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EX-31.2 - EXHIBIT 31.2 CFO CERTIFICATION - ROFIN SINAR TECHNOLOGIES INCa20160630ex312.htm
EX-32.2 - EXHIBIT 32.2 CFO CERTIFICATION - ROFIN SINAR TECHNOLOGIES INCa20160630ex322.htm
EX-32.1 - EXHIBIT 32.1 CEO CERTIFICATION - ROFIN SINAR TECHNOLOGIES INCa20160630ex321.htm
EX-31.1 - EXHIBIT 31.1 CEO CERTIFICATION - ROFIN SINAR TECHNOLOGIES INCa20160630ex311.htm


UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 

FORM 10-Q
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2016
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-21377

 
ROFIN-SINAR TECHNOLOGIES INC.
(Exact name of Registrant as specified in its charter)
 
Delaware
 
38-3306461
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
40984 Concept Drive, Plymouth, MI
 
48170
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:  (734) 455-5400
 
(Former name, former address and former fiscal year,
if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes [X] / No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted in its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes [X ] / No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer", "accelerated filer" and "Smaller Reporting Company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [X]    Accelerated filer  [  ]
Non-accelerated filer   [   ]   Smaller reporting company [   ]

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] / No [X]

28,414,403 shares of the registrant's common stock, par value $0.01 per share, were outstanding as of August 8, 2016.




ROFIN-SINAR TECHNOLOGIES INC.
INDEX
PART I
FINANCIAL INFORMATION
Page No.
 
 
 
 
Item 1 - Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2 -
 
 
 
 
 
 
 
 
Item 3 -
 
 
 
 
 
Item 4 -
 
 
 
 
PART II
OTHER INFORMATION
 
 
 
 
 
 
Item 1 -
 
 
 
 
 
Item 1A -
 
 
 
 
 
Item 2 -
 
 
 
 
 
Item 3 -
 
 
 
 
 
Item 4 -
 
 
 
 
 
Item 5 -
 
 
 
 
 
Item 6 -
 
 
 
 
 


2



PART I.  ITEM 1.  FINANCIAL INFORMATION

Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except per share amounts)
 
 
June 30, 2016
 
September 30, 2015
ASSETS
 
 

 
 

Current assets:
 
 
 
 
Cash and cash equivalents (Note 4)
 
$
177,650

 
$
169,729

Short-term investments (Note 4)
 
109

 
5,833

Accounts receivable, net of allowance for doubtful accounts
               $3,326 and $3,279, respectively
 
93,642

 
96,093

Inventories, net (Note 5)
 
190,310

 
181,025

Other current assets and prepaid expenses
 
38,633

 
35,896

Total current assets
 
500,344

 
488,576

Property and equipment, net
 
94,051

 
92,573

Goodwill (Note 6)
 
92,497

 
93,541

Other intangibles, net (Note 6)
 
13,012

 
14,767

Other assets
 
17,671

 
17,034

Total assets
 
$
717,575

 
$
706,491

LIABILITIES AND EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Lines of credit and short-term borrowings
 
$
7,047

 
$
5,226

Accounts payable, trade
 
19,993

 
23,443

Accounts payable to related party
 
283

 
299

Income tax payable
 
3,544

 
7,998

Accrued liabilities (Note 7)
 
68,537

 
72,652

Total current liabilities
 
99,404

 
109,618

Long-term debt
 
13,187

 
18,085

Pension obligations
 
25,983

 
25,439

Other long-term liabilities
 
13,181

 
10,740

Total liabilities
 
151,755

 
163,882

Commitments and contingencies
 


 


Stockholders’ equity:
 
 

 
 

Preferred stock, 5,000,000 shares authorized, none issued or outstanding
 

 

Common stock, $0.01 par value, 50,000,000 shares authorized, 33,670,987 shares issued at June 30, 2016, and 33,053,687 shares issued at September 30, 2015
 
337

 
331

Additional paid-in capital
 
257,975

 
239,333

Retained earnings
 
547,845

 
529,234

Accumulated other comprehensive income (Note 10)
 
(63,466
)
 
(57,517
)
Treasury stock, at cost, 5,256,584 shares at June 30, 2016, and
4,871,884 shares at September 30, 2015
 
(177,264
)
 
(169,262
)
Total Rofin-Sinar Technologies Inc. stockholders’ equity
 
565,427

 
542,119

Non-controlling interest in subsidiaries
 
393

 
490

Total equity
 
565,820

 
542,609

Total liabilities and equity
 
$
717,575

 
$
706,491


See accompanying notes to condensed consolidated financial statements


3



Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
Periods Ended June 30, 2016 and 2015
(dollars in thousands, except per share amounts)
 
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Net sales
 
$
125,940

 
$
132,547

 
$
348,954

 
$
377,653

Cost of goods sold
 
76,376

 
80,282

 
220,301

 
237,364

Gross profit
 
49,564

 
52,265

 
128,653

 
140,289

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
24,071

 
24,657

 
73,227

 
73,246

Research and development expenses
 
9,294

 
9,896

 
27,187

 
30,222

Amortization expense
 
642

 
739

 
2,020

 
2,274

Income from operations
 
15,557

 
16,973

 
26,219

 
34,547

 
 
 
 
 
 
 
 
 
Other (income) expense
 
 

 
 

 
 

 
 
Interest income
 
(130
)
 
(82
)
 
(316
)
 
(282
)
Interest expense
 
79

 
100

 
270

 
276

Foreign currency (income) expense
 
(439
)
 
1,235

 
570

 
(2,044
)
Other (income) expense
 
(287
)
 
(266
)
 
(313
)
 
(148
)
Income before income tax
 
16,334

 
15,986

 
26,008

 
36,745

Income tax expense
 
4,835

 
4,437

 
7,494

 
10,278

Net income
 
11,499

 
11,549

 
18,514

 
26,467

Less: Net income (loss) attributable to the non-controlling interest
 
(36
)
 
(9
)
 
(97
)
 
5

Net income attributable to RSTI
 
$
11,535

 
$
11,558

 
$
18,611

 
$
26,462

 
 
 
 
 
 
 
 
 
Net income attributable to RSTI per share:
 
 

 
 

 
 

 
 
Per share of common stock basic
 
$
0.41

 
$
0.41

 
$
0.66

 
$
0.94

Per share of common stock diluted
 
$
0.40

 
$
0.41

 
$
0.65

 
$
0.94

 
 
 
 
 
 
 
 
 
Weighted-average shares used in computing earnings per share (Note 12)
 
 

 
 

 
 

 
 
Basic
 
28,348,799

 
28,167,456

 
28,335,589

 
28,109,651

Diluted
 
28,627,365

 
28,323,341

 
28,486,671

 
28,263,315

 
See accompanying notes to condensed consolidated financial statements


4



Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Periods Ended June 30, 2016 and 2015
(dollars in thousands)

 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Net income
 
$
11,499

 
$
11,549

 
$
18,514

 
$
26,467

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Fair value of interest rate swap agreements, net of tax expense of $0, $1, $7 and $3
 

 
2

 
24

 
8

Foreign currency translation adjustments
 
(11,410
)
 
14,668

 
(6,175
)
 
(38,353
)
Defined benefit pension plans, net of tax of $85, $21, $142 and $61
 
30

 
34

 
202

 
104

          Other comprehensive income (loss), net of tax
 
$
(11,380
)
 
$
14,704

 
$
(5,949
)
 
$
(38,241
)
               Total comprehensive income (loss)
 
$
119

 
$
26,253

 
$
12,565

 
$
(11,774
)
Less: Total comprehensive income (loss) attributable to the
              non-controlling interest
 
(36
)
 
(9
)
 
(97
)
 
5

Total comprehensive income (loss) attributable to RSTI
 
$
155

 
$
26,262

 
$
12,662

 
$
(11,779
)
 
 
 
 
 
 
 
 
 


See accompanying notes to condensed consolidated financial statements






























5



Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Nine Months Ended June 30, 2016 and 2015
(dollars in thousands)
 
 
Common
Stock

 
Additional
Paid-in
Capital

 
Retained
Earnings

 
Accumulated
Other
Comprehensive
Income (Loss)

