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. The
increase in R&D expenses in the 2008 periods was due primarily to higher
expenses related to the development of products targeted at the photovoltaic
industry.
The company's cash, cash equivalents and marketable securities at the end
of the second quarter of 2008 totaled $141.1 million, an increase of $6.7
million during the quarter.
Mr. Phillippy continued, 'While our operational performance in the second
quarter exceeded our expectations slightly, the low order intake levels during
the quarter, the generally weak conditions in our primary end markets and the
slower than anticipated rebound in our Lasers Division's financial performance
cause us to be cautious about our outlook for the third quarter and second
half of 2008. We currently expect our consolidated net sales in the third
quarter to be approximately 5% to 10% lower than the second quarter of 2008.
We also expect this reduction in revenue to negatively impact our expected
profitability in the third quarter, particularly in our Lasers Division. As a
result of this weaker financial outlook, we are in the process of analyzing
and quantifying actions to improve our financial performance in the second
half of this year and in 2009. Once this analysis is completed, we will
quantify the expected financial impact in the third and fourth quarters of
this year. In addition, as we work through the legal process to recover the
amounts owed relating to the discontinued operation, we anticipate recovering
some, if not all, of the amounts that were written off. As these actions are
finalized and the legal proceedings progress and their financial impacts are
quantified, we will provide updated guidance.'
ABOUT NEWPORT CORPORATION
Newport Corporation is a leading global supplier of advanced-technology
products and systems to customers in the scientific research,
microelectronics, aerospace and defense/security, life and health sciences and
precision industrial manufacturing markets. Newport's innovative solutions
leverage its expertise in high-power semiconductor, solid-state and ultrafast
lasers, photonics instrumentation, sub-micron positioning systems, vibration
isolation, optical components and subsystems and precision automation 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, chief financial officer and treasurer, will
host an investor conference call today, July 30, 2008, at 5:00 p.m. Eastern
time (2:00 p.m. Pacific time) to review the company's results for the second
quarter of 2008 and its business outlook. 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 (888) 684-1262 within the U.S.
and Canada or (913) 312-1495 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 or
(719) 457-0820 from abroad. Playback will be available beginning at 8:00 p.m.
Eastern time (5:00 p.m. Pacific time) on Wednesday, July 30, 2008, and
continue through 8:00 p.m. on Wednesday, August 6, 2008. The replay
confirmation code is 6469557.
SAFE HARBOR STATEMENT
This news release contains forward-looking statements, including without
limitation statements regarding Newport's expected sales and profitability in
the third quarter of 2008 and the actions being considered to improve its
financial results for the second half of 2008 and for 2009, and Newport's
anticipated recovery of amounts owed relating to the sale of its previously
discontinued operation. 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 29, 2007, assumptions relating to the foregoing involve
judgments and risks with respect to, among other things, the outcome of legal
proceedings relating to the recovery of amounts due to Newport; the timing of
acquisition and divestiture activities and the amounts of charges associated
with those activities; 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 to photovoltaic customers and the life and health sciences
market; Newport's ability to successfully integrate businesses acquired; the
levels of private and governmental research funding worldwide; 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 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. 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 Operations
(Unaudited)
Three Months Ended Six Months Ended
June 28, June 30, June 28, June 30,
(In thousands) 2008 2007 2008 2007
