered along with any forward-looking statements contained in this Annual Report on Form 10-K, because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. The following discussion is not an all-inclusive listing of risks, although we believe these are the material risks that we face.
Any such material charges, whether related to goodwill or purchased intangible assets, may have a material negative impact on our financial and operating results. If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Any such material charges, whether related to goodwill or purchased intangible assets, may have a material negative impact on our financial and operating results. 39 If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
We also enter into development projects from time to time that might result in intellectual property developed during a project that is assigned to the other party without us retaining rights to that intellectual property or is jointly owned with the other party. Our global operations are subject to complex and rapidly changing legal and regulatory requirements.
We also enter development projects from time to time that might result in intellectual property developed during a project that is assigned to the other party without us retaining rights to that intellectual property or is jointly owned with the other party. Our global operations are subject to complex and rapidly changing legal and regulatory requirements.
On the export side, denial orders and placing companies on the U.S. Entity List could decrease our access to customers and markets and materially impact our revenues in the aggregate. In April 2018, for example, the U.S. Department of Commerce issued a denial order against two companies in the telecommunications market. In 2019 and 2020, the U.S.
On the export side, denial orders and placing companies on the U.S. Entity List could decrease our access to customers, suppliers, and markets and materially impact our revenues in the aggregate. In April 2018, for example, the U.S. Department of Commerce issued a denial order against two companies in the telecommunications market. In 2019 and 2020, the U.S.
In the event that a third party were successful in a claim that one of our processes infringed its proprietary rights, we could be required to pay substantial damages or royalties, or spend substantial amounts in order to obtain a license or modify processes so that they no longer infringe such proprietary rights.
In the event that a third party were successful in a claim that one of our products or processes infringed its proprietary rights, we could be required to pay substantial damages or royalties, or spend substantial amounts in order to obtain a license or modify our products or processes so that they no longer infringe such proprietary rights.
If such indebtedness is accelerated, there can be no assurance that we will have sufficient financial resources or that we will be able to arrange financing to repay our borrowings at such time. Unfavorable changes in tax rates, tax liabilities, or tax accounting rules could negatively affect future results.
If such indebtedness is accelerated, there can be no assurance that we will have sufficient financial resources or that we will be able to arrange financing to repay our borrowings at such time. 35 Unfavorable changes in tax rates, tax liabilities, or tax accounting rules could negatively affect future results.
In addition, the overall integration of an acquired business can be a time-consuming and expensive process that, without proper planning and effective and timely implementation, could significantly disrupt our business. 27 Potential difficulties that we may encounter in the integration process include: • the integration of management teams, strategies, technologies and operations, products, and services; • the disruption of ongoing businesses and distraction of their respective management teams from ongoing business concerns; • the retention of, and possible decrease in business from, existing customers; • the creation of uniform standards, controls, procedures, policies, and information systems; • the reduction of the costs associated with combined operations; • the integration of corporate cultures and maintenance of employee morale; • the retention of key employees; and • potential unknown liabilities associated with the acquired business.
In addition, the overall integration of an acquired business can be a time-consuming and expensive process that, without proper planning and effective and timely implementation, could significantly disrupt our business. 25 Potential difficulties that we may encounter in the integration process include: • the integration of management teams, strategies, technologies and operations, products, and services; • the disruption of ongoing businesses and distraction of their respective management teams from ongoing business concerns; • the retention of, and possible decrease in business from, existing customers; • the creation of uniform standards, controls, procedures, policies, and information systems; • the reduction of the costs associated with combined operations; • the integration of corporate cultures and maintenance of employee morale; • the retention of key employees; and • potential unknown liabilities associated with the acquired business.
However, there can be no assurance that others will not develop or patent similar technology, or that all aspects of our proprietary technology will be protected. Others have obtained patents covering a variety of materials, devices, equipment, configurations, and processes, and others could obtain patents covering technology similar to ours.
However, there can be no assurance that others will not develop or patent similar technology, or that all aspects of our proprietary technology will be protected. Others have obtained patents covering a variety of materials, devices, equipment, configurations, products, and processes, and others could obtain patents covering technology similar to ours.
Our competitive position depends on our ability to develop new products and processes. To meet our strategic objectives, we must develop, manufacture, and market new products and continue to update our existing products and processes to keep pace sudden increases in market demand and other market developments to address increasingly sophisticated customer requirements.
Our competitive position depends on our ability to develop new products and processes. To meet our strategic objectives, we must develop, manufacture, and market new products and continue to update our existing products and processes to keep pace with sudden increases in market demand and other market developments and to address increasingly sophisticated customer requirements.
In addition, we may enter into other credit agreements or other debt arrangements from time to time which contain similar or more extensive restrictive covenants and events of default, in which case we may face similar or additional limitations as a result of the terms of those credit agreements or other debt arrangements. 33 Any inability to access financial markets from time to time to raise required capital, finance our working capital requirements or our acquisition strategies, or otherwise support our liquidity needs could negatively impact our ability to finance our operations, meet certain obligations, or implement our growth strategy.
In addition, we may enter into other credit agreements or other debt arrangements from time to time which contain similar or more extensive restrictive covenants and events of default, in which case we may face similar or additional limitations as a result of the terms of those credit agreements or other debt arrangements. 31 Any inability to access financial markets from time to time to raise required capital, finance our working capital requirements or our acquisition strategies, or otherwise support our liquidity needs could negatively impact our ability to finance our operations, meet certain obligations, or implement our growth strategy.
The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position. A widespread health crisis could materially and adversely affect our business, financial condition, and results of operations.
The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position. 29 A widespread health crisis could materially and adversely affect our business, financial condition, and results of operations.
Given macroeconomic conditions, varying consumer demand and technical process limitations at manufacturers, we may see fluctuations in orders, including periods with no or few orders, and our customers may seek to reschedule or cancel orders. 30 Additionally, challenges in meeting evolving technological requirements for these complex products by us and our suppliers could result in delays in shipments and rescheduled or cancelled orders by our customers.
Given macroeconomic conditions, varying consumer demand and technical process limitations at manufacturers, we may see fluctuations in orders, including periods with no or few orders, and our customers may seek to reschedule or cancel orders. 28 Additionally, challenges in meeting evolving technological requirements for these complex products by us and our suppliers could result in delays in shipments and rescheduled or cancelled orders by our customers.
Customers may also change a specification for a product that our suppliers cannot meet which may limit and/or otherwise impact our ability to supply such customers. 29 Some of our products, for example in the OLED display industry, require designs and specifications that are at the cutting-edge of available technologies and change frequently to meet rapidly evolving market demands.
Customers may also change a specification for a product that our suppliers cannot meet which may limit and/or otherwise impact our ability to supply such customers. 27 Some of our products, for example in the OLED display industry, require designs and specifications that are at the cutting-edge of available technologies and change frequently to meet rapidly evolving market demands.
Any such delay in shipment would result in a delay or cancellation of our ability to convert such order into revenues. Furthermore, financial or other difficulties faced by these suppliers or significant changes in demand for these components or materials could limit their availability. We continue to consolidate our supply base and move supplier locations.
Any such delay in shipment would result in a delay or cancellation of our ability to convert such orders into revenues. Furthermore, financial or other difficulties faced by these suppliers or significant changes in demand for these components or materials could limit their availability. We continue to consolidate our supply base and move supplier locations.
Any economic downturn could have a material adverse effect on our business, results of operations, or financial condition. 32 Foreign currency risk may negatively affect our revenues, cost of sales, and operating margins, and could result in foreign exchange losses. We conduct our business and incur costs in the local currency of most countries in which we operate.
Any economic downturn could have a material adverse effect on our business, results of operations, or financial condition. 30 Foreign currency risk may negatively affect our revenues, cost of sales, and operating margins, and could result in foreign exchange losses. We conduct our business and incur costs in the local currency of most countries in which we operate.
Furthermore, if we are unable to repay the amounts due and payable under the Credit Agreement, those lenders could proceed against the collateral granted to them to secure that indebtedness, which could force us into bankruptcy or liquidation. In the event that our lenders accelerated the repayment of the borrowings, we may not have sufficient assets to repay that indebtedness.
Furthermore, if we are unable to repay the amounts due and payable under the Credit Agreement, those lenders could proceed against the collateral granted to them to secure that indebtedness, which could force us into bankruptcy or liquidation. In the event that our lenders accelerate the repayment of the borrowings, we may not have sufficient assets to repay that indebtedness.
If we fail to fulfill our commitments under these supply agreements, our business, after using all remedies available, financial conditions, and results of operations may suffer a material adverse effect. We depend on highly complex manufacturing processes that require strategic materials, components, and products from limited sources of supply.
If we fail to fulfill our commitments under these supply agreements, our business, after using all remedies available, financial condition, and results of operations may suffer a material adverse effect. We depend on highly complex manufacturing processes that require strategic materials, components, and products from limited sources of supply.
A small number of customers have consistently accounted for a significant portion of our revenues, with one customer contributing more than 10% of total revenues in fiscal 2023 . Our success will depend on our continued ability to develop and manage relationships with our large customers and their continued need for our products.
A small number of customers have consistently accounted for a significant portion of our revenues, with one customer contributing more than 10% of total revenues in fiscal 2024. Our success will depend on our continued ability to develop and manage relationships with our large customers and their continued need for our products.
Some of the risks that may affect our ability to integrate or realize anticipated benefits from acquired companies, businesses, or assets include those associated with: • unexpected losses of key employees of the acquired company; • standardizing the combined company’s standards, processes, procedures, and controls, including integrating enterprise resource planning systems and other key business applications; • coordinating new product and process development; • increasing complexity from combining operations; • increasing the scope, geographic diversity, and complexity of our operations; • difficulties in consolidating facilities and transferring processes and know-how; • diversion of management’s attention from other business concerns; and • actions we may take in connection with acquisitions, such as: ◦ using a significant portion of our available cash; ◦ issuing equity securities, which would dilute current shareholders’ percentage ownership; ◦ incurring significant debt; ◦ incurring or assume contingent liabilities, known or unknown, including potential lawsuits, infringement actions, or similar liabilities; ◦ incurring impairment charges related to goodwill or other intangibles; and ◦ facing antitrust or other regulatory inquiries or actions.