 
Treasury
Stock

 
Rofin-Sinar
Technologies
Stockholders’
Equity

 
Non-Controlling
Interest in
Subsidiaries

 
Total
Equity

BALANCES at September 30, 2014
$
329

 
$
232,832

 
$
487,976

 
$
(14,072
)
 
$
(169,262
)
 
$
537,803

 
$
906

 
$
538,709

Total comprehensive income (loss)
 

 
 

 
26,462

 
(38,241
)
 

 
(11,779
)
 
5

 
(11,774
)
Purchase of non-controlling interest

 
(69
)
 

 

 

 
(69
)
 
(379
)
 
(448
)
Common stock issued in connection with Stock Incentive Plans
2

 
5,526

 

 

 

 
5,528

 

 
5,528

BALANCES at June 30, 2015
$
331

 
$
238,289

 
$
514,438

 
$
(52,313
)
 
$
(169,262
)
 
$
531,483

 
$
532

 
$
532,015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCES at September 30, 2015
$
331

 
$
239,333

 
$
529,234

 
$
(57,517
)
 
$
(169,262
)
 
$
542,119

 
$
490

 
$
542,609

Total comprehensive income (loss)

 

 
18,611

 
(5,949
)
 

 
12,662

 
(97
)
 
12,565

Common stock issued in connection with Stock Incentive Plans
6

 
18,642

 

 

 

 
18,648

 

 
18,648

Purchases of treasury stock

 

 

 

 
(8,002
)
 
(8,002
)
 

 
(8,002
)
BALANCES at June 30, 2016
$
337

 
$
257,975

 
$
547,845

 
$
(63,466
)
 
$
(177,264
)
 
$
565,427

 
$
393

 
$
565,820

 

See accompanying notes to consolidated financial statements


6



Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended June 30, 2016 and 2015
(dollars in thousands)
 
 
 
Nine Months Ended June 30,
 
 
2016

 
2015

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
18,514

 
$
26,467

Adjustments to reconcile net income to net
 
 

 
 

cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
11,530

 
12,273

Stock-based compensation expense
 
3,070

 
3,182

Other adjustments
 
3,426

 
(5,220
)
Change in operating assets and liabilities:
 
 

 
 

Accounts receivable, trade
 
789

 
14,462

Inventories
 
(11,694
)
 
(8,888
)
Accounts payable
 
(3,079
)
 
2,798

Changes in other operating assets and liabilities
 
(6,949
)
 
12,714

Net cash provided by operating activities
 
15,607

 
57,788

CASH FLOWS FROM INVESTING ACTIVITIES
 
 

 
 

Proceeds from the sale of property and equipment
 
105

 
629

Additions to property and equipment
 
(14,568
)
 
(28,929
)
Purchases of short-term investments
 
(5,924
)
 
(8,473
)
Sales of short-term and long-term investments
 
11,435

 
12,643

Net cash used in investing activities
 
(8,952
)
 
(24,130
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 

 
 

Borrowing from banks
 
16,309

 
29,760

Repayments to banks
 
(19,489
)
 
(18,729
)
Payment of contingent acquisition-related obligations
 
(1,093
)
 
(800
)
Purchase of non-controlling interests
 

 
(413
)
Purchases of treasury stock
 
(8,002
)
 

Issuance of common stock
 
15,192

 
2,071

Net cash provided by financing activities
 
2,917

 
11,889

Effect of foreign currency translation on cash
 
(1,651
)
 
(10,228
)
 
 
 
 
 
Net increase in cash and cash equivalents
 
7,921

 
35,319

Cash and cash equivalents at beginning of period
 
169,729

 
128,537

Cash and cash equivalents at end of period
 
$
177,650

 
$
163,856

 
 
 
 
 
Cash paid for interest
 
$
230

 
$
165

Cash paid for taxes
 
$
11,464

 
$
9,387

 
See accompanying notes to condensed consolidated financial statements


7



Rofin-Sinar Technologies Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollars in thousands)

1.
Basis of Presentation

The accompanying unaudited, condensed and consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting, and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements for interim reporting do not include all of the information and notes or disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. Results for interim periods should not be considered indicative of results for a full year. The September 30, 2015, condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended September 30, 2015, as filed with the Securities and Exchange Commission on November 30, 2015 (10-K) and January 28, 2016 (10-K/A).

On March 16, 2016, the Company entered into a Merger Agreement with Coherent, Inc. ("Coherent") and Rembrandt Merger Sub Corp., a wholly-owned subsidiary of Coherent ("Merger Sub"), providing for, subject to the terms and conditions of the Merger Agreement, the acquisition of the Company by Coherent at a price of $32.50 per share, without interest (the "Merger Consideration"), through the Merger of Merger Sub with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly-owned subsidiary of Coherent.

The obligations of the parties to complete the Merger are subject to customary closing conditions, including (i) the approval of the Merger Agreement by the Company's stockholders, (ii) the receipt of certain regulatory approvals, including the expiration or early termination of any regulatory waiting periods, and certain foreign antitrust approvals, and (iii) other customary closing conditions. On April 28, 2016, the Company and Coherent received notice from the U.S. Federal Trade Commission that it had granted early termination, effective immediately, of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 for Coherent's pending acquisition of the Company. In addition, on June 29, 2016, at a Special Meeting of Stockholders, the Merger Agreement was approved by the Company's stockholders.

Under certain circumstances, if the Merger Agreement is terminated and the Merger is not completed, we may be required to pay Coherent a termination fee of $25.5 million, which would have a material adverse effect on our results of operations. In addition, in general, the Company is entitled to receive a reverse termination fee of $65 million from Coherent if the Merger Agreement is terminated because Coherent is unable to obtain regulatory approval for the Merger and in certain other circumstances, including where Coherent is unable to consummate the debt financing necessary to pay a portion of the Merger Consideration.

These provisions are described in more detail in the Merger Agreement, which has been filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on March 22, 2016. The foregoing description of certain aspects to the Merger Agreement does not purport to be complete, and is qualified in its entirety to the Merger Agreement filed with the SEC, as noted above.

Assuming timely satisfaction of necessary closing conditions and the timely completion of Coherent’s financing for the Merger, we anticipate that the Merger will be consummated in the last calendar quarter of 2016. 

We have incurred, and will continue to incur, substantial financial advisory, legal, and other professional fees and expenses in connection with the Merger, various of which we must pay regardless of whether the Merger is completed.


2.
New Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 provides guidance on revenue from contracts with customers, which implements a five step process of how an entity should recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard was initially released as effective for fiscal years beginning after December 15, 2016; however, in July 2015, the FASB approved a one year deferral of this standard, with a new effective date for fiscal years beginning after December 15, 2017 (fiscal year 2019 for the

8



Company). The new guidelines can be implemented using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and has not yet determined the method by which it will adopt the standard, to the extent the Merger is not consummated as expected.

In August 2014, the FASB issued No. ASU 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern". ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or are available to be issued). The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016 (fiscal year 2018 for the Company). Early application is permitted. The Company does not believe the adoption of this guidance will have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement". ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If the arrangement includes a software license, the customer should account for the software license element in a manner consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015 (fiscal year 2017 for the Company). The Company does not believe the pronouncement will have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”. This standard amends existing guidance to require the presentation of debt issuance cost in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company does not believe the pronouncement will have a material impact on the Company’s financial statements and will implement the pronouncement in fiscal year 2017, to the extent the Merger is not consummated as expected.

In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory". The new guidance does not apply to inventory that is measured using last-in, first-out or the retail inventory method. The guidance applies to all other inventory, which includes inventory that is measured using first-in, first-out or average cost and requires that inventory should be measured at the lower of cost and net realizable value. These amendments are effective for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements, and will implement the guidance in fiscal year 2018, to the extent the Merger is not consummated as expected.

On November 20, 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Assets". The new guidance will require entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. This amendment is effective for fiscal years beginning after December 15, 2016, and interim periods within those years. Early adoption is allowed and entities are permitted to apply the amendments either prospectively or retrospectively. The Company will adopt the guidance in fiscal year 2018, to the extent the Merger is not consummated as expected.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Liabilities.  ASU No. 2016-01 requires equity investments, except those accounted for under the equity method of accounting, to be measured at fair value with changes in fair value recognized in net income.  Companies may elect to measure equity instruments that do not have readily determinable fair values at cost, less impairment (if any), plus or minus changes resulting from observable price changes.  If a company has elected to measure a liability at fair value, any changes in fair value resulting from instrument specific credit risk are required to be recorded through other comprehensive income.  Companies are also required to separately present financial assets and financial liabilities, by measurement category and form of financial asset, on the balance sheet or in the notes to the financial statements.  ASU No. 2016-01 will be effective for fiscal years and interim periods beginning after December 15, 2017 (fiscal year 2019 for the Company) and is required to be applied prospectively with a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.  Early adoption is not permitted, except for recognition of changes in fair value of a liability resulting from a change in instrument specific credit risk through other comprehensive income. 

