IRVINE, Calif., April 23, 2002 (PRIMEZONE) -- Newport Corporation (Nasdaq:NEWP) today reported financial results for its first quarter ended March 31, 2002, reflecting improved semiconductor equipment sales and orders and continued weakness in its fiber optic communications business. The company also reported lower sales to its other markets due to traditional seasonal purchasing patterns and the weak macroeconomic climate.
For the first quarter of 2002, sales from continuing operations totaled $43.9 million, resulting in a loss from continuing operations of $0.8 million, or $0.02 per diluted share. In the fourth quarter of 2001, Newport had sales from continuing operations of $44.3 million and income from continuing operations of $1.6 million, or $0.04 per diluted share. During the robust market environment experienced during the first quarter of 2001, the company recorded sales from continuing operations of $99.1 million and pro forma income from continuing operations of $15.9 million, or $0.42 per diluted share.
The 2002 first quarter sales and loss from continuing operations exclude the results of Newport's Industrial Metrology Systems Division, which is being accounted for as a discontinued operation due to the previously announced plans to sell the business. Pursuant to generally accepted accounting principles, Newport recorded a $3.4 million charge in the first quarter of 2002 to reflect the year-to-date segment operating loss and the anticipated loss from the sale. The Industrial Metrology Systems Division recorded sales of $4.8 million in the first quarter of 2002, sales of $6.0 million in the fourth quarter of 2001 and sales of $7.7 million in the first quarter of 2001.
The loss from continuing operations also excludes the previously announced one-time, non-cash charge of $14.5 million, or $0.39 per diluted share, reflected as a cumulative effect of a change in accounting principle, resulting from a write-down of goodwill relating to past acquisitions required by the adoption of Financial Accounting Standard No. 142.
Newport's net loss for the first quarter of 2002, including the effects of the discontinued operation and the cumulative effect of a change in accounting principle, was $18.7 million, or $0.50 per diluted share, compared with net income in the first quarter of 2001 of $6.9 million, or $0.18 per diluted share, including the effects of acquisition and other non-recurring charges recorded in the first quarter of 2001.
New orders from continuing operations in the first quarter of 2002 increased 17% to $39.5 million versus $33.8 million in the fourth quarter of 2001. Order cancellations from continuing operations in the first quarter of 2002 totaled $0.9 million -- lower than any quarter in 2001. In the fourth quarter of 2001, order cancellations from continuing operations were $6.8 million. Net orders from continuing operations in the first quarter of 2002, after adjusting for cancellations, increased 43% to $38.6 million compared with $27.0 million in the fourth quarter of 2001, but were well below the $76.2 million recorded during the robust market environment of the first quarter of 2001.
New orders received from semiconductor capital equipment customers reflect a significant rebound during the quarter. New semiconductor orders in the first quarter of 2002 were $15.0 million, more than double the $7.2 million recorded in the fourth quarter of 2001, but still below the $20.2 million recorded in the first quarter of 2001.
New orders from customers in the fiber optic communications market totaled $4.5 million in the first quarter of 2002, compared with $4.9 million in the fourth quarter of 2001 and $36.4 million in the first quarter of 2001, reflecting the continuing weakness in this market.
New orders from continuing operations from customers in Newport's other end markets -- primarily research and aerospace -- were $20.0 million in the first quarter of 2002, compared with $21.7 million in the fourth quarter of 2001 and $26.7 million in the first quarter of 2001. Orders in the 2001 first quarter included a significant amount of orders from research and laser-electro-optical industries in support of the strong growth in telecommunications forecast at that time, and this purchasing activity is not expected to recur in future periods. Orders from Newport's other research and aerospace customers were higher on a year-over-year basis but slightly lower on a sequential basis due to traditional seasonal capital spending patterns in these markets.
Robert G. Deuster, president and chief executive officer, said: "We are pleased to see this strengthening in our semiconductor capital equipment segment. Our efforts have been very focused on getting our products and subsystems designed into our customers' next-generation systems and on gaining market share during the down-cycle. We believe that these efforts are beginning to pay off, and we expect to benefit from them later in 2002 and beyond. In the fiber optic industry, while we continue to see interest from component manufacturers in our automation solutions, the downturn in this industry continues, and our low order intake level is reflective of the ongoing capital spending constraints on many of our component manufacturer customers and others throughout the telecommunications supply chain."
