-----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, FR1negRIaB+J9px/qdaA0rX46o7gkjZOgjaoTUxJbJX5/BDHlP+jWnyF+1bmzhQ/ XUNYgOv8mklr5nFuYvNnWg== 0000898430-01-503534.txt : 20020410 0000898430-01-503534.hdr.sgml : 20020410 ACCESSION NUMBER: 0000898430-01-503534 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 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: 1788689 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 d10q.txt FORM 10-Q DATED SEPTEMBER 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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, 2001 ----------------------------- 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 (IRS Employer of incorporation or organization) Identification No.) 1791 Deere Avenue, Irvine, CA 92606 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (949) 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 the issuer's common stock as of September 30, 2001, was 36,647,105. Page 1 of 20 Exhibit Index on Sequentially Numbered Page 20 NEWPORT CORPORATION INDEX
PART I. FINANCIAL INFORMATION Page Number Item 1: Financial Statements: Consolidated Statement of Operations and Condensed Consolidated Statement of Stockholders' Equity for the Three and Nine Months ended September 30, 2001 and 2000. 3 Consolidated Balance Sheet at September 30, 2001 and December 31, 2000. 4 Consolidated Statement of Cash Flows for the Nine Months ended September 30, 2001 and 2000. 5 Notes to Condensed Consolidated Financial Statements. 6-12 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. 13-19 Item 3: Quantitative and Qualitative Disclosures About Market Risk. 19-20 PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. 20 SIGNATURE 20
Page 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements NEWPORT CORPORATION Consolidated Statement of Operations and Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
(In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2001 2000 2001 2000 ---- ---- ---- ---- Net sales $ 62,903 $ 73,629 $268,543 $187,175 Cost of sales (see Note 2) 66,003 40,959 185,029 101,291 --------- -------- -------- -------- Gross profit (loss) (3,100) 32,670 83,514 85,884 Selling, general and administrative expense (see Note 2) 16,880 14,201 55,344 37,492 Research and development expense 7,689 6,449 24,133 17,227 Restructuring and impairment charges (see Note 2) 13,438 - 13,438 - Acquisition and other non-recurring charges (see Note 3) - - 10,683 - --------- -------- -------- -------- Income (loss) from operations (41,107) 12,020 (20,084) 31,165 Interest and other income, net 3,108 3,135 10,569 1,893 --------- -------- -------- -------- Income (loss) before income taxes (37,999) 15,155 (9,515) 33,058 Income tax provision (benefit) (12,540) 3,941 (3,140) 6,745 --------- -------- -------- -------- Net income (loss) ($25,459) $ 11,214 ($6,375) $ 26,313 ========= ======== ======== ======== Net income (loss) per share: Basic ($0.70) $0.32 ($0.18) $0.81 Diluted ($0.70) $0.30 ($0.18) $0.75 Number of shares used to calculate net income per share: Basic 36,487 34,514 36,335 32,679 Diluted 36,487 36,827 36,335 35,126 Pro forma information reflecting the tax effect of the conversion of Kensington Laboratories, Inc. from an S-Corporation to a C-Corporation Income (loss) before income taxes ($37,999) $ 15,155 ($9,515) $ 33,058 Income tax provision (benefit) (12,540) 5,155 (3,140) 11,064 --------- -------- -------- -------- Net income (loss) ($25,459) $ 10,000 ($6,375) $ 21,994 ========= ======== ======== ======== Earnings (loss) per share: Basic ($0.70) $0.29 ($0.18) $0.67 Diluted ($0.70) $0.27 ($0.18) $0.63 Stockholders' equity, beginning of period $ 507,208 $103,131 $485,965 $ 83,246 Net income (loss) (25,459) 11,214 (6,375) 26,313 Dividends - - (358) (284) Other distributions to shareholders - (677) (3,821) (2,374) Other comprehensive income (loss) 2,756 (1,827) 795 (2,799) Deferred compensation 412 479 673 (1,058) Issuance of common stock 1,145 337,731 9,183 347,007 --------- -------- -------- -------- Stockholders' equity, end of period $ 486,062 $450,051 $486,062 $450,051 ========= ======== ======== ========
See accompanying notes Page 3 NEWPORT CORPORATION Consolidated Balance Sheet
(In thousands, except share data) September 30, December 31, 2001 2000 ---- ---- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 4,477 $ 16,861 Marketable securities 263,921 289,781 Customer receivables, net 58,298 70,241 Income tax receivable - 4,110 Inventories 94,421 80,585 Deferred tax assets 27,423 17,720 Other current assets 9,218 7,836 -------- -------- Total current assets 457,758 487,134 Property, plant and equipment, at cost, net 47,567 41,308 Goodwill, net 27,433 18,805 Investments and other assets 8,890 9,773 -------- -------- $541,648 $557,020 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,259 $ 24,797 Accrued payroll and related expenses 13,013 13,313 Deferred revenue 673 2,696 Other current liabilities 13,910 12,444 Current portion of long-term debt 7,958 7,590 -------- -------- Total current liabilities 49,813 60,840 Long-term debt 4,479 9,540 Other liabilities 1,294 675 Commitments and contingencies Stockholders' equity: Common stock, $.1167 par value, 200,000,000 shares authorized; 36,647,000 shares issued and outstanding at September 30, 2001; 36,168,000 shares at December 31, 2000 4,275 4,220 Capital in excess of par value 384,106 374,978 Unamortized deferred compensation (321) (996) Accumulated other comprehensive loss (6,440) (7,235) Retained earnings 104,442 114,998 -------- -------- Total stockholders' equity 486,062 485,965 -------- -------- $541,648 $557,020 ======== ========