9



 
In February 2016, the FASB issued ASU No. 2016-02, "Leases".  ASU No. 2016-02 requires lessees to record the assets and liabilities arising from all leases in the statement of financial position. Under ASU 2016-02, lessees will recognize a liability for lease payments and a right-of-use asset. When measuring assets and liabilities, a lessee should include amounts related to option terms, such as the option of extending or terminating the lease or purchasing the underlying asset, that are reasonably certain to be exercised.  For leases with a term of 12 months or less, lessees are permitted to make an accounting policy election to not recognize lease assets and liabilities. ASU 2016-02 retains the distinction between finance leases and operating leases and the classification criteria remains similar. For financing leases, a lessee will recognize the interest on a lease liability separate from amortization of the right of use asset. In addition, repayments of principal will be presented within financing activities and interest payments will be presented within operating activities in the statement of cash flows. For operating leases, a lessee will recognize a single lease cost on a straight-line basis and classify all cash payments within operating activities in the statement of cash flows. ASU No. 2016-02 will be effective for fiscal years and interim periods beginning after December 15, 2018 and is required to be applied using a modified retrospective approach. Early adoption is permitted but has not been elected. The Company has not yet evaluated the expected impact of ASU No. 2016-02 on its financial position and results of operations and will adopt the guidance in fiscal year 2020, to the extent the Merger is not consummated as expected.
 
Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s financial statements upon adoption.

 
3.
Acquisitions and Formations of New Entities

The Company uses the acquisition method of accounting for its acquisitions with the respective results of operations included in the consolidated results from the date of acquisition

Effective June 12, 2014, the Company acquired the remaining 5% of the common stock of DILAS Diodenlaser GmbH through its wholly-owned subsidiary ROFIN-SINAR Technologies Europe S.L. The Company currently owns 100% of the outstanding share capital of DILAS Diodenlaser GmbH.

Effective December 23, 2014, the Company acquired an additional 8.8% of the common stock of Nanjing Eastern Laser Co., Ltd. The Company currently owns 88.8% of the outstanding share capital of Nanjing Eastern Laser Co., Ltd.

The Company also completed the following acquisition of certain assets.

On April 10, 2014, the Company completed the acquisition of certain assets of FiLaser USA LLC ("FiLaser") and subsidiaries. The transaction contained all intellectual property including know-how, patents and patent applications of FiLaser. FiLaser has developed advanced laser process technology used for precision cutting and drilling of brittle material including glass, sapphire and semiconductor substrates. The Company still has approximately 4% of the purchase price as security for various claims. In addition, the purchase agreement also provides for potential future earn-out payments from revenues generated from certain of these intangible assets.


4.
Fair Value Measurements

The Company’s cash, short-term investments, accounts receivable, and accrued liabilities are carried at amounts, which reasonably approximate their fair values due to their short-term nature. The Company’s notes payable are at variable interest rates that approximate market. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied.

10



 
Assets and liabilities recorded at fair value in our balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities are as follows:
 
Level 1 - Unadjusted observable quoted prices for identical instruments in active markets.

Level 2 - Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 - Unobservable inputs reflecting management's own assumptions about the inputs used in pricing the asset or liability.

Financial assets and liabilities measured at fair value on a recurring basis are detailed in the table below:
June 30, 2016
 
Total

 
Level 1

 
Level 2

 
Level 3

     Cash and cash equivalents
 
$
177,650

 
$
177,650

 
$

 
$

     Short-term investments
 
109

 
109

 

 

     Derivatives
 
(525
)
 

 
(525
)
 

     Other long-term assets
 
550

 

 
550

 

          Total assets and liabilities at fair value
 
$
177,784

 
$
177,759

 
$
25

 
$


September 30, 2015
 
Total

 
Level 1

 
Level 2

 
Level 3

     Cash and cash equivalents
 
$
169,729

 
$
169,729

 
$

 
$

     Short-term investments
 
5,833

 
5,833

 

 

     Derivatives
 
(51
)
 

 
(51
)
 

     Other long-term assets
 
550

 

 
550

 

          Total assets and liabilities at fair value
 
$
176,061

 
$
175,562

 
$
499

 
$

 

5.
Inventories

Inventories are stated at the lower of cost or market, after provisions for excess and obsolete inventory salable at prices below cost.

Costs are determined using the first in, first out and weighted-average cost methods and are summarized as follows:
 
 
June 30, 2016

 
September 30, 2015

Finished goods
 
$
33,914

 
$
29,720

Work in progress
 
43,845

 
38,602

Raw materials and supplies
 
67,221

 
67,434

Demo inventory
 
13,328

 
13,655

Service parts
 
32,002

 
31,614

     Total inventories
 
$
190,310

 
$
181,025


Net inventory is net of provisions for excess and obsolete inventory of $28,673 and $29,109 at June 30, 2016, and September 30, 2015, respectively.


11




6.
Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended June 30, 2016, are as follows:
 
 
Germany

 
United States

 
Rest of World

 
Total

Balance as of September 30, 2015
 
$
36,612

 
$
12,766

 
$
44,163

 
$
93,541

Currency translation differences
 
(251
)
 
(19
)
 
(774
)
 
(1,044
)
Balance as of June 30, 2016
 
$
36,361

 
$
12,747

 
$
43,389

 
$
92,497


The carrying values of other intangible assets are as follows:
 
 
June 30, 2016
 
September 30, 2015
 
 
Gross Carrying
Amount

 
Accumulated
Amortization

 
Gross Carrying
Amount

 
Accumulated
Amortization

Amortized intangible assets:
 
 
 
 
 
 
 
 
Patents
 
$
16,940

 
$
9,703

 
$
16,985

 
$
9,151

Customer base
 
17,463

 
16,953

 
17,220

 
16,451

Other
 
23,347

 
18,082

 
23,527

 
17,363

Total
 
$
57,750

 
$
44,738

 
$
57,732

 
$
42,965


Amortization expense for each of the nine-month periods ended June 30, 2016 and 2015, was $2,020 and $2,274, respectively. At June 30, 2016, estimated amortization expense of existing intangible assets for the remainder of fiscal year 2016 and the next five fiscal years based on the average exchange rates as of June 30, 2016, is as follows:
2016 (remainder)
600

2017
2,300

2018
1,900

2019
1,200

2020
1,000

2021
1,000

 

7.
Accrued Liabilities

Accrued liabilities are comprised of the following:
 
 
June 30, 2016

 
September 30, 2015

Employee compensation
 
$
20,014

 
$
24,314

Warranty reserves
 
10,397

 
10,913

Invoices to be received
 
3,730

 
4,343

Customer deposits
 
18,954

 
16,188

Other
 
15,442

 
16,894

     Total accrued liabilities
 
$
68,537

 
$
72,652

 

8.
Income Taxes

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as interest expense and selling, general and administrative expense, respectively. The Company has classified unrecognized tax benefits as non-current because payment is not anticipated within one year of the balance sheet date.


12



As of June 30, 2016, the Company's gross unrecognized tax benefits totaled $0.2 million which includes less than $0.1 million of interest and penalties. The Company estimates that the unrecognized tax benefits will not change significantly within the next year.

The Company files federal and state income tax returns in several domestic and foreign jurisdictions. In most tax jurisdictions, returns are subject to examination by the relevant tax authorities for a number of years after the returns have been filed. With limited exceptions, the Company is no longer subject to examination by the United States Internal Revenue Service for tax years through 2009. With respect to state and local tax jurisdictions and countries outside the United States, with limited exceptions, the Company is no longer subject to income tax audits for tax years before 2009.


9.
Product Warranties

The Company provides for the estimated costs of product warranties when revenue is recognized. The estimate of costs to fulfill warranty obligations is based on historical experience and an expectation of future conditions.
  