Net sales $117,664 $110,904 $232,907 $218,168
Cost of sales 70,367 61,843 139,499 122,476
Gross profit 47,297 49,061 93,408 95,692
Selling, general and
administrative expenses 30,092 28,792 59,883 58,806
Research and development expense 12,341 10,874 23,785 21,477
Operating income 4,864 9,395 9,740 15,409
Write-down of note receivable and
other amounts related to
previously discontinued operations (7,060) - (7,060) -
Interest and other income
(expense), net (206) 16 (689) 217
Income before income taxes (2,402) 9,411 1,991 15,626
Income tax provision, net 390 1,448 1,058 2,412
Net income (loss) $(2,792) $7,963 $933 $13,214
Net income (loss) per share:
Basic $(0.08) $0.20 $0.03 $0.33
Diluted $(0.08) $0.20 $0.03 $0.33
Shares used in the computation of
net income (loss) per share:
Basic 36,009 38,955 36,273 39,629
Diluted 36,009 39,554 36,385 40,491
Other operating data:
New orders received during the
period $110,076 $111,920 $235,051 $222,234
Backlog at the end of period
scheduled to ship within 12
months $122,165 $111,913
Newport Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands) Three Months Ended Six Months Ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Net income (loss):
Net income (loss) -- GAAP $(2,792) $7,963 $933 $13,214
Write-down of note receivable and
other amounts related to previously
discontinued operations, net of tax
impact 6,759 - 6,759 -
Non-GAAP net income $3,967 $7,963 $7,692 $13,214
Net income (loss) per diluted share:
Net income (loss) -- GAAP $(0.08) $0.20 $0.03 $0.33
Write-down of note receivable and
other amounts related to previously
discontinued operations, net of tax
impact 0.19 - 0.18 -
Non-GAAP net income per diluted share $0.11 $0.20 $0.21 $0.33
Newport Corporation
Consolidated Balance Sheets
(Unaudited)
June 28, December 29,
(In thousands) 2008 2007
ASSETS
Current assets:
Cash and cash equivalents $65,142 $88,737
Marketable securities 75,982 55,127
Accounts receivable, net 90,095 87,606
Notes receivable, net 3,923 3,821
Inventories 112,820 113,969
Deferred income taxes 6,366 6,248
Prepaid expenses and other current assets 14,227 13,603
Total current assets 368,555 369,111
Property and equipment, net 65,266 61,872
Goodwill 174,197 174,197
Deferred income taxes 16,975 16,932
Intangible assets, net 44,131 46,171
Investments and other assets 16,362 21,664
$685,486 $689,947
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term obligations $15,192 $12,402
Accounts payable 25,074 33,319
Accrued payroll and related expenses 22,520 23,096
Accrued expenses and other current
liabilities 27,690 24,598
Total current liabilities 90,476 93,415
Long-term debt 175,000 175,000
Obligations under capital leases,
less current portion 1,432 1,381
Accrued pension liabilities 11,510 10,740
Other liabilities 4,908 4,966
Stockholders' equity 402,160 404,445
$685,486 $689,947
Newport Corporation
Sales & Orders by End Market
(Unaudited)
(In thousands, except percentages)
Three Months Ended Six Months Ended
6/28/08 6/30/07 6/28/08 6/30/07
Sales by End Market
Scientific research, aerospace
and defense/security $38,015 $39,887 $76,452 $74,659
Microelectronics 36,594 32,963 72,894 64,733
Life and health sciences 20,941 20,124 41,708 40,850
Industrial manufacturing and
other 22,114 17,930 41,853 37,926
Total $117,664 $110,904 $232,907 $218,168
As a percentage of net sales:
Scientific research, aerospace
and defense/security 32.3 36.0 32.8 34.2
Microelectronics 31.1 29.7 31.3 29.7
Life and health sciences 17.8 18.1 17.9 18.7
Industrial manufacturing and
other 18.8 16.2 18.0 17.4
Total 100.0 100.0 100.0 100.0
Orders by End Market
Scientific research, aerospace
and defense/security $38,383 $40,601 $74,065 $76,314
Microelectronics 34,699 31,153 75,781 61,941
Life and health sciences 16,763 22,395 43,284 44,517
Industrial manufacturing and
other 20,231 17,771 41,921 39,462
Total $110,076 $111,920 $235,051 $222,234
As a percentage of total orders:
Scientific research, aerospace
and defense/security 34.9 36.3 31.5 34.3
Microelectronics 31.5 27.8 32.3 27.9
Life and health sciences 15.2 20.0 18.4 20.0
Industrial manufacturing and
other 18.4 15.9 17.8 17.8
Total 100.0 100.0 100.0 100.0
Note: Sales and orders from semiconductor equipment manufacturers and
photovoltaic customers are included in the company's Microelectronics end
market.
SOURCE Newport Corporation