See accompanying notes Page 4 NEWPORT CORPORATION Consolidated Statement of Cash Flows (Unaudited)
(In thousands) Nine Months Ended September 30, ---------------------- 2001 2000 --------- --------- Operating activities: Net income (loss) ($6,375) $ 26,313 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 11,120 8,836 Increase in receivables and inventory provisions 27,217 2,431 Other non-cash items, net (1,030) (272) Changes in operating assets and liabilities: Customer receivables 12,151 (18,365) Income tax receivable, net 3,922 (9,580) Inventories (38,381) (25,529) Other current assets (1,831) (1,518) Other assets (470) (40) Accounts payable and other accrued expenses (8,174) 12,671 Deferred revenue (3,762) 1,206 Other, net 616 (60) --------- --------- Net cash used in operating activities (4,997) (3,907) --------- --------- Investing activities: Purchases of property, plant and equipment (19,395) (10,650) Acquisition of businesses, net of cash acquired (12,833) (50) Purchases of marketable securities (473,962) (311,653) Sales of marketable securities 502,529 - Payments for equity investment (1,250) (1,510) Proceeds from sale of equity investment - 1,430 Payments for in-process technology - (834) --------- --------- Net cash used in investing activities (4,911) (323,267) Financing activities: Payments on long-term borrowings (4,861) (4,169) Cash dividends paid (690) (468) Other distributions to shareholders (3,821) (2,372) Proceeds from sale of common stock, net - 329,851 Issuance of common stock under employee agreements, including associated tax benefit 7,444 14,949 Payments on line of credit - (10,150) --------- --------- Net cash provided by (used in) financing activities (1,928) 327,641 --------- --------- Effect of foreign exchange rate changes on cash (548) (304) --------- --------- Net increase (decrease) in cash and cash equivalents (12,384) 163 Cash and cash equivalents at beginning of period 16,861 9,241 --------- --------- Cash and cash equivalents at end of period $ 4,477 $ 9,404 ========= ========= Cash paid in the period for: Interest $ 553 $ 1,411 Taxes 950 3,536
See accompanying notes Page 5 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (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 acquisition of Kensington Laboratories, Inc. (see Note 2) which has been accounted for as a pooling of interests. The unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. 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. Operating results for the nine-month period ended September 30, 2001, are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. Although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnotes 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 Annual Report on Form 10-K for the year ended December 31, 2000. Earnings (Loss) per Share Basic earnings (loss) per share is computed using the weighted average number of shares of common stock outstanding during the periods, excluding restricted stock. Diluted earnings per share is computed using the weighted average number of shares of common stock outstanding during the periods, including restricted stock, and the dilutive effects of common stock equivalents (stock options), determined using the treasury stock method, outstanding during the periods. Diluted loss per share excludes the antidilutive effects of common stock equivalents outstanding during the periods. New Accounting Standards In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("Statement 144") effective for fiscal years beginning after December 15, 2001. Under Statement 144 assets held for sale will be included in discontinued operations if the operations and cash flows will be or have been eliminated from the ongoing operations of the entity and the entity will not have any significant continuing involvement in the operations of the component. The Company is required to adopt Statement 144 in its fiscal year beginning January 1, 2002. The Company is currently assessing the expected financial impact of Statement 144 on its consolidated financial statements. The Company adopted FAS 133, "Accounting for Derivative Instruments and Hedging Activities" as of the beginning of fiscal 2001. FAS 133 requires certain derivative instruments to be recorded at fair value. Derivative instruments held by the Company are comprised of foreign exchange contracts held as a hedge against foreign currency denominated receivables. The adoption of this standard did not have a material impact on the results of operations, financial position or cash flows of the Company. In June 2001 the FASB issued Statement No. 141, Business Combinations ("Statement 141"), and No. 142, Goodwill and Other Intangible Assets ("Statement 142"), effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but, instead, will be subject to annual impairment tests in accordance with Statements 141 and 142. