Newport Corporation Reports Fourth Quarter and Year-End Results

Sales and Earnings In Line With Guidance

Irvine, California, UNITED STATES


IRVINE, Calif., Jan. 29, 2002 (PRIMEZONE) -- Newport Corporation (Nasdaq:NEWP) today reported results for the fourth quarter and full year ended December 31, 2001 in line with its previous guidance. Newport posted breakeven earnings per share in the fourth quarter of 2001 on sales of $50.3 million. For the year ended December 31, 2001, Newport recorded $318.9 million in sales versus $284.0 million in 2000. Of 2001's full year sales, $205.7 million were recorded in the first half of 2001 and $113.2 million were recorded in the second half, reflecting the dramatic downturn in Newport's primary fiber optic and semiconductor equipment markets. Sales to the fiber optic communications market in 2001 were $102.4 million compared with $110.7 million in 2000. Full year 2001 sales to the semiconductor equipment market increased 25 percent to $90.7 million versus the $72.5 million recorded in 2000. Net sales in 2001 to the company's other end markets totaled $125.8 million, an increase of 25 percent from $100.8 million in 2000.

Newport's earnings for 2001 were impacted by a number of non-recurring actions, including charges related to acquisitions and major cost reduction initiatives. A reconciliation of the earnings including and excluding these items is as follows:


                                               Acquisition &   
 ($ in millions,                   Charges for   Other Non- 
  except per                     Cost Reduction  Recurring
 share amounts)      As Reported   Initiatives    Charges    Pro Forma
 ---------------     -----------   -----------   ---------   ---------
 Operating
  income (loss)        ($23.2)        $39.1        $12.6       $28.5
 Net income (loss)       (6.3)         26.2          8.5        28.4
 Earnings (loss)
  per share            ($0.17)                                 $0.75

Including the impact of the charges noted above, Newport had a net loss of $6.3 million, or $0.17 per share, for 2001 compared with net income of $42.0 million, or $1.17 per share, in 2000. The pro forma earnings per share for 2001, excluding such charges, were $0.75. Newport reported pro forma earnings per share of $1.01 in year 2000. The year ago results reflect the pro forma effect of Newport's acquisition of Kensington Laboratories, which was accounted for as a pooling of interests.

New orders received in the fourth quarter of $38.9 million were offset by $6.9 million of cancellations. The net orders of $32.0 million represented a 24 percent sequential increase over the $25.9 million of net orders received in the third quarter of 2001. For the full year 2001, new orders, net of cancellations, were $188.6 million versus the $411.0 million of orders received during the robust market conditions of year 2000.

"We believe that year-over-year comparisons, while traditional, are not as meaningful this year considering the steep declines that persisted during most of 2001 in the two key end markets we serve, fiber optic communications and semiconductor capital equipment," said Robert G. Deuster, Newport's chairman and chief executive officer.

"As we mentioned in our news release on January 7, 2002, Newport's order capture rates appear to have stabilized in the fourth quarter. Based on discussions with our customers, we believe that we have reached the bottom of the business downturn in the fiber optic communications and semiconductor equipment markets, and we expect our order rates to increase throughout 2002," Deuster said.

New orders from customers in the fiber optic communications market were $4.9 million in the fourth quarter of 2001 compared with $6.2 million in the third quarter of 2001. Orders from such customers in the fourth quarter of 2000, at the height of the fiber optic communications cycle, were $60.7 million. New orders from semiconductor capital equipment customers increased slightly on a sequential basis to $7.4 million in the fourth quarter of 2001 compared with $7.0 million in the third quarter of 2001. Orders from such customers in the fourth quarter of year 2000 were $26.8 million, reflecting the strength of the semiconductor market at that time. New orders from all other customers increased slightly on a sequential basis to $26.6 million in the fourth quarter of 2001 versus $25.4 million in the third quarter of 2001. Newport reported orders from these customers of $41.4 million in the fourth quarter last year.

Deuster said, "The challenges we faced in 2001 did not deter us from positioning Newport for future growth and profitability. We made several strategic investments and capitalized on the slow-down in our strategic end markets to significantly reduce our operating cost structure and increase the efficiency of our manufacturing operations, while retaining ample capacity for future growth. We believe that the enhancements we have made to our businesses will make us even more successful when the economic conditions impacting our primary end markets improve." To recap 2001, Deuster noted that Newport had:


 -- Completed its merger with Kensington Laboratories, a privately
    held manufacturer of high precision robotic and motion control
    equipment, which was accounted for as a pooling of interests.  As
    expected, the transaction was accretive to Newport's financial
    results and enhanced its position as a leading supplier to 
    semiconductor original equipment manufacturers.