The changes in warranty reserve for the nine-month periods ended June 30, 2016 and 2015, are as follows:
 
 
2016

 
2015

Balance at September 30,
 
$
10,913

 
$
10,778

Additional accruals for warranties during the period
 
2,051

 
1,880

Usage during the period
 
(2,448
)
 
(1,746
)
Currency translation
 
(119
)
 
(802
)
Balance at June 30,
 
$
10,397

 
$
10,110



10.
Accumulated Other Comprehensive Income (Loss)

The changes in Accumulated Other Comprehensive Income by component, net of tax, during the three-month periods ended June 30, 2016 and 2015, are as follows:
 
 
Defined Benefit Plans

 
Foreign Currency Translation Adjustments

 
Fair Value of Interest Swap Agreements

 
Total

Balance at March 31, 2016
 
$
(6,425
)
 
$
(45,661
)
 
$

 
$
(52,086
)
Other comprehensive income (loss) before reclassifications
 

 
(11,410
)
 

 
(11,410
)
Amounts reclassified from accumulated other comprehensive income
 
30

 

 

 
30

Balance at June 30, 2016
 
$
(6,395
)
 
$
(57,071
)
 
$

 
$
(63,466
)
 
 
Defined Benefit Plans

 
Foreign Currency Translation Adjustments

 
Fair Value of Interest Swap Agreements

 
Total

Balance at March 31, 2015
 
$
(6,181
)
 
$
(60,780
)
 
$
(56
)
 
$
(67,017
)
Other comprehensive income (loss) before reclassifications
 

 
14,668

 
2

 
14,670

Amounts reclassified from accumulated other comprehensive income
 
34

 

 

 
34

Balance at June 30, 2015
 
$
(6,147
)
 
$
(46,112
)
 
$
(54
)
 
$
(52,313
)




13



The changes in Accumulated Other Comprehensive Income by component, net of tax, during the nine-month periods ended June 30, 2016 and 2015, are as follows:
 
 
Defined Benefit Plans

 
Foreign Currency Translation Adjustments

 
Fair Value of Interest Swap Agreements

 
Total

Balance at September 30, 2015
 
$
(6,597
)
 
$
(50,896
)
 
$
(24
)
 
$
(57,517
)
Other comprehensive income (loss) before reclassifications
 

 
(6,175
)
 
24

 
(6,151
)
Amounts reclassified from accumulated other comprehensive income
 
202

 

 

 
202

Balance at June 30, 2016
 
$
(6,395
)
 
$
(57,071
)
 
$

 
$
(63,466
)
 
 
Defined Benefit Plans

 
Foreign Currency Translation Adjustments

 
Fair Value of Interest Swap Agreements

 
Total

Balance at September 30, 2014
 
$
(6,251
)
 
$
(7,759
)
 
$
(62
)
 
$
(14,072
)
Other comprehensive income (loss) before reclassifications
 

 
(38,353
)
 
8

 
(38,345
)
Amounts reclassified from accumulated other comprehensive income
 
104

 

 

 
104

Balance at June 30, 2015
 
$
(6,147
)
 
$
(46,112
)
 
$
(54
)
 
$
(52,313
)

The reclassifications out of Accumulated Other Comprehensive Income for the three and nine-month periods ended June 30, 2016 and 2015, are as follows:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Unamortized loss on defined benefit pension plans
 
 
 
 
 
 
 
 
     Amortization
 
$
115

 
$
55

 
$
344

 
$
165

     Tax effects
 
(85
)
 
(21
)
 
(142
)
 
(61
)
Total reclassification for the period
 
$
30

 
$
34

 
$
202

 
$
104



11.
Stock Incentive Plans

The Company maintains a 2007 Incentive Stock Plan and a 2015 Incentive Stock Plan, whereby incentive and non-qualified stock options, restricted stock and performance shares may be granted to officers and other key employees to purchase a specified number of shares of common stock at a price not less than the fair market value on the date of grant. The term of these plans continues through 2017 and 2025, respectively. There were no incentive stock options, restricted stock or performance shares granted in fiscal year 2015 or through the first nine months of fiscal year 2016 under either plan. Non-qualified stock options were granted to officers and other key employees in the first quarter of each of fiscal year 2016 and 2015 under the 2007 Incentive Stock Plan. Options granted to officers and other key employees generally vest over five years and will expire not later than 10 years after the date on which they are granted. During the nine-month periods ended June 30, 2016 and 2015, outside directors each received 3,000 shares of common stock, from the 2007 Incentive Stock Plan, that were fully vested upon grant.





14



The fair value of our stock options was estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used in these calculations:
 
 
2016 Grants

 
2015 Grants

Weighted average grant date fair value
 
$
11.75

 
$
8.55

Expected life
 
6.40 years

 
5.46 years

Volatility
 
36.41
%
 
37.57
%
Risk-free interest rate
 
1.97
%
 
1.74
%
Dividend yield
 
%
 
%
 
For purposes of the Black-Scholes model, the Company uses historical data to estimate the expected life, volatility, and annual forfeiture rates of an option. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.

The balance of outstanding stock options and all options activity for the nine months ended June 30, 2016, is as follows:
 
 
Number of
Shares

 
Weighted
Average
Exercise Price
 
Weighted Average
Remaining
Contractual Term
(Years)
 
Aggregate
Intrinsic
Value
(Millions)

Outstanding at September 30, 2015
 
3,338,100

 
$
27

 
2/5 
 
4.63 years
 
 
Granted
 
321,500

 
$
29

 
5/8 
 
 
 
 
Exercised
 
(602,300
)
 
$
25

 
5/8 
 
 
 
 
Forfeited
 
(187,900
)
 
$
26

 
1/8 
 
 
 
 
Outstanding at June 30, 2016
 
2,869,400

 
$
28

 
1/10 
 
5.20 years
 
$
14.36

 
 
 
 
 
 
 
 
 
 
 
Exercisable at June 30, 2016
 
1,890,630

 
$
29

 
0 
 
3.68 years
 
$
8.98

 
As of June 30, 2016, there were $8.9 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 3.13 years.

During the three and nine-month periods ended June 30, 2016 and 2015, the following activity occurred under the 2007 Incentive Stock Plan:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Total intrinsic value of stock options exercised
 
$
1,140

 
$
81

 
$
2,740

 
$
1,221

Cash received from stock option exercises
 
$
4,452

 
$
498

 
$
15,442

 
$
2,071


In the event the Merger is consummated, at the Effective Time of the Merger (as defined in the Merger Agreement), each then outstanding option to purchase shares of common stock that was outstanding as of the signing of the Merger Agreement, will accelerate and become vested in full as of immediately prior to the Effective Time, and such option will be canceled in exchange for the right to receive a cash payment equal to the number of shares of common stock covered by the vested portion of such option (taking into account any accelerated vesting as a result of the Merger) multiplied by the excess of the Merger Consideration (as defined in the Merger Agreement) over the option exercise price per share of such option. At the Effective Time, each then outstanding option to purchase Shares that was granted subsequent to the signing of the Merger Agreement, if any, will be converted at the Effective Time into an option to purchase shares of Coherent common stock, on an appropriately adjusted number of shares and exercise price equivalent basis pursuant to the terms of the Merger Agreement.



15




12.
Earnings Per Common Share
 
The basic earnings per common share (EPS) calculation is computed by dividing net income attributable to holders of RSTI common stock by the weighted average number of shares outstanding during the period. Diluted earnings per common share reflect the potential dilution from common stock equivalents (stock options).

The calculation of the weighted average number of shares outstanding for each period is as follows:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Weighted number of shares for basic earnings per common share
 
28,348,799

 
28,167,456

 
28,335,589

 
28,109,651

Potential additional shares due to outstanding dilutive stock options
 
278,566

 
155,885

 
151,082

 
153,664

Weighted number of shares for diluted earnings per common share
 
28,627,365

 
28,323,341

 
28,486,671

 
28,263,315

 
The weighted average diluted shares outstanding for the nine months ended June 30, 2016 and 2015, excludes the dilutive effect of approximately 1.8 million and 2.4 million stock options, respectively, since the impact of including these options in diluted earnings per share for these periods was antidilutive.