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the non-amortization provisions of Statement 142 is expected to result in an increase in net income of approximately $1.6 million per year (or $0.04 per diluted share based on the weighted average share outstanding at September 30, 2001). During 2002, the Company will perform the first of the required See accompanying notes Page 6 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002 and has not yet determined what effect, if any, applying those tests will have on the Company's financial position and results of operations. Foreign Currency Balance sheet accounts denominated in foreign currencies are translated at exchange rates as of the date of the balance sheet. Income statement accounts denominated in foreign currencies are translated at average exchange rates for the period. Translation gains and losses are accumulated as a separate component of stockholders' equity. The Company has adopted local currencies as the functional currencies for its subsidiaries because their principal economic activities are most closely tied to the respective local currencies. The Company may enter into foreign exchange contracts as a hedge against foreign currency denominated receivables. It does not engage in currency speculation. Market value gains and losses on contracts are recognized currently, offsetting gains or losses on the associated receivables. Foreign currency transaction gains and losses are included in current earnings. Foreign exchange contracts totaled $6.4 million and $4.3 million at September 30, 2001, and December 31, 2000, respectively. 2. Restructuring and Impairment Charges In July and September 2001, due to the continued weak economic environment in the Company's key end markets, the Company reduced its sales forecasts and announced a cost reduction program designed to bring its operating structure in line with its current business outlook. These initiatives included headcount reductions, facility consolidations and product rationalizations. During the third quarter of 2001, the Company reduced its workforce at its Garden Grove, CA, Irvine, CA, San Luis Obispo, CA and Longmont, CO operations. Severance and other costs related to such reductions totaled $3.4 million and represented 20% of the Company's worldwide workforce, or approximately 400 employees. Facility consolidations included the consolidation of the San Luis Obispo, CA, Garden Grove, CA, and Longmont, CO operations into expanded facilities in Irvine, CA. The Company expects all consolidation activities to be completed by June 30, 2002. Costs related to the facility consolidations totaled $9.3 million and included reserves for asset impairments of $5.4 million, lease termination costs of $2.1 million and the write-off of goodwill of $1.8 million. The following table summarizes the activities in the Company's restructuring reserves (in thousands):
Employee Facility Severance Consolidations Other Total ---------- --------------- ------ -------- Restructuring and asset impairment charges $3,366 $ 9,348 $ 724 $13,438 Cash payments (518) (31) (116) (665) Write-offs (337) (5,861) (601) (6,799) ------ ------- ----- ------- Accrued restructuring at September 30, 2001 $2,511 $ 3,456 $ 7 $ 5,974 ====== ======= ===== =======
The accrued restructuring reserve is included in other current liabilities in the accompanying consolidated balance sheet. In addition to the workforce reductions and facility consolidations discussed above, the Company revised its sales forecasts given current market conditions, and as a result established reserves for excess and obsolete inventory in the amount of $24.4 million. See accompanying notes Page 7 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) The Company also established reserves in the amount of $0.7 million related to capitalized software costs and $0.6 million for other costs related to the restructuring. The table below summarizes the reserves established in connection with the cost reduction program and where those charges have been reflected in the accompanying consolidated statement of operations for the three- and nine-months ended September 30, 2001 (in thousands):
Cost of Selling, General & Sales Administrative Total ----- -------------- ----- Inventory reserves $24,393 $ - $24,393 Other 710 631 1,341 ------- ---- ------- Total $25,103 $631 $25,734 ======= ==== =======
The restructuring and asset impairment charges, inventory reserves and other charges relate to the following business segments (in thousands): Fiber Optics & Photonics $28,636 Industrial Metrology Systems 3,883 Industrial & Scientific Technologies 3,684 Non-segment related 2,969 ------- Total $39,172 =======
3. Mergers and Acquisitions Kensington Laboratories, Inc. In February 2001, the Company merged with Kensington Laboratories, Inc. ("KLI"), a manufacturer of high-precision robotic and motion control equipment for the semiconductor and fiber optic communications industries. The Company issued 3,526,000 shares of its common stock to the KLI shareholders in the transaction. The transaction was accounted for as a pooling of interests, and, accordingly, the accompanying unaudited condensed consolidated financial statements have been restated to incorporate the results of operations, financial position and cash flows of KLI for all periods presented. KLI's results are included in our Industrial and Scientific Technologies reportable segment in Note 10. See accompanying notes Page 8 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) Net sales and net income of Newport and KLI were the following:
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- (In thousands) 2001 2000 2001 2000 ---- ---- ---- ---- Net sales: Newport $ 52,430 $66,594 $ 229,081 $166,130 KLI 11,031 9,080 44,181 26,231 Less: intercompany sales (558) (2,045) (4,719) (5,186) --------- ------- --------- -------- Combined $ 62,903 $73,629 $ 268,543 $187,175 ========= ======= ========= ======== Net income: Newport ($27,456) $ 8,179 ($13,533) $ 15,517 KLI 1,997 3,035 7,158 10,796 --------- ------- --------- -------- Combined ($25,459) $11,214 ($6,375) $ 26,313 ========= ======= ========= ======== Earnings per share: Basic Newport $ (0.75) $ 0.26 ($0.37) $ 0.54 KLI 0.05 0.06 0.19 0.27 --------- ------- --------- -------- Combined ($0.70) $ 0.32 ($0.18) $ 0.81 ========= ======= ========= ======== Diluted Newport ($0.75) 0.24 ($0.37) $ 0.49 KLI 0.05 0.06 0.19 0.26 --------- ------- --------- -------- Combined ($0.70) $ 0.30 ($0.18) $ 0.75 ========= ======= ========= ========