 -- Acquired Design Technology Corporation, a privately held company 
    specializing in the use of robotics and flexible automation 
    solutions for fiber optic component manufacturers.  This 
    acquisition enhanced Newport's integrated automation efforts and
    established a customer service presence on the U.S. East Coast.

 -- Received two new U.S. patents critical to the edge grip handling 
    of 300-millimeter semiconductor wafers.  These patents further 
    reinforce Newport's market leadership in the wafer handling and 
    motion control technology required for semiconductor capital 
    equipment manufacturers' next-generation products.

 -- Reduced Newport's cost structure and increased its operating 
    efficiency by a program of facility consolidation and overall 
    headcount reduction.  Two manufacturing facilities were 
    consolidated into expanded operations in Irvine, California during
    2001 and one additional facility was identified for consolidation 
    during the second quarter of 2002.  In addition, Newport 
    consolidated all metrology systems manufacturing into the 
    Company's CEJohansson operations in Eskilstuna, Sweden.  Newport 
    also implemented a program to reduce overall headcount by 20 
    percent, or approximately 400 positions.  Newport believes that 
    consolidating its widely separated manufacturing facilities into 
    much more tightly integrated organizations will enable it to 
    operate more efficiently and profitably, especially during soft 
    market conditions.

 -- Invested in critical research and development (R&D) to design new
    products for the next growth phase in the fiber optic 
    communication and semiconductor equipment industries despite the 
    focus on cost reduction.  R&D expense in the fourth quarter of  
    2001 was $6.7 million, or 13.1 percent of sales, compared with 
    $7.2 million, or 7.4 percent of sales in the fourth quarter of 
    2000.

Deuster further noted that Newport has continued to take actions early in 2002 to strengthen its strategic position, including:


 -- Signing a definitive agreement to acquire Micro Robotics Systems,
    Inc. ("MRSI"), a privately held manufacturer of high precision, 
    fully automated assembly and dispensing systems for the fiber 
    optic communications, microwave and semiconductor packaging 
    markets.

 -- Appointing Kevin T. Crofton vice president and general manager of
    Newport's Fiber Optics and Photonics Division.  Crofton comes to 
    Newport from LAM Research (Nasdaq:LRCX), a major semiconductor
    capital equipment manufacturer.  Newport believes that his 
    background in semiconductor process equipment will be a 
    significant advantage to its automation business as the market for
    fiber optic device manufacturing equipment matures and utilizes 
    more conventional semiconductor process and yield improvement 
    solutions.

Deuster said, "The agreement with MRSI and Kevin Crofton's appointment to head our Fiber Optics and Photonics Division are important steps for us to enhance our position as a leading single-source supplier of test, measurement and automation solutions to the fiber optic communications and semiconductor equipment markets."

2002 FIRST QUARTER OUTLOOK

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially as a result of the factors more specifically referenced below. The amounts do not include estimates for MRSI because the actual timing of closing the transaction is undetermined.

-- The company expects sales in the first quarter of 2002 to show the effects of the low net order intake levels in the second half of 2001. Sales are expected to be approximately 5% - 10% below the $50.3 million recorded in the fourth quarter of 2001.

-- Gross margin percentage in the first quarter of 2002 is expected to show slight deterioration from the fourth quarter level primarily as a result of the lower sales volume.

-- SG&A expenses are expected to be approximately flat when compared to the fourth quarter of 2001.

-- R&D spending for the first quarter of 2002 is expected to be flat compared with the fourth quarter of 2001, or approximately $6.5 - $6.8 million.

-- The company expects interest and other income to decrease slightly in the first quarter of 2002 versus the fourth quarter of 2001 as a result of lower interest rates and lower cash balances resulting from the cash to be paid to acquire MRSI. The company expects to generate positive cash flow from operations during the quarter. Newport's cash balance at December 31, 2001 was $281.6 million.

