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Please direct questions regarding Newport's financial performance to:
Chuck Cargile
Senior Vice President and CFO
Tel: 949-863-3144

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Newport Corporation Reports Fourth Quarter And Year End 2012 Results

IRVINE, Calif., Feb. 20, 2013 /PRNewswire/ -- Newport Corporation (NASDAQ: NEWP) today reported financial results for its fourth quarter and full year ended December 29, 2012, and its outlook for 2013.  The company noted the following regarding the fourth quarter results:

  • Net sales of $141.6 million;
  • Net loss attributable to Newport Corporation of $112.8 million, or $2.94 per share, when measured according to generally accepted accounting principles (GAAP);
  • Non-GAAP net income of $14.3 million, or $0.37 per diluted share, excluding the impairment of assets related to Ophir, acquisition expenses, restructuring and severance costs, the amortization of intangible assets, stock-based compensation expense, and the tax impact of excluded amounts; and
  • Cash generated from operations of $27.1 million, which contributed to an increase in cash and marketable securities of $23.5 million in the fourth quarter, to $100.4 million.

Commenting on the results, Robert J. Phillippy, Newport's President and Chief Executive Officer, stated, "The fourth quarter was another demonstration of solid operational execution by the Newport team.  Our non-GAAP operating income, non-GAAP earnings per share and cash from operations all reached their highest levels of the year, despite a slight sequential reduction in revenue.  We continue to implement our strategic plan, with specific focus on long-term growth initiatives and effective operational execution, to position Newport to achieve significant growth in sales and profitability in the future." 

Sales and Orders

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














(In thousands, except percentages, unaudited)

Three Months Ended


Year Ended



Percentage Change vs. Prior Year Period












Fourth

Year





December 29,

December 31,


December 29,

December 31,



Quarter

Ended





2012

2011 ¹


2012

2011 ¹



2012

2012














Sales by End Market

























 Scientific research and defense/security 


$           51,630

$           60,826


$         202,548

$         183,702



-15.1%

10.3%

 Microelectronics 




28,632

35,778


138,773

157,786



-20.0%

-12.0%

 Life and health sciences 



32,283

37,985


132,268

120,037



-15.0%

10.2%

 Industrial manufacturing and other  


29,098

26,324


121,757

83,529



10.5%

45.8%


 Total 



$         141,643

$         160,913


$         595,346

$         545,054



-12.0%

9.2%














Orders by End Market

























 Scientific research and defense/security 


$           52,771

$           55,787


$         203,379

$         183,526



-5.4%

10.8%

 Microelectronics 




26,153

31,701


142,900

163,536



-17.5%

-12.6%

 Life and health sciences 



26,975

37,258


143,275

113,869



-27.6%

25.8%

 Industrial manufacturing and other  


27,973

26,226


122,481

82,065



6.7%

49.2%


 Total 



$         133,872

$         150,972


$         612,035

$         542,996



-11.3%

12.7%














Notes:

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

In the fourth quarter of 2012, the company's sales and orders decreased 12.0% and 11.3%, respectively, compared with the fourth quarter of 2011, due to weakness in most of its end markets.  However, the company noted that sales to and orders from customers in its industrial manufacturing and other end markets increased 10.5% and 6.7%, respectively, compared with the prior year period.   

On a sequential basis, sales declined slightly compared with the third quarter of 2012, due to weaker demand in the microelectronics and industrial manufacturing markets, offset by higher sales to customers in the scientific research and life and health sciences markets.  New orders in the fourth quarter of 2012 declined 6.9% compared with the third quarter level, due primarily to lower demand from customers in the microelectronics and life and health sciences end markets, offset in part by higher demand from customers in the scientific research and industrial manufacturing end markets.

Operating Income (Loss) and Net Income (Loss)

Newport reported an operating loss for the fourth quarter of 2012 of $116.3 million when calculated in accordance with GAAP.  This operating loss was due to a $130.9 million non-cash charge relating to the impairment of goodwill, intangible and other assets associated with the acquisition of Ophir.  On a non-GAAP basis, excluding the impairment charge related to Ophir, acquisition-related expenses, restructuring and severance costs, amortization of intangible assets and stock-based compensation expense, the company's operating income for the fourth quarter of 2012 was $21.6 million, or 15.2% of net sales.

On a GAAP basis, the company reported a net loss attributable to Newport Corporation for the fourth quarter of 2012 of $112.8 million, or $2.94 per share.  On a non-GAAP basis, excluding the items referenced above and the tax impact of such excluded amounts, net income for the fourth quarter of 2012 was $14.3 million, or $0.37 per diluted share. 

The company has provided a reconciliation of its gross profit, operating income, net income and net income per diluted share calculated in accordance with GAAP and on a non-GAAP basis on page 7 of this release.  Management believes that the supplemental presentation of non-GAAP financial information provides 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

In the fourth quarter of 2012, Newport generated $27.1 million in cash from operations, which was the highest level in any quarter of the year.  During the full year of 2012, Newport generated cash from operations of $81.4 million and reduced its total indebtedness by $39.5 million, or 18%.  As of December 29, 2012, the company had a total of $100.4 million in cash and marketable securities.