Some of the risks that may affect our ability to integrate or realize anticipated benefits from acquired companies, businesses, or assets include those associated with: • a significant negative financial result from the acquired company relative to our pre-acquisition expectations; • unexpected losses of key employees of the acquired company; • standardizing the combined company’s standards, processes, procedures, and controls, including integrating enterprise resource planning systems and other key business applications; • coordinating new product and process development; • increasing complexity from combining operations; • increasing the scope, geographic diversity, and complexity of our operations; • difficulties in consolidating facilities and transferring processes and know-how; • diversion of management’s attention from other business concerns; and • actions we may take in connection with acquisitions, such as: ◦ using a significant portion of our available cash; ◦ issuing equity securities, which would dilute current shareholders’ percentage ownership; ◦ incurring significant debt; ◦ incurring or assume contingent liabilities, known or unknown, including potential lawsuits, infringement actions, or similar liabilities; ◦ incurring impairment charges related to goodwill or other intangibles; and ◦ facing antitrust or other regulatory inquiries or actions.
As a result of the Restructuring Plan, we expect to incur approximately $150 million to $200 million of pre-tax charges in the fiscal years 2023 to 2025 primarily as a result of the reduction in force and facility consolidations related to the closure and relocation of sites.
As a result of the Restructuring Plan, we expect to incur approximately $175 million to $200 million of pre-tax charges in the fiscal years 2023 to 2025 primarily as a result of the reduction in force and facility consolidations related to the closure and relocation of sites.
Additionally we have $348 million of undrawn capacity under our senior secured revolving credit facility (the “Revolving Credit Facility”). We may also incur additional indebtedness in the future by entering into new financing arrangements.
Additionally, we have $346 million of undrawn capacity under our senior secured revolving credit facility (the “Revolving Credit Facility”). We may also incur additional indebtedness in the future by entering into new financing arrangements.
As of June 30, 2023, we had approximately $4.3 billion of outstanding indebtedness on a consolidated basis, including under (i) our $850 million senior secured term loan A facility (the “Term A Facility”), (ii) our $2.8 billion senior secured term loan B facility (the “Term Loan B Facility”, and together with the Term A Facility, the “Senior Credit Facilities”) and (iii) our $990 million 5.000% senior notes due 2029 (the “2029 Notes”).
As of June 30, 2024, we had approximately $4.1 billion of outstanding indebtedness on a consolidated basis, including under (i) our $850 million senior secured term loan A facility (the “Term A Facility”), (ii) our $2.8 billion senior secured term loan B facility (the “Term Loan B Facility”, and together with the Term A Facility, the “Senior Credit Facilities”) and (iii) our $990 million 5.000% senior notes due 2029 (the “2029 Notes”).
There are risks associated with our participation in the display capital equipment market, including as a result of there being a relatively limited number of end customer manufacturers.
There are risks associated with our participation in the display capital equipment market, including there being a relatively limited number of end customer manufacturers.
Our subsidiaries are separate legal entities that have no obligation to make any funds available to us, whether by dividends, loans, or other payments. 45
Our subsidiaries are separate legal entities that have no obligation to make any funds available to us, whether by dividends, loans, or other payments. 43
The Credit Agreement and the Indenture, dated as of December 10, 2021 (the “Indenture”), which provides for the 2029 Notes, contain various affirmative and negative covenants that will, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, incur additional indebtedness, enter into sale and lease-back transactions, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, and/or merge or consolidate with any other person or sell or convey certain of our assets to any one person, among other things.
The Credit Agreement and the Indenture, dated as of December 10, 2021 (as amended, restated, supplemented and/or otherwise modified from time to time, the “Indenture”), which provides for the 2029 Notes, contain various affirmative and negative covenants that will, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, incur additional indebtedness, enter into sale and lease-back transactions, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, and/or merge or consolidate with any other person or sell or convey certain of our assets to any one person, among other things.
New laws, changes in existing laws, and abrogation of local regulations by national laws may result in significant uncertainties in how they will be interpreted and enforced. Failure to comply with any of these foreign laws and regulations could have a material adverse effect on our business, results of operations, or financial condition.
New laws, changes in existing laws, and abrogation of local regulations by national laws also result in significant uncertainties in how they will be interpreted and enforced. Failure to comply with any of these United States and/or foreign laws and regulations could have a material adverse effect on our business, results of operations, or financial condition.
Additionally, our product offerings may become obsolete given the frequent introduction of alternative technologies. In the event either our customers’ or our products fail to gain market acceptance, or the semiconductor capital equipment market fails to grow, it would likely have a significant negative effect on our business and results of operations.
Additionally, our product offerings may become obsolete given the frequent introduction of alternative technologies. Situations where either our customers’ or our products fail to gain market acceptance, or the semiconductor capital equipment market fails to grow, it would likely have a significant negative effect on our business and results of operations.
The negative impact from increases in commodity prices and diminished availability of rare earth minerals and noble gases might not be recovered through our product sales, which could have a material adverse effect on our net earnings and financial condition.
The negative impact from increases in commodity prices and diminished availability of rare earth minerals and noble gases might not be recovered through our product sales, which could have a material adverse effect on our results of operations and financial condition.
Our indebtedness could have important consequences for us, including: • making it difficult for us to satisfy all of our obligations with respect to our debt, or to our trade or other creditors; • increasing our vulnerability to adverse economic or industry conditions; • limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is limited; • requiring us to pay higher interest rates upon refinancing or on our variable-rate indebtedness if interest rates rise; • requiring a substantial portion of our cash flows from operations and the proceeds of any capital markets offerings or loan borrowings for the payment of interest on our debt and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions, and general corporate requirements; • limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; and • placing us at a competitive disadvantage to less leveraged competitors. 36 We may not generate sufficient cash flow from operations, together with any future borrowings, to enable us to pay our indebtedness or to fund our other liquidity needs.
Our indebtedness could have important consequences for us, including: • making it difficult for us to satisfy all of our obligations with respect to our debt, or to our trade or other creditors; • increasing our vulnerability to adverse economic or industry conditions; • limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is limited; • requiring us to pay higher interest rates upon refinancing or on our variable-rate indebtedness if interest rates rise; • requiring a substantial portion of our cash flows from operations and the proceeds of any capital markets offerings or loan borrowings for the payment of interest on our debt and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions, and general corporate requirements; • limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; and • placing us at a competitive disadvantage to less leveraged competitors.
We incurred substantial expenses related to the acquisition of Legacy Coherent and we continue to incur substantial expenses related to the integration of Legacy Coherent and its subsidiaries.
We incurred substantial expenses related to the acquisition of Coherent, Inc. and we continue to incur substantial expenses related to the integration of Coherent, Inc. and its subsidiaries.
Risks Relating to Our Business and Our Industry Investments in future markets of potential significant growth may not result in the expected return. We continue to make investments in programs with the goal of gaining a greater share of end markets using laser systems, semiconductor lasers and other components.
Risks Relating to Our Business and Our Industry Investments in future markets of potential significant growth may not result in the expected return. We continue to make investments in programs with the goal of gaining a greater share of end markets using laser systems, semiconductor lasers and components, including the key components for fast growth markets.
We may be unable to successfully implement our acquisitions strategy or integrate acquired companies and personnel with existing operations. We have acquired several companies, including Finisar Corporation in September 2019 and Legacy Coherent in July 2022.
We may be unable to successfully implement our acquisitions strategy or integrate acquired companies and personnel with existing operations. We have acquired several relatively large companies, including Finisar Corporation in September 2019 and Coherent, Inc. in July 2022.
We may incur losses related to foreign currency fluctuations, and foreign exchange controls may prevent us from repatriating cash in countries outside the U.S. Inflation and increased borrowing costs could impact our cash flows and profitability.
We may incur losses related to foreign currency fluctuations, and foreign exchange controls may prevent us from repatriating cash in countries outside the United States. Inflation and increased borrowing costs could impact our cash flows and profitability.
Under accounting principles generally accepted in the United States, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually.
Under accounting principles generally accepted in the United States, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill and indefinite life intangible assets are required to be tested for impairment at least annually.
The terms of the Credit Agreement contain a restriction on our ability to pay cash dividends on our capital stock. Credit facilities, indentures, or other financing agreements that we enter into in the future also may contain provisions that restrict or prohibit our ability to pay cash dividends on our capital stock.
Credit facilities, indentures, or other financing agreements that we enter into in the future also may contain provisions that restrict or prohibit our ability to pay cash dividends on our capital stock.
Additionally, our borrowing costs, including those under our current credit agreement, dated as of July 1, 2022, by and among us, the lenders and other parties thereto, and JP Morgan Chase Bank, NA, as administrative agent and collateral agent (the “Credit Agreement”), increase or decrease ( i.e. , “float”) based on interest rate benchmarks.
Additionally, our borrowing costs, including those under our current credit agreement, dated as of July 1, 2022, by and among us, the lenders and other parties thereto, and JP Morgan Chase Bank, NA, as administrative agent and collateral agent (as amended, restated, supplemented and/or otherwise modified from time to time, the “Credit Agreement”), increase or decrease ( i.e. , “float”) based on interest rate benchmarks.
We may need to refinance all or a portion of our indebtedness, on or before its maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. In addition, we may incur additional indebtedness in order to finance our operations, fund acquisitions, or repay existing indebtedness.
We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. In addition, we may incur additional indebtedness in order to finance our operations, fund acquisitions, or repay existing indebtedness.
These features of the Series B Preferred Stock could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management. 42 We do not currently intend to pay dividends on our common stock; holders will benefit from an investment in our common stock only if it appreciates in value and by the intended anti-dilution actions of our share-buyback program.
These features of the Series B Preferred Stock could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management. We do not currently intend to pay dividends on our common stock; holders will benefit from an investment in our common stock only if it appreciates in value.
Our declaration and payment of dividends on our capital stock in the future will be determined by our Board of Directors (or an authorized committee thereof) in its sole discretion and will depend on our financial condition, earnings, growth prospects, other uses of cash, funding requirements, applicable Pennsylvania law, and other factors our Board of Directors deems relevant.
Our declaration and payment of dividends on our capital stock in the future will be determined by our Board of Directors (or an authorized committee thereof) in its sole discretion and will depend on our financial condition, earnings, growth prospects, other uses of cash, funding requirements, applicable Pennsylvania law, and other factors our Board of Directors deems relevant. 41 The terms of the Credit Agreement contain a restriction on our ability to pay cash dividends on our capital stock.
Our failure to execute on our succession planning may affect our ability to maintain our differentiated knowledge base. We contract with a number of large end-user service providers and product companies that have considerable bargaining power, which may require us to agree to terms and conditions that could have an adverse effect on our business or ability to recognize revenues.
We contract with a number of large end-user service providers and product companies that have considerable bargaining power, which may require us to agree to terms and conditions that could have an adverse effect on our business or ability to recognize revenues. Large end-user service providers and product companies comprise a significant portion of our customer base.