-- Initiatives undertaken in 2001 to reduce the company's overall tax rate are expected to lead to a lower tax rate in 2002. The tax rate is expected to be 31% in 2002 versus 33% in 2001.

-- As a result, although the company has successfully lowered its breakeven point, it expects to incur a loss of three to five cents in the first quarter of 2002.

-- On January 1, 2002, the company adopted FASB Statement No. 142, Goodwill and Other Intangible Assets. The company is still determining the effect of this adoption, if any, which will be reflected as a cumulative effect of a change in accounting principles in the first quarter of 2002 and will not affect operating income.

"Although we are seeing signs of a market recovery in our two key end markets, this potential recovery is not expected to have a material positive impact on our first quarter financial results. We do expect market conditions to improve throughout the remainder of 2002 and, as a result, expect our financial results to improve as well," Deuster summarized.

ABOUT NEWPORT CORPORATION

Newport Corporation is a global leader in the design, manufacture and marketing of high precision components, instruments and integrated systems to the fiber optic communications, semiconductor equipment, aerospace, research and industrial metrology markets. The company's innovative products are designed to enhance productivity and capabilities in test and measurement and automated assembly for precision manufacturing, engineering and research applications. Customers include Fortune 500 corporations, technology companies and research laboratories in commercial, academic and government sectors worldwide. Newport is part of the Russell 1000 Index and the Standard & Poor's Midcap 400 Index.

INVESTOR CONFERENCE CALL

Robert G. Deuster, chairman and chief executive officer, and Charles F. Cargile, vice president and chief financial officer, will host an investor conference call today, January 29, 2002 at 5:00 p.m., Eastern Time, to review the company's fourth quarter and year-end results. The call will be open to all interested investors through a live audio Web broadcast via the Internet at www.newport.com and www.companyboardroom.com. Rebroadcast over the Internet will be available through 8:00 p.m., Eastern Time, Tuesday, February 12, 2002, on both Web sites. A telephonic playback of the conference call will also be available through 8:00 p.m., Eastern Time, Tuesday, February 5, 2002. Listeners should call (800) 633-8284 (domestic) or (858) 812-6440 (international) and use Reservation No. 20258313.

This news release contains forward-looking statements, including without limitation the statements under the heading "2002 First Quarter Outlook" and the statements made by Robert G. Deuster that are based on current expectations and involve risks and uncertainties. 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. As discussed in Newport's Annual Report on Form 10-K for the year ended December 31, 2000 and its subsequent SEC reports, assumptions relating to the foregoing involve judgments and risks with respect to, among other things, potential order cancellations and push-outs, potential product returns, future economic, competitive and market conditions, including those in Europe and Asia and those related to its strategic markets, whether its products, particularly those targeting the company's strategic markets, will continue to achieve customer acceptance, the ability of Newport to successfully integrate its acquired and to-be-acquired companies, the contributions of those companies to Newport's operating results and risks of future impairment and write-offs of the goodwill associated with such acquisitions, risks associated with terrorist activity and resulting economic uncertainty, the risks of power interruptions and electricity rate increases and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Newport. 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 Income Statement
       (In thousands, except per share amounts and percentages)

                   Three Months Ended        Twelve Months Ended
                      December 31,                December 31,
                    2001       2000   % Chg     2001       2000  % Chg
                  --------   --------  ----   --------   -------- ----
 Net sales        $ 50,326   $ 96,830  (48)   $318,869   $284,005  12
 Cost of sales,
  including asset
  writedowns related
  to acquisition
  integration,
  inventory
  valuations and
  other costs        32,640     53,074         217,669    154,365
                     ------    -------         -------    -------
 Gross profit        17,686     43,756  (60)   101,200    129,640 (22)
 
 Selling, general
  and administrative
  expense            14,151     19,656          69,495     57,148
 Restructuring,
  acquisition, and
  other one-time
  charges              --         --            24,121       --
 Research and
  development
  expense             6,606      7,188          30,739     24,415
                     ------    -------         -------    -------
 Income (loss) from
  operations         (3,071)    16,912  NM     (23,155)    48,077 NM
 Income (loss) from
  operations %         (6.1)      17.5            (7.3)      16.9
 Interest and other
  income, net         3,225      4,148          13,794      6,041
                     ------    -------         -------    -------
 Income (loss) before
  income taxes          154     21,060  (99)    (9,361)    54,118 NM
 Income tax provision
  (benefit)              51      5,400          (3,089)    12,145
                     ------    -------         -------    -------
 Net income (loss) $    103  $  15,660  (99)   ($6,272) $  41,973 NM
 