First quarter 2002 sales to semiconductor capital equipment companies were $16.8 million, a 31% increase compared with the $12.8 million recorded in the fourth quarter of 2001. In the first quarter of 2001, Newport's sales to this segment were $27.0 million.
Sales to fiber optic customers in the first quarter of 2002 remained weak, reflecting the continued low levels of capital spending by these companies. Sequentially, sales to fiber optic customers dropped to $5.0 million in the first quarter of 2002 versus $7.0 million in the fourth quarter of 2001. In the first quarter of 2001, by way of comparison, Newport recorded all-time record sales to fiber optic customers of $44.5 million. First quarter 2002 sales from continuing operations to customers in Newport's other end-markets decreased to $22.1 million, compared with $24.5 million in the fourth quarter of 2001 and $27.6 million in the first quarter of 2001. Such sales in the 2001 first quarter included significant purchases by customers in the research and laser-electro-optical industries supporting the telecommunications industry, which purchasing activity is not expected to recur in future periods. Sales to Newport's other research and aerospace customers were higher on a year-over-year basis but slightly lower on a sequential basis due to traditional seasonal capital spending patterns in these markets.
In addition to the planned divestiture of its metrology business, Newport took a number of strategic steps to better position the company for long-term growth in its key end markets. In particular, Newport:
* Completed the acquisition of Micro Robotics Systems, Inc. (MRSI), a privately held capital equipment manufacturer of high precision, fully automated capital equipment for assembly and dispensing applications in the fiber optic communications, microwave communications and semiconductor equipment markets. The acquisition is expected to be slightly accretive to Newport's full year 2002 results. * Entered into agreements with Flextronics Photonics, a business unit of Flextronics International (Nasdaq:FLEX), pursuant to which Flextronics transferred certain elements of its optical component manufacturing technology to Newport, and Newport is developing next-generation assembly automation systems for the optical component manufacturing market based on this process technology. The agreements also include the joint development of next- generation automated manufacturing solutions, and establish Newport as Flextronics' exclusive supplier of automated fiber optic alignment and attachment equipment. * Appointed Kevin T. Crofton to the position of vice president and general manager of Newport's Fiber Optics and Photonics Division, bringing to the company additional experience in capital equipment business management.
The gross margin from continuing operations in the first quarter of 2002 was 32.1%, a decrease from the 36.7% recorded in the fourth quarter of 2001. The decrease was substantially due to a $1.8 million positive adjustment in the fourth quarter of 2001 required to convert the inventory at Kensington Laboratories to Newport's standard costing methodology. In the first quarter of 2001, the gross margin of 45.1% reflected the positive leverage of the record sales volume.
Selling, general and administrative (SG&A) expense from continuing operations for the first quarter of 2002 totaled $11.4 million, which was slightly below the $11.5 million recorded in the fourth quarter of 2001 and well below the $17.5 million recorded during the corresponding period of 2001, reflecting the benefit of cost cutting measures implemented in the third and fourth quarters of 2001.
Research and development (R&D) expense from continuing operations for the first quarter of 2002 of $6.4 million reflected a slight increase compared with the $6.0 million recorded in the fourth quarter of 2001 and a decrease from the $7.2 million recorded in the first quarter of 2001.
Interest and other income, net of interest expense, consisting primarily of interest earned on marketable securities, totaled $2.5 million for the first quarter of 2002 as compared with $3.4 million in the fourth quarter of 2001 and $4.0 million in the first quarter of 2001. The decrease on a year-over-year basis is due largely to the lower average cash balance and reduced interest rate levels during the quarter. The tax rate for the first quarter of 2002 was 31 percent.
Deuster added: "Newport's balance sheet and cash position remain strong. At the end of March 2002, we had $262 million in cash and will add to that position as a result of the sale of our non-strategic metrology systems division. We remain committed to our focus on lowering the breakeven point for our businesses and generating positive cash flow."
Second Quarter 2002 Business 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.