Assessments of the potential impact of future climate change legislation, regulation, and international treaties and accords are uncertain, given the wide scope of potential regulatory change in countries in which we operate. 38 We may incur increased capital expenditures resulting from required compliance with revised or new legislation or regulations, added costs to purchase raw materials, lower profits from sales of our products, allowances or credits under a “cap and trade” system, increased insurance premiums and deductibles as new actuarial tables are developed to reshape coverage, changes in competitive position relative to industry peers, changes to profit or loss arising from increased or decreased demand for goods produced by us, or changes in costs of goods sold.
We may incur increased capital expenditures resulting from required compliance with revised or new legislation or regulations, added costs to purchase raw materials, lower profits from sales of our products, allowances or credits under a “cap and trade” system, increased insurance premiums and deductibles as new actuarial tables are developed to reshape coverage, changes in competitive position relative to industry peers, changes to profit or loss arising from increased or decreased demand for goods produced by us, or changes in costs of goods sold.
For some of the components and finished or intermediary goods, we are the sole qualified manufacturer. Our manufacturing processes are highly complex, and quality issues are often difficult to forecast, detect, and correct. From time to time we have experienced problems achieving acceptable yields in our manufacturing facilities, resulting in delays in the availability of our products.
Our manufacturing processes are highly complex, and quality issues are often difficult to forecast, detect, and correct. From time to time we have experienced problems achieving acceptable yields in our manufacturing facilities, resulting in delays in the availability of our products.
In the course of our business, we collect and store sensitive data, including intellectual property (both our own and that of our customers), as well as proprietary business information. We also maintain personal and confidential data regarding our employees.
In the course of our business, we collect and store sensitive data, including intellectual property (both our own and that of our customers) and other proprietary business information, as well as personal and confidential data regarding our employees, vendors, partners, customers and other business contacts, and other regulated or protected data.
These include tariffs, quotas, taxes and other market barriers, restrictions on the export or import of technology, potentially limited intellectual property protection, import and export requirements and restrictions, anti-corruption and anti-bribery laws, foreign exchange controls and cash repatriation restrictions, foreign investment rules and regulations, data privacy requirements, competition laws, employment and labor laws, pensions and social insurance, and environmental health and safety laws and regulations. 34 Compliance with these laws and regulations can be onerous and expensive, and requirements differ among jurisdictions.
These include tariffs, quotas, taxes and other market barriers, restrictions on the export or import of technology, potentially limited intellectual property protection, import and export requirements and restrictions, anti-corruption and anti-bribery laws, foreign exchange controls and cash repatriation restrictions, foreign investment rules and regulations, financial accounting and reporting rules and regulations, competition laws, employment and labor laws, pensions and social insurance, and environmental health and safety laws and regulations.
Similarly, if one or more of the analysts who cover us change their recommendations regarding our common stock or publish inaccurate or unfavorable research about our business, our share price could decline.
Similarly, if one or more of the analysts who cover us change their recommendations regarding our common stock or publish inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, our share price or trading volume could decline.
Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different from the treatment reflected in our historical income tax provision and accruals, which could materially and adversely affect our business, results of operation, or financial condition. 37 Natural disasters or other global or regional catastrophic events could disrupt our operations, give rise to substantial environmental hazards, and adversely affect our results.
Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different from the treatment reflected in our historical income tax provision and accruals, which could materially and adversely affect our business, results of operations, or financial condition.
The loss of one or more of our large customers, any reduction or delay in sales to these customers, our inability to successfully develop relationships with additional customers, or future price concessions that we may make could significantly harm our business.
The loss of one or more of our large customers, any reduction or delay in sales to these customers, our inability to successfully develop relationships with additional customers, or future price concessions that we may make could significantly harm our business. 37 Actions that we are taking to restructure our business in alignment with our strategic priorities may not be as effective as anticipated.
We are subject to complex and rapidly changing import and export regulations which could limit our sales and decrease our profitability, and we may be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations. Obtaining export licenses can be difficult, time-consuming and require interpretation of complex regulations.
We are subject to complex and rapidly changing import and export regulations of the countries in which we operate and/or sell which could limit our sales and decrease our profitability, and we may be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations.
The trading prices for our common stock varied between a high of $60.46 per share and a low of $26.29 per share in the fiscal year ended June 30, 2023.
The trading prices for our common stock varied between a high of $73.98 per share and a low of $28.92 per share in the fiscal year ended June 30, 2024.
Additionally, our revenues and collections also may be adversely affected by transportation delays that could have a negative impact on the timing of payments that we receive under our sales arrangements. If these issues continue beyond the short term, our overall supply chain and our revenues derived from our sales flow could be adversely impacted.
Additionally, our revenues and collections also may be adversely affected by transportation delays that could have a negative impact on the timing of payments that we receive under our sales arrangements.
Actions that we are taking to restructure our business in alignment with our strategic priorities may not be as effective as anticipated. In May 2023, we announced that our Board of Directors approved a restructuring plan (the “Restructuring Plan”) which includes site consolidations, facilities movements and closures, and the relocation and requalification of certain manufacturing facilities.
In May 2023, we announced that our Board of Directors approved a restructuring plan (the “Restructuring Plan”) which includes site consolidations, facilities movements and closures, and the relocation and requalification of certain manufacturing facilities.
We could be subject to service outages or breaches of security systems which may result in disruption, unauthorized access, misappropriation, or corruption of this information. Security breaches of our network or data, including physical or electronic break-ins, vendor service outages, computer viruses, attacks by hackers or similar breaches can create system disruptions, shutdowns, and unauthorized disclosure of confidential information.
Security breaches and other incidents impacting our network, systems or data, including physical or electronic break-ins, vendor service outages, computer viruses, attacks by hackers or similar breaches can create system disruptions, shutdowns and unauthorized disclosure of confidential information.
In addition, the Term Loan A Facility and Revolving Credit Facility require that the Company maintain (i) a maximum total net leverage ratio, as defined in the New Credit Agreement, initially of 5.25 to 1.00 as of the last day of each fiscal quarter, commencing with the end of the first full fiscal quarter after the Closing Date, stepping down to 4.00 to 1.00 at December 31, 2023 and thereafter and (ii) an interest coverage ratio, as defined in the Credit Agreement, of at least 2.50 to 1.00.
In addition, the Term Loan A Facility and Revolving Credit Facility require that the Company maintain (i) a maximum total net leverage ratio, as defined in the New Credit Agreement, of 4.00 to 1.00 from December 31, 2023 through maturity and (ii) an interest coverage ratio, as defined in the Credit Agreement, of at least 2.50 to 1.00.
Our failure to achieve the expected results from the Restructuring Plan and other cost reduction initiatives for any reason also could lead to the implementation of additional restructuring-related activities in the future, which may exacerbate these risks or introduce new risks which could adversely affect our business, results of operations and financial condition. 39 We have announced that we are reviewing strategic alternatives for our silicon carbide business, but there can be no assurance that a strategic transaction will be completed or that we will achieve the expected benefits of any strategic transaction that we determine to pursue.
Our failure to achieve the expected results from the Restructuring Plan and other cost reduction initiatives for any reason also could lead to the implementation of additional restructuring-related activities in the future, which may exacerbate these risks or introduce new risks which could adversely affect our business, results of operations and financial condition.
Our operations may be adversely affected if we are unable to manufacture certain products in our manufacturing facilities. We manufacture some of the components that we incorporate into our subsystem products; in other cases, we provide components to contract manufacturers to produce finished or intermediary goods.
We manufacture some of the components that we incorporate into our subsystem products; in other cases, we provide components to contract manufacturers to produce finished or intermediary goods. For some of the components and finished or intermediary goods, we are the sole qualified manufacturer.
The issuance of preferred stock or even the ability to issue preferred stock could also have the effect of delaying, deterring, or preventing a change of control or other corporate action. 43 The redemption rights of the holders of Series B Preferred Stock may result in the use of our cash in such a way that could adversely affect our business, financial condition or results of operations.
The redemption rights of the holders of Series B Preferred Stock may result in the use of our cash in such a way that could adversely affect our business, financial condition or results of operations.
With respect to the manufacturing, use, storage, and disposal of the low-level radioactive material thorium fluoride, our facilities and procedures have been inspected and licensed by the Nuclear Regulatory Commission. Thorium-bearing by-products are collected and shipped as solid waste to a government-approved low-level radioactive waste disposal site in Clive, Utah.
With respect to the manufacturing, use, storage, and disposal of the low-level radioactive material thorium fluoride, our United States facilities and procedures have been inspected and licensed by the Nuclear Regulatory Commission.
Large end-user service providers and product companies comprise a significant portion of our customer base. These large customers generally have greater purchasing power than smaller customers and, accordingly, often negotiate more favorable terms from suppliers, including us.
These large customers generally have greater purchasing power than smaller customers and, accordingly, often negotiate more favorable terms from suppliers, including us.
Our success requires us to attract, retain, and develop key personnel and maintain good relations with our employees. We are highly dependent upon the experience and continuing services of certain scientists, engineers, production, sales, and management personnel. Competition for the services of these personnel is intense.
We are highly dependent upon the experience and continuing services of certain scientists, engineers, production, sales, and management personnel. Competition for the services of these personnel is intense. There can be no assurance that we will be able to retain or attract the personnel necessary for our success.
Our success in generating sales in this industry will depend on, among other things: • maintaining and enhancing our relationships with our customers; • the education of potential end-user customers about the benefits of lasers and laser systems; and • our ability to accurately predict and develop our products to meet industry standards. 40 We cannot ensure you that our expenditures for research and development will result in the launch of new products or, if such products are introduced, that those products will achieve sufficient market acceptance or to generate sales to offset the costs of development.
Our success in generating sales in this industry will depend on, among other things: • maintaining and enhancing our relationships with our customers; • the education of potential end-user customers about the benefits of lasers and laser systems; and • our ability to accurately predict and develop our products to meet industry standards.
We make significant decisions based on our estimates of customer requirements. We use our estimates to determine the levels of business we seek and accept, production schedules, personnel needs, and other resource requirements. 28 Customers may require rapid increases in production on short notice.
We use our estimates to determine the levels of business we seek and accept, production schedules, personnel needs, and other resource requirements. 26 Customers may require rapid increases in production on short notice. We may not be able to purchase sufficient supplies or allocate sufficient manufacturing capacity to meet such increases in demand.
From time to time new regulations are enacted, and it is difficult to anticipate how such regulations will be implemented and enforced. We continue to evaluate the necessary steps for compliance with regulations as they are enacted. The implementation of such regulations may require us to incur additional costs and expend internal resources.