 Earnings (loss)
  per share
   Basic           $   0.00  $    0.44 (100)    ($0.17) $    1.25 NM
   Diluted         $   0.00  $    0.41 (100)    ($0.17) $    1.17 NM
 Number of shares
  used to calculate
  earnings per share
   Basic             36,614     35,813          36,405     33,464
   Diluted           37,825     37,944          36,405     35,835

 NOTE: Refer to the attached Consolidated Income Statement for the pro
       forma presentation.

                 Condensed Consolidated Balance Sheet

  (In thousands)                    December 31,   December 31,
                                        2001            2000
                                    -----------    -----------  
 ASSETS                                                        
   Cash and cash equivalents        $     7,107    $    16,861  
   Marketable securities                274,494        289,781  
   Customer receivables, net             35,833         70,241  
   Inventories                           96,424         80,585  
   Deferred tax assets                   11,091         17,720  
   Other current assets                  15,172         11,946  
                                      ---------      ---------  
     Total current assets               440,121        487,134  
   Long-term deferred tax assets         22,240            --
   Investments and other assets           9,000          9,773
   Property, plant and equipment,                              
     at cost                             45,460         41,308  
   Goodwill, net                         27,056         18,805  
                                      ---------      ---------
                                      $ 543,877      $ 557,020  
                                      =========      =========  
 LIABILITIES AND EQUITY                                         
  Accounts payable                  $    12,939  $      24,797  
  Accrued payroll expenses               12,813         13,313  
  Taxes based on income                    --            1,139  
  Current portion of long-term debt       6,189          7,590  
  Deferred revenue                          823          2,696  
  Other current liabilities              18,039         11,305  
                                      ---------      ---------
    Total current liabilities            50,803         60,840  
                                                               
                                                               
  Long-term debt                          3,409          9,540  
  Other liabilities                         658            675  
  Stockholders' equity                  489,007        485,965  
                                      ---------      ---------
                                    $   543,877  $     557,020  
                                      =========      =========

                            Newport Corporation
                Pro Forma Consolidated Income Statement
       (In thousands, except per share amounts and percentages)

                    Three Months Ended       Twelve Months Ended
                        December 31,             December 31,
                       2001     2000  % Chg     2001      2000   % Chg
                     -------  ------- ----    --------  -------- ----
 Net sales           $50,326  $96,830  (48)   $318,869  $284,005  12
 Cost of sales        32,640   53,074          190,778   154,365
                     -------  -------         --------  --------
 Gross profit         17,686   43,756  (60)    128,091   129,640  (1)
 
 Selling, general
  and administrative
  expense             14,151   19,656           68,864    57,148
 Research and
  development
  expense              6,606    7,188           30,739    24,415
                     -------  -------         --------  --------
 Income (loss) from
  operations          (3,071)  16,912  NM       28,488    48,077 (41)
 Income (loss) from
  operations %          (6.1)    17.5              8.9      16.9
 Interest and other
  income, net          3,225    4,148           13,842     6,041
                     -------  -------         --------  --------
 Income before
  income taxes           154   21,060  (99)     42,330    54,118 (22)
 Income tax
  provision               51    6,743           13,969    17,807
                     -------  -------         --------  --------
 Net income          $   103  $14,317  (99)   $ 28,361  $ 36,311 (22)
 
 Earnings per
  share
   Basic             $  0.00  $  0.40 (100)   $   0.78  $   1.09 (28)
   Diluted           $  0.00  $  0.38 (100)   $   0.75  $   1.01 (26)
 Number of shares
  used to calculate
  earnings per share
   Basic              36,614   35,813           36,405    33,464
   Diluted            37,825   37,944           37,830    35,835
 
    Note: Adjusted to (a) exclude the impacts of the $51.7 million of
          non-recurring charges in the first and third quarters of
          2001 and (b) reflect pro forma tax provisions of $1.3
          million and $5.7 million in the 2000 three- and twelve-month
          periods, respectively, on the operations of Kensington
          Laboratories, Inc., with whom Newport merged via a
          transaction accounted for as a pooling of interests in
          February 2001.


        

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