** Subsequent to the end of the first quarter of 2002, Newport announced plans to sell the majority of its Industrial Metrology Systems Division in two separate transactions with unrelated strategic buyers. Total proceeds from the divested business are expected to be in the range of $10 million to $12 million. The company expects to incur additional losses from the operations of this business until the transactions close. The transactions are expected to be completed in the second quarter of 2002 and to be immediately accretive to Newport's earnings per share by eliminating losses that have occurred in the company's metrology operations. The following guidance excludes the impact of the discontinued operations and focuses only on continuing operations.
** The company also noted that two photonics companies in which it had made minority investments in prior years are experiencing severe difficulties and may in the future sell, reorganize or liquidate for less than current book value. At this time, it is too early to determine the amount of any write-down that may be required in the event of any such actions. The company noted that the carrying value of these investments totals approximately $7 million. The following guidance excludes the potential write-down of these investments.
** Despite the increase in order levels in the latter part of the 2002 first quarter, Newport currently anticipates that the effects of the low order levels during the second half of 2001 will cause second quarter net sales to be sequentially lower than the first quarter. The company currently expects net sales from continuing operations in the second quarter of 2002 to be in the range of $38 million to $42 million.
** Gross margin for the second quarter of 2002 is expected to be relatively flat compared with the 32.1% experienced in the first quarter of 2002 as the negative impact of the anticipated lower sales level is expected to be offset in part by the effects of the company's cost reduction efforts.
** SG&A expenses in the second quarter of 2002 are expected to be relatively flat as compared with the $11.4 million recorded in the first quarter of 2002.
** R&D spending is expected to be between $6.0 million and $6.5 million in the second quarter of 2002.
** The company expects interest and other income, net of interest expense and excluding any potential write-downs of investments, to be between $2.0 million and $2.3 million in the second quarter of 2002, depending on interest rates, cash balances, foreign exchange markets and potential business development activity.
** The tax rate on continuing operations for the second quarter of 2002 is expected to be consistent with the 31% tax rate in the first quarter of 2002.
** The company expects the number of diluted common shares outstanding to remain essentially flat at approximately 37 million to 38 million for the second quarter of 2002.
** For the second quarter of 2002, the company expects to incur a loss per share from continuing operations, excluding the effects of the discontinued operation and the potential investment write-downs, in the range of $0.03 to $0.07.
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 and research 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.
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, April 23, 2002 at 5 p.m., Eastern Time, to review the company's first quarter results. 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.streetevents.com. Rebroadcast over the Internet will be available through 8 p.m., Eastern Time, Tuesday, May 7, 2002, on both Web sites. A telephonic playback of the conference call will also be available through 7 p.m., Eastern Time, Tuesday, April 30, 2002. Listeners should call (800) 633-8284 (domestic) or (858) 812-6440 (international) and use Reservation No. 20471468.
This news release contains forward-looking statements, including without limitation the statements under the heading, "Second Quarter 2002 Business 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, 2001 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 and the contributions of those companies to Newport's operating results, 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)
(Unaudited)
Three Months Ended
March 31,
2002 2001 % Chg
-------- -------- -----
Net sales $ 43,917 $ 99,069 (56)
Cost of sales 29,828 54,396
-------- --------
Gross profit 14,089 44,673 (68)
Selling, general and
administrative expense 11,378 17,496
Acquisition and other
non-recurring charges -- 10,683
Research and
development expense 6,379 7,224
-------- --------
Income (loss) from
operations (3,668) 9,270 NM
Income (loss) from
operations % (8.4) 9.4
Interest and other
income, net 2,524 3,934
-------- --------
Income (loss) from
continuing operations
before income taxes (1,144) 13,204 NM
Income tax provision
(benefit) (355) 4,588
-------- --------
Income (loss) from
continuing operations (789) 8,616 NM
Loss from discontinued
operations, net of
tax of $509 and
$1,169 for the three
months ended March 31,
2002 and 2001,
respectively (3,378) (1,674)
Cumulative effect of
a change in
accounting principle (14,500) --
-------- --------
Net income (loss) ($18,667) $ 6,942 NM
Number of shares used
to calculate earnings
(loss) per share:
Basic 37,257 36,165
Diluted 37,257 37,988
Earnings (loss) per
share, basic:
Income (loss) from
continuing operations ($ 0.02) $ 0.24 NM
Loss from discontinued
operations, net of tax ($ 0.09) ($ 0.05) NM
Cumulative effect of
a change in accounting
principle ($ 0.39) -- NM
Net income (loss) ($ 0.50) $ 0.19 NM
Earnings (loss) per
share, diluted:
Income (loss) from
continuing operations ($ 0.02) $ 0.23 NM
Loss from discontinued
operations, net of tax ($ 0.09) ($ 0.05) NM
Cumulative effect of
a change in
accounting principle ($ 0.39) -- NM
Net income (loss) ($ 0.50) $ 0.18 NM
NOTE: Refer to the attached Consolidated Income Statement for the
pro forma presentation.