We believe that we have obtained all of the permits and licenses required for operation of our business. From time to time new regulations are enacted, and it is difficult to anticipate how such regulations will be implemented and enforced. We continue to evaluate the necessary steps for compliance with regulations as they are enacted.
These fluctuations may be unrelated to our performance or out of our control, and could lead to securities class action litigation that could result in substantial expenses and diversion of management’s attention and corporate resources, any or all of which could adversely affect our business, financial condition, and results of operations.
These fluctuations may be unrelated to our performance or out of our control, and could lead to securities class action litigations that could result in substantial expenses and diversion of management’s attention and corporate resources, any or all of which could adversely affect our business, financial condition, and results of operations. 40 Provisions in our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws and the Pennsylvania Associations Code (the “Code”) may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock.
Failure to comply with any of these laws and regulations could result in civil and criminal, monetary, and nonmonetary penalties; disruptions to our business; limitations on our ability to import and export products and services; and damage to our reputation. We may fail to accurately estimate the size and growth rate of our markets and our customers’ demands.
Failure to comply with any of these laws and regulations could result in civil and criminal, monetary, and nonmonetary penalties; disruptions to our business; limitations on our ability to import and export products and services; and damage to our reputation. Obtaining export licenses can be difficult, time-consuming and require interpretation of complex regulations.
The occurrence of any one or more of the foregoing factors could have a material adverse effect on our business, results of operations, or financial condition.
The occurrence and impact of these various risks are difficult to predict, but one or more of them could have a material adverse effect on our business, results of operations, or financial condition.
This may have the effect of reducing funds available for working capital, capital expenditures, acquisitions and other general corporate purposes, thereby negatively affecting the interests of holders of our other capital stock, including our common stock.
This may have the effect of reducing funds available for working capital, capital expenditures, acquisitions and other general corporate purposes, thereby negatively affecting the interests of holders of our other capital stock, including our common stock. 42 Holders of our Series B Preferred Stock can exercise significant control over us, which could limit the ability of holders of our other capital stock to influence the outcome of key transactions, including a change of control.
We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations and Competent Authority processes to determine the adequacy of our provision for income taxes.
The various tax authorities may also challenge recent legal entity restructuring and integration undertaken to facilitate cost reductions and the increased efficiency of our business and finance activities. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations and Competent Authority processes to determine the adequacy of our provision for income taxes.
Inability to satisfy customer demand in a timely manner may harm our reputation, reduce our other opportunities, damage our relationships with customers, reduce revenue growth, and/or cause us to incur contractual penalties. Alternatively, downturns in the industries in which we compete may cause our customers to significantly and abruptly reduce their demand, or even cancel orders.
Rapid customer ramp-up and significant increases in demand may strain our resources or negatively affect our margins. Inability to satisfy customer demand in a timely manner may harm our reputation, reduce our other opportunities, damage our relationships with customers, reduce revenue growth, and/or cause us to incur contractual penalties.
The generation, use, collection, storage, and disposal of all other hazardous by-products, such as suspended solids containing heavy metals or airborne particulates, are believed by us to be in material compliance with regulations. We believe that we have obtained all of the permits and licenses required for operation of our business.
Thorium-bearing by-products are collected and shipped as solid waste to a government-approved low-level radioactive waste disposal site in Clive, Utah. 34 The generation, use, collection, storage, and disposal of all other hazardous by-products, such as suspended solids containing heavy metals or airborne particulates, are believed by us to be in material compliance with regulations.
We may face particular data privacy and security and data protection risks due to laws and regulations regulating the protection or security of personal and other sensitive data.
Investigations, claims, disputes, enforcement actions, litigation or other legal proceedings could have a material adverse effect on our business, results of operations, or financial condition. We may face particular data privacy and security and data protection risks due to laws and regulations regulating the protection or security of personal and other sensitive data.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, our share price or trading volume could decline. 44 We depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments with respect to our outstanding preferred stock.
We depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments with respect to our outstanding preferred stock.
If we are unable to prevent or contain such security or privacy breaches, our operations could be disrupted or we could suffer legal claims, loss of reputation, financial loss, property damage, or regulatory penalties. 35 We use and generate potentially hazardous substances that are subject to stringent environmental and safety regulations.
If we are unable to prevent or fully mitigate the risks or potential harm from such incidents or breaches, our operations could be disrupted or we could suffer legal claims, loss of reputation, financial loss, loss of contracts or business opportunities, property damage, or regulatory penalties.
There can be no assurance that we will be able to retain or attract the personnel necessary for our success. The loss of the services of our key personnel could have a material adverse effect on our business, results of operations, or financial condition.
The loss of the services of our key personnel could have a material adverse effect on our business, results of operations, or financial condition. Our failure to execute on our succession planning may affect our ability to maintain our differentiated knowledge base.
This may require significant investments of management time and financial resources.
Consequently, we expect to continue to consider strategic acquisition of businesses, products, or technologies complementary to our business. This may require significant investments of management time and financial resources.
GDPR requires companies to satisfy requirements regarding the handling of personal data (generally, of EU residents), including its use, protection and the rights of affected persons regarding their data. Failure to comply with GDPR requirements could result in fines of up to 20 million Euro or 4% of global annual revenues, whichever is higher.
Violations of these privacy, cybersecurity, and data protection laws may be subject to significant penalties and damages. For example, failure to comply with GDPR requirements is subject to fines of up to 20 million Euro or 4% of global annual revenues, whichever is higher.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Information regarding our principal U.S. properties at June 30, 2023, is set forth below: Location Primary Use(s) Primary Business Segment(s) Approximate Square Footage Ownership Sherman, TX Manufacturing Materials 700,000 Owned Easton, PA Manufacturing and Research and Development Materials 281,000 Leased Saxonburg, PA Manufacturing and Research and Development Materials 235,000 Owned and Leased Santa Clara, CA Manufacturing and Research and Development Lasers 200,000 Owned Warren, NJ Manufacturing and Research and Development Materials 159,000 Leased Fremont, CA Manufacturing and Research and Development Materials 153,000 Leased Newark, DE Manufacturing and Research and Development Materials 135,000 Leased Murrieta, CA Manufacturing and Research and Development Materials 108,000 Leased Information regarding our principal foreign properties at June 30, 2023, is set forth below: Location Primary Use(s) Primary Business Segment(s) Approximate Square Footage Ownership China Manufacturing, Research and Development, and Distribution Materials and Networking 3,047,000 Owned and Leased Germany Manufacturing, Research and Development Lasers 846,000 Owned and Leased Malaysia Manufacturing Networking 640,000 Owned United Kingdom Manufacturing, Research and Development Materials and Networking 319,000 Owned and Leased Philippines Manufacturing Materials 318,000 Leased Vietnam Manufacturing Materials and Networking 211,000 Owned and Leased Germany Manufacturing and Distribution Materials and Networking 138,000 Owned and Leased Switzerland Manufacturing, Research and Development, and Distribution Materials 112,000 Leased The square footage listed for each of the above properties represents facility square footage, except in the case of the Philippines location, which includes land.
Biggest changePROPERTIES Information regarding our principal U.S. properties at June 30, 2024, is set forth below: Location Primary Use(s) Primary Business Segment(s) Approximate Square Footage Ownership Sherman, TX Manufacturing Materials 700,000 Owned Easton, PA Manufacturing and Research and Development Materials 281,000 Leased Saxonburg, PA Manufacturing and Research and Development Materials 235,000 Owned and Leased Santa Clara, CA Manufacturing and Research and Development Lasers 200,000 Owned Warren, NJ Manufacturing and Research and Development Materials 159,000 Leased Newark, DE Manufacturing and Research and Development Materials 135,000 Leased Fremont, CA Manufacturing and Research and Development Materials 122,000 Leased Murrieta, CA Manufacturing and Research and Development Materials 108,000 Leased Information regarding our principal foreign properties at June 30, 2024, is set forth below: 45 Location Primary Use(s) Primary Business Segment(s) Approximate Square Footage Ownership China Manufacturing, Research and Development, and Distribution Materials and Networking 2,993,000 Owned and Leased Germany Manufacturing, Research and Development Lasers 911,000 Owned and Leased Malaysia Manufacturing, Research and Development Networking 863,000 Owned Vietnam Manufacturing Materials and Networking 719,000 Owned and Leased Philippines Manufacturing Materials 426,000 Leased United Kingdom Manufacturing, Research and Development Materials and Networking 319,000 Owned and Leased Germany Manufacturing and Distribution Materials and Networking 138,000 Owned and Leased Switzerland Manufacturing, Research and Development, and Distribution Materials 112,000 Leased The square footage listed for each of the above properties represents facility square footage, except in the case of the Philippines location, which includes land.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeManagement believes, after consulting with legal counsel, that the ultimate liabilities, if any, resulting from such legal proceedings will not materially affect the Company’s financial condition, liquidity, or results of operations. 46
Biggest changeManagement believes, after consulting with legal counsel, that the ultimate liabilities, if any, resulting from such legal proceedings will not materially affect the Company’s financial condition, liquidity, or results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company’s current fiscal year peer group includes IPG Photonics Corp., Wolfspeed Inc., Lumentum Holdings, Inc., Corning, Inc., MKS Instruments, Inc., and Honeywell International, Inc. The old peer group includes CMC Materials Inc., Corning Incorporated, Franklin Electric Co., Inc., Lumentum Holdings Inc., MKS Instruments Inc., and Silicon Laboratories, Inc. 48 49
Biggest changeThe Company’s current fiscal year peer group includes IPG Photonics Corp., Wolfspeed Inc., Lumentum Holdings, Inc., Corning, Inc., MKS Instruments, Inc., and Honeywell International, Inc. 47 48
The Program has no expiration and may be suspended or discontinued at any time. Shares purchased by the Company are retained as treasury stock and available for general corporate purposes. The Company did not repurchase shares pursuant to this Program during the fiscal years ended June 30, 2023 or June 30, 2022.
The Program had no expiration and could be suspended or discontinued at any time. Shares purchased by the Company are retained as treasury stock and available for general corporate purposes. The Company did not repurchase shares pursuant to this Program during the fiscal years ended June 30, 2024 or June 30, 2023.
PERFORMANCE GRAPH The following graph compares cumulative total shareholder return on the Company’s common stock with the cumulative total shareholder return of the Russell 1000 Index, Nasdaq Composite Index and with a peer group of companies constructed by the Company for the period from June 30, 2018, through June 30, 2023.
