2007 Coherent,Inc.Annual Report,Proxy Statement and Notice of Annual Meeting Superior Reliability & Performance Dear Shareholders,Customers and Employees, Coherenthas tackled many challenges over Our sales in the OEM components and the lasteighteen months.We have completed instrumentation marketalso exhibited double our voluntary stock option review,filed all of digitgrowth in 2007 (up 16.9% over FY06) our SEC reports and our common stock has primarily due to increased adoption of our been re-listed for trading on the NASDAQ patented OPS™ platform in the biotechnology Global SelectMarket.With these activities in community and growth in the refractive the past,we can focus all of our energies on surgery marketwhere our Existar™ Series executing againstour marketdevelopment lasers enjoy a strong leadership position.We plans and increasing shareholder value. will bolster our position by introducing new versions of the OPS and Cube™ platforms. MARKETS We will also incorporate new features such as The markets we serve continue to be vibrant beam delivery,making iteasier for customers and dynamic. to integrate our lasers into their products. The materials processing markethas exhibit- The microelectronics business was down ed strong growth over the pastfew years 3.9% in FY07 compared to a year ago,due in (our sales in this marketin FY07 were up partto a capital investmentslowdown in 24.1% over a year ago).Today,our business the flatpanel display industry.While we are is primarily lightindustrial applications like mindful of the cyclicality of this market,it productmarking,textile processing and remains a key growth engine for the company. engraving.The acquisition of Nuvonyx in April Lasers are proving to be pivotal in reducing 2007 allows us to expand into certain heavy the costof manufacture for a wide array of industrial applications such as cladding and electronic components.The changes that heattreating.We envision extending this lasers have helped drive in chip manufactur- technology into other high power processes ing,circuitboard fabrication and flatpanel such as cutting and welding in the future. displays are well documented.There are also encouraging signs thatlasers could provide reductions by continuing to consolidate unique solutions in silicon drilling and singu- suppliers, leading to volume buying power. lation,thereby reducing the costs of a number While our product reliability already ranks at of silicon-based products from memory or near the top of the industry, we strive for devices to solar cells. improvement for two primary reasons: Higher reliability means better cost of ownership, which aids in the adoption of laser-based Despite an increase of 5.5% in FY07,the applications; and lower warranty expenses, scientific markethas been trending down which helps our bottom line. We are also over the lastfew years.Governmentfunding focusing on expanding our use of contract for R&D and saturation effects have con- manufacturing (CM) to assist in our EBITDA tributed to the trend.We remain committed growth plan. All of our new product designs to this marketand atthe same time want are being engineered to have higher CM to improve the economics of this business. content and compatibility. Last, but not least, To this end,we have begun to introduce we will continue to improve our business new,cost-effective solutions thatmeetthe processes to deliver better leverage on our needs of the marketand better match the sales and general administration expenses. company’s overall margin profile.The first of these new products,the Mantis™,was Our emphasis on platform designs is released in January 2008. another key lever in growing EBITDA.We have had tremendous success with our OPERATIONS OPS platform.The parts and manufacturing Late lastyear,we outlined our ambitious methods commonality amongstthe product plan to expand our adjustedE BITDA* groups is very high (as high as 90-95%). to 19-23% by the end of fiscal2010.There are va rious aspects to achieving this goal. We will continue ourefforts for material cost *We define adjusted EBITDA as earnings before interest,taxes, depreciation,amortization,stock compensation expenses and other non-operating income and expense items. During fiscal 2007,we took the OPS We are introducing a second new platform to another level of performance platform design this spring based upon with the release of our firstmid-power high performance fiber technology.The productoffering,the Mini-G.The Mini-G firstproductoffering is targeted atmicro- addresses several key applications in forensics, materials processing.This is an application display,ophthalmology and laser pumping. where lasers have long held promise,but Ithas been a hitwith customers given its failed to deliver on key metrics of total cost performance,compactness and electrical of ownership,process control/enhancement efficiency – it’s the firstlaser in its class that and ruggedness.We believe our new platform can be battery-powered and truly man- satisfies all three. portable.The Mini-G has since been joined by a yellow version thatmeets critical needs In closing,Coherentenjoys a marketand in ophthalmology.Other models are nearing technology leadership position.We have marketreadiness. many exciting growth opportunities and we are committed to delivering superior We are expanding the platform concept financial performance. into our productcategories.In November 2007,we launched our new E-Series carbon We have had excellentfree cash flow and dioxide laser platform.The E-Series was are committed to continuing in the future. conceived,designed and is manufactured We enjoy a very strong cash balance and to deliver an unparalleled reduction in total have elected to return a significantportion costof ownership.Itincorporates a novel to our shareholders via a $225 million Dutch power supply to simplify