-----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, PEsSbjY+AY5V9zsQVIWvKFz9m0JNWFANgiaW+/ROGxVzQxSN+toQldmY8lJ4MJDS 8Spyvo+XdKLaZJCxyZEysQ== 0001017062-98-001663.txt : 19980805 0001017062-98-001663.hdr.sgml : 19980805 ACCESSION NUMBER: 0001017062-98-001663 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980803 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: SEC FILE NUMBER: 000-01649 FILM NUMBER: 98676230 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 FOR THE PERIOD ENDED JUNE 30, 1998 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 June 30, 1998 ------------------- 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 each of the issuer's classes of common stock as of June 30, 1998, was 9,112,310. Page 1 of 13 Exhibit Index on Sequentially Numbered Page 12 NEWPORT CORPORATION INDEX PART I. FINANCIAL INFORMATION Page Number Item 1: Financial Statements: Consolidated Statement of Income and Condensed Consolidated Statement of Stockholders' Equity for the Three and Six Months ended June 30, 1998 and 1997. 3 Consolidated Balance Sheet at June 30, 1998 and December 31, 1997. 4 Consolidated Statement of Cash Flows for the Three and Six Months ended June 30, 1998 and 1997. 5 Notes to Condensed Consolidated Financial Statements. 6-8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. 9-12 PART II. OTHER INFORMATION Item 4: Submission of Matters to a Vote of Security Holders. 12 Item 6: Exhibits and Reports on Form 8-K. 12 SIGNATURE 12 Page 2 NEWPORT CORPORATION Consolidated Income Statement and Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
(In thousands, except Three Months Ended Six Months Ended per share amounts) June 30, June 30, -------------------- -------------------- 1998 1997 1998 1997 --------- -------- -------- --------- Net sales $33,833 $31,861 $67,496 $62,912 Cost of sales 18,670 17,920 37,853 35,452 ------- ------- ------- ------- Gross profit 15,163 13,941 29,643 27,460 Selling, general and administrative expense 8,419 8,827 16,731 17,593 Research and development expense 3,180 2,341 5,952 4,465 ------- ------- ------- ------- Income from operations 3,564 2,773 6,960 5,402 Interest expense (485) (494) (993) (1,004) Other income (expense), net 139 (59) 202 (269) ------- ------- ------- ------- Income before income taxes 3,218 2,220 6,169 4,129 Income tax provision 1,029 755 1,974 1,404 ------- ------- ------- ------- Net income $ 2,189 $ 1,465 $ 4,195 $ 2,725 ======= ======= ======= ======= Net income per share Basic $ 0.24 $ 0.17 $ 0.47 $ 0.31 Diluted $ 0.23 $ 0.16 $ 0.44 $ 0.30 Number of shares used to calculate net income per share Basic 9,032 8,834 8,978 8,822 Diluted 9,497 9,088 9,441 9,084 Stockholders' equity, beginning of period $63,736 $57,232 $60,658 $57,429 Net income 2,189 1,465 4,195 2,725 Dividends (183) (179) (183) (179) Unrealized translation gain (loss) 328 (624) (127) (2,165) Unamortized deferred compensation 59 51 (148) (73) Repurchase of common stock (1,387) (1,118) (1,387) (1,343) Issuance of common stock 751 1,335 2,485 1,768 ------- ------- ------- ------- Stockholders' equity, end of period $65,493 $58,162 $65,493 $58,162 ======= ======= ======= =======
See accompanying notes Page 3 NEWPORT CORPORATION Consolidated Balance Sheet
(Dollars in thousands, except per share amounts) June 30, December 31, 1998 1997 ----------- ------------ ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 10,795 $ 7,456 Customer receivables, net 21,570 23,372 Other receivables 822 979 Inventories 30,622 28,326 Deferred tax assets 3,248 3,256 Other current assets 2,307 2,065 -------- -------- Total current assets 69,364 65,454 Investments and other assets 4,838 5,830 Property, plant and equipment, at cost, net 21,526 22,994 Goodwill, net 9,727 10,133 -------- -------- $105,455 $104,411 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,750 $ 6,082 Accrued payroll and related expenses 4,666 5,855 Taxes based on income 2,096 2,056 Current portion of long-term debt 1,869 2,380 Other accrued liabilities 3,323 4,766 -------- -------- Total current liabilities 17,704 21,139 Long-term debt 20,673 21,027 Other liabilities 1,585 1,587 Commitments and contingencies Stockholders' equity: Common stock, $.35 stated value, 20,000,000 shares authorized; 9,112,000 shares issued and outstanding at June 30, 1998; 8,951,000 shares at December 31, 1997 3,189 3,132 Capital in excess of stated value 9,067 8,026 Unamortized deferred compensation (667) (519) Unrealized translation loss (5,163) (5,036) Retained earnings 59,067 55,055 -------- -------- Total stockholders' equity 65,493 60,658 -------- -------- $105,455 $104,411 ======== ========
See accompanying notes Page 4 NEWPORT CORPORATION Consolidated Statement of Cash Flows (Unaudited)