Financial Outlook

Commenting on Newport's outlook for 2013, Mr. Phillippy said, "Over the past year we have integrated our recent acquisitions, improved operational efficiencies and increased our cash generation despite very challenging market conditions.  Based on the input we have received from our customers, we expect market conditions to improve during the course of 2013 and our sales to increase in the second half of the year.  However, we have not yet seen a meaningful increase in order activity, and based on our current backlog we expect our net sales in the first quarter of 2013 to be slightly lower on a sequential basis.  Additionally, we expect our non-GAAP operating income and non-GAAP earnings per diluted share to decline sequentially in the first quarter, due to an increase in our operating expenses resulting from the seasonal nature of some expenses and continued investment to fund our growth initiatives.  We expect the benefit of these investments, coupled with improved market conditions, to position us well to deliver solid financial results in 2013 and beyond."

ABOUT NEWPORT CORPORATION 
Newport Corporation is a leading global supplier of advanced-technology products and systems to customers in the scientific research and defense/security, microelectronics, life and health sciences and industrial manufacturing markets.  Newport's innovative solutions leverage its expertise in advanced technologies, including lasers, photonics and precision motion equipment, and optical components and sub-systems, 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.

To download Newport's investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit Apple's App Store for the iPhone and iPad or Google Play for Android mobile devices.

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, February 20, 2013, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company's results for the fourth quarter of 2012 and business outlook for 2013.  The call will be open to all interested investors through a live audio web broadcast via the Internet at www.newport.com/investors.  The call also will be available to investors and analysts by dialing 877-889-9587 within the U.S. and Canada or 973-935-2046 from abroad.  The passcode to enter the conference call is 94827664.

The webcast will be archived on the Newport website and can be reached through the same link.  An archived webcast will also be available on Newport's investor relations app.  A telephonic playback of the conference call will be available by calling 855-859-2056 within the U.S. and Canada and 404-537-3406 from abroad.  Playback will be available beginning at 6:00 p.m. Eastern time on Wednesday, February 20, 2013, and continue through 11:59 p.m. Eastern time on Wednesday, February 27, 2013.  The replay passcode is 94827664.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, including without limitation statements regarding the company's expectation of significant future growth in sales and profitability resulting from its focus on its long-term growth initiatives and its effective operational execution, its expectation of improved market conditions during the course of 2013, Newport's expected sales, operating expenses, non-GAAP operating income and non-GAAP earnings per diluted share levels in the first quarter of 2013, and the company's expectation of increased sales in the second half of 2013 and solid financial results in 2013 and beyond.  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 acquired businesses and its other cost savings initiatives; the strength of business conditions in the industries Newport serves, particularly the semiconductor and defense/security industries; Newport's ability to successfully penetrate and increase sales to its targeted end markets; 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.

Contact:
Charles F. Cargile, 949/863-3144
Newport Corporation, Irvine, CA
investor@newport.com
or
Rob Fink, 212/896-1206
KCSA Strategic Communications
newport@kcsa.com


Newport Corporation

Consolidated Statements of Income and Comprehensive Income

(Unaudited)


















Three Months Ended


Year Ended


December 29,


December 31,


December 29,


December 31,

(In thousands, except per share amounts)

2012


2011


2012


2011









Net sales

$         141,643


$         160,913


$         595,346


$        545,054

Cost of sales

78,815


94,515


334,758


305,325

Gross profit

62,828


66,398


260,588


239,729









Selling, general and administrative expenses

35,914


47,007


159,181


140,636

Research and development expense

12,395


13,485


52,714


45,270

Impairment charge

130,853


-


130,853


-

Operating income (loss)

(116,334)


5,906


(82,160)


53,823









Foreign currency translation gain from dissolution of subsidiary

-


-


-


7,198

Recovery of note receivable and other amounts related to 








previously discontinued operations, net 

-


-


-


619

Gain on sale of investments

-


-


6,248


-

Loss on extinguishment of debt

-


(582)


-


(582)

Interest and other expense, net

(1,462)


(3,554)


(8,559)


(10,550)

Income (loss) before income taxes

(117,796)


1,770


(84,471)


50,508









Income tax provision (benefit)

(4,665)


(32,709)


5,479


(29,154)

Net income (loss)

(113,131)


34,479


(89,950)


79,662

Net loss attributable to non-controlling interests

(326)


(46)


(527)


(46)

Net income (loss) attributable to Newport Corporation

$        (112,805)


$           34,525


$          (89,423)


$          79,708

















Net income (loss)

$        (113,131)


$           34,479


$          (89,950)


$          79,662

Other comprehensive income (loss):








Foreign currency translation gains (losses)

1,668


(1,573)


1,169


(10,222)

Unrecognized net pension gains (losses)

(2,339)


7


(2,243)


551

Unrealized gains (losses) on marketable securities

168


(84)


48


(365)

Comprehensive income (loss)

$        (113,634)


$           32,829


$          (90,976)


$          69,626









Comprehensive loss attributable to non-controlling interests

$               (384)


$                (57)


$               (593)


