NEWPORT CORP - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - NEWPORT CORP	d389470d8k.htm

Exhibit 99.1

LOGO

Press Release

Contact:

Charles F. Cargile, 949/863-3144

Newport Corporation, Irvine, CA

investor@newport.com

Dan Peoples, 858/552-8146

Makinson Cowell (US)

NEWPORT CORPORATION REPORTS

SECOND QUARTER AND FIRST HALF 2012 RESULTS

- Strong Earnings and Cash Generation -

- Company Implementing Plan to Achieve $15 Million in Annualized Cost Savings -

Irvine, California – August 1, 2012 – Newport Corporation (NASDAQ: NEWP) today reported financial results for its second quarter and six months ended June 30, 2012, and its outlook for the third quarter of 2012. The company noted the following highlights regarding the second quarter:

•

Net sales of $153.7 million;

•

Net income attributable to Newport Corporation of $9.2 million, or $0.24 per diluted share, when measured according to generally accepted accounting principles (GAAP);

•

Net income attributable to Newport Corporation of $11.6 million, or $0.30 per diluted share, when measured on a non-GAAP basis, excluding certain expenses related to recent acquisitions, restructuring and severance costs, the amortization of intangible assets, stock-based compensation expense, and a gain resulting from the sale of a minority-owned investment, net of the tax impact of such excluded amounts;

•

Cash from operations of $15.1 million, of which $11.1 million was used to reduce indebtedness; and

•

The company is implementing a plan to achieve annualized cost savings of $15 million per year through integration synergies and other cost reductions.

Commenting on the results, Robert J. Phillippy, Newport’s President and Chief Executive Officer, stated, “In the second quarter of 2012, we increased our operating income and cash from

operations sequentially over the first quarter despite a slight decline in sales. We also had a very productive quarter in securing new business and launching new products, with several design wins with OEM customers and our introduction of the industry’s first production ready, high-precision 450mm wafer handling solution for next generation semiconductor manufacturing.”

Sales and Orders

Newport’s sales and orders by end market were as follows:


(In thousands, except percentages, unaudited)	Three Months Ended				Six Months Ended				Percentage Change vs. Prior Year Period
(In thousands, except percentages, unaudited)	June 30, 2012		July 2, 2011 ¹		June 30, 2012		July 2, 2011 ¹		Second Quarter 2012			First Half 2012
*Sales by End Market*
Scientific research, aerospace and defense/security	$	47,832	$	39,964	$	101,378	$	81,055		19.7	%		25.1	%
Microelectronics		41,583		45,352		77,718		87,915		-8.3	%		-11.6	%
Life and health sciences		33,336		24,878		70,309		51,032		34.0	%		37.8	%
Industrial manufacturing and other		30,904		19,938		61,417		38,541		55.0	%		59.4	%

Total	$	153,655	$	130,132	$	310,822	$	258,543		18.1	%		20.2	%

*Orders by End Market*
Scientific research, aerospace and defense/security	$	49,667	$	41,631	$	99,259	$	83,507		19.3	%		18.9	%
Microelectronics		42,505		57,663		84,657		99,755		-26.3	%		-15.1	%
Life and health sciences		19,345		26,097		82,940		52,208		-25.9	%		58.9	%
Industrial manufacturing and other		36,769		18,306		67,534		37,949		100.9	%		78.0	%

Total	$	148,286	$	143,697	$	334,390	$	273,419		3.2	%		22.3	%

Notes:

¹	Certain prior period amounts have been reclassified to conform to the current period presentation.

In the second quarter of 2012, sales and orders increased 18.1% and 3.2%, respectively, compared with the second quarter of 2011, as weakness in some of the company’s end markets was more than offset by the contributions from the three acquisitions completed by the company in the last year. These acquisitions added $34.7 million in sales and $26.8 million in new orders in the second quarter of 2012.