(In thousands) Six Months Ended June 30 -------------------- 1998 1997 -------- --------- Operating activities: Net income $ 4,195 $ 2,725 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,083 2,813 Increase in provision for losses on receivables and inventories 894 994 Deferred income taxes - (20) Other non-cash items, net (222) 24 Changes in operating assets and liabilities: Receivables 1,873 1,365 Inventories (3,229) (1,121) Other current assets (705) (581) Other assets 320 356 Accounts payable and other accrued expenses (2,925) (2,211) Taxes based on income 41 (42) Other, net (1) 1 ------- ------- Net cash provided by operating activities 3,324 4,303 ------- ------- Investing activities: Purchases of property, plant and equipment, net (2,946) (2,493) Disposition of property, plant and equipment, net 2,395 282 Acquisition of businesses, net of cash acquired - (879) Proceeds from sale of investment 720 - Other, net 31 (157) ------- ------- Net cash provided by (used in) investing activities 200 (3,247) ------- ------- Financing activities: Decrease in short-term borrowings (493) (279) Decrease in long-term borrowings (346) (320) Cash dividends paid (180) (177) Repurchase of common stock (1,387) (1,343) Issuance of common stock under employee agreements, including associated tax benefit 2,217 1,593 ------- ------- Net cash used in financing activities (189) (526) ------- ------- Effect of foreign exchange rate changes on cash 4 212 ------- ------- Net increase in cash and cash equivalents 3,339 742 Cash and cash equivalents at beginning of period 7,456 3,375 ------- ------- Cash and cash equivalents at end of period $10,795 $ 4,117 ======= ======= Cash paid in the period for: Interest $ 1,004 $ 1,025 Taxes 1,293 1,437
See accompanying notes Page 5 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements June 30, 1998 (Unaudited) 1. Interim Reporting General The accompanying unaudited financial statements consolidate the accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with generally accepted accounting principles for interim financial information. 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. Operating results for the six-month period ended June 30, 1998, are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 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, 1997. Net Income per Share Net income per share for all periods have been presented and, where necessary, restated to conform with the provisions of Statement of Financial Accounting Standards No. 128, Earnings Per Share. Basic net income per share is based on the weighted average number of shares of common stock outstanding during the periods, excluding restricted stock, while diluted net income per share is based on the weighted average number of shares of common stock outstanding during the periods and the dilutive effects of common stock equivalents (stock options), determined using the treasury stock method, outstanding during the periods. Foreign Currency Balance sheet accounts denominated in foreign currencies are translated at exchange rates as of the date of the balance sheet and income statement accounts 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 $4.3 million and $5.6 million at June 30, 1998, and December 31, 1997, respectively. Page 6 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements June 30, 1998 (Unaudited) Adoption of Statement of Financial Accounting Standards No. 130 As of January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS No. 130). SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or stockholders' equity. SFAS No. 130 requires unrealized gains or losses on foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of SFAS No. 130. The components of comprehensive income, net of related tax, are as follows:
Three Months Ended Six Months Ended June 30, June 30, -------- --------- (In thousands) 1998 1997 1998 1997 ------- --------- ------- -------- Net Income $2,189 $1,465 $4,195 $ 2,725 Unrealized translation gain (loss) 328 (624) (127) (2,165) ------ ------ ------ ------- Comprehensive income $2,517 $ 841 $4,068 $ 560 ====== ====== ====== =======
Pending Adoption of Statement of Financial Accounting Standards No. 131 In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS No. 131), which is effective for years beginning after December 15, 1997. SFAS No. 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS No. 131 is effective for financial statements for fiscal years beginning after December 15, 1997, and therefore the Company will adopt the new requirements effective with the filing of its Annual Report on Form 10-K for the year ended December 31, 1998. Management has not completed its review of SFAS No. 131, but does expect that, while adoption of SFAS No. 131 may result in more reported segments than are currently reported, it will not have an impact on the Company's results of operations, financial position or cash flow. 2. Customer Receivables 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. Customer receivables consist of the following:
June 30, December 31, (In thousands) 1998 1997 -------- ------------ Customer receivables $22,026 $23,857 Less allowance for doubtful accounts 456 485 ------- ------- $21,570 $23,372 ======= =======
Page 7 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements June 30, 1998 (Unaudited) 3. 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:
June 30, December 31, (In thousands) 1998 1997 -------- ----------- Raw materials and purchased parts $11,384 $10,161 Work in process 5,760 5,236 Finished goods 13,478 12,929 ------- ------- $30,622 $28,326 ======= ======= 4. Property, Plant and Equipment Property plant and equipment consist of the following: June 30, December 31, (In thousands) 1998 1997 -------- ----------- Land $ 1,188 $ 1,954 Buildings 6,665 12,069 Leasehold improvements 8,318 8,381 Machinery and equipment 21,714 20,620 Office equipment 10,975 10,074 ------- ------- 48,860 53,098 Less accumulated depreciation 27,334 30,104 ------- ------- $21,526 $22,994 ======= =======
5. Other Income (Expense), Net Other income (expense), net, consists of the following:
Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- (In thousands) 1998 1997 1998 1997 -------- -------- ------ ------ Interest and dividend income $126 $ 25 $ 212 $ 69 Exchange losses, net (87) (63) (131) (356) Gains on sales of investments, net 134 - 134 - Other (34) (21) (13) 18 ---- ---- ----- ----- $139 $(59) $ 202 $(269) ==== ==== ===== =====
Page 8 NEWPORT CORPORATION Notes to Condensed Consolidated Financial Statements June 30, 1998 (Unaudited) INTRODUCTORY NOTE This 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 the Company intends that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements contained in this Form 10-Q except for historical information may be deemed to be 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) the existence and development of the Company's technical and manufacturing capabilities, (ii) anticipated competition, (iii) potential future growth in revenues and income, (iv) potential future decreases in costs, and (v) 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 assumptions that the Company will not lose a significant customer or customers or experience increased fluctuations of demand or rescheduling of purchase orders, that the Company's markets will continue to grow, that the Company's products will remain accepted within their respective markets and will not be replaced by new technology, that competitive conditions within the Company's markets will not change materially or adversely, that the Company will retain key technical and management personnel, that the Company's forecasts will accurately anticipate market demand, that there will be no material adverse change in the Company's operations or business, that fluctuations in foreign currency exchange rates do not have a material adverse impact on the Company's competitive position in international markets and that the Company will not experience significant supply shortages with respect to purchased components, sub-systems or raw materials. Additional factors that may affect future operating results are discussed in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although, the Company believes that the assumptions underlying the forward-looking statements will be realized. In addition, the business and operations of the Company are subject to substantial risks that increase the uncertainty inherent in the forward- looking statements. 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 the Company or any other person that the objectives or plans of the Company will be achieved. The following is management's discussion and analysis of certain significant factors that have affected the earnings and financial position of the Company during the period included in the accompanying financial statements. This discussion compares the three- and six-month periods ended June 30, 1998, with the three- and six-month periods ended June 30, 1997. This discussion should be read in conjunction with the financial statements and associated notes. Page 9 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Six Months Ended June 30, 1998 and 1997 RESULTS OF OPERATIONS
FINANCIAL ANALYSIS Period-to-Period Increase (decrease) ------------------- Percentage of Net Sales Three Six ----------------------- Months Months Three Months Ended Six Months Ended Ended Ended June 30, June 30, June 30, June 30, June 30, June 30, 1998 1997 1998 1997 1998 1998 ------- ------- ------- ------- ------- ------- Net sales 100.0% 100.0% 100.0% 100.0% 6.2% 7.3% Cost of sales 55.2 56.2 56.1 56.4 4.2 6.8 ----- ----- ----- ----- Gross margin 44.8 43.8 43.9 43.6 8.8 7.9 Selling, general and administrative expense 24.9 27.7 24.8 28.0 (4.6) (4.9) Research and development expense 9.4 7.4 8.8 7.0 35.8 33.3 ----- ----- ----- ----- Income from operations 10.5 8.7 10.3 8.6 28.5 28.8 Interest expense (1.4) (1.5) (1.5) (1.6) (1.8) (1.1) Other income (expense), net 0.4 (0.2) 0.3 (0.4) - - Income taxes (3.0) (2.4) (2.9) (2.2) 36.3 40.6 Net income 6.5% 4.6% 6.2% 4.3% 49.4 53.9 ===== ===== ===== =====