Design Technology Corporation In February 2001, the Company acquired Design Technology Corporation ("DTC"), a systems integrator specializing in the use of robotics and flexible automation solutions for manufacturing processes. The acquisition was accounted for using the purchase method. In connection with these acquisitions, during the three-month period ended March 31, 2001, the Company recorded non-recurring charges of $12.5 million. Of this amount, $9.2 million was related to the acquisition of Kensington Laboratories, Inc. ("KLI") and consisted of investment banking, legal and accounting fees. The Company also recorded a charge of $1.8 million for asset writedowns related to integration charges in connection with its December 2000 acquisition of the business of CE Johansson AB. The table below summarizes where the above non-recurring charges have been reflected in the accompanying consolidated statement of operations for the period ended September 30, 2001:
Cost of Selling, General & Sales Administrative Total ----- -------------- ----- Acquisition and other one-time charges $ - $10,683 $10,683 Asset writedown 1,788 - 1,788 ------ ------- ------- Total related charges $1,788 $10,683 $12,471 ====== ======= =======
See accompanying notes Page 9 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) 4. Marketable Securities Marketable securities consist of money market funds, certificates of deposit, commercial paper and funding agreements, U.S. agency notes, corporate notes and bonds and asset-backed securities. These securities are stated at current fair market value. The excess of fair market value over book value is included as a component of comprehensive income (see Note 8). 5. Customer Receivables The Company maintains reserves for potential credit losses. Such losses have been minimal and within management's estimates. Receivables from customers are generally unsecured. Customer receivables consist of the following:
September 30, December 31, (In thousands) 2001 2000 ---- ---- Customer receivables $59,864 $70,918 Less allowance for doubtful accounts 1,566 677 ------- ------- $58,298 $70,241 ======= ======= 6. 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) 2001 2000 ------ ------- Raw materials and purchased parts $28,095 $24,949 Work in process 19,553 17,124 Finished goods 46,773 38,512 ------- ------- $94,421 $80,585 ======= =======
7. Property, Plant and Equipment Property, plant and equipment consist of the following:
September 30, December 31, (In thousands) 2001 2000 ---- ---- Land $ 888 $ 920 Buildings 5,120 5,304 Leasehold improvements 19,175 14,725 Machinery and equipment 57,428 49,652 Office equipment 24,556 20,786 ------- ------- 107,167 91,387 Less accumulated depreciation 59,600 50,079 ------- ------- $ 47,567 $41,308 ======= =======
See accompanying notes Page 10 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) 8. Interest and Other Income, Net Interest and other income, net, consists of the following:
Three Months Ended Nine Months Ended September 30, September 30 ------------- ------------ (In thousands) 2001 2000 2001 2000 ---- ---- ---- ---- Interest and dividend income $ 2,980 $ 3,521 $ 10,405 $ 3,734 Interest expense (301) (493) (920) (1,841) Exchange gains 492 215 472 170 Gains (losses) on sale of investments, net 84 (8) 1,013 (8) Other (147) (100) (401) (162) --------- -------- --------- -------- $ 3,108 $ 3,135 $ 10,569 $ 1,893 ========= ======== ========= ========
9. Comprehensive Income (Loss) The components of comprehensive income (loss), net of related tax, are as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- (In thousands) 2001 2000 2001 2000 ---- ----- ---- ---- Net income (loss) ($25,459) $ 11,214 ($6,375) $ 26,313 Foreign currency translation gain (loss) 1,405 620 (1,911) (1,546) Unrealized gain on marketable securities 1,351 - 2,706 - --------- -------- -------- -------- ($22,703) $ 11,834 ($5,580) $ 24,767 ========= ======== ======== ========
10. Segment Reporting The Company operates in three reportable segments, Industrial & Scientific Technologies, Fiber Optics & Photonics and Industrial Metrology Systems (formerly Video Metrology). Selected financial information for these segments for the three- and nine-months ended September 30, 2001 and 2000 follows:
(In thousands) Industrial Industrial & Scientific Fiber Optics Metrology Technologies & Photonics Systems Total ------------ ----------- ------- ----- Three Months Ended September 30, 2001: - -------------------------------------- Sales to external customers $ 42,591 $15,436 $ 4,876 $ 62,903 Segment income (loss) 6,700 (6,196) (2,439) (1,935) Three Months Ended September 30, 2000: - -------------------------------------- Sales to external customers $ 47,480 $24,542 $ 1,607 $ 73,629 Segment income (loss) 11,285 2,497 (1,762) 12,020 Nine Months Ended September 30, 2001: - ------------------------------------- Sales to external customers $164,423 $86,352 $17,768 $268,543 Segment income (loss) 40,961 (2,176) (7,226) 31,559 Nine Months Ended September 30, 2000: - ------------------------------------- Sales to external customers $124,554 $57,478 $ 5,143 $187,175 Segment income (loss) 29,380 6,819 (5,034) 31,165
See accompanying notes Page 11 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) The following reconciles segment income to consolidated income before income taxes.