On a sequential basis, sales and orders declined from the first quarter levels. Sales declined 2.2% compared with the first quarter of 2012, as stronger sales to customers in Newport’s microelectronics and industrial markets partially offset the effect of weakness in the company’s other target end markets, which have been negatively impacted by uncertainty regarding government funding levels. New orders declined 20.3% compared with the first quarter of 2012, due to lower orders from life and health sciences customers, offset in part by higher orders from customers in all of the company’s other target end markets. The company noted that first quarter orders from life and health sciences customers included a $37.7 million order for ultrafast lasers that did not repeat in the second quarter.

Operating Income and Net Income

Newport reported operating income for the second quarter of 2012 of $11.3 million, or 7.4% of net sales, when calculated in accordance with generally accepted accounting principles (GAAP). On a non-GAAP basis, excluding acquisition-related expenses, restructuring and severance costs, the amortization of intangible assets and stock-based compensation expense, the company’s operating income for the second quarter of 2012 was $20.2 million, or 13.1% of net sales.

The company reported net income attributable to Newport Corporation for the second quarter of 2012 of $9.2 million, or $0.24 per diluted share, when calculated in accordance with GAAP. On a non-GAAP basis, excluding the items referenced above and a gain on the sale of assets, net of the tax impact of such excluded amounts, net income attributable to Newport Corporation for the second quarter of 2012 was $11.6 million, or $0.30 per diluted share.

The company has provided a reconciliation of its operating income, net income and net income per diluted share calculated in accordance with GAAP and on a non-GAAP basis following the statements of income and comprehensive income included in this release. Management believes that the supplemental presentation of non-GAAP financial information helps to provide insight into the company’s core business results, as well as a more meaningful comparison of its financial results between periods.

Cash, Cash Equivalents and Marketable Securities

Newport ended the second quarter of 2012 with $57.4 million in cash, cash equivalents and marketable securities, an increase of $6.1 million compared with the first quarter of 2012. In the first six months of 2012, Newport has reduced its total indebtedness by $32.6 million.

Cost Savings Plan

The company noted that it is implementing a broad-based initiative designed to achieve annualized cost savings of $15 million per year. This initiative includes actions currently underway to maximize operating efficiencies through the integration of its recent acquisitions, as well as other cost reduction steps across most of Newport’s businesses. The early results of this cost reduction plan contributed to the $2.2 million sequential reduction in selling, general and administrative expenses in the second quarter compared with the first quarter level.

Mr. Phillippy continued, “We expect these actions to maximize the benefits of our recent acquisitions, enhance our cash generation and ensure continued growth in profitability. In parallel, we will continue to drive future growth by investing in technology and product development to build upon our industry leading portfolio.”

Financial Outlook

The company noted that it expects its end market demand in the third quarter of 2012 to be similar to the second quarter level. As a result, Newport now expects its sales in the third quarter of 2012 to be similar to or slightly lower than the amount recorded in the second quarter of 2012. As a result of the profit improvement actions in process, the company expects its third quarter 2012 operating income and earnings per diluted share, on a non-GAAP basis, to be slightly higher than the second quarter levels.

Mr. Phillippy concluded, “Our outlook for the remainder of 2012 is more cautious than it was earlier in the year due to the general weakness in economic conditions and, specifically, uncertainty related to government funding. We are taking actions to enhance our profitability and cash generation, while continuing to invest in opportunities to drive future growth. By taking these actions, including capturing integration savings, we will fortify our business in the near term and position ourselves well for enhanced growth and greater profit leverage once global macroeconomic conditions improve.”

ABOUT NEWPORT CORPORATION

Newport Corporation is a leading global supplier of advanced-technology products and systems to customers in the scientific research, aerospace and defense/security, microelectronics, life and health sciences and precision industrial manufacturing markets. Newport’s innovative solutions leverage its expertise in photonics technologies, including lasers, photonics instrumentation, sub-micron positioning systems, vibration isolation, optical components and subsystems, precision automation and three-dimensional non-contact measurement equipment, to enhance the capabilities and productivity of its customers’ manufacturing, engineering and research applications. Newport is part of the Standard & Poor’s SmallCap 600 Index and the Russell 2000 Index.

