-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TyZYh66w+JqXG1Cgl4D+zuiciRq9k5Yo/fJsWlqPpvbyef3lKmajbe4ym8PG/un4 1JsieoeWMdjQj8guoTbSlw== 0000898430-95-002321.txt : 19951119 0000898430-95-002321.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002321 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWPORT CORP CENTRAL INDEX KEY: 0000225263 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 940849175 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01649 FILM NUMBER: 95591215 BUSINESS ADDRESS: STREET 1: 1791 DEERE AVE CITY: IRVINE STATE: CA ZIP: 92714 BUSINESS PHONE: 7148633144 FORMER COMPANY: FORMER CONFORMED NAME: DOLE JAMES CORP DATE OF NAME CHANGE: 19910905 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 *** FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 -------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _______________________ Commission File Number 0-1649 -------- NEWPORT CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 94-0849175 - ----------------------------------------------------- ------------------- (State or other Jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1791 Deere Avenue, Irvine, CA 92714 - ----------------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 863-3144 -------------- N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _______ ------ The number of shares outstanding of each of the issuer's classes of common stock as of September 30, 1995, was 8,678,256 --------- Page 1 of 12 Pages Exhibit Index on Sequentially Numbered Page 11 NEWPORT CORPORATION INDEX
Page Number PART I. FINANCIAL INFORMATION Item 1: Financial Statements: Condensed Consolidated Statement of Operations and Condensed Consolidated Statement of Stockholders' Equity for the Three and Nine Months ended September 30, 1995 and 1994. 3 Condensed Consolidated Balance Sheet at September 30, 1995 and December 31, 1994. 4 Condensed Consolidated Statement of Cash Flows for the Nine Months ended September 30, 1995 and 1994. 5 Notes to Condensed Consolidated Financial Statements. 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. 11 SIGNATURE 11
2 NEWPORT CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
(In thousands except Three Months Ended Nine Months Ended per share amounts) September 30, September 30, -------------------- ------------------- 1995 1994 1995 1994 --------- -------- -------- -------- Net sales $24,253 $23,031 $74,094 $68,916 Cost of sales 13,079 12,441 40,527 37,857 ------- ------- ------- ------- Gross profit 11,174 10,590 33,567 31,059 Selling, general and administrative expense 8,091 7,990 24,966 23,700 Research and development expense 1,491 1,319 4,940 3,983 ------- ------- ------- ------- Income from operations 1,592 1,281 3,661 3,376 Interest expense (386) (455) (1,190) (1,351) Other income/(expense), net (112) 226 1,095 1,264 ------- ------- ------- ------- Income before income taxes 1,094 1,052 3,566 3,289 Income tax provision 350 354 1,141 1,197 ------- ------- ------- ------- Net income $ 744 $ 698 $ 2,425 $ 2,092 ======= ======= ======= ======= Net income per share $ 0.08 $ 0.08 $ 0.28 $ 0.25 ======= ======= ======= ======= Average number of shares 8,808 8,482 8,665 8,455 ======= ======= ======= ======= Stockholders' equity, beginning of period $49,589 $44,284 $46,651 $43,643 Net income 744 698 2,425 2,092 Dividends paid (171) (141) (312) (299) Unrealized translation gain (loss) (51) 556 1,034 664 Reduction in unrealized gain on marketable securities -0- (17) (343) (745) Unamortized deferred compensation 28 15 (217) (111) Issuance of common shares 771 94 1,672 245 ------- ------- ------- ------- Stockholders' equity, end of period $50,910 $45,489 $50,910 $45,489 ======= ======= ======= =======