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- (In thousands) 2001 2000 2001 2000 ---- ---- ---- ---- Segment income ($1,935) $12,020 $ 31,559 $31,165 Unallocated restructuring, acquisition and other non-recurring charges (see Notes 2 and 3) (39,172) - (51,643) - Interest and other income (expense), net 3,108 3,135 10,569 1,893 -------- ------- -------- ------- Income before income taxes ($37,999) $15,155 ($9,515) $33,058 ======== ======= ======== =======
See accompanying notes Page 12 NEWPORT CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation for the Three Month and Nine Month Periods Ended September 30, 2001 and 2000 INTRODUCTORY NOTE This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements contained in this Form 10-Q that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. 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. These forward-looking statements include (i) information contained in Note 1 to the Financial Statements included herein regarding the expected effect of the application of FASB Statement No. 142 on the Company's future operating results, and (ii) the need for, and availability of, additional financing. The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on certain assumptions, including that we will not lose a significant customer or customers or experience increased fluctuations of demand or cancellation or rescheduling of purchase orders, that our markets will continue to grow, that our products will remain accepted within their respective markets and will not be replaced by new technology, that competitive conditions within our markets will not change materially or adversely, that we will retain key technical and management personnel, that our forecasts will accurately anticipate market demand, that there will be no material adverse change in our operations or business, that fluctuations in foreign currency exchange rates do not have a material adverse impact on our competitive position in international markets, that we will not experience significant supply shortages with respect to purchased components, sub-systems or raw materials, that we will successfully integrate our acquired and to-be-acquired companies, that terrorist activity and acts of ware and the resulting economic uncertainly will not have a material adverse effect on our business or operating results, and that power interruptions and electricity rate increases will not have a material adverse effect on our business or operating results. Assumptions relating to the foregoing involve judgments and risks with respect to, among other things, future economic, competitive and market conditions, including those in Europe and Asia and those related to our strategic markets, whether our products, particularly those targeting our strategic markets, 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 our control. Although we believe that the assumptions underlying the forward-looking statements will be realized, our business and operations are subject to substantial risks that increase the uncertainty inherent in the forward-looking statements. Certain of these risks are discussed in more detail in our Annual Report on Form 10-K for the year ended December 31, 2000. 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 us or any other person that our objectives or plans will be achieved. We undertake 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. The following is our discussion and analysis of certain significant factors that have affected our earnings and financial position during the period included in the accompanying financial statements. This discussion compares the three- and nine-month periods ended September 30, 2001, with the three- and nine-month periods ended September 30, 2000. This discussion should be read in conjunction with the financial statements and associated notes. MERGERS AND ACQUISITIONS AND OTHER 2001 EVENTS Current 2001 Events In July and September 2001, due to the continued weak economic environment in our key end markets, we revised our sales forecasts and announced a cost reduction program designed to bring its operating structure in line with its current Page 13 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 business outlook. These initiatives included headcount reductions, facility consolidations and product rationalizations. During the third quarter of 2001, we reduced our workforce at its Garden Grove, Irvine, San Luis Obispo, CA and Longmont, CO operations. Severance and other costs related to such reductions totaled $3.4 million and represented 20% of our worldwide workforce, or approximately 400 employees. Facility consolidations included the consolidation of the San Luis Obispo, CA, Garden Grove, CA, and Longmont, CO operations into an expanded campus in Irvine, CA. We expect all consolidation activities to be completed by June 30, 2002. Costs related to the facility consolidations totaled $9.3 million and include reserves for asset impairments of $5.4 million, lease termination costs of $2.1 million and the write-off of goodwill of $1.8 million. The following table summarizes the activities in our restructuring reserves (in thousands):
Employee Facility Severance Consolidations Other Total ---------- --------------- ------ -------- Restructuring and asset impairment charges $3,366 $ 9,348 $ 724 $13,438 Cash payments (518) (31) (116) (665) Write-offs (337) (5,861) (601) (6,799) ------ ------- ----- ------- Accrued restructuring at September 30, 2001 $2,511 $ 3,456 $ 7 $ 5,974 ====== ======= ===== =======
The accrued restructuring reserve is included in other current liabilities in the accompanying consolidated balance sheet. In addition to the workforce reduction and facility consolidations discussed above, we revised our sales forecasts given current market conditions, and as a result established reserves for excess and obsolete inventory in the amount of $24.4 million. We also established reserves in the amount of $0.7 million related to capitalized software costs and $0.6 million for other costs related to the restructuring. The table below summarizes the reserves established in connections with the cost reduction program and where those charges have been reflected in the accompanying consolidated statement of operations for the three- and nine-months ended September 30, 2001:
Cost of Selling, General & Sales Administrative Total ------- ------------------ ------- Inventory reserves $24,393 $ - $24,393 Other 710 631 1,341 ------- ---- ------- Total $25,103 $631 $25,734 ======= ==== =======
The restructuring and asset impairment charges, inventory reserves and other charges relate to the following business segments (in thousands): Fiber Optics & Photonics $28,636 Industrial Metrology Systems 3,883 Industrial & Scientific Technologies 3,684 Non-segment related 2,969 ------- Total $39,172 =======