 

13.
Defined Benefit Plans

Components of net periodic cost were as follows for the three and nine-month periods ended June 30, 2016 and 2015:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Service cost
 
$
218

 
$
232

 
$
655

 
$
709

Interest cost
 
288

 
265

 
864

 
809

Expected return on plan assets
 
(165
)
 
(175
)
 
(494
)
 
(525
)
Amortization of prior net (gain) loss
 
96

 
(6
)
 
288

 
(19
)
Amortization of prior service cost
 
19

 
61

 
56

 
184

     Net periodic pension cost
 
$
456

 
$
377

 
$
1,369

 
$
1,158

 

14.
Segment and Geographic Information

Assets, property and equipment, sales, and income before income taxes, by geographic region attributable based on the geographic location of the RSTI entities are summarized below:
 
 
June 30, 2016

 
September 30, 2015

ASSETS
 
 
 
 
North America
 
$
261,957

 
$
258,424

Germany
 
444,853

 
433,435

Other
 
355,550

 
343,072

Intercompany eliminations
 
(344,785
)
 
(328,440
)
 
 
$
717,575

 
$
706,491


16



 
 
June 30, 2016

 
September 30, 2015

PROPERTY AND EQUIPMENT, NET
 
 

 
 

North America
 
$
17,122

 
$
16,128

Germany
 
53,430

 
51,124

Other
 
23,666

 
25,560

Intercompany eliminations
 
(167
)
 
(239
)
 
 
$
94,051

 
$
92,573

 
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

NET SALES
 
 
 
 
 
 
 
 
North America
 
$
39,242

 
$
38,294

 
$
110,813

 
$
113,425

Germany
 
80,432

 
80,162

 
220,671

 
231,372

Other
 
66,950

 
73,493

 
173,271

 
197,063

Intercompany eliminations
 
(60,684
)
 
(59,402
)
 
(155,801
)
 
(164,207
)
 
 
$
125,940

 
$
132,547

 
$
348,954

 
$
377,653

INTERCOMPANY SALES
 
 

 
 

 
 
 
 
North America
 
$
2,381

 
$
4,261

 
$
6,670

 
$
11,281

Germany
 
43,972

 
41,548

 
112,449

 
114,094

Other
 
14,331

 
13,593

 
36,682

 
38,832

Intercompany eliminations
 
(60,684
)
 
(59,402
)
 
(155,801
)
 
(164,207
)
 
 
$

 
$

 
$

 
$

EXTERNAL SALES
 
 

 
 

 
 
 
 
North America
 
$
36,862

 
$
34,033

 
$
104,144

 
$
102,144

Germany
 
36,460

 
38,614

 
108,222

 
117,278

Other
 
52,618

 
59,900

 
136,588

 
158,231

 
 
$
125,940

 
$
132,547

 
$
348,954

 
$
377,653

 
INCOME (LOSS) BEFORE INCOME TAX
 
 

 
 

 
 
 
 
North America
 
$
1,628

 
$
4,326

 
$
1,664

 
$
5,204

Germany
 
5,771

 
5,492

 
11,774

 
15,477

Other
 
7,943

 
7,201

 
13,378

 
17,957

Intercompany eliminations
 
992

 
(1,033
)
 
(808
)
 
(1,893
)
 
 
$
16,334

 
$
15,986

 
$
26,008

 
$
36,745



15.
Enterprise-Wide Information

The Company generates revenues from the sale and servicing of laser products used for macro applications, from the sale and servicing of laser products for marking and micro applications, and from the sale of component products as follows:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Macro applications
 
$
50,360

 
$
48,660

 
$
141,319

 
$
144,742

Marking and micro applications
 
51,559

 
64,129

 
145,090

 
177,637

Components
 
24,021

 
19,758

 
62,545

 
55,274

 
 
$
125,940

 
$
132,547

 
$
348,954

 
$
377,653

 

17



16.
Treasury Stock

On November 11, 2015, the Board of Directors authorized the Company to initiate a share buyback of up to $50.0 million of the Company’s Common Stock over the next eighteen months to be made from time to time in the open market or in privately negotiated transactions at the Company’s discretion. During the second quarter ended March 31, 2016, the Company repurchased approximately 0.4 million shares of common stock, at an average price of $20.80, under the stock buyback program for a total price of $8.0 million. The Merger Agreement prohibits the Company from repurchasing shares of common stock without the prior written approval of Coherent.


18



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "may", "believe", "will", "expect", "project", "anticipate", "estimate", "plan", "continue", "position" or other words or terms of similar meaning. These forward-looking statements are based on the current plans, expectations, and assumptions of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations, including by way of example those risk factors discussed under the section entitled "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K, as amended, for the year ended September 30, 2015, and this Quarterly Report on Form 10-Q and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, as well as future results of operations and financial condition. In making these forward-looking statements, we claim the protection of the safe-harbor for forward-looking statements contained in the Reform Act. We do not assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements.


Overview

Rofin-Sinar Technologies Inc. (herein also referred to as "RSTI", "Rofin-Sinar", "Rofin" or the "Company" or "we", "us" or "our") is a leader in the design, development, engineering, manufacturing and marketing of laser sources and laser-based system solutions for industrial material processing applications, which include primarily cutting, welding and marking a wide range of materials. Our product portfolio ranges from single laser-beam sources to highly complex systems, covering all of the key laser technologies such as solid-state, fiber, ultrashort pulse and CO2 lasers, as well as diode lasers, and the entire power spectrum, from single-digit watts up to multi-kilowatts, as well as a comprehensive spectrum of wavelengths or pulse durations. An extensive range of laser components completes the product portfolio. Lasers are a non-contact technology for material processing, which have several advantages compared to conventional manufacturing tools, that are desirable in industrial applications. Our lasers all deliver a high-quality beam at guaranteed power outputs and feature compact design, high processing speed, flexibility, low operating and maintenance costs, and easy integration into the customer's production process, thus meeting a broad range of our customers' material processing requirements.

Through our global manufacturing, distribution and service network, the Company provides a comprehensive range of laser sources and laser-based system solutions to the following principal target markets: the machine tool, automotive, semiconductor, electronics and photovoltaic industries. The Company sells directly to end-users and to original equipment manufacturers (“OEMs”) (principally in the machine tool industry) that integrate Rofin's laser sources with other system components. Many of Rofin's customers are among the largest global participants in their respective industries.  
 
Rofin's sales approach in the laser-related business reflects the many different requirements of our customers throughout a multitude of industries, and is divided into three areas of core competence: Macro, Micro and Marking. The core of the Macro business section is high-powered laser sources, primarily used for cutting and welding as well as surface treatment applications. The Micro section concentrates on laser sources and laser-based system solutions that require less power output for micro-processing of materials. The Marking section specializes in innovative marking solutions on both organic and inorganic materials for many different industries. The activities in the components sector, which comprise diodes and diode laser components, power supplies, fibers and fiber beam deliveries as well as fiber laser components, round out the Company's business activities in the industrial laser market.

During the third quarter of fiscal years 2016 and 2015, we realized approximately 40% and 37% of revenues, respectively, from the sale and servicing of laser products used for macro applications, approximately 41% and 48%, respectively, from the sale and servicing of laser products for marking and micro applications, and approximately 19% and 15%, respectively, from the sale of components.

Third quarter results were negatively impacted by non-recurring costs of $1.7 million, primarily related to the contemplated merger with Coherent, that had an after tax effect of approximately $1.3 million on net income ($0.05 per share on EPS). However, as a result of our continuing efforts to further improve our cost structure and to streamline processes, we were able to reduce operating costs and achieve gross margin of 39% of net sales.


19



Net sales of almost $126 million were mainly supported by robust European demand, a solid performance by our service and parts business, as well as very strong sales in our component business. Sales of components reached a record level in the quarter, with an increase in turnover of more than 20% when compared to the third quarter of the prior financial year.

Order entry for the quarter decreased slightly by 1% to $128.1 million compared to the third quarter of fiscal year 2015. The backlog as of June 30, 2016, which mainly comprises laser products, amounted to $135.0 million, of which $50.9 million was for laser macro applications, $62.6 million was for laser marking and micro applications, and $21.5 million was for components. In addition to this solid backlog and the strengthening trend in order activity in America and Asia, we anticipate a continued strong components business while we stay focused on our cost reduction measures.