Newport Corporation
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
March 31, December 31,
2002 2001
------ ------
ASSETS
Cash and cash equivalents $ 7,964 $ 7,107
Marketable securities 254,217 274,494
Customer receivables, net 35,440 35,833
Inventories 91,511 96,424
Deferred tax assets 11,846 11,091
Net current assets held for sale 15,517 --
Other current assets 14,626 15,172
------- -------
Total current assets 431,121 440,121
Long-term deferred tax assets 22,240 22,240
Investments and other assets 8,693 9,000
Property, plant and equipment,
at cost 43,336 45,460
Goodwill, net 59,197 27,056
------- -------
$ 564,587 $ 543,877
======= =======
(Unaudited)
March 31, December 31,
2002 2001
------ ------
LIABILITIES AND EQUITY
Accounts payable $ 10,565 $ 12,939
Accrued payroll expenses 9,135 12,813
Current portion of long-term debt 4,040 6,189
Deferred revenue 2,533 823
Net current liabilities held for sale 5,924 --
Other current liabilities 14,244 18,039
------ ------
Total current liabilities 46,441 50,803
Long-term debt 3,748 3,409
Other liabilities -- 658
Stockholders' equity 514,398 489,007
------ ------
$ 564,587 $ 543,877
======= =======
Newport Corporation
Pro Forma Consolidated Income Statement
(In thousands, except per share amounts and percentages)
(Unaudited)
Three Months Ended
March 31,
2002 2001 % Chg
-------- -------- -----
Net sales $ 43,917 $ 99,069 (56)
Cost of sales 29,828 54,396
-------- --------
Gross profit 14,089 44,673 (68)
Selling, general and
administrative expense 11,378 17,496
Research and
development expense 6,379 7,224
-------- --------
Income (loss) from
operations (3,668) 19,953 NM
Income (loss) from
operations % (8.4) 20.1
Interest and other
income, net 2,524 3,982
-------- --------
Income (loss) from
continuing operations
before income taxes (1,144) 23,935 NM
Income tax provision
(benefit) (355) 8,040
-------- --------
Income (loss) from
continuing operations (789) 15,895 NM
Loss from discontinued
operations, net of
tax of $509 and $490 for
the three months ended
March 31, 2002 and 2001,
respectively (3,378) (565)
Cumulative effect of
a change in accounting
principle (14,500) --
-------- --------
Net income (loss) ($18,667) $ 15,330 NM
Number of shares used
to calculate earnings
(loss) per share:
Basic 37,257 36,165
Diluted 37,257 37,988
Earnings (loss) per
share, basic:
Income (loss) from
continuing operations ($ 0.02) $ 0.44 NM
Loss from discontinued
operations, net
of tax ($ 0.09) ($ 0.02) NM
Cumulative effect of
a change in
accounting
principle ($ 0.39) -- NM
Net income (loss) ($ 0.50) $ 0.42 NM
Earnings (loss) per
share, diluted:
Income (loss) from
continuing operations ($ 0.02) $ 0.42 NM
Loss from discontinued
operations, net
of tax ($ 0.09) ($ 0.02) NM
Cumulative effect of
a change in
accounting
principle ($ 0.39) -- NM
Net income (loss) ($ 0.50) $ 0.40 NM
Note: The above pro forma presentation excludes the impact of
$12.5 million in acquisition and other non-recurring charges
recorded in the three months ended March 31, 2001.