Page 14 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 Other 2001 Events During the three-month period ended March 31, 2001, we recorded non-recurring charges of $12.5 million related primarily to mergers and acquisitions. Of this amount, $9.2 million was related to the merger with Kensington Laboratories, Inc. ("KLI") and consisted of investment banking, legal and accounting fees. We also recorded a charge of $1.8 million for asset writedowns related to integration charges in connection with our December 2000 acquisition of the business of CE Johansson AB. Pro forma net income excluding the non-recurring charges incurred during the three- and nine-month periods ended September 30, 2001, and reflecting the pro forma tax effect of the conversion of KLI from an S-Corporation to a C- Corporation on the three- and nine-month periods ended September 30, 2000 is presented below:
Three Months Ended Nine Months Ended September 30, September 30, ------------------- --------------------- (In thousands) 2001 2000 2001 2000 ------ ------- ------- ------- Income before income taxes $1,173 $15,155 $42,176 $33,058 Income tax provision 387 5,155 13,918 11,064 ------ ------- ------- ------- Net income $ 786 $10,000 $28,258 $21,994 Earnings per share: Basic $ 0.02 $ 0.29 $ 0.78 $ 0.67 Diluted $ 0.02 $ 0.27 $ 0.75 $ 0.63
Kensington Laboratories, Inc. In February 2001, we merged with KLI, a manufacturer of high-precision robotic and motion control equipment for the semiconductor and fiber optic communications industries. We issued 3,526,000 shares of its common stock to the KLI shareholders in the transaction. The transaction was accounted for as a pooling of interests, and accordingly, the accompanying financial statements have been restated to incorporate the results of operations, financial position and cash flows of KLI for all periods presented. Design Technology Corporation In February 2001, we acquired Design Technology Corporation ("DTC"), a systems integrator specializing in the use of robotics and flexible automation solutions for manufacturing processes. The acquisition was accounted for using the purchase method. Page 15 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 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, -------------------- ------------------- -------------- 2001 2000 2001 2000 2001 2001 ----- ----- ----- ----- ------ ------ Net sales 100.0% 100.0% 100.0% 100.0% (14.6%) 43.5% Cost of sales 104.9 55.6 68.9 54.1 61.1 82.7 ----- ----- ----- ----- Gross profit (loss) (4.9) 44.4 31.1 45.9 (109.5) (2.8) Selling, general and administrative expense 26.8 19.3 20.6 20.0 18.9 47.6 Research and development expense 12.2 8.8 9.0 9.2 19.2 40.1 Restructuring and impairment charges 21.4 - 5.0 - 100.0 - Acquisition and other non- recurring charges - - 4.0 - - 100.0 ----- ----- ----- ----- Income (loss) from operations (65.3) 16.3 (7.5) 16.7 (442.0) (164.4) Interest and other income 4.9 4.3 4.0 1.0 (0.1) 458.3 ----- ----- ----- ----- Income (loss) before income taxes (60.4) 20.6 (3.5) 17.7 (350.7) (128.8) Income taxes (benefit) (19.9) 5.4 (1.1) 3.6 (418.2) (146.6) ----- ----- ----- Net income (loss) (40.5) 15.2 (2.4) 14.1 (327.0) (124.2) ===== ===== ===== =====
Net Sales Net sales for the three- and nine-month periods ended September 30, 2001 were $62.9 million and $268.5 million, respectively, compared with $73.6 million and $187.2 million, respectively, for the three- and nine-month periods ended September 30, 2000. The results reflect a decrease of 14.6% and an increase of 43.5%, respectively, when compared with the corresponding periods of the previous year. The sales decrease for the three-month period was due primarily to a reduction in sales to the fiber optic communications market partially offset by sales increases in the semiconductor equipment market as well as by the inclusion of sales from acquired businesses accounted for using the purchase method for which there were no comparable sales in the 2000 period. The sales increase for the nine-month period was due to sales increases in all market segments as well as by the inclusion of sales from acquired businesses accounted for using the purchase method for which there were no comparable sales in the 2000 period. Three- and nine-month sales to the fiber optic communications market were $14.6 million and $95.4 million, respectively, reflecting a decrease of $16.9 million, or 53.5%, and an increase of $25.3 million, or 36.1, compared with the corresponding prior year periods. Sales to the semiconductor equipment market totaled $22.5 million and $77.8 million for the three- and nine-month periods ended September 30, 2001, reflecting increases of $5.7 million, or 33.4%, and $32.9 million, or 73.3%, respectively, compared with the corresponding periods in 2000. Three- and nine-month sales to the general metrology market were $16.1 million and $57.5 million, respectively, reflecting increases of $3.5 million, or 27.6%, and $23.0 million, or 66.5%, compared with the corresponding prior year periods. The increases in sales to the general metrology market in both periods were due primarily to the inclusion of sales from acquired businesses accounted for using the purchase method for which there were no comparable sales in the 2000 periods. Third quarter 2001 sales to our other market segments, including aerospace and research and computer peripherals, were $9.7 million, reflecting a decrease of $3.0 million, or 23.7%, compared with the corresponding prior year period. Sales to these other market segments during the nine-month period were $37.8 million, comparable with the $37.7 million recorded in the prior year period. Page 16 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 Domestic sales totaled $43.7 million and $181.5 million for the three- and nine- month periods ended September 30, 2001, respectively, reflecting a decrease of $9.0 million, or 17.1%, when compared to the corresponding three-month period in 2000 and an increase of $46.5 million, or 34.4%, when compared with the corresponding nine-month period in 2000. The decrease for the quarter was due to sales declines in the fiber optic communications market of $13.3 million, or 64.4%, which was partially offset by an increase in sales to the semiconductor equipment and general metrology markets of $4.9 million, or 29.4%, and $0.5 million, or 6.1%, respectively. Domestic sales to the other market segments during the third quarter decreased $1.1 million, or 14.5%, over the third quarter of 2000. The increase for the nine-month period ended September 30, 2001 was primarily due to sales increases in the fiber optic communications, semiconductor equipment and general metrology markets of $10.0 million, or 21.4%, $30.9 million, or 72.0%, and $6.2 million, or 28.6%, respectively, compared with the corresponding prior year period, offset in part by a decrease in sales to the other market segments of $0.7 million, or 3.0%, compared with the prior year period. The increase in domestic sales to the general metrology market was partly due to the inclusion of sales from acquired businesses accounted for using the purchase method for which there were no comparable sales in the 2000 periods. International sales totaled $19.2 million and $87.0 million for the three- and nine-month periods ended September 30, 2001, respectively, reflecting a decrease of $1.7 million, or 8.2%, and an increase of $34.9 million, or 66.9%, respectively, compared