$                (57)

Comprehensive income (loss) attributable to Newport Corporation

(113,250)


32,886


(90,383)


69,683

Comprehensive income (loss)  

$        (113,634)


$           32,829


$          (90,976)


$          69,626









Net income (loss) per share attributable to Newport Corporation:








Basic

$              (2.94)


$               0.92


$              (2.35)


$              2.13

Diluted

$              (2.94)


$               0.90


$              (2.35)


$              2.06









Shares used in the computation of net income (loss) per share:








Basic

38,316


37,602


38,133


37,407

Diluted

38,316


38,495


38,133


38,673









Other operating data:








New orders received during the period

$         133,872


$         150,972


$         612,035


$        542,996

Backlog at the end of period scheduled to ship within 12 months





$         154,216


$        168,697

 

 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)






























Three Months Ended


Year Ended

(In thousands, except per share amounts)


December 29,
2012


December 31,
2011


December 29,
2012


December 31,
2011










Net Sales


$          141,643


$        160,913


$           595,346


$        545,054










Cost of sales:









Cost of sales - GAAP


$            78,815


$          94,515


$           334,758


$        305,325

Amortization of intangible assets


890


180


2,321


720

Stock-based compensation expense


203


134


693


488

Acquisition-related costs 


-


3,844


808


3,844

Non-GAAP cost of sales


77,722


90,357


330,936


300,273

Non-GAAP gross profit


$            63,921


$          70,556


$           264,410


$        244,781










Non-GAAP gross profit as a percentage of net sales


45.1%


43.8%


44.4%


44.9%










Operating income (loss):









Operating income (loss) - GAAP


$        (116,334)


$            5,906


$           (82,160)


$          53,823

Impairment charge


130,853


-


130,853


-

Amortization of intangible assets


2,878


4,955


17,701


7,753

Stock-based compensation


2,104


1,522


8,369


6,201

Acquisition-related costs


785


7,857


5,127


10,955

Restructuring and severance costs


1,288


1,175


3,134


2,174

Gain on sale of assets


-


-


(166)


-

Non-GAAP operating income


$            21,574


$          21,415


$             82,858


$          80,906










Non-GAAP operating income as a percentage of net sales


15.2%


13.3%


13.9%


14.8%










Net income (loss) attributable to Newport Corporation:









Net income (loss) - GAAP


$        (112,805)


$          34,525


$           (89,423)


$          79,708

Impairment charge


130,853


-


130,853


-

Foreign currency translation gain from dissolution of subsidiary


-


-


-


(7,198)

Amortization of intangible assets


2,878


4,955


17,701


7,753

Stock-based compensation


2,104


1,522


8,369


6,201

Acquisition-related costs


785


7,857


5,127


10,955

Restructuring and severance costs


1,288


1,175


3,134


2,174

Gain on sale of assets


-


-


(6,414)


(619)

Loss on extinguishment of debt


-


582


-


582

Commitment fee for interim revolving line of credit


-


-


-


500

Release of valuation allowance against certain deferred tax assets


-


(34,052)


(1,815)


(34,052)

Income tax provision on non-GAAP adjustments


(10,848)


(1,162)


(15,842)


(2,224)

Non-GAAP net income 


$            14,255


$          15,402


$             51,690


$          63,780



















Net income (loss) per diluted share attributable to Newport Corporation:







Net income (loss) - GAAP


$              (2.94)


$              0.90


$               (2.35)


$              2.06

Total non-GAAP adjustments


3.31


(0.50)


3.68


(0.41)

Non-GAAP net income per diluted share


$                0.37


$              0.40


$                 1.33


$              1.65



















Dilutive shares used in computation of non-GAAP net income 


38,764


38,495


38,810


38,673










 

Newport Corporation

Consolidated Balance Sheets

(Unaudited)










December 29,


December 31,

(In thousands)

2012


2011





ASSETS




Current assets:




Cash and cash equivalents

$             88,767


$             55,701

Restricted cash

3,107


12,367

Marketable securities

8,498


4,787

Accounts receivable, net 

89,445


97,690

Notes receivable, net

1,536


2,091

Inventories, net

108,728


112,968

Deferred income taxes

19,872


30,339

Prepaid expenses and other current assets

17,727


15,374

Total current assets

337,680


331,317





Property and equipment, net

82,843


89,873

Goodwill

79,586


143,259

Deferred income taxes

5,646


9,289

Intangible assets, net

77,446


150,572

Investments and other assets

37,760


39,759


$           620,961


$           764,069





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Short-term borrowings, net

$             32,985


$             45,149

Accounts payable

31,061


30,856

Accrued payroll and related expenses

29,096


36,914

Accrued expenses and other current liabilities

34,696


39,800

Total current liabilities

127,838


152,719





Long-term debt, net 

150,758


178,043

Accrued pension liabilities

27,764


24,444

Other liabilities

23,783


36,586





Total stockholders' equity of Newport 

289,432


370,258

Non-controlling interests

1,386


2,019

Total stockholders' equity 

290,818


372,277


$           620,961


$           764,069

 

 

 

 

SOURCE Newport Corporation