integration into a tender. customer’s tool.And itcan be scaled in power to address a broad setof applications. Thank you for your continued support, John Ambroseo Presidentand CEO Garry W.Rogerson Chairman of the Board NOTICE OF ANNUAL MEETING OF STOCKHOLDERS March 19, 2008 TO OUR STOCKHOLDERS: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of COHERENT, INC., a Delaware corporation, will be held on March 19, 2008 at 5:30 p.m., local time, at our principal offices located at 5100 Patrick Henry Drive, Santa Clara, California 95054, for the following purposes: 1. To elect seven directors to serve for the ensuing year and until their successors are duly elected (Proposal One); 2. To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year endingSeptember 27, 2008 (Proposal Two); and 3. To transact such other business as may properly be brought before the meeting and any adjournment(s) thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Stockholders of record at the close of business on February 6, 2008 are entitled to notice of and to vote at the meeting. All stockholders are cordially invited to attend the meeting. However, to assure your representation at the meeting, you are urged to mark, sign, date and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope enclosed for that purpose, orfollow the instructions on the enclosed proxy card to vote by telephone or via the Internet. Any stockholder of record attending the meeting may vote in person even if he or she has returned a proxy. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder. Sincerely, /s/ John R. Ambroseo John R. Ambroseo President and Chief Executive Officer Santa Clara, California February 15, 2008 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MARCH 19, 2008 The proxy statement and annual report to stockholders are available at www.proxyvote.com. YOUR VOTE IS IMPORTANT In order to assure your representation at the meeting, you are requested to complete, sign and date the enclosed proxy card as promptly as possible and return itin the enclosed envelope or follow the instructions on the enclosed proxy card to vote by telephone or via the Internet. Any stockholder attending the Annual Meeting may vote in person even if he or she returned a proxy card. COHERENT, INC. 5100 PATRICK HENRY DRIVE SANTA CLARA, CALIFORNIA 95054 PROXY STATEMENT INFORMATION CONCERNING SOLICITATION AND VOTING General The enclosed Proxy is solicited on behalf of the Board of Directors of Coherent, Inc. for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at our principal offices located at 5100 Patrick Henry Drive, Santa Clara, California 95054, on March 19, 2008 at 5:30 p.m., local time, and at any adjournment(s) thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. Our telephone number at the address above is (408) 764-4000. These proxy solicitation materials were mailed on or about February 15, 2008 to all stockholders entitled to vote at the meeting. On November 1, 2006, a Special Committee was established by our Board of Directors to conduct an independent investigation relating to our historical stock option practices. We requested the independent review following an internal review of our historical stock option practices, which was a voluntary review initiated in light of news of the option practices of numerous companies across several industries. Due to the ongoing nature of the independent investigation and its impact on our filing of annual reports on Form 10-K and quarterly reports on Form 10-Q, we did not hold an annual meeting of stockholders following our 2006 fiscal year. During calendar year 2007, two members of the Board resigned who had previously been elected by the stockholders at the meeting held March 30, 2006. Record Date and Share Ownership Stockholders of record at the close of business on February 6, 2008 (the “Record Date”) are entitled to notice of and to vote at the meeting and at any adjournment(s) thereof. At the Record Date, 31,543,035 shares of our common stock, $0.01 par value, were issued and outstanding. Revocability of Proxies Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use (i) by delivering to us at our principal offices (Attention: Bret M. DiMarco, Executive Vice President and General Counsel) a written notice of revocation or a duly executed proxy bearing a later date, (ii) in the case of a stockholder who has voted by telephone or through the Internet, by making a timely and valid telephone or Internet vote, as the case may be, or (iii) by attending the meeting and voting in person. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder, and you will need to provide a copy of such proxy at the meeting. Attendance at the Annual Meeting All stockholders of record as of the Record Date may attend the Annual Meeting. Please note that cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. No items will be allowed into the Annual Meeting that might pose a concern for the safety of those attending. For directions to attend the Annual Meeting, please contact Investor Relations by telephone at (408) 764-4110. 1 Voting and Costs of Solicitation On all matters, other than the election of directors, each share has one vote. See “Election of Directors— Vote Required” for a description of your cumulative voting rights with respect to the election of directors. If you are a stockholder of record as of the Record Date, you may vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card, vote by proxy over the telephone or vote by proxy on the Internet. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. As stated above, you may still attend the Annual Meeting and vote in person if you have already voted by proxy. (cid:120) To vote in person: Come to the Annual Meeting and we will give you a ballot at the time of voting. If you have previously turned in a proxy card, please notify us at the Annual Meeting that you intend to cancel the proxy and vote by ballot. (cid:120) To vote using the proxy card: Simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, the designated proxies will vote your shares as you direct. (cid:120) To vote over the telephone: Dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the control number from the enclosed proxy card. Your vote must be received by 11:59 P.M. Eastern Time on March 18, 2008 to be counted. (cid:120) To vote on the Internet: go to www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the control number from the enclosed proxy card. Your vote must be received by 11:59 P.M. Eastern Time on March 18, 2008 to be counted. If you return a signed and dated proxy card without marking any voting directions, your shares will be voted: (cid:120) “For” the election of all seven (7) nominees for director set forth herein, provided that in the event cumulative voting occurs, the proxy holders will cumulate votes using their judgment so as to ensure the election of as many of the nominees set forth herein as possible; and (cid:120) “For” ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 27, 2008 as described in Proposal Two. If any other matter is properly presented at the Annual Meeting, your proxy holders (one of the individuals named on your proxy card) will vote your shares in their discretion. The cost of this solicitation will be borne by us. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. In addition, proxies may be solicited by certain of our directors, officers and regular employees, without additional compensation, personally or by telephone or facsimile. 2 Quorum; Abstentions; Broker Non-Votes Our Bylaws provide that stockholders holding a majority of the shares of common stock issued and outstanding and entitled to vote on the Record Date shall constitute a quorum at meetings of stockholders. Votes will be counted by the inspector of election appointed for the annual meeting, who will separately count “For” and (with respect to proposals other than the election of directors) “Against” votes, abstentions and broker non-votes. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Because directors are elected by a plurality vote, abstentions in the election of directors have no impact once a quorum exists. Broker non-votes have no effect and will not be counted towards the vote total for any proposal, but will be counted for purposes of determining the presence or absence of a quorum for the transaction of business. If you hold shares in your name, and you sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by our Board on all matters and as the proxy holders may determine in their discretion with respect to any other matters that properly come before the meeting. Deadline for Receipt of Stockholder Proposals Proposals of stockholders that are intended to be presented by such stockholders at the annual meeting of stockholders for the 2008 fiscal year must be received by us no later than the close of business on the 60th day, nor earlier than the close of business on the 90th day, prior to the annual meeting of stockholders for the 2008 fiscal year and must otherwise be in compliance with applicable laws and regulations in order to be considered for inclusion in the proxy statement and form of proxy relating to that meeting. Under the federal securities laws, for such a matter to be included in the proxy materials for annual meeting of stockholders for the 2008 fiscal year, timely notice must be delivered to us at our principal executive offices to the attention of Bret M. DiMarco, our Corporate Secretary, not less than 120 days before the date of our proxy statement released to stockholders in connection with the previous year’s annual meeting, which will be October 18, 2008. Stockholder proposals must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). If a stockholder who has notified us of his or her intention to present a proposal at an annual meeting does not appear to present his or her proposal at such meeting, we need not present the proposal for vote at such meeting. However, if a stockholder wishes only to recommend a candidate for consideration by the Governance and Nominating Committee as a potential nominee for the Company’s Board of Directors, see the procedures discussed in “Proposal One — Election of Directors — Board Meetings and Committees — Process for Recommending Candidates for Election to the Board of Directors.” The attached proxy card grants to the proxyholders discretionary authority to vote on any matter raised at the Annual Meeting. Delivery of Voting Materials to Stockholders Sharing an Address (cid:3) (cid:3) (cid:3) To reduce the expense of delivering duplicate voting materials to our stockholders who may hold shares of Coherent common stock in more than one stock account, we are delivering only one set of the proxy solicitation materials to certain stockholders who share an address, unless otherwise requested. A separate proxy card is included in the voting materials for each of these stockholders. We will promptly deliver, upon written or oral request, a separate copy of the annual report or this proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered. To obtain an additional copy, you may write us at 5100 Patrick Henry Drive, Santa Clara, California 95054, Attn: Investor Relations, or contact us by telephone at (408) 764-4000 and request to be connected to our Investor Relations department. Similarly, if you share an address with another stockholder and have received multiple copies of our proxy materials, you may contact us at the address or telephone number specified above to request that only a single copy of these materials be delivered to your address in the future. If shareholders received one set of materials due to the foregoing, such shareholder may revoke their 3