NET SALES Net sales for the three- and six-month periods ended June 30, 1998 were $33.8 million and $67.5 million, respectively, compared with $31.9 million and $62.9 million for the three- and six-month periods ended June 30, 1997, increasing 6.2% and 7.3% over the respective prior year periods. Increases for the three- and six-month periods were attributable to the strength of the U.S. market, with domestic sales increasing $2.7 million and $5.6 million, respectively, offsetting lower international sales in both periods. Versus the prior year quarter, sales to the fiber optic communications market grew 78.9%, while sales to the semiconductor and computer peripherals markets declined 2.3% and 26.4%, respectively. For the six-month period, sales to the fiber optic communications and semiconductor markets grew 55.9% and 11.4%, respectively, over the corresponding 1997 period, offsetting a 16.6% decline in sales to the computer peripherals market during the same period. The Company's domestic sales totaled $23.8 million and $45.7 million for the three- and six-month periods ended June 30, 1998, compared with $21.1 million and $40.1 million for the three- and six-month periods ended June 30, 1997, increases of 12.8% and 14.0% versus the respective prior year periods. Domestic growth was driven for the most part by increased sales to the fiber optic communications market, as mentioned previously. The Company's international sales totaled $10.0 million and $21.8 million for the three- and six-month periods ended June 30, 1998, compared with $10.8 million and $22.8 million for the corresponding prior year periods, decreases of 7.4% and 4.4% respectively. European sales were negatively impacted by foreign exchange rate effects of $0.3 million and $0.9 million for the three- and six- month periods ended June 30, 1998, respectively. Excluding the exchange rate effects, European sales were approximately flat for the quarter, and were $0.7 million, or 5.5%, higher for the six-month period, most notably in France, Germany, U.K. and the Netherlands. Sales to the Asian markets declined 28% for the quarter compared to last year due almost entirely to a decrease in sales to Korea. Six-month sales into Asia were 8% of total sales versus 10% of total sales in the comparable 1997 period. Management anticipates that sales to the Asian markets will continue to be down for the remainder of 1998 as economic uncertainty and oversupply in the semiconductor and disk drive markets remain. Order rates for the second quarter were essentially flat versus the prior year period as an increase of 126.7% in the fiber optic communications market was offset by declines of 31.1%, 17.0% and 8.7% in the semiconductor, computer peripherals and research markets, respectively. Page 10 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Six Months Ended June 30, 1998 and 1997 Overall, management anticipates that net sales in 1998 will increase over 1997; however, such growth is dependent on many factors, including economic uncertainty in Asia which may partially offset anticipated sales growth in other geographic markets, and cannot be assured. GROSS PROFIT Gross profit increased 8.8% and 7.9% on sales increases of 6.2% and 7.3% for the three- and six-month periods ended June 30, 1998, compared with the three- and six-month periods ended June 30, 1997. Gross margin (gross profit as a percentage of sales) increased to 44.8% and 43.9% of sales for the three- and six-month periods ended June 30, 1998, compared with 43.8% and 43.6% in the comparable 1997 periods. This increase in gross margin percentage reflects a greater proportion of higher margin photonics product sales during the quarter. Management anticipates that the Company's overall gross margin will improve in 1998 as a result of this product mix effect, the overall increase in sales volume and continued productivity improvements Company-wide. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative (SG&A) expenses for the three- and six-month periods ended June 30, 1998, decreased 4.6% and 4.9% compared with the three- and six-month periods ended June 30, 1997. SG&A expenses when stated as a percentage of sales were 24.9% and 24.8%, compared with 27.7% and 28.0% for the prior year periods. The decrease in SG&A expenses is primarily due a favorable exchange rate effect and successful cost containment measures throughout the Company. RESEARCH AND DEVELOPMENT EXPENSES Research and development (R&D) expenses for the three- and six-month periods ended June 30, 1998, increased 35.8% and 33.3% compared with the three- and six- month periods ended June 30, 1997. As a percentage of sales, R&D expenses were 9.4% and 8.8% versus 7.3% and 7.1% for the prior year periods. The increase in expenses is in line with management's commitment to continued product development and enhancement of existing products. INTEREST EXPENSE AND OTHER INCOME (EXPENSE), NET Interest expense totaled $0.5 million and $1.0 million for the three- and six- month periods ended June 30, 1998 and 1997. Other income (expense), net was a $0.1 million gain versus a $0.1 million loss for the 1998 and 1997 second quarters. Year-to-date, other income (expense), net was a $0.2 million gain for 1998 versus a $0.3 million loss in 1997. The increase in other income was primarily attributable to a gain on the sale of an equity investment and lower foreign exchange losses in the current year. PROVISION FOR TAXES The effective annual tax rate for both the three- and six-month periods ended June 30, 1998 was 32%, compared with 34% for both corresponding 1997 periods. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities of $3.3 million for the six-month period ended June 30, 1998 was principally attributable to the Company's net income ($4.2 million), non-cash items, principally depreciation and amortization ($3.1 million), decreases in receivables ($1.9 million) and increases in provisions for losses on receivables and inventory ($0.9 million). Partially offsetting these amounts were increases in certain other operating assets, principally inventories ($3.2 million), accounts payable ($2.9 million) and other current assets ($0.7 million). Net cash provided by investing activities of $0.2 million for the six-month period ended June 30, 1998, was principally attributable to the Company's sale of an equity investment and other property for net proceeds of $3.1 million offset in part by the Company's purchases of property, plant and equipment. Page 11 NEWPORT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Three and Six Months Ended June 30, 1998 and 1997 Net cash used in financing activities of $0.2 million for the six-month period ended June 30, 1998, was primarily due to the repurchase of common stock under the Company's share repurchase program and a decrease in borrowings, partially offset by issuance of common stock under employee agreements. Although the Company has no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies, the Company continues to evaluate acquisitions of products, technologies or companies that complement the Company's business and may make such acquisitions in the future, and there can be no assurance that the Company will not need to obtain additional sources of capital to finance any such acquisitions. The Company believes its current working capital position together with estimated cash flows from operations and its existing credit availability are adequate to fund operations in the ordinary course of business, anticipated capital expenditures and debt repayment requirements over at least the next year. NEWPORT CORPORATION PART II. OTHER INFORMATION Item 4: Submission of Matters to a Vote of Security Holders. (a) The Annual Meeting of Stockholders was held on May 27, 1998. (b) Set forth below is the name of each Class I director elected at the meeting and the number of votes cast for their election, the number of votes against their election, the number of votes abstained and the number of broker non-votes:
Number of Number of Number of Number of Broker Name Votes "For" Votes "Against" Votes "Abstain" "Non-Votes" ---- ----------- --------------- --------------- ----------- R. Jack Aplin 8,588,059 0 24,160 538,115 Robert L. Guyett 8,589,836 0 22,384 538,114
(c) Proposal Two to appoint Ernst & Young LLP as the Company's independent auditors resulted in the following number of votes for, against, abstain, withheld and non-vote:
Number of Number of Number of Number of Number of Broker Votes "For" Votes "Against" Votes "Abstain" Votes "Withheld" "Non-Votes" - ----------- --------------- --------------- ---------------- ----------- 8,591,744 12,050 8,425 0 538,115
Item 6. Exhibits and reports on Form 8-K. (a) Exhibits Exhibit 27 Financial Data Schedule (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: July 31, 1998 By: /S/ROBERT C. HEWITT --------------------------------------------------- Robert C. Hewitt, Principal Financial Officer, duly authorized to sign on behalf of the Registrant Page 12 EX-27 2 FINANCIAL DATA SCHEDULE
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 JUNE 30, 1998. 1,000 6-MOS DEC-31-1998 JUN-30-1998 10,795 0 22,026 456 30,622 69,364 48,860 27,334 105,455 17,704 20,673 0 0 3,189 62,304 105,455 67,496 67,496 37,853 37,853 22,654 29 993 6,169 1,974 4,195 0 0 0 4,195 0.47 0.44
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