PERFORMANCE GRAPH The following graph compares cumulative total shareholder return on the Company’s common stock with the cumulative total shareholder return of the Russell 1000 Index and with a peer group of companies constructed by the Company for the period from June 30, 2019, through June 30, 2024.
As of August 15, 2023, there were approximately 918 holders of record of our common stock. The Company historically has not paid cash dividends on its common stock and does not presently anticipate paying cash dividends on its common stock in the future.
As of August 13, 2024, there were approximately 906 holders of record of our common stock. The Company historically has not paid cash dividends on its common stock and does not presently anticipate paying cash dividends on its common stock in the future.
As of June 30, 2023, the Company has cumulatively purchased 1,416,587 shares of its common stock pursuant to the Program for approximately $22 million. The dollar value of shares as of June 30, 2023 that may yet be purchased under the Program is approximately $28 million.
As of June 30, 2024, the Company has cumulatively purchased 1,416,587 shares of its common stock pursuant to the Program for approximately $22 million. On February 21, 2024, the Company’s Board of Directors terminated the Program and any remaining amount authorized for the repurchase of shares.
Removed
The peer group was changed to better represent the Company following its acquisition of Coherent, Inc. on July 1, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSupplemental information pertaining to our sources and uses of cash for the periods indicated is presented as follows: 59 Sources (uses) of Cash (millions): Year Ended June 30, 2023 2022 2021 Proceeds from long-term borrowings and revolving credit facility $ 3,715 $ — $ — Net proceeds from debt and equity issuances 1,358 990 1,611 Net cash provided by operating activities 634 413 574 Proceeds from exercises of stock options and purchases of stock under employee stock purchase plan 24 18 32 Effect of exchange rate changes on cash and cash equivalents and other items (4) 34 22 Payment on Convertible Debt and Finisar Notes (4) (15) — Other investing and financing (5) (8) 5 Payment of dividends (28) (35) (20) Payments in satisfaction of employees’ minimum tax obligations (54) (21) (20) Debt issuance costs (127) (10) — Additions to property, plant & equipment (436) (314) (146) Payments on existing debt (1,330) (62) (926) Purchases of businesses, net of cash acquired (5,489) — (34) Net cash provided by operating activities: Net cash provided by operating activities was $634 million during the current fiscal year ended June 30, 2023 compared to $413 million of cash provided by operating activities during the same period last fiscal year.
Biggest changeSupplemental information pertaining to our sources and uses of cash for the periods indicated is presented as follows: Sources (uses) of Cash (millions): Year Ended June 30, 2024 2023 2022 Net cash provided by operating activities $ 546 $ 634 $ 413 Net proceeds from debt and equity issuances, including noncontrolling interest holders 968 1,358 990 Proceeds from exercises of stock options and purchases of stock under employee stock purchase plan 42 24 18 Proceeds from long-term borrowings and revolving credit facilities 19 3,715 — Payments on Convertible Debt and Finisar Notes — (4) (15) Cash paid for dividends — (28) (35) Debt issuance costs — (127) (10) Purchases of businesses, net of cash acquired — (5,489) — Effect of exchange rate changes on cash and cash equivalents and other items (1) (4) 34 Other investing and financing (5) (5) (8) Payments in satisfaction of employees’ minimum tax obligations (22) (54) (21) Payments on existing debt and revolving credit facilities (248) (1,330) (62) Additions to property, plant & equipment (347) (436) (314) Net cash provided by operating activities: Net cash provided by operating activities was $546 million during the current fiscal year ended June 30, 2024 compared to $634 million of cash provided by operating activities during the same period last fiscal year.
Gross margins excluding the fair value adjustment on acquired inventory and incremental amortization decreased 206 basis points for fiscal 2023 compared to the fiscal 2022, which included a less favorable mix of revenues, higher costs related to the write-off of inventory for product lines that are being exited, underutilized operating capacity in several plants, shut down costs related to site consolidations, and the unfavorable impact of foreign exchange rates.
Gross margins excluding the fair value adjustment on acquired inventory and incremental amortization decreased 206 basis points for fiscal 2023 compared to the 56 fiscal 2022, which included a less favorable mix of revenues, higher costs related to the write-off of inventory for product lines that are being exited, underutilized operating capacity in several plants, shut down costs related to site consolidations, and the unfavorable impact of foreign exchange rates.
The IR&D expenses are primarily related to our continued investment in new products and manufacturing processes across all of our businesses, including significant investments in indium phosphide semiconductor lasers, silicon carbide materials, devices for both power electronics and wireless devices, and lasers for display processing and semiconductor capital equipment. 55 Selling, general and administrative.
The IR&D expenses are primarily related to our continued investment in new products and manufacturing processes across all of our businesses, including significant investments in indium phosphide semiconductor lasers, silicon carbide materials, devices for both power electronics and wireless devices, and lasers for display processing and semiconductor capital equipment. Selling, general and administrative.
The strength in the communications market, primarily in the Networking segment, was due to stronger demand in telecom and datacom. Lasers revenue for fiscal 2023 was $1,469 million, of which 74% was in the industrial end market and 26% in the instrumentation end market. Organic revenue growth was $374 million, or 11%, year-over-year.
The strength in the communications market, primarily in the Networking segment, was due to stronger demand volumes in telecom and datacom. Lasers revenue for fiscal 2023 was $1,469 million, of which 74% was in the industrial end market and 26% in the instrumentation end market. Organic revenue growth was $374 million, or 11%, year-over-year.
Materials contributed $230 million of this organic growth year-over-year, with $316 million growth in the electronics end market from innovations in sensing products, partially offset by softer sales from the industrial end market. Networking increased $144 million year-over-year, with growth in both telecom and datacom. Gross margin.
Materials contributed $230 million of this organic growth year-over-year, with $316 million growth in the electronics end market from innovations in sensing products, partially offset by softer sales from the industrial end market. Networking increased $144 million year-over-year, with volume growth in both telecom and datacom. Gross margin.
Gross margin for the year ended June 30, 2023 was $1,618 million, or 31%, of total revenues, compared to $1,265 million, or 38% of total revenues, for fiscal 2022. Gross margin as a percentage of revenues decreased 680 basis points compared to the prior fiscal year.
Gross margin for the year ended June 30, 2023 was $1,618 million, or 31%, of total revenues, compared to $1,265 million, or 38% of total revenues, for fiscal 2022. Gross margin as a percentage of revenues decreased 680 basis points compared to fiscal 2022.
The remaining contributions to the increased revenues were from growth in the electronics market, which grew 102% year-over-year, contributing an incremental $315 million in sales, and strength in the communications market, which grew by 6% year-over-year, contributing an incremental $139 million in sales.
The remaining contributions to the increased revenues were from volume growth in the electronics market, which grew 102% year-over-year, contributing an incremental $315 million in sales, and strength in the communications market, which grew by 6% year-over-year, contributing an incremental $139 million in sales.
The Company believes existing cash, cash flow from operations, and available borrowing capacity from its Senior Credit Facilities will be sufficient to fund its needs for working capital, capital expenditures, repayment of scheduled long-term borrowings and lease obligations, investments in IR&D, and internal and external growth objectives at least through fiscal year 2024.
The Company believes existing cash, cash flow from operations, and available borrowing capacity from its Senior Credit Facilities will be sufficient to fund its needs for working capital, capital expenditures, repayment of scheduled long-term borrowings and lease obligations, investments in IR&D, and internal and external growth objectives at least through fiscal year 2025.
The fiscal 2022 losses include a $24 million realized loss related the purchase of $345 million Euros to pay off the Euro based debt of Legacy Coherent at transaction closing. Income taxes. Our effective income tax rate for fiscal 2023 was 27%, compared to an effective tax rate of 17% last fiscal year.
The fiscal 2022 losses include a $24 million realized loss related the purchase of $345 million Euros to pay off the Euro based debt of Coherent, Inc. at transaction closing. Income taxes. Our effective income tax rate for fiscal 2023 was 27%, compared to an effective tax rate of 17% last fiscal year.
We will continue to monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods. 53 Income Taxes The Company prepares and files tax returns based on its interpretation of tax laws and regulations and records estimates based on these judgments and interpretations.
We will continue to monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods. 51 Income Taxes The Company prepares and files tax returns based on its interpretation of tax laws and regulations and records estimates based on these judgments and interpretations.
The increase in revenues of $144 million during fiscal 2023 was primarily due to increased revenue in the communications market due to stronger demand in telecom and datacom. Operating income for the year ended June 30, 2023 for Networking decreased 4% to $222 million, compared to operating income of $232 million last fiscal year.
The increase in revenues of $144 million during fiscal 2023 was primarily due to increased revenue in the communications market due to stronger demand in telecom and datacom. Operating income for the year ended June 30, 2023 for Networking decreased 4% to $222 million, compared to operating income of $232 million for fiscal year 2022.
Management believes operating income to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 14.
Management believes operating income to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 15.
Management believes operating income to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 14.
Management believes operating income to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 15.
Note 1. Nature of Business and Summary of Significant Accounting Policies, of the Notes to our Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K, describes the significant accounting policies and accounting methods used in the preparation of the Company’s Consolidated Financial Statements.
Nature of Business and Summary of Significant Accounting Policies, of the Notes to our Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K, describes the significant accounting policies and accounting methods used in the preparation of the Company’s Consolidated Financial Statements.
The decrease in operating income during the current fiscal year was driven by $60 million in restructuring charges, primarily severance, related to our Restructuring Plan and $33 million for charges for impairment of certain tradename, customer list and technology intangibles. The increases were partially offset by lower variable compensation costs and lower IR&D spending.
The decrease in operating income during fiscal 2023 was driven by $60 million in restructuring charges, primarily severance, related to our Restructuring Plan and $33 million for charges for impairment of certain tradename, customer list and technology intangibles. The increases were partially offset by lower variable compensation costs and lower IR&D spending.
Internal research and development. IR&D expenses for the fiscal year ended June 30, 2023 were $500 million, or 10% of revenues, compared to $377 million, or 11% of revenues, last fiscal year. The increase of $122 million for fiscal 2023 was driven by an additional $132 million of IR&D expenses from the Lasers segment.
Internal research and development. IR&D expenses for the fiscal year ended June 30, 2023 were $500 million, or 10% of revenues, compared to $377 million, or 11% of revenues, in fiscal 2022. The increase of $122 million for fiscal 2023 was driven by an additional $132 million of IR&D expenses from the Lasers segment.
Investors should not assume that the Company agrees with any statement, conclusion of any analysis, or report issued by any analyst irrespective of the content of the statement or report. 50 Overview Coherent Corp.