with the corresponding periods in 2000. The decrease for the quarter was due primarily to a decrease in sales to the fiber optic communications market of $3.6 million, or 33.1%, partially offset by sales increases in the semiconductor equipment and general metrology markets of $0.8 million, or 219.5%, and $3.0 million, or 65.7%, respectively. International sales to the other market segments decreased $1.9 million, or 37.4%, when compared with the third quarter of 2000. The increase for the nine-month period was due primarily to sales increases in the fiber optic communications, semiconductor equipment and general metrology markets of $15.2 million, or 65.7%, $2.1 million, or 104.8%, and $16.7 million, or 131.8%, respectively, compared with the corresponding prior year period. International sales to our other market segments increased $0.9 million, or 6.0%, compared with the prior year nine-month period. Geographically, third quarter 2001 sales to customers in Europe increased $5.8 million, or 56.2%, over the third quarter of 2000. Third quarter 2001 sales to customers in the Pacific Rim decreased $4.8 million, or 83.1%, while third quarter 2001 sales to customers in Canada decreased $3.0 million, or 69.3%, when compared to the prior year period. For the nine-month period ended September 30, 2001, sales to customers in Europe increased $31.2 million, or 115.7%, over the corresponding prior year period. Sales to customers in the Pacific Rim increased $3.0 million, or 22.4%, when compared with the prior year period. Sales to customers in Canada decreased $0.5 million, or 5.2%, over the prior year period. Increased European sales to the general metrology market were due primarily to the inclusion of sales from acquired businesses accounted for using the purchase method for which there were no comparable sales in 2000. European sales for the three- and nine-month periods were reduced by $0.4 million and $1.7 million, respectively, compared with the same periods in 2000, because of a negative foreign exchange rate impact due to the strength of the U.S. dollar versus the euro in the current year periods. Gross Margin Gross margins for the three- and nine-month periods ended September 30, 2001 were (4.9%) and 33.1%, respectively, and were negatively impacted by inventory and other asset writedowns of $25.1 million and $26.9 million, respectively. Excluding these writedowns, gross margin for the three- and nine-month periods would have been 35.0% and 41.1%, compared with margins of 44.4% and 45.9% in the corresponding periods in 2000. The decrease in gross margins for both the three- and nine-month periods was due primarily to the lower absorption of fixed overhead caused by the sharp decline in sales. Further, gross margins for the three- and nine-month periods in 2000 reflect significantly higher than usual margins in KLI's operations, whereas gross margins for the 2001 periods reflect additional costs resulting from the expanded infrastructure at KLI's operations. Selling, General and Administrative (SG&A) Expense SG&A expenses totaled $16.9 million, or 26.8% of net sales, and $55.3 million, or 20.6% of net sales, for the three- and nine-month periods ended September 30, 2001, increases of $2.7 million, or 18.9%, and $17.9 million, or 47.6%, respectively. The increase in total SG&A dollars resulted primarily from increases in expenses from recently acquired businesses as well as from additional costs required to support the year to date sales growth. Page 17 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 Research and Development (R&D) Expense R&D expenses totaled $7.7 million, or 12.2% of net sales, and $24.1 million, or 9.0% of net sales, for the three- and nine-month periods ended September 30, 2001, increases of $1.2 million, or 19.2%, and $6.9 million, or 40.1%, respectively. The three- and nine-month period increases were attributable to increases in expenses from recently acquired businesses as well as increased costs related to the development of three-dimensional multi-sensor measurement capabilities for our video metrology software and development efforts to improve active laser beam stabilization. Restructuring, Acquisition and Other One-Time Charges Restructuring, acquisition and other one-time charges of $13.4 million and $24.1 million were recorded in the three- and nine-month periods ended September 30, 2001, respectively. The third quarter charge related to the cost reduction initiatives is described in Note 2 to the Financial Statements included herein. The charge recorded in the first quarter of 2001 consisted primarily of investment banking, legal and accounting fees associated with transactions and is described in Note 3. Interest and Other Income, Net Interest and other income, net, totaled $3.1 million and $10.6 million for the three- and nine-month periods ended September 30, 2001, compared with $3.1 million and $1.9 million for the corresponding prior year periods. The increase for the nine-month period is a result of interest income attributable to the investment of proceeds from the secondary offering completed in July 2000. Income Taxes The effective tax rate for the three- and nine-month periods ended September 30, 2001, was 33.0% versus 26.0% and 20.4%, for the corresponding prior year periods. The increase in the effective tax rate was primarily the result of earnings attributable to KLI for which a tax provision was not recorded in the prior year due to KLI's S-Corp income tax status. LIQUIDITY AND CAPITAL RESOURCES Net cash used in our operating activities of $5.0 million for the nine-month period September 30, 2001 was attributable to our $6.4 million net loss and an increase in net operating assets of $26.9 million, net of non-cash charges for depreciation, amortization and asset reserves of $28.3 million. Our customer receivables decreased by $11.9 million, or 17.0%, from the end of 2000. The days sales outstanding ratio improved to 55 days at the end of the third quarter 2001 from 68 days at the end of the fourth quarter of 2000. Our inventories increased $13.8 million, or 17.2%, at the end of the third quarter of 2001 compared with the end of the fourth quarter of 2000 due primarily to production planning during the first two quarters of 2001 associated with our goal of maintaining competitive manufacturing lead times and to meet requirements of existing customer orders. Inventory turns were consistent with prior year-end levels. Net cash used in investing activities of $4.9 million for the nine-month period ended September 30, 2001, was principally attributable to purchases of property, plant and equipment, as well as to certain recent acquisitions of businesses, offset in part by net sales of marketable securities. Net cash used in financing activities of $1.9 million for the nine-month period ended September 30, 2001, was principally attributable to the payment of cash dividends and other distributions to the former KLI shareholders and to payments on long-term borrowings, offset in part by the issuance of common stock in connection with employee stock option and purchase plans. In September 