INVESTOR CONFERENCE CALL

Robert J. Phillippy, President and Chief Executive Officer, and Charles F. Cargile, Senior Vice President and Chief Financial Officer, will host an investor conference call today, August 1, 2012, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company’s results for the second quarter

of 2012 and its outlook for the third quarter of 2012. The call will be open to all interested investors through a live audio web broadcast via the Internet at www.newport.com/investors and www.earnings.com. The call also will be available to investors and analysts by dialing 877-856-1965 within the U.S. and Canada or 719-325-4790 from abroad.

The webcast will be archived on both websites and can be reached through the same links. A telephonic playback of the conference call also will be available by calling 888-203-1112 within the U.S. and Canada and 719-457-0820 from abroad. Playback will be available beginning at 8:00 p.m. Eastern time today and continue through 8:00 p.m. Eastern time on Wednesday, August 8, 2012. The replay passcode is 2543312.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, including without limitation statements regarding the expected cost savings and other impacts of the company’s cost reduction initiatives, its expectation of future sales growth resulting from its investments in technology and product development, and Newport’s expected end market demand, sales, non-GAAP operating income and non-GAAP earnings per diluted share in the third quarter of 2012. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Assumptions relating to the foregoing involve judgments and risks with respect to, among other things, Newport’s ability to achieve expected benefits from the integration of Ophir Optronics, High Q Laser and ILX Lightwave and its other cost savings initiatives; the strength of business conditions in the industries Newport serves, particularly the semiconductor industry; Newport’s ability to successfully penetrate and increase sales to its targeted end markets, particularly the life and health sciences market; the levels of private and governmental research funding worldwide; potential order cancellations and push-outs; future economic, competitive and market conditions, including those in Europe and Asia and those related to its strategic markets; whether its products will continue to achieve customer acceptance; and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Newport. Certain of these judgments and risks are discussed in more detail in Newport’s periodic reports filed with the Securities and Exchange Commission. Although Newport believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Newport or any other person that Newport’s objectives or plans will be achieved. Newport undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

###

Newport Corporation

Consolidated Statements of Income and Comprehensive Income

(Unaudited)


	Three Months Ended						Six Months Ended
(In thousands, except per share amounts)	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Net sales	$	153,655		$	130,132		$	310,822		$	258,543
Cost of sales		86,772			70,460			175,870			140,995

Gross profit		66,883			59,672			134,952			117,548
Selling, general and administrative expenses		41,887			32,739			85,947			63,212
Research and development expense		13,651			10,196			27,450			20,633

Operating income		11,345			16,737			21,555			33,703
Foreign currency translation gain from dissolution of subsidiary		—			—			—			7,198
Gain on sale of investment		5,298			—			5,298			—
Interest and other expense, net		(2,828	)		(1,624	)		(5,015	)		(4,029	)

Income before income taxes		13,815			15,113			21,838			36,872
Income tax provision		4,754			1,191			6,189			2,191

Net income		9,061			13,922			15,649			34,681
Net loss attributable to non-controlling interests		(93	)		—			(97	)		—

Net income attributable to Newport Corporation	$	9,154		$	13,922		$	15,746		$	34,681

Net income	$	9,061		$	13,922		$	15,649		$	34,681
Other comprehensive income:
Foreign currency translation gains (losses)		(3,485	)		902			(1,898	)		(3,135	)
Unrecognized net pension losses		102			559			86			425
Unrealized gains on marketable securities		(140	)		(900	)		(107	)		(762	)

Comprehensive income	$	5,538		$	14,483		$	13,730		$	31,209

Comprehensive loss attributable to non-controlling interests	$	(69	)	$	—		$	(115	)	$	—
Comprehensive income attributable to Newport Corporation		5,607			14,483			13,845			31,209