Investors should not assume that the Company agrees with any statement, conclusion of any analysis, or report issued by any analyst irrespective of the content of the statement or report. 49 Overview Coherent Corp.
In the fourth quarter of fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination and the write-off of property and equipment, net of $65 million from reimbursement arrangements. We expect the restructuring actions to be substantially completed by the end of fiscal 2025.
In fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. We expect the restructuring actions to be substantially completed by the end of fiscal 2025.
Operating income differs from net earnings in that operating income excludes certain expenses, including interest, the impact of foreign exchange, and other miscellaneous expenses as reported.
Operating income differs from net earnings in that operating income excludes certain operational expenses, including interest, the impact of foreign exchange, and other miscellaneous expenses as reported in Other expense (income) - net.
New Senior Credit Facilities On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the “Term A Facility”), with an aggregate principal amount of $850 million, a term loan B credit facility (the “Term B Facility” and, together with the Term A Facility, the “Term Facilities”), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Facilities, the “Senior Credit Facilities”), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million.
Financing outflows included payments to settle the Company’s existing senior credit facilities. 59 New Senior Credit Facilities On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the “Term A Facility”), with an aggregate principal amount of $850 million, a term loan B credit facility (the “Term B Facility” and, together with the Term A Facility, the “Term Facilities”), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Facilities, the “Senior Credit Facilities”), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million.
However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material. See Note 21. Restructuring and Synergy and Site Consolidation Plan to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information.
However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material. See Note 22. Restructuring Plan to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information.
Selling, general and administrative (“SG&A”) expenses for the year ended June 30, 2023 were $1,037 million, or 20% of revenues, compared to $474 million, or 14% of revenues, last fiscal year.
Selling, general and administrative (“SG&A”) expenses for the year ended June 30, 2023 were $1,037 million, or 20% of revenues, compared to $474 million, or 14% of revenues, in fiscal year 2022.
Synergy and Site Consolidation Plan On May 20, 2023, the Company announced that it has accelerated some of the actions planned as part of its multi-year synergy and site consolidation efforts following the acquisition of Legacy Coherent, including site consolidations and relocations to lower cost sites.
Synergy and Site Consolidation Plan On May 20, 2023, the Company announced that it had accelerated some of the actions planned as part of its multi-year synergy and site consolidation efforts following the acquisition of Coherent, Inc., including site consolidations and relocations to lower cost sites.
The increase in revenues during the current fiscal year was primarily driven by an increase in demand in the electronics end market from innovations in sensing products, partially offset by softer demand in the industrial end market.
The increase in revenues during fiscal 2023 was primarily driven by an increase in demand in the electronics end market from innovations in sensing products, partially offset by softer demand in the industrial end market.
Operating income for the fiscal year ended June 30, 2023 for Materials decreased 27%, with operating income of $160 million in the current year, compared to operating income of $219 million last fiscal year.
Operating income for the fiscal year ended June 30, 2023 for Materials decreased 27%, with operating income of $160 million in fiscal 2023, compared to operating income of $219 million for fiscal year 2022.
Our cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of June 30, 2023 , we held approxim ately $636 million of c ash and cash equivalents outside of the United States.
Our cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of June 30, 2024 , we held approxim ately $870 million of c ash, cash equivalents and restricted cash outside of the United States.
For fiscal year 2023, we performed a quantitative assessment, The fair values of the reporting units were determined using a discounted cash flow analysis with projected financial information based on our most recently completed long-term strategic planning processes and also considers the current financial performance compared to our prior projections of the reporting units, as well as a market analysis.
The fair values of the reporting units were determined using a discounted cash flow analysis with projected financial information based on our most recently completed long-term strategic planning processes and also considers the current financial performance compared to our prior projections of the reporting units, as well as a market analysis.
Net cash provided by financing activities: Net cash provided by financing activities was $3.6 billion for the fiscal year ended June 30, 2023, compared to net cash provided by financing activities of $863 million for the same period last fiscal year.
Net cash provided by financing activities was $3.6 billion for the year ended June 30, 2023 compared to net cash provided by financing activities of $863 million for the year ended June 30, 2022.
Restructuring charges related to our Restructuring Plan for the year ended June 30, 2023 were $119 million, or 2% of revenues, and consist of severance and equipment write-offs, net of reimbursements, due to the consolidation of certain manufacturing sites. See Note 21. Restructuring and Synergy and Site Consolidation Plan for further information. Interest and other, net.
Restructuring charges related to our Restructuring Plan for the year ended June 30, 2023 were $119 million, or 2% of revenues, and consist of severance and equipment write-offs, net of reimbursements, due to the consolidation of certain manufacturing sites. See Note 22.
Coherent’s MD&A is presented in ten sections: • Forward-Looking Statements • Overview • Acquisition and Background of Coherent, Inc. • Restructuring and Site Consolidation • Critical Accounting Policies and Estimates • Transfer to the New York Stock Exchange and Conversion of Series A Preferred Stock • Fiscal Year 2023 Compared to Fiscal Year 2022 • Fiscal Year 2022 Compared to Fiscal Year 2021 • Liquidity and Capital Resources • Off Balance Sheet Arrangements Forward-looking statements in Item 7 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to Item 1A for discussion of these risks and uncertainties).
Coherent’s MD&A is presented in the following sections: • Forward-Looking Statements • Overview • Restructuring and Site Consolidation • Silicon Carbide Investment • Critical Accounting Policies and Estimates • Conversion of Series A Preferred Stock • Fiscal Year 2024 Compared to Fiscal Year 2023 • Fiscal Year 2023 Compared to Fiscal Year 2022 • Liquidity and Capital Resources • Off Balance Sheet Arrangements Forward-looking statements in Item 7 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to Item 1A for discussion of these risks and uncertainties).
Revenues for the year ended June 30, 2023 increased 56% to $5,160 million, compared to $3,317 million for the prior fiscal year. The biggest driver of increased revenue relates to the Lasers segment, which was acquired as part of the Legacy Coherent (“Merger”) acquisition.
Consolidated Revenues. Revenues for the year ended June 30, 2023 increased 56% to $5,160 million, compared to $3,317 million for fiscal 2022. The biggest driver of increased revenue relates to the Lasers segment, which was acquired as part of the Merger.
We are reporting financial information (revenue and operating income) for these new reporting segments in this Annual Report on Form 10-K. 54 The following table sets forth select items from our Consolidated Statements of Earnings (Loss) for the years ended June 30, 2023 and 2022 ($ in millions except per share information): Year Ended June 30, 2023 Year Ended June 30, 2022 % of Revenues % of Revenues Total revenues $ 5,160 100 % $ 3,317 100 % Cost of goods sold 3,542 69 2,051 62 Gross margin 1,618 31 1,265 38 Operating expenses: Internal research and development 500 10 377 11 Selling, general and administrative 1,037 20 474 14 Restructuring charges 119 2 — — Interest and other, net 318 6 132 4 Earnings (loss) before income taxes (356) (7) 282 8 Income Tax Expense (Benefit) (96) (2) 47 1 Net earnings (loss) $ (259) (5) % $ 235 7 % Diluted earnings (loss) per share $ (2.93) $ 1.45 Consolidated Revenues.
Fiscal Year 2023 Compared to Fiscal Year 2022 The following table sets forth select items from our Consolidated Statements of Earnings (Loss) for the years ended June 30, 2023 and 2022 ($ in millions except per share information) (1) : Year Ended Year Ended June 30, 2023 June 30, 2022 % of Revenues % of Revenues Total revenues $ 5,160 100 % $ 3,317 100 % Cost of goods sold 3,542 69 2,051 62 Gross margin 1,618 31 1,265 38 Operating expenses: Internal research and development 500 10 377 11 Selling, general and administrative 1,037 20 474 14 Restructuring charges 119 2 — — Interest and other, net 318 6 132 4 Earnings (loss) before income tax (356) (7) 282 8 Income tax (expense) benefit (96) (2) 47 1 Net earnings (loss) $ (259) (5) % $ 235 7 % Diluted earnings (loss) per share $ (2.93) $ 1.45 (1) Some amounts may not add due to rounding.
Estimates of fair value are based on our projection of revenues, operating costs and cash flows of each reporting unit, considering historical and anticipated results and general economic and market conditions and their projections.
Estimates of fair value are based on our projection of revenues, operating costs and cash flows of each reporting unit, considering historical and anticipated results and general economic and market conditions and their projections. For fiscal year 2024, we performed a quantitative assessment.
Implementation of tax planning strategies to recover these deferred tax assets or future income generation in these jurisdictions could lead to the reversal of these valuation allowances and a reduction of income tax expense. Business Combinations Business combinations are accounted for using the purchase method of accounting.
Implementation of tax planning strategies to recover these deferred tax assets or future income generation in these jurisdictions could lead to the reversal of these valuation allowances and a reduction of income tax expense.
If actual results are not consistent with management’s estimates and assumptions, a material goodwill impairment charge could occur, which could have a material adverse effect on our consolidated financial statements.
Determination of the fair value requires discretion and the use of estimates by management. If actual results are not consistent with management’s estimates and assumptions, a material goodwill impairment charge could occur, which could have a material adverse effect on our consolidated financial statements.
Net cash used in investing activities: Net cash used in investing activities was $5.9 billion for the fiscal year ended June 30, 2023, compared to net cash used of $320 million for the same period last fiscal year. In fiscal 2023, $5.5 billion was used to fund the Merger.
Net cash used in investing activities: Net cash used in investing activities was $0.4 billion for the fiscal year ended June 30, 2024, compared to net cash used of $5.9 billion for the same period last fiscal year. In fiscal 2023, $5.5 billion was used to fund the Merger. Cash used to fund capital expenditures decreased by $89 million year-over-year.
Materials ($ in millions) Year Ended June 30, % Increase 2022 2021 Revenues $ 1,119 $ 1,102 2 % Operating income $ 219 $ 227 (4) % Revenues for the fiscal year ended June 30, 2022 for Materials increased 2% to $1,119 million, compared to revenues of $1,102 million for fiscal year 2021.
Materials ($ in millions) Year Ended June 30, % Increase 2023 2022 Revenues $ 1,350 $ 1,119 21 % Operating income $ 160 $ 219 (27) % Revenues for the fiscal year ended June 30, 2023 for Materials increased 21% to $1,350 million, compared to revenues of $1,119 million for fiscal year 2022.
The increase in cash flows provided by operating activities during the year ended June 30, 2023 compared to the same period last fiscal year was driven by improved management of working capital accounts. Net cash provided by operating activities was $413 million and $574 million for the fiscal years ended June 30, 2022 and 2021, respectively.