At the Special Stockholders Meeting on June 29, 2016, the proposed Merger Agreement with Coherent was approved by our stockholders with more than 95% of ROFIN shares present at the Special Meeting, voting in favor of the merger. The closing of the merger, which remains subject to certain conditions including receipt of regulatory approval in Europe, is expected to occur in the fourth calendar quarter of 2016.

The merger with Coherent, if completed, delivers significant and immediate value for our stockholders, with an acquisition price of $32.50 per share, equating to a 42% premium over the closing price on the day prior to the announcement. We expect the combined organization will create a stronger, more diversified business with accelerated innovation and enhanced scale, capable of providing meaningful opportunities in the laser space for our employees, customers and suppliers.

 At June 30, 2016, the Company had 2,126 employees compared to 2,235 employees at June 30, 2015.


Results of Operations

For the periods indicated, the following table sets forth the percentage of net sales represented by the respective line items in the Company's condensed consolidated statements of operations.
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2016

 
2015

 
2016

 
2015

Net sales
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Cost of goods sold
 
60.6
%
 
60.6
%
 
63.1
%
 
62.9
%
Gross profit
 
39.4
%
 
39.4
%
 
36.9
%
 
37.1
%
Selling, general and administrative expenses
 
19.1
%
 
18.6
%
 
21.0
%
 
19.4
%
Research and development expenses
 
7.4
%
 
7.5
%
 
7.8
%
 
8.0
%
Amortization expenses
 
0.5
%
 
0.6
%
 
0.6
%
 
0.6
%
Income from operations
 
12.4
%
 
12.8
%
 
7.5
%
 
9.1
%
Income before income taxes
 
13.0
%
 
12.1
%
 
7.5
%
 
9.7
%
Net income attributable to RSTI
 
9.2
%
 
8.7
%
 
5.3
%
 
7.0
%
 
Net Sales - Net sales of $125.9 million and $349.0 million represent decreases of $6.6 million and $28.7 million, or 5% and 8%, for the three and nine-month periods ended June 30, 2016, as compared to the corresponding periods in fiscal year 2015, mainly due to lower business with the photovoltaic industry. The decrease for the three-month period ended June 30, 2016, resulted from a decrease of $10.5 million, or 21%, in Asia, and $0.7 million, or 3%, in North America partially offset by an increase of $4.7 million, or 9%, in Europe, compared to the corresponding period in fiscal year 2015. The decrease for the nine-month period ended June 30, 2016, resulted from a decrease of $2.6 million, or 2%, in Europe, $20.5 million, or 16%, in Asia, and $5.6 million, or 7%, in North America, compared to the corresponding period in fiscal year 2015. The U.S. dollar strengthened against foreign currencies, primarily against the Euro, which had an unfavorable effect on net sales of $12.2 million for the nine-month period ended June 30, 2016.

Net sales of laser products for macro applications increased by $1.7 million, or 3%, to $50.4 million for the three-month period ended June 30, 2016, which was mainly due to higher service and spare part business as compared to the corresponding period of fiscal year 2015. Net sales of laser products for macro applications decreased by $3.4 million, or 2%, to $141.3 million for the nine-month period ended June 30, 2016, which was mainly due to a lower service and spare parts business as well as a decrease in the semiconductor industry as compared to the corresponding period of fiscal year 2015.


20



Net sales of laser products for marking and micro applications decreased by $12.6 million, or 20%, to $51.6 million for the three-month period ended June 30, 2016, mainly due to a decrease in the photovoltaic industry. Net sales of lasers for marking and micro applications decreased by $32.5 million, or 18%, to $145.1 million for the nine-month period ended June 30, 2016, mainly due to a decrease in the photovoltaic, electronics and semiconductor industries.

Revenues for the component business increased by $4.3 million, or 22%, to $24.0 million for the three-month period ended June 30, 2016, compared to the corresponding period in fiscal year 2015. Revenues for component business increased by $7.3 million, or 13%, to $62.5 million for the nine-month period ended June 30, 2016, compared to the corresponding period in fiscal year 2015. The increase was mainly attributable to higher demand for fibers, laser diodes and optical components.
 
Gross Profit - Our gross profit of $49.6 million for the three-month period ended June 30, 2016, represents a decrease of $2.7 million, or 5%, when compared to the corresponding period of fiscal year 2015. Our gross profit of $128.7 million for the nine-month period ended June 30, 2016, represents a decrease of $11.6 million, or 8%, when compared to the corresponding period of fiscal year 2015. As a percentage of sales, gross profit for the three-month period ended June 30, 2016, remained consistent at 39.4% and for the nine-month period ended June 30, 2016, gross profit decreased from 37.1% to 36.9% compared to the corresponding period of fiscal year 2015. The decrease in the gross margin is mainly a result of unfavorable product mix and a lower business level, partially offset by improvements achieved in the manufacturing costs, mainly in our high-power fiber lasers. Gross profit was unfavorably affected by $3.0 million due to the strengthening of the U.S. dollar against foreign currencies, primarily against the Euro, in the nine-month period ended June 30, 2016.

Selling, General and Administrative Expenses - Selling, general and administrative ("SG&A") expenses of $24.1 million and $73.2 million for the three and nine-month period ended June 30, 2016, respectively, represent a decrease of $0.6 million, or 2%, for the three-month period, and remained consistent for the nine-month period, compared to the corresponding periods of fiscal year 2015. The decrease in SG&A expenses for the three-month period primarily results from lower labor costs, exhibitions costs and commissions partially offset by the incurrence of $1.7 million of non-recurring expenses related to the proposed merger with Coherent. As a percentage of net sales, SG&A expenses were consistent for the three-month period and increased from 19% to 21%, for the nine-month period ended June 30, 2016, as compared to the corresponding prior year periods. The consistent level in SG&A expenses for the nine-month period primarily reflects the incurrence of $6.8 million of non-recurring expenses related to the proposed merger with Coherent and the proxy contest initiated by Silver Arrow Capital Holding Ltd. and its affiliates, offset by lower labor and facility costs, as a result of our cost efficiency programs, and the impact of exchange rate fluctuations amounting to $2.3 million.

Research and Development - The Company spent net $9.3 million and $27.2 million on research and development ("R&D") during the three and nine-month periods ended June 30, 2016, respectively, which represents a decrease of $0.6 million, or 6%, and $3.0 million, or 10%, for the three and nine-month periods ended June 30, 2016, as compared to the corresponding period in fiscal year 2015. The decrease is mainly a result of lower labor and material costs. Gross R&D expenses for the three-month periods ended June 30, 2016 and 2015, were $9.5 million and $10.0 million, respectively, and were reduced by $0.2 million and $0.1 million, respectively, of government grants during the applicable period. Gross R&D expenses for the nine-month periods ended June 30, 2016 and 2015, were $27.7 million and $30.7 million, respectively, with both periods reduced by $0.5 million due to government grants. R&D, a significant portion of which is conducted in Europe, and therefore incurred in foreign currencies, was favorably affected by $1.1 million due to the strengthening of the U.S. dollar against foreign currencies, primarily the Euro, for the nine-month period ended June 30, 2016.

Amortization Expense - Amortization expense for the three and nine-month periods ended June 30, 2016, amounted to $0.6 million and $2.0 million, respectively. This represents a decrease of $0.1 million and $0.3 million for the three and nine-month periods when compared to the same respective periods of fiscal year 2015.

Other (Income) Expense -  Net other income of $0.8 million for the three-month period ended June 30, 2016, represents an increase of $1.8 million compared to net other expense of $1.0 million for the corresponding period of the prior year. Net other expense of $0.2 million for the nine-month period ended June 30, 2016, represents a decrease of $2.4 million compared to net other income of $2.2 million for the corresponding period of the prior year. The increase in net foreign currency gains in the three-month period ended June 30, 2016, is due to higher net exchange gains in the current period compared to the corresponding period in fiscal year 2015. The increase in net foreign currency expense in the nine-month period ended June 30, 2016, is due to higher net exchange losses in the current period compared to the corresponding period in fiscal year 2015.