See accompanying notes 3 NEWPORT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands) September 30, December 31, 1995 1994 -------------- ------------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 2,296 $ 3,014 Marketable securities -- 610 Customer receivables, net 17,512 18,755 Other receivables 1,378 1,912 Inventories 21,850 21,432 Other current assets 2,782 2,600 ------- ------- Total current assets 45,818 48,323 Investments, notes receivable and other assets 4,803 4,441 Property, plant and equipment, at cost, net 22,895 23,044 Goodwill, net 8,882 8,846 ------- ------- $82,398 $84,654 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,583 $ 5,393 Accrued payroll and related expenses 4,047 4,679 Taxes based on income 1,775 1,308 Accrued restructuring liabilities, net 609 2,364 Current portion of long-term debt 10,181 10,316 Other accrued liabilities 3,734 2,544 ------- ------- Total current liabilities 24,929 26,604 Deferred taxes 267 282 Notes payable to banks-long term 6,292 11,117 Stockholders' equity: Common stock, $.35 stated value, 20 million shares authorized; 8,678,000 shares issued and outstanding currently; 8,441,000 shares at December 31, 1994 3,037 2,954 Capital in excess of stated value 7,360 5,771 Unamortized deferred compensation (468) (251) Unrealized gain on marketable securities -- 343 Unrealized translation loss (1,744) (2,778) Retained earnings 42,725 40,612 ------- ------- Total stockholders' equity 50,910 46,651 ------- ------- $82,398 $84,654 ======= =======
See accompanying notes 4 NEWPORT CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ------------------- (In thousands) 1995 1994 -------- -------- OPERATING ACTIVITIES: Net income $ 2,425 $ 2,092 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 3,351 2,744 Net gain from sales of investments (832) (778) Increase in provision for losses on receivables and inventories 405 148 Decrease in deferred income taxes (15) (130) Net (gains) losses from sales of equipment (44) 122 Changes in operating assets and liabilities: Decrease in receivables 2,295 682 (Increase) decrease in inventories (185) 961 Increase in prepaid expenses (97) (228) Decrease in accounts payable & other accrued expenses (2,686) (3,831) Increase in accrued income taxes 465 718 Other 721 611 ------- ------- Net cash provided by operating activities 5,803 3,111 ------- ------- INVESTING ACTIVITIES: Proceeds from sales of investments (net) 822 1,189 Purchases of property, plant and equipment (net) (1,834) (998) Other 137 65 ------- ------- Net cash provided by (used in) investing activities (875) 256 ------- ------- FINANCING ACTIVITIES: Decrease in short-term borrowings, net (579) (1,472) Decrease in long-term borrowings, net (5,500) (2,042) Cash dividends paid (312) (299) Proceeds from issuance of common stock under employee agreements 879 -- ------- ------- Net cash used in financing activities (5,512) (3,813) ------- ------- Effect of foreign exchange rate changes on cash (134) 212 ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (718) (234) Cash and cash equivalents at beginning of period 3,014 2,614 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,296 $ 2,380 ======= ======= CASH PAID IN THE PERIOD FOR: Interest $ 882 $ 928 Taxes 587 258
See accompanying notes 5 NEWPORT CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) 1. INTERIM REPORTING GENERAL The accompanying unaudited financial statements consolidate the accounts of the Company and its wholly owned subsidiaries and have been restated to reflect the acquisitions of RAM Optical Instrumentation, Inc. (ROI) and Light Control Instruments, Inc. (LCI) (Note 2) which have been accounted for using the pooling of interests method. The accounts of the Company's subsidiaries in Europe have been consolidated using a one-month lag. In the opinion of management, all adjustments necessary for a fair presentation of the information in the unaudited condensed consolidated financial statements have been made and consist of only normal recurring accruals. Certain reclassifications have been made to prior period amounts to conform to current year presentation. Although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission, and consequently, these statements should be read in conjunction with the Company's consolidated financial statements and notes thereto, contained in the Company's Form 8-K dated May 17, 1995. EARNINGS PER SHARE Earnings per share is based on the weighted average number of shares of common stock and the dilutive effects of common stock equivalents (stock options), determined using the treasury stock method. 2. ACQUISITIONS On February 28, 1995, the Company acquired all the outstanding capital stock of ROI, a manufacturer of video inspection systems, in exchange for 1,251,000 shares of its common stock. Additionally, an option to purchase 3,500 ROI common shares was exchanged for an option to purchase 72,975 Newport common shares. On March 30, 1995, the Company acquired all the outstanding stock of LCI, a manufacturer of laser-diode instruments, in exchange for 128,000 shares of its common stock. Net sales and net income (loss) of Newport, ROI and LCI were as follows for the three- and nine-months ended September 30, 1994:
(In thousands) Three Months Nine Months ------------ ----------- Net sales Newport $20,992 $62,922 ROI 1,907 5,600 LCI 132 394 ------- ------- Combined $23,031 $68,916 ======= ======= Net income (loss) Newport $ 743 $ 2,335 ROI (41) (232) LCI (4) (11) ------- ------- Combined $ 698 $ 2,092 ======= =======
These transactions have been accounted for as poolings of interests. Costs associated with these acquisitions totaling $0.1 million were charged to operations in the first quarter of 1995. 6 NEWPORT CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) 3. CUSTOMER RECEIVABLES Customer receivables consist of the following:
September 30, December 31, (In thousands) 1995 1994 ------------- ------------ Customer receivables $18,089 $19,215 Less allowance for doubtful accounts 577 460 ------- ------- $17,512 $18,755 ======= =======
The Company maintains adequate reserves for potential credit losses. Such losses have been minimal and within management's estimates. Receivables from customers are generally unsecured. 4. INVENTORIES Inventories are stated at cost, determined on either a first-in, first-out (FIFO) or average cost basis and do not exceed net realizable value. Inventories consist of the following:
September 30, December 31, (In thousands) 1995 1994 ------------- ------------ Raw materials and purchased parts $ 7,476 $ 7,350 Work in process 3,733 3,541 Finished goods 10,641 10,541 ------- ------- $21,850 $21,432 ======= =======
5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following:
September 30, December 31, (In thousands) 1995 1994 ------------- ------------ Land $ 2,233 $ 2,115 Buildings 13,338 12,671 Leasehold improvements 7,415 7,176 Machinery and equipment 19,657 19,119 Office equipment 8,506 7,596 ------- ------- 51,149 48,677 Less accumulated depreciation 28,254 25,633 ------- ------- $22,895 $23,044 ======= =======
7 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 The following is management's discussion and analysis of certain significant factors which have affected the earnings and financial position of the Company during the period included in the accompanying financial statements. This discussion includes the impact of the acquisition of RAM Optical Instrumentation Inc. ("ROI") and Light Control Instruments Inc. ("LCI") and represents the three- and nine-month periods ended September 30, 1995, compared with the three- and nine-month periods ended September 30, 1994. This discussion should be read in conjunction with the financial statements and associated notes. Prior period financial statements have been restated to reflect the acquisitions of ROI and LCI using the pooling of interests method. ACQUISITIONS: On February 28, 1995, the Company acquired all the outstanding capital stock of ROI, a manufacturer of video inspection systems, in exchange for 1,251,000 shares of its common stock. Additionally, an option to purchase 3,500 ROI common shares was exchanged for an option to purchase 72,975 Newport common shares. On March 30, 1995, the Company acquired all the outstanding stock of LCI, a manufacturer of laser-diode instruments, in exchange for 128,000 shares of its common stock. These transactions have been accounted for as poolings of interests. Costs associated with these acquisitions totaling $0.1 million were charged to operations in the first quarter of 1995. RESTRUCTURING: At December 31, 1994, $2.4 million remained of the restructuring reserves established during 1992 and 1993. During the first three quarters of 1995, $1.8 million was charged to the reserve representing $0.6 million for severance and $1.2 million to close facilities. It is expected that the remaining $0.6 million, principally severance and costs to close facilities, will be spent during the remainder of 1995. RESULTS OF OPERATIONS FINANCIAL ANALYSIS:
