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.