IRVINE, Calif., July 30 /PRNewswire-FirstCall/ -- Newport Corporation (Nasdaq: NEWP) today reported financial results for its second quarter ended June 28, 2008, and provided guidance regarding its outlook in the third quarter of 2008.

Sales in the second quarter of 2008 totaled $117.7 million, an increase of 6.1% compared with the $110.9 million recorded in the second quarter of 2007. Sales in the first half of 2008 totaled $232.9 million, an increase of 6.8% compared with the $218.2 million recorded in the first half of 2007. New orders received in the second quarter of 2008 totaled $110.1 million, a decrease of approximately 1.6% compared with the $111.9 million recorded in the second quarter of 2007. New orders received in the first half of 2008 totaled $235.1 million, an increase of 5.8% compared with the $222.2 million recorded in the first half of 2007.

Robert J. Phillippy, president and chief executive officer, commented, 'Despite weak overall macroeconomic conditions, we achieved our sales objectives in the second quarter. In particular, we experienced strong year-over-year increases in shipments of products to customers for industrial manufacturing and photovoltaic applications. The strength in these areas was offset in part by lower sales to research customers and semiconductor equipment manufacturers.'

Commenting on orders, Mr. Phillippy stated, 'Our order level for the second quarter of 2008 was slightly below the comparable quarter of 2007 and was below our expectations, due primarily to lower orders received from customers in the life and health sciences (LHS) market. This decrease in LHS market orders was offset in part by higher orders from photovoltaic customers. Following two consecutive quarters of all-time record orders from LHS customers, we believe that our lower orders from this market in the second quarter primarily reflect the timing of our customers' needs. However, a few of our original equipment manufacturer (OEM) customers in this market have reported a modest slowdown in demand for their medical laser systems for cosmetic procedures. On the other hand, we continue to be pleased by the traction we are gaining in the photovoltaic market. Our new orders from photovoltaic customers in the second quarter exceeded $6.5 million, the second highest quarterly level ever recorded by Newport from this market after the all-time record level in the first quarter of this year. In the first half of 2008, we have received new orders totaling approximately $22 million from customers in the photovoltaic industry.'

Based on generally accepted accounting principles (GAAP), Newport reported a net loss in the second quarter of 2008 of $2.8 million, or $0.08 per diluted share, compared with net income of $8.0 million, or $0.20 per diluted share, in the second quarter of 2007. Included in the net loss is a non-cash, pre-tax charge of $7.1 million to write-off a note receivable and other amounts relating to a business that had been classified as a discontinued operation and subsequently sold in 2005. The buyer of that business has failed to make certain principal, interest and rent payments due under its agreements with Newport. The company has a secured interest in the assets of the business and has begun legal proceedings to recover the amounts owed. Pursuant to GAAP, the note receivable and other amounts have been fully written off in the second quarter, and in future periods, any cash received by the company in satisfaction of these items will be recorded as other income in the company's financial statements. Excluding this charge, the company would have reported net income of $4.0 million, or $0.11 per diluted share, in the second quarter of 2008. For the first half of 2008, Newport reported net income of $0.9 million, or $0.03 per diluted share, compared with $13.2 million, or $0.33 per diluted share, in the first half of 2007. Excluding the write-off charge, Newport's net income for the first half of 2008 would have been $7.7 million, or $0.21 per diluted share. A table reconciling the company's net income (loss) and net income (loss) per diluted share for the second quarter and first half of 2008 in accordance with GAAP and on a non-GAAP basis excluding the write-off is included for reference herein.

The company's gross profit for the second quarter of 2008 was $47.3 million, or 40.2% of net sales, compared with $49.1 million, or 44.2% of net sales, for the second quarter of 2007. The company's gross profit for the first half of 2008 was $93.4 million, or 40.1% of net sales, compared with $95.7 million, or 43.9% of net sales, for the first half of 2007. The decrease in gross profit in both periods of 2008 was due primarily to lower gross margins in the company's Lasers Division, which incurred higher manufacturing costs and experienced greater market pricing pressure compared with the corresponding periods of 2007.

Selling, general and administrative (SG&A) expenses for the second quarter of 2008 were $30.1 million, or 25.6% of net sales, compared with $28.8 million, or 26.0% of net sales, in the second quarter of 2007. SG&A expenses for the first half of 2008 totaled $59.9 million, or 25.7% of net sales, compared with $58.8 million, or 27.0% of net sales, in the first half of 2007.

Research and development (R&D) expenses for the second quarter of 2008 were $12.3 million, or 10.5% of net sales, compared with $10.9 million, or 9.8% of net sales, in the second quarter of 2007. R&D expenses for the first half of 2008 totaled $23.8 million, or 10.2% of net sales, compared with $21.5 million, or 9.8% of net sales, in the corresponding period of 2007.