The increase in cash flows provided by operating activities during the fiscal year ended June 30, 2023 compared to the fiscal year ended June 30, 2022 was driven by improved management of working capital accounts.
The loss was driven by $297 million of amortization expense related to the preliminary fair value of intangible assets acquired, $158 million of amortization of the preliminary fair value step-up on acquired inventory, $79 million of integration and site consolidation and shut down costs, one-time charges of $39 million for transaction fees and financing, and $18 million of nonrecurring share-based compensation.
The loss was driven by $297 million of amortization expense related to the preliminary fair value of intangible assets acquired, $158 million of amortization of the preliminary fair value step-up on acquired inventory, $79 million of integration and site consolidation and shut down costs, one-time charges of $39 million for transaction fees and financing, and $18 million of nonrecurring share-based compensation. 58 Liquidity and Capital Resources Historically, our primary sources of cash have been provided from operations, long-term borrowings, and advance funding from customers.
In relation to the Term Facilities, the Company incurred expense of $256 million for the fiscal year ended June 30, 2023, which is included in interest expense in the Consolidated Statements of Earnings (Loss). During the fiscal year ended June 30, 2023, the Company made payments of $265 million for the Term Facilities, including voluntary prepayments of $212 million.
In relation to the Term Facilities, the Company incurred expense of $237 million for the fiscal year ended June 30, 2024, which is included in Interest expense in the Consolidated Statements of Earnings (Loss).
Cash used to fund capital expenditures increased by $122 million year-over-year, to continue to increase capacity to meet the growing demand for our product portfolio. Net cash used in investing activities was $320 million and $173 million for the fiscal years ended June 30, 2022 and 2021, respectively.
Cash used to fund capital expenditures increased by $122 million during the fiscal year ended June 30, 2023 compared to the fiscal year ended June 30, 2022, to continue to increase capacity to meet the growing demand for our product portfolio.
The Term A Facility and the Revolving Credit Facility borrowings bear interest at adjusted SOFR plus 1.75% as of June 30, 2023. As amended, the Term B Facility bears interest at an adjusted SOFR rate (subject to a 0.50% floor) plus 2.75%.
As further amended, the New Term B Loans bear interest at a SOFR rate (subject to a 0.50% floor) plus 2.50% as of June 30, 2024. The maturity of the New Term Loans and revolving credit facility remains unchanged.
Segment and Geographic Reporting to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information on the Company’s reportable segments and for the reconciliation of operating income to net earnings, which is incorporated herein by reference.
Segment and Geographic Reporting to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information on the Company’s reportable segments and for the reconciliation of operating income to net earnings, which is incorporated herein by reference. 54 Networking ($ in millions) Year Ended June 30, % Decrease 2024 2023 Revenues $ 2,296 $ 2,341 (2) % Operating income $ 179 $ 222 (20) % Revenues for the year ended June 30, 2024 for Networking decreased 2% to $2,296 million, compared to $2,341 million for last fiscal year.
Segment and Geographic Reporting to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information on the Company’s reportable segments and for the reconciliation of operating income to net earnings, which is incorporated herein by reference.
Segment and Geographic Reporting to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information on the Company’s reportable segments and for the reconciliation of operating income to net earnings, which is incorporated herein by reference. 57 Networking ($ in millions) Year Ended June 30, % Increase 2023 2022 Revenues $ 2,341 $ 2,197 7 % Operating income $ 222 $ 232 (4) % Revenues for the year ended June 30, 2023 for Networking increased 7% to $2,341 million, compared to $2,197 million for fiscal year 2022.
Cash inflow for the current year-to-date period was from borrowings under the New Term Facilities, defined below, as well the net proceeds from the issuance of Coherent’s Series B-2 Convertible Preferred Stock. Financing outflows included payments to settle the Company’s existing senior credit facilities.
Cash inflow for fiscal 2023 was from borrowings under the New Term Facilities, defined below, as well the net proceeds from the issuance of Coherent’s Series B-2 Convertible Preferred Stock.
The driver of the decreased operating income was the $56 million in restructuring charges, primarily severance, related to our Restructuring Plan, partially offset by strong sales, lower variable compensation costs and the leveraging of corporate resources across each of our three segments. 56 Materials ($ in millions) Year Ended June 30, % Increase 2023 2022 Revenues $ 1,350 $ 1,119 21 % Operating income $ 160 $ 219 (27) % Revenues for the fiscal year ended June 30, 2023 for Materials increased 21% to $1,350 million, compared to revenues of $1,119 million last fiscal year.
The driver of the decreased operating income was the $56 million in restructuring charges, primarily severance, related to our Restructuring Plan, partially offset by strong sales, lower variable compensation costs and the leveraging of corporate resources across each of our three segments.
We expect to consider a range of strategic alternatives including a minority investment in the SiC business by a strategic or financial partner, joint venture, and/or a sale of the SiC business in fiscal 2024. 52 Critical Accounting Policies and Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its Consolidated Financial Statements and accompanying notes.
Critical Accounting Policies and Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its Consolidated Financial Statements and accompanying notes. Note 1.
The Company Common Stock and Mandatory Convertible Preferred Stock began trading on the NYSE on February 23, 2023, under the ticker symbols “COHR” and “IIVI”, respectively. All outstanding shares of Mandatory Convertible Preferred Stock were converted to Company Common Stock on July 3, 2023, and no shares of Mandatory Convertible Preferred Stock are currently issued and outstanding.
Conversion of Series A Preferred Stock All outstanding shares of Mandatory Convertible Preferred Stock were converted to Company Common Stock on July 3, 2023, and no shares of Mandatory Convertible Preferred Stock are currently issued and outstanding.
These restructuring actions are expected to be accompanied by other cost reductions and are intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient and sustainable business model.
These restructuring actions are expected to be accompanied by other cost reductions and are intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient and sustainable business model. In fiscal 2024, these activities resulted in charges of $27 million, primarily for accelerated depreciation, the write-off of property and equipment, and site move costs.
Contractual Obligations As of June 30, 2023, in the ordinary course of business, we had total estimated purchase commitments from vendors of approximately $757 million. In addition, as of June 30, 2023, we had obligations under our operating leases of approximately $219 million, $47 million of which will be paid in the fiscal year 2024. 61
In addition, as of June 30, 2024, we had obligations under our operating leases of approximately $258 million, $52 million of which will be paid in the fiscal year 2025. 61
Weighted Average Interest Rate The weighted average interest rate of total borrowings was 6% and 2% for the years ended June 30, 2023 and 2022, respectively.
As of June 30, 2024, the Company had no borrowings outstanding under the Revolving Credit Facility. Weighted Average Interest Rate The weighted average interest rate of total borrowings was 7% and 6% for the years ended June 30, 2024 and 2023, respectively.
Operating income for the fiscal year ended June 30, 2022 for Materials decreased 4% to $219 million, compared to operating income of $227 million for fiscal year 2021.
Operating income for the fiscal year ended June 30, 2024 for Materials decreased 61%, with operating income of $63 million in the current year, compared to operating income of $160 million last fiscal year.
The IR&D expenses are primarily related to our continued investment in new products and manufacturing processes across all its businesses including significant investments in indium phosphide semiconductor lasers, silicon carbide materials and devices for both power electronics and wireless devices, semiconductor technology, gallium arsenide semiconductor lasers, and silicon carbide semiconductor technology. Selling, general and administrative.
The IR&D expenses are primarily related to our continued investment in new products and platform technologies in an effort to accelerate our organic growth across all of our businesses, including significant investments in datacom transceivers for AI, indium phosphide and gallium arsenide semiconductor lasers, silicon carbide materials, and lasers for display processing, semiconductor capital equipment, and instrumentation.
We also generate revenue, earnings and cash flows from government-funded research and development contracts relating to the development and manufacture of new technologies, materials and products.
We also generate revenue, earnings and cash flows from externally-funded research and development contracts relating to the development and manufacture of new technologies, materials and products. Our customer base includes original equipment manufacturers; laser end users; system integrators of high-power lasers; manufacturers of equipment and devices for our end markets.
Interest and other, net for the year ended June 30, 2023 was expense of $318 million compared to expense of $132 million last fiscal year, an increase of $186 million.
Restructuring Plan to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information. Interest and other, net. Interest and other, net for the year ended June 30, 2023 was expense of $318 million compared to expense of $132 million in fiscal 2022, an increase of $186 million.
Net cash provided by financing activities was $863 million for the year ended June 30, 2022 compared to net cash provided by financing activities of $676 million for the year ended June 30, 2021.
Net cash provided by financing activities: Net cash provided by financing activities was $0.8 billion for the fiscal year ended June 30, 2024, compared to net cash provided by financing activities of $3.6 billion for the same period last fiscal year.
In the fourth quarter of fiscal 2023, the acceleration of these activities resulted in $20 million in charges primarily for employee termination, the write-off of inventory for products that are being exited and shut down costs. See Note 21.
In fiscal 2023, the acceleration of these activities resulted in $20 million in charges primarily for employee termination costs, the write-off of inventory for products that have been exited and shut down costs. Silicon Carbide Investment On May 10, 2023, the Company announced that it had commenced a review of strategic alternatives for its Silicon Carbide business.
Gross margin as a percentage of revenues increased 20 basis points compared to fiscal 2021. Internal research and development. IR&D expenses for the fiscal year ended June 30, 2022 were $377 million, or 11% of revenues, compared to $330 million, or 11%. of revenues, in fiscal 2021.
Internal research and development (“IR&D”) expenses for the fiscal year ended June 30, 2024 were $479 million, or 10% of revenues, compared to $500 million, or 10% of revenues, last fiscal year.
The increase in cash flows provided by operating activities during the fiscal year ended June 30, 2022 compared to the fiscal year ended June 30, 2021 was primarily driven by decreased net earnings of $63 million due to increased interest expense.
The decrease in cash flows provided by operating activities during the year ended June 30, 2024 compared to the same period last fiscal year was primarily due to lower non-cash adjustments partially offset by lower losses. Net cash provided by operating activities was $634 million and $413 million for the fiscal years ended June 30, 2023 and 2022, respectively.
Restructuring and Synergy and Site Consolidation Plan to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information. SiC Strategy On May 10, 2023, the Company announced that it has commenced a review of strategic alternatives for its Silicon Carbide “SiC” business.
Noncontrolling Interests to the Company’s Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information .
Networking ($ in millions) Year Ended June 30, % Increase 2023 2022 Revenues $ 2,341 $ 2,197 7 % Operating income $ 222 $ 232 (4) % Revenues for the year ended June 30, 2023 for Networking increased 7% to $2,341 million, compared to $2,197 million for last fiscal year.