2001, the Company announced that it was terminating its semi-annual cash dividend. At September 30, 2001, we had in place a $10.0 million unsecured line of credit expiring March 5, 2004 and a $10.0 million unsecured line of credit expiring March 4, 2002. Both lines bear interest at either the prevailing prime rate, or the prevailing London Interbank Offered Rate plus 1.0%, at our option, plus an unused line fee of 0.2% per year. At September 30, 2001, there were no balances outstanding under the lines of credit, with $18.7 million available under the combined lines, after considering outstanding letters of credit of $1.3 million. We believe our current working capital position together with estimated cash flows from operations and existing credit availability will be adequate to fund our operations in the ordinary course of business, our anticipated capital expenditures and our debt payment requirements for at least the next twelve months. However, this belief is based upon many assumptions and is subject to numerous risks, and there can be no assurance that we will not require additional funding in the future. Page 18 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 Although we have no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies, we continue to evaluate acquisitions of products, technologies or companies that complement our business and may make such acquisitions in the future. Accordingly, there can be no assurance that we will not need to obtain additional sources of capital to finance any such acquisitions. ADDITIONAL FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS European Economic and Monetary Union (EMU) - New European Currency On January 1, 1999, member countries of the European Economic and Monetary Union established fixed conversion rates between their existing national currencies and one common currency - the euro. The euro trades on currency exchanges and, during a three-year dual-currency transition period, either the euro or the national currencies may be used in business transactions. Beginning in January 2002, new euro-denominated bills and coins will be issued, and the national currencies will be withdrawn from circulation. Our operating subsidiaries affected by the euro conversion have implemented and are implementing plans to address the systems and business issues raised by the euro currency conversion. These issues include, among others, (1) the need to adapt computer and other business systems and equipment to accommodate euro-denominated transactions; and (2) the competitive impact of cross-border price transparency, which may make it more difficult for businesses to charge different prices for the same products on a country-by-country basis, particularly once the euro currency is issued in 2002. While we anticipate that the euro conversion will not have a material adverse impact on our financial condition or results of operations, there can be no assurance that key vendors, customers and distributors will not be affected by such euro currency issues, which could have an adverse effect on our business, operating results and financial condition. Further, there can be no assurance that the currency market volatility will not increase, which could have an adverse effect on our euro exposures. Item 3. Quantitative and Qualitative Disclosures About Market Risk The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed are foreign exchange rates which may generate translation and transaction gains and losses and interest rate risk. Foreign Currency Risk Operating in international markets sometimes involves exposure to volatile movements in currency exchange rates. The economic impact of currency exchange rate movements on our operating results is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, may cause us to adjust our financing and operating strategies. Consequently, isolating the effect of changes in currency does not incorporate these other important economic factors. Operating profit from international operations totaled $1.5 million and $10.3 million for the three- and nine-month periods ended September 30, 2001. As currency exchange rates change, translation of the income statements of international operations into U.S. dollars affects year-over-year comparability of operating results. We do not generally hedge translation risks because cash flows from international operations are generally reinvested locally. We do not enter into hedges to minimize volatility of reported earnings because we do not believe it is justified by the exposure or the cost. Changes in currency exchange rates that would have the largest impact on translating future international operating profit include the euro, British pound, Canadian dollar, Swedish krona and Swiss franc. We estimate that a 10% change in foreign exchange rates would have affected reported net income by approximately $0.1 million and $0.7 million for the three- and nine-month periods ended September 30, 2001. We believe that this quantitative measure has inherent limitations because, as discussed in the first paragraph of this section, it does not take into account any governmental actions or changes in either customer purchasing patterns or financing and operating strategies. Page 19 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Nine Months Ended September 30, 2001 Transaction gains and losses arise from monetary assets and liabilities denominated in currencies other than a subsidiary's functional currency. Net foreign exchange gains and losses were not material to our earnings for the last three years. Interest Rate Risk The interest rates we pay on certain of our debt instruments are subject to interest rate risk. Our unsecured lines of credit bear interest at either the prevailing prime rate, or the prevailing London Interbank Offered Rate plus 1.0%, at our option. Our long term debt instruments carry fixed interest rates. We estimate that a 10% increase in interest rates on our unsecured lines of credit would not have a material impact on our reported net income. Our investments in marketable securities, which totals $263.9 million at September 30, 2001, are sensitive to changes in the general level of U.S. interest rates. We estimate that a 10% decline in the interest earned on our investment portfolio would have resulted in an after tax decline in our net income of $0.2 million and $0.7 million for both the three- and nine-month periods ended September 30, 2001. The sensitivity analyses presented in the interest rate and foreign exchange discussions above disregard the possibility that rates can move in opposite directions and that gains from one category may or may not be offset by losses from another category and vice versa. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits -------- None (b) Reports on Form 8-K ------------------- None 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 14, 2001 By: /S/CHARLES F. CARGILE ---------------------------------------- Charles F. Cargile, Principal Financial Officer, duly authorized to sign on behalf of the Registrant See accompanying notes Page 20 -----END PRIVACY-ENHANCED MESSAGE-----