Income Tax Expense - Income tax expense of $4.8 million and $7.5 million for the three and nine-month periods ended June 30, 2016, respectively, represents an effective tax rate of 30% and 29%, compared to 28% and 28% for the corresponding periods of fiscal year 2015, respectively. The increase in the effective tax rate for the three-month period is mainly a result of non-deductible expenses related to the proposed merger with Coherent. Income tax expense, a significant portion of which is

21



incurred in foreign currencies, was favorably affected by $0.3 million due to the strengthening of the U.S. dollar against foreign currencies, primarily against the Euro, during the nine-month period ended June 30, 2016.

Net Income Attributable to RSTI - As a result of the foregoing factors, the Company realized consolidated net income attributable to RSTI of $11.5 million and $18.6 million for the three and nine-month periods ended June 30, 2016, respectively, which remained consistent for the three-month period and represents a decrease of $7.9 million, or 30%, for the nine-month period when compared to the corresponding periods in fiscal year 2015. For the three-month period ended June 30, 2016, the basic and diluted earnings per common share calculations equaled $0.41 and $0.40, based upon a weighted average of 28.3 million and 28.6 million shares of common stock outstanding, as compared to basic and diluted earnings per common share calculation of $0.41, based upon a weighted average of 28.2 million and 28.3 million shares of common stock outstanding for the corresponding periods of fiscal year 2015.


Liquidity and Capital Resources

The Company's primary sources of liquidity at June 30, 2016, were cash and cash equivalents of $177.7 million, short-term investments of $0.1 million, short-term credit lines of $61.4 million and long-term credit lines of $18.3 million. As of June 30, 2016, $1.9 million was outstanding under the short-term lines of credit and $1.9 million was used for bank guarantees under these lines of credit, leaving $57.6 million available for borrowing under the short-term lines of credit. In addition, the Company maintains short-term credit lines specific to bank guarantees for $11.8 million, of which $4.3 million was used at June 30, 2016. As a result, at June 30, 2016, the Company had an aggregate of $65.0 million of unused and available credit under its short-term and bank guarantee lines of credit. At such date, the entire amount of our long-term lines of credit was fully drawn and $5.1 million was classified under short-term lines of credit for the current portion of the long-term debt. The Company is subject to financial covenants, which could restrict the Company from drawing money under these lines of credit. At June 30, 2016, the Company was in compliance with these covenants.

Cash and cash equivalents decreased by $7.9 million during the nine-month period ended June 30, 2016. Approximately $15.6 million in cash and cash equivalents were provided by operating activities, mainly as the result of net income generated for the nine-month period ended June 30, 2016, a decrease in trade accounts receivable and changes in non-cash transactions (depreciation and stock-based compensation expenses), partially offset by an increase of net inventories, and a decrease in accounts payable and changes in other operating assets and liabilities.

Net cash used in investing activities totaled $9.0 million for the nine-month period ended June 30, 2016, and was primarily related to additions to property and equipment, partially offset by net sales of short-term and long-term investments.

Net cash provided by financing activities totaled $2.9 million for the nine-month period ended June 30, 2016, and was primarily related to the issuance of common stock from option exercises and by borrowings from banks, partially offset by the purchase of common stock under the share buyback program, payments of contingent acquisition-related obligations and by repayments to banks.
 
Management believes that the Company's cash flow from operations, along with existing cash and cash equivalents and availability under the credit facilities and lines of credit, will provide adequate resources to meet both our capital requirements and operational needs on both a short-term and long-term basis.

As of June 30, 2016, $126.2 million of the total $177.8 million of our cash, cash equivalents and short-term investments, was held by our non-US subsidiaries, with the balance of $51.6 million held by our US subsidiaries. As of that date, $17.7 million was owed by our non-US subsidiaries and $2.6 million was owed by our US subsidiaries from the total indebtedness amounting to $20.2 million. We expect our existing domestic cash, cash equivalents and short-term investments, together with cash flows from operations to be sufficient to fund our domestic operating activities. In addition, our US subsidiaries had $20.0 million in available and unused lines of credit at June 30, 2016. As a result, we do not intend, nor do we foresee a need, to repatriate foreign earnings that are considered to be indefinitely reinvested, and we do not believe there are any material implications for or restrictions on the liquidity of our domestic subsidiaries as a result of having a majority of our cash, cash equivalents and short-term investments held by our foreign subsidiaries.



22



Contractual Obligations and Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements, other than those listed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K, as amended, for the fiscal year ended September 30, 2015, or financing arrangements involving variable interest entities. There have been no material changes in contractual obligations outside of the ordinary course of business since September 30, 2015.


Currency Exchange Rate Fluctuations

Although we report our consolidated financial statements in U.S. dollars, during the nine-month period ended June 30, 2016, approximately 64% of our sales have been denominated in other currencies, primarily the Euro, British pound sterling, Swiss franc, Swedish krona, Singapore dollar, Taiwanese dollar, Korean won, Canadian dollar, Chinese RMB, Japanese yen and Indian rupee. Net sales, costs and related assets and liabilities of our operations are generally denominated in the functional currencies of the relevant operating units, thereby serving to reduce our exposure to exchange gains and losses.

Exchange differences upon translation from each operating unit's functional currency to U.S. dollars are accumulated as a separate component of equity. The currency translation adjustment component of stockholders’ equity had the effect of decreasing total equity by $57.1 million at June 30, 2016, as compared to $50.9 million at September 30, 2015.


Critical Accounting Policies

Our significant accounting policies are more fully described in Part 2, Item 8, Note 1 of our condensed consolidated financial statements in our Annual Report on Form 10-K, as amended, for the fiscal year ended September 30, 2015. Certain of the accounting policies require the application of significant judgment by management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty.


Allowance for Doubtful Accounts

The Company records allowances for uncollectible customer accounts receivable based on historical experience. Additionally, an allowance is made based on an assessment of specific customers' financial condition and liquidity.
If the financial condition of the Company's customers were to deteriorate, additional allowances may be required. No individual customer represents more than 10% of total accounts receivable. Any increase in allowance will impact operating income during a given period.


Inventory Valuation

Inventories are stated at the lower of cost or market, after provisions for excess and obsolete inventory salable at prices below cost. Provisions for slow moving and obsolete inventories are provided based on current assessments about historical experience and future product demand and production requirements for the next twelve months. We also write-down up to 90% of our total demo inventory costs over thirty six months. These factors are impacted by market conditions, technology changes and changes in strategic direction, and require estimates and management judgment that may include elements that are uncertain. The Company evaluates the adequacy of these provisions quarterly. Although the Company strives to achieve a balance between market demands and risk of inventory excess or obsolescence, it is possible that, should conditions change, additional provisions may be needed. Any changes in the provisions will impact operating income during a given period.


Warranty Reserves
 
The Company provides reserves for the estimated costs of product warranties when revenue is recognized. The Company relies upon historical experience, expectation of future conditions, and its service data to estimate its warranty reserve. The Company continuously monitors this data to evaluate the sufficiency of the reserve. Warranty expense has historically been within our expectations. To the extent we experience increased warranty claim activity or increased costs associated with servicing those claims (such costs may include material, labor and travel costs), revisions to the estimated warranty liability would be required. Increases in reserves will impact operating income during the period.

23




Pension

The determination of the Company's obligation and expense for pension is dependent on the selection of certain assumptions used by actuaries in calculating those amounts. Assumptions are made about interest rates, expected investment return on plan assets, total turnover rates and rates of future compensation increases. In addition, the Company's actuarial consultants use subjective factors such as withdrawal rates and mortality rates to develop their calculations of these amounts. The Company generally reviews these assumptions at the beginning of each fiscal year. The Company is required to consider current market conditions, including changes in interest rates, in making these assumptions. The actuarial assumptions that the Company may use may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in a significant impact on the amount of pension benefits expense the Company has recorded or may record.

The discount rate enables the Company to state expected future cash flows at a present value on the measurement date. The Company has little latitude in selecting this rate, and it must represent the market rate of high-quality fixed income investments. A lower discount rate increases the present value of benefit obligations and increases pension expense.

To determine the expected long-term rate of return on plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets.