Period-to-Period Increase (decrease) Three Nine Percentage of Net Sales Months Months Three Months Ended Nine Months Ended Ended Ended September 30, September 30, September 30, 1995 1994 1995 1994 1995 1994 ----- ----- ----- ----- ------ ----- Net sales 100.0% 100.0% 100.0% 100.0% 5.3% 7.5% Cost of sales 53.9 54.0 54.7 54.9 5.1 7.1 ----- ----- ----- ----- ------ ----- Gross profit 46.1 46.0 45.3 45.1 5.5 8.1 ------------ Selling, general and administrative expense 33.4 34.7 33.7 34.4 1.3 5.3 Research and development expense 6.1 5.7 6.7 5.8 13.0 24.0 ----- ----- ----- ----- ------ ----- Income from operations 6.6 5.6 4.9 4.9 24.3 8.4 ---------------------- Interest expense (1.6) (2.0) (1.6) (2.0) (15.2) (11.9) Other income, net (0.5) 1.0 1.5 1.8 (149.6) (13.4) ----- ----- ----- ----- ------ ----- Income before income taxes 4.5 4.6 4.8 4.7 4.0 8.4 -------------------------- Income taxes 1.4 1.5 1.5 1.7 (1.1) (4.7) ----- ----- ----- ----- ------ ----- Net income 3.1 3.0 3.3 3.0 6.6 15.9 ---------- ===== ===== ===== ===== ====== =====
8 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 RESULTS OF OPERATIONS (CONT'D) NET SALES: Sales for the three- and nine-month periods ended September 30, 1995, were $24.3 million and $74.1 million, respectively, compared with $23.0 million and $68.9 million for the three- and nine-month periods ended September 30, 1994. The current quarter increase is attributable to sales growth in U.S. domestic markets ($0.8 million), Canada ($0.3 million), and Europe ($0.1 million) combined with a favorable exchange rate effect ($0.8 million) on sales denominated in foreign currencies, offset in part by declines in sales to the Pacific Rim ($0.7 million). The year-to-date increase is attributable to sales growth in U.S. domestic ($3.4 million) and European markets ($0.5 million) and a favorable exchange rate effect ($3.1 million) on sales denominated in foreign currencies offset in part by declines in sales to the Pacific Rim ($1.8 million). The Company's domestic sales totaled $14.0 million and $40.5 million for the three- and nine-month periods ended September 30, 1995, compared with $13.2 million and $37.1 million for the three- and nine-month periods ended September 30, 1994, a sales increase of 6.1% and 9.2%, respectively, for the quarter and the nine-month period. The current quarter sales increases from the year ago level was primarily attributable to increased sales revenue at ROI. The nine- month sales increase from the year ago level was primarily the result of growth across the core product lines and to increased sales revenue at ROI and LCI. International sales of the company were $10.3 million and $33.6 million for the three- and nine-month periods ended September 30, 1995, compared with $9.8 million and $31.8 million for the three- and nine-month periods ended September 30, 1994, a sales increase of 5.1% and 5.7% for the respective periods. The increase for the three months ended September 30, 1995 resulted primarily from the favorable exchange rate effect mentioned previously offset in part by declines in the Pacific Rim. The year-to-date increase resulted from a strengthening of sales in the major markets of Europe and the favorable exchange rate effect mentioned previously offset in part by declines in the Pacific Rim. The Company believes the international sales decline in the Pacific Rim from the year ago level resulted primarily from the weak economic environment in Japan. COST OF SALES: Cost of sales when stated as a percentage of sales for the three- and nine-month periods ended September 30, 1995, was 53.9% and 54.7%, respectively, a decrease compared with 54.0% and 54.9% for the three- and nine-month periods ended September 30, 1994. These results reflect continuation of gross margin improvements following actions taken during the first quarter of 1994, when the company initiated a number of cost saving measures in Europe. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative (SG&A) expenses for the three- and nine- month periods ended September 30, 1995, increased 1.3% and 5.3%, respectively, compared with the three- and nine-month periods ended September 30, 1994. SG&A expenses when stated as a percentage of sales were 33.4% and 33.7%, compared with 34.7% and 34.4% for the prior year periods. This improvement is principally attributable to the favorable impact of increased sales volume. 