Comprehensive income	$	5,538		$	14,483		$	13,730		$	31,209

Net income per share attributable to Newport Corporation:
Basic	$	0.24		$	0.37		$	0.41		$	0.93
Diluted	$	0.24		$	0.36		$	0.40		$	0.89
Shares used in the computation of net income per share:
Basic		38,220			37,477			37,975			37,241
Diluted		38,898			38,788			38,915			38,812
Other operating data:
New orders received during the period	$	148,286		$	143,697		$	334,390		$	273,419
Backlog at the end of period scheduled to ship within 12 months							$	168,706		$	128,775

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)


	Three Months Ended						Six Months Ended
(In thousands, except per share amounts)	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Net Sales	$	153,655		$	130,132		$	310,822		$	258,543
Operating income:
Operating income - GAAP	$	11,345		$	16,737		$	21,555		$	33,703
Amortization of intangible assets		5,031			756			10,208			1,512
Stock-based compensation		1,878			1,151			4,092			3,170
Acquisition-related costs		1,503			2,095			3,409			2,339
Restructuring and severance costs		444			575			1,023			711
Gain on sale of assets		—			—			(166	)		—

Non-GAAP operating income	$	20,201		$	21,314		$	40,121		$	41,435

Non-GAAP operating income as a percentage of net sales		13.1	%		16.4	%		12.9	%		16.0	%
Net income attributable to Newport Corporation:
Net income - GAAP	$	9,154		$	13,922		$	15,746		$	34,681
Foreign currency translation gain from dissolution of subsidiary		—			—			—			(7,198	)
Amortization of intangible assets		5,031			756			10,208			1,512
Stock-based compensation		1,878			1,151			4,092			3,170
Acquisition-related costs		1,503			2,095			3,409			2,339
Restructuring and severance costs		444			575			1,023			711
Gain on sale of assets		(5,298	)		(619	)		(5,464	)		(619	)
Release of valuation allowance against certain deferred tax assets		—			—			(1,391	)		—
Income tax provision on non-GAAP adjustments		(1,096	)		(172	)		(3,865	)		(495	)

Non-GAAP net income	$	11,616		$	17,708		$	23,758		$	34,101

Net income per diluted share attributable to Newport Corporation:
Net income - GAAP	$	0.24		$	0.36		$	0.40		$	0.89
Total non-GAAP adjustments		0.06			0.10			0.21			(0.01	)

Non-GAAP net income per diluted share	$	0.30		$	0.46		$	0.61		$	0.88

Newport Corporation

Consolidated Balance Sheets

(Unaudited)


(In thousands)	June 30, 2012		December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	49,718	$	55,701
Restricted cash		2,938		12,367
Marketable securities		4,776		4,787
Accounts receivable, net		100,742		97,690
Notes receivable, net		3,366		2,091
Inventories, net		108,718		112,968
Deferred income taxes		29,746		30,339
Prepaid expenses and other current assets		14,623		15,374

Total current assets		314,627		331,317
Property and equipment, net		86,267		89,873
Goodwill		146,793		143,259
Deferred income taxes		8,938		9,289
Intangible assets, net		145,075		150,572
Investments and other assets		40,149		39,759

	$	741,849	$	764,069

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings, net	$	31,625	$	45,149
Accounts payable		31,067		30,856
Accrued payroll and related expenses		30,468		36,914
Accrued expenses and other current liabilities		37,627		39,800

Total current liabilities		130,787		152,719
Long-term debt, net		158,943		178,043
Accrued pension liabilities		24,887		24,444
Other liabilities		37,823		36,586
Total stockholders’ equity of Newport Corporation		387,545		370,258
Non-controlling interests		1,864		2,019

Total stockholders’ equity		389,409		372,277

	$	741,849	$	764,069

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