Materials ($ in millions) Year Ended June 30, % Decrease 2024 2023 Revenues $ 1,017 $ 1,350 (25) % Operating income $ 63 $ 160 (61) % Revenues for the fiscal year ended June 30, 2024 for Materials decreased 25% to $1,017 million, compared to revenues of $1,350 million last fiscal year.
Generally, cash balances held outside the United States could be repatriated to the United States. At June 30, 2023, we had $16 million of restricted cash. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements as defined by Regulation S-K of the Securities Act of 1933.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements as defined by Regulation S-K of the Securities Act of 1933. Contractual Obligations As of June 30, 2024, in the ordinary course of business, we had total estimated purchase commitments from vendors of approximately $751 million.
Our cash position, borrowing capacity and debt obligations are as follows (in millions): June 30, 2023 June 30, 2022 Cash, cash equivalents, and restricted cash $ 833 $ 2,582 Available borrowing capacity under New Revolving Credit Facility 348 450 Total debt obligations 4,310 2,300 On July 1, 2022, we utilized $2.1 billion of cash, cash equivalents, and restricted cash as part of the funding required to complete the Merger.
Our cash position, borrowing capacity and debt obligations are as follows (in millions): June 30, 2024 June 30, 2023 Cash and cash equivalents $ 926 $ 821 Restricted cash, current 174 12 Restricted cash, non-current 690 4 Available borrowing capacity under Revolving Credit Facility 346 348 Total debt obligations 4,100 4,310 Other Liquidity On December 4, 2023, the Company consummated two investment agreements under which Silicon Carbide LLC, a Company subsidiary, received $1.0 billion cash in exchange for 25% of the equity of that entity.
We are reporting financial information (revenue and operating income) for these new reporting segments in this Annual Report on Form 10-K. 57 The following table sets forth select items from our Consolidated Statements of Earnings (Loss) for the years ended June 30, 2022 and 2021 ($ in millions except per share information): Year Ended Year Ended June 30, 2022 June 30, 2021 % of Revenues % of Revenues Total revenues $ 3,317 100 % $ 3,106 100 % Cost of goods sold 2,051 62 1,928 62 Gross margin 1,265 38 1,177 38 Operating expenses: Internal research and development 377 11 330 11 Selling, general and administrative 474 14 445 14 Interest and other, net 132 4 50 2 Earnings before income tax 282 8 353 11 Income taxes 47 1 55 2 Net earnings $ 235 7 % $ 298 10 % Diluted earnings per share $ 1.45 $ 2.37 Consolidated Revenues.
Fiscal Year 2024 Compared to Fiscal Year 2023 The Company reports its financial results in the following three designated segments: (i) Networking, (ii) Materials, and (iii) Lasers. 52 The following table sets forth select items from our Consolidated Statements of Earnings (Loss) for the years ended June 30, 2024 and 2023 ($ in millions except per share information) (1) : Year Ended June 30, 2024 Year Ended June 30, 2023 % of Revenues % of Revenues Total revenues $ 4,708 100 % $ 5,160 100 % Cost of goods sold 3,252 69 3,542 69 Gross margin 1,456 31 1,618 31 Operating expenses: Internal research and development 479 10 500 10 Selling, general and administrative 854 18 1,037 20 Restructuring charges 27 1 119 2 Interest and other, net 244 5 318 6 Loss before income taxes (148) (3) (356) (7) Income Tax Benefit 11 — (96) (2) Net loss (159) (3) (259) (5) Net loss attributable to noncontrolling interests (3) — % — — % Net loss attributable to Coherent Corp. $ (156) (3) % $ (259) (5) % Diluted loss per share $ (1.84) $ (2.93) (1) Some amounts may not add due to rounding.
This growth was partially offset by decreased revenue in the consumer market, which fell 20%, or $56 million, year-over-year due to lower sales in 3D sensing. Gross margin. Gross margin for the year ended June 30, 2022 was $1,265 million, or 38%, of total revenues, compared to $1,177 million, or 38% of total revenues, for fiscal 2021.
Operating income for the year ended June 30, 2024 for Networking decreased 20% to $179 million, compared to operating income of $222 million last fiscal year. The decrease in operating income for fiscal 2024 was driven by $45 million lower revenues and lower margin percentage partially offset by lower restructuring charges.
Networking ($ in millions) Year Ended June 30, % Increase 2022 2021 Revenues $ 2,197 $ 2,004 10 % Operating income $ 232 $ 201 15 % Revenues for the year ended June 30, 2022 for Networking increased 10% to $2,197 million, compared to $2,004 million for fiscal year 2021.
Lasers ($ in millions) Year Ended June 30, % Decrease 2024 2023 Revenues $ 1,395 $ 1,469 (5) % Operating income $ (146) $ (419) (65) % Revenues for the fiscal year ended June 30, 2024 for Lasers decreased 5% to $1,395 million, compared to revenues of $1,469 million last fiscal year.
Net cash used in investing activities during the fiscal year ended June 30, 2022 primarily included $314 million of cash expenditures to continue to increase capacity to meet the growing demand for our product portfolio.
Net cash used in investing activities was $5.9 billion and $320 million for the fiscal years ended June 30, 2023 and 2022, respectively. In fiscal 2023, $5.5 billion was used to fund the Merger.
Removed
Our customer base includes original equipment manufacturers; laser end users; system integrators of high-power lasers; manufacturers of equipment and devices for industrial, optical communications, electronics, and instrumentation markets; U.S. government prime contractors; and various U.S. government agencies.
Added
In fiscal 2024, the acceleration of these activities resulted in $40 million of charges primarily for overlapping labor related to transition of manufacturing operations to other sites, shut down costs for sites being exited, accelerated depreciation and employee termination costs.
Removed
Acquisition and Background of Coherent, Inc. The acquisition of Coherent, Inc. (“Legacy Coherent”), one of the world’s leading providers of laser and optics-based product solutions, closed on July 1, 2022. For the full fiscal year 2023, Legacy Coherent was included in the combined company and renamed as the Lasers segment.
Added
On December 4, 2023, Silicon Carbide LLC (“Silicon Carbide”), one of the Company’s subsidiaries, completed the sale of Class A Common Units to Denso Corporation (“Denso”) and Mitsubishi Electric Corporation (“MELCO”), under which they collectively invested an aggregate of $1 billion in Silicon Carbide LLC (collectively, the “Equity Investments”).
Removed
The Lasers segment’s lasers and optics products serve industrial customers in semiconductor and display capital equipment, precision manufacturing and aerospace & defense, as well as instrumentation customers in life science and scientific instrumentation. Legacy Coherent delivers systems to the world’s leading brands, innovators, and researchers, all backed with a global service and support network.
Added
As a consequence of the Equity Investments, the Company’s ownership interest in the Class A Common Units of Silicon Carbide LLC was reduced to approximately 75%. Denso and MELCO each, individually, own approximately 12.5% of the Class A Common Units of Silicon Carbide LLC.
Removed
Since inception in 1966, Legacy Coherent has grown through internal organic expansion and through strategic acquisitions of complementary businesses, technologies, intellectual property, manufacturing processes, and product offerings.
Added
The Equity Investments in Silicon Carbide enables Coherent to increase its available free cash flow to provide greater financial and operational flexibility to execute its capital allocation priorities, as the aggregate $1 billion investment will be used to fund future capital expansion of Silicon Carbide. See Note 12.
Removed
The word “laser” is an acronym for “light amplification by stimulated emission of radiation.” Lasers emit an intense output of light with unique and highly useful properties, of which its near perfect collimation (beam like property) is the most commonly known, as well usually being highly monochromatic at a precise wavelength (color).
Added
Noncontrolling Interests 50 included in Item 8 of this Annual Report on Form 10-K for further information on the noncontrolling interests in our Silicon Carbide subsidiary.
Removed
The name Coherent originates from another key property which is related to the synchronization of the phase of the light oscillations, which is known as coherence. Therefore, lasers are many orders of magnitude brighter than any other optical source.
Added
The Organization for Economic Co-operation and Development (“OECD”), a global policy forum, introduced a framework to implement a global minimum tax of 15% which would apply to multinational corporations, referred to as Pillar Two.
Removed
Lasers also can be pulsed at almost any repetition rate, even beyond a billion times per second, and are the technology which underpin the global fiber optic communications network, as well as producing the shortest man-made pulses of any technology known.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed1 unchanged
Biggest changeOn February 23, 2022, we entered into an interest rate cap (the “Cap”, with an effective date of July 1, 2023. On March 20, 2023, we amended the Cap contract. As the Cap is not effective until July 2023, there is no impact on variable rate borrowings from the Cap for the year ended June 30, 2023. 62
Biggest changeOn February 23, 2022, we entered into an interest rate cap (the “Cap”), amended on March 20, 2023, with an effective date of July 1, 2023.
In the normal course of business, we use a variety of techniques and derivative financial instruments as part of our overall risk management strategy, which is primarily focused on our exposure in relation to the Chinese Renminbi, Euro, Swiss Franc, Japanese Yen, Singapore Dollar, Korean Won and Malaysian Ringgit. No significant changes have occurred in the techniques and instruments used.
In the normal course of business, we use a variety of techniques and derivative financial instruments as part of our overall risk management strategy, which is primarily focused on our exposure in relation to the Chinese Renminbi, Euro, Swiss Franc, Japanese Yen, Singapore Dollar and Korean Won. No significant changes have occurred in the techniques and instruments used.
On March 20, 2023, we amended the swap contract. If we had not effectively hedged our variable rate debt, a change in the interest rate of 100 basis points on these variable rate borrowings would have resulted in additional interest expense of $47 million for the year ended June 30, 2023.
If we had not effectively hedged our variable rate debt, a change in the interest rate of 100 basis points on these variable rate borrowings would have resulted in additional interest expense of $33 million for the year ended June 30, 2024. 62
Interest Rate Risk As of June 30, 2023, our total borrowings include variable rate borrowings, which expose us to changes in interest rates. In November 2019, we entered into an interest rate swap contract to limit the exposure of our variable interest rate debt by effectively converting a portion of interest payments to fixed interest rate debt.
In November 2019, we entered into an interest rate swap contract, amended on March 20, 2023, to limit the exposure of our variable interest rate debt by effectively converting a portion of interest payments to fixed interest rate debt.
Added
Interest Rate Risk As of June 30, 2024, our total borrowings include variable rate borrowings, which expose us to changes in interest rates.

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