9 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 RESULTS OF OPERATIONS (CONT'D) RESEARCH AND DEVELOPMENT EXPENSES: Research and development (R&D) expenses for the three- and nine-month periods ended September 30, 1995, increased 13.0% and 24.0%, respectively, compared with the three- and nine-month periods ended September 30, 1994. These R&D expenses when stated as a percentage of sales were 6.1% and 6.7%, compared with 5.7% and 5.8% for the prior year periods. These increases are principally attributable to costs associated with the development of new precision systems for niche markets in the semiconductor, medical instrumentation and telecommunications industries. During the current quarter the Company capitalized $0.1 million of software development costs in accordance with the requirements of Statement of Financial Accounting Standards No. 86. INTEREST EXPENSE AND OTHER INCOME: Interest expense for the three- and nine-month periods ended September 30, 1995, was $0.4 million and $1.2 million, respectively, compared with $0.5 million and $1.4 million for the three- and nine-month periods ended September 30, 1994. The reduction resulting principally from a $6.1 million year-to-date reduction of the Company's debt offset in part by increased interest expense caused by the exchange rate impact of the strengthening over the year of the French franc relative to the U.S. dollar. Other income and expense, consisting of interest income, dividends and other income and expense was an expense of $0.1 million and income of $1.1 million for the three-and nine-month periods ended September 30, 1995. This compares with income of $0.2 million and $1.3 million for the three- and nine-month periods ended September 30, 1994. The decrease in other income for the three-month period ended September 30, 1995 was primarily attributable to realized foreign currency losses. There was a $0.1 million realized foreign currency loss for the three months ended September 30, 1995, compared with a gain totaling $0.1 million for the three-month period ended September 30, 1994. PROVISION FOR TAXES: The tax provision for the three and nine-month periods ended September 30, 1995, of $0.4 million and $1.1 million, respectively, is principally federal and state taxes on domestic taxable income. Foreign net operating losses that occurred during the periods have not been currently benefited in accordance with Statement of Financial Accounting Standards No. 109. LIQUIDITY AND CAPITAL RESOURCES: During the nine months ended September 30, 1995, the Company generated $5.8 million cash from operations, $0.8 million from sales of investments and $0.9 million from exercises of stock options. These funds were used to reduce debt by $6.1 million, acquire capital equipment with a cost of $1.8 million and pay dividends totaling $0.3 million. At September 30, 1995, amounts available for borrowing under the Company's credit lines totaled $6.2 million, an improvement over the availability of $3.5 million at December 31, 1994. The Company believes its current working capital position together with estimated cash flows from operations, its existing credit availability and anticipated refinancings are adequate for operations in the ordinary course of business, anticipated capital expenditures as well as restructuring and debt payment requirements through 1996. 10 NEWPORT CORPORATION PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K. (a) Exhibits Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed no Reports on Form 8-K during the quarter ended September 30, 1995. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEWPORT CORPORATION (Registrant) Dated: November 13, 1995 By: /S/ROBERT C. HEWITT ------------------------------------- Robert C. Hewitt, Principal Financial Officer, duly authorized to sign on behalf of the Registrant 11 EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED WITHIN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1995. 1,000 3-MOS DEC-31-1995 SEP-30-1995 2,296 0 18,089 577 21,850 45,818 51,149 28,254 82,398 24,929 6,292 3,037 0 0 47,873 82,398 74,094 74,094 40,527 24,881 4,940 85 1,190 3,566 1,141 2,425 0 0 0 2,425 0.28 0.28
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