Income Taxes

We estimate our income tax provision in each of the jurisdictions in which we operate, a process that includes estimating exposures related to examinations by taxing authorities. We must also make judgments regarding the ability to realize our deferred tax assets. The carrying value of our net deferred tax assets is based on our belief that it is more likely than not that we will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. A valuation allowance has been established for deferred tax assets that we do not believe meet the “more likely than not” criteria. We assess whether an uncertain tax position taken or expected to be taken in a tax return meets the threshold for recognition and measurement in the consolidated financial statements. Our judgments regarding future taxable income as well as tax positions taken or expected to be taken in a tax return may change due to changes in market conditions, changes in tax laws or other factors. If our assumptions and consequently our estimates change in the future, the valuation allowances and/or tax reserves established may be increased or decreased, resulting in a respective increase or decrease in income tax expense.


Share-Based Payment

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee's requisite vesting period. We make judgments about the fair value of the awards, including the expected term of the award, volatility of the underlying stock and estimated forfeitures, which impact the amount of compensation expense recognized in the financial statements. Such amounts may change as a result of additional grants, forfeitures, modifications in assumptions and other factors. The income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under existing tax law. Under current U.S. federal tax laws, we receive a compensation expense deduction related to stock options only when those options are exercised and vested shares are received. Accordingly, the financial statement recognition of compensation cost for stock options creates a deductible temporary difference which results in a deferred tax asset and a corresponding deferred tax benefit in the income statement for all U.S.-based employees. Stock-based compensation expense related to non-US employees is treated as a permanent difference for income tax purposes.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

For the nine-month period ended June 30, 2016, we did not experience any material change in market risk exposures affecting the quantitative and qualitative disclosures as presented in our Annual Report on Form 10-K, as amended, for the fiscal year ended September 30, 2015.

24




The following discussion about the Company's market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. The Company is exposed to market risk related to changes in interest rates and foreign currency exchange rates. The Company does not use derivative financial instruments for trading purposes.


Interest Rate Sensitivity

At June 30, 2016, the Company maintained cash, cash equivalents and short-term investments of $177.8 million, mainly consisting of interest bearing securities and demand deposits with maturities mainly of less than one year. If interest rates were to increase or decrease by 10%, interest income would increase or decrease by less than $0.1 million.
 
At June 30, 2016, the Company had $20.2 million of fixed rate debt.

Maturities of this debt are as follows:
2016
$
2.3
 million
2017
$
5.5
 million
2018
$
2.4
 million
2019
$
1.7
 million
2020
$
1.8
 million
2021 and thereafter
$
6.5
 million

A 10% change in the interest rates of the Company's debt would result in an increase or decrease in interest expense of less than $0.1 million.


Foreign Currency Exchange Risk

The Company enters into foreign currency forward contracts and forward exchange options generally of less than one year duration to hedge a portion of its foreign currency risk on sales transactions. At June 30, 2016, the Company held Japanese yen forward exchange options with notional amounts of Euro 3.9 million and $0.1 million. Under these Japanese yen forward exchange options, the profit or loss resulting from a 10% change in currency exchange rates would vary approximately from a
less than $0.1million loss to a $0.8 million loss.


Item 4.  Controls and Procedures

As of the end of the quarterly period covered by this report, the Chief Executive Officer and Chief Financial Officer of the Company (collectively, the "certifying officers") have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended). These disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in its periodic reports filed with the Securities and Exchange Commission (the "Commission") is recorded, processed, summarized and reported within the time periods specified by the Commission's rules and forms, and that the information is communicated to the certifying officers on a timely basis.

The certifying officers concluded, based on their evaluation, that the Company's disclosure controls and procedures were effective, as of the end of the quarterly period covered by this report, in ensuring that material information relating to the Company, including its consolidated subsidiaries, is made known to them in a timely fashion, taking into consideration the size and nature of the Company's business and operations.

There have been no changes in the Company's internal control over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



25



PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

There have been no material changes from the legal matters reported in our Annual Report on Form 10-K, as amended, for the year ended September 30, 2015, as filed with the SEC except as follows:

On April 8, 2016, a putative class action was filed in the Circuit Court of Wayne County, Michigan against the Company, our directors, Coherent and Merger Sub. On behalf of all public stockholders, Plaintiff alleged a breach of fiduciary duty by the directors and aiding and abetting of such breaches by the Company and Coherent. Plaintiff’s claims arose out of the approval by the directors of the Merger Agreement, together with allegations that the consideration to be paid to the stockholders in the proposed transaction was inadequate. On June 4, 2016, Plaintiff moved for an order scheduling a preliminary injunction hearing and authorizing Plaintiff to conduct expedited discovery. On June 13, 2016, the court denied Plaintiff's motion and dismissed the lawsuit, finding that the Delaware Court of Chancery was the sole and exclusive forum to adjudicate the claims.

 
Item 1A. Risk Factors

For information regarding risk factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussion provided under "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K, as amended, for the year ended September 30, 2015. See also "Overview" and "Forward-Looking Statements" included in this Quarterly Report on Form 10-Q. Set forth below is an additional risk factor that we have recently identified.

The proposed acquisition by Coherent may disrupt our business and, if this transaction is not completed, our stock price may decline, we will have incurred significant expenses, and we may need to pay a termination fee to Coherent in certain circumstances.

On March 16, 2016, the Company entered into a Merger Agreement with Coherent and Merger Sub providing for, subject to the terms and conditions of the Merger Agreement, the acquisition of the Company by Coherent at a price of $32.50 per share, without interest through the merger of Merger Sub with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly-owned subsidiary of Coherent.

The obligations of the parties to complete the Merger are subject to customary closing conditions, including (i) the approval of the Merger Agreement by the Company's stockholders, (ii) the receipt of certain regulatory approvals, including the expiration or early termination of any regulatory waiting periods, and certain foreign antitrust approvals, and (iii) other customary closing conditions. The Merger Agreement also contains customary covenants, including covenants requiring both the Company and Coherent to use their reasonable best efforts to cause the Merger to be consummated and covenants requiring the Company, subject to certain exceptions, to operate our business in the ordinary course pending consummation of the Merger. The Merger Agreement likewise places certain contractual restrictions on the conduct of our business that may affect our ability to execute on our business strategy and attain our financial objectives.

Under certain circumstances, if the Merger Agreement is terminated and the Merger is not completed, we may be required to pay Coherent a termination fee of $25.5 million, which would have a material adverse effect on our results of operations. In addition, in general, the Company is entitled to receive a reverse termination fee of $65 million from Coherent if the Merger Agreement is terminated because Coherent is unable to obtain regulatory approval for the Merger and in certain other circumstances, including where Coherent is unable to consummate the debt financing necessary to pay a portion of the Merger Consideration. It is possible that the agreed upon reverse termination fee may not adequately compensate the Company for damages it sustains resulting from or related to the failure of the Merger to be consummated. There is no assurance that all of the conditions set forth in the Merger Agreement will be satisfied or waived to the extent permitted by applicable law or that the Merger will occur when or as expected. If the Merger is not completed, the share price of our common stock could decline, for reasons including the loss of the premium over the pre-announcement market price of our common stock that was to be paid upon consummation of the Merger.

In addition, we have incurred and will continue to incur substantial financial advisory, legal, and other professional fees and expenses in connection with the Merger, various of which we must pay regardless of whether the Merger is completed.

Furthermore, the contemplated Merger, whether or not consummated, may result in a loss of key personnel of the Company and may disrupt our sales and marketing or other key business activities, including our relationships with customers, suppliers and other third parties, which may have an adverse impact on our financial performance. 

26





Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.   Defaults Upon Senior Securities

None

Item 4.   Mine Safety Disclosures

Not applicable
 

Item 5.   Other Information

None.

Item 6.   Exhibits
 
31.1   
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2     
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1   
Section 1350 Certification of Chief Executive Officer
32.2       
Section 1350 Certification of Chief Financial Officer
101.INS *
XBRL Instance Document
101.SCH *
XBRL Taxonomy Extension Schema
101.CAL *
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *
XBRL Taxonomy Extension Label Linkbase Document
101.PRE *
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
 
* The Exhibits 101 are filed with the SEC only.

27



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 

Date: August 9, 2016
Rofin-Sinar Technologies Inc.
 
(Registrant)
 
 
 
/s/ Thomas Merk
 
Thomas Merk
 
President, Chief Executive Officer,
 
(Principal Executive Officer)
 
 
 
/s/ Ingrid Mittelstaedt
 
Ingrid Mittelstaedt
 
Chief Financial Officer,
 
Executive Vice President, Finance
 
and Administration, and Treasurer
 
(Principal Financial and Accounting Officer)



28