8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

July 31, 2013

NEWPORT CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	000-01649	94-0849175
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1791 Deere Avenue, Irvine, California	92606
(Address of principal executive offices)	(Zip Code)

(949) 863-3144

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On July 31, 2013, Newport Corporation (the “Registrant”) announced its financial results for the second quarter and six months ended June 29, 2013, and its financial outlook for the remainder of 2013.  The press release issued by the Registrant in connection with the announcement is attached to this report as Exhibit 99.1.

This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing by the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as may be set forth by specific reference in such a filing.

Use of Non-GAAP Financial Measures

In the press release attached to this report as Exhibit 99.1, the Registrant has supplemented certain of its financial measures prepared in accordance with accounting principles generally accepted in the United States (GAAP) with non-GAAP financial measures.  These non-GAAP financial measures and the reasons for their inclusion, as well as the limitations on the usefulness of such information to an investor, are described below.

The Registrant has provided non-GAAP measures of (1) gross profit, (2) operating income, (3) net income attributable to Newport Corporation, and (4) net income per diluted share attributable to Newport Corporation, for the three and six months ended June 29, 2013 and June 30, 2012, which exclude a number of items that management considers to be outside of the Registrant’s core operating results.  A table detailing the items excluded from the non-GAAP measures and reconciling such non-GAAP results with the Registrant’s GAAP results is included following the consolidated statements of income and comprehensive income that are a part of the press release.  In the press release, the Registrant has also provided qualitative guidance concerning its expected non-GAAP operating income and non-GAAP earnings per diluted share for its third fiscal quarter of 2013.  As of July 31, 2013, the Registrant is unable to quantify the expected impact of the items expected to be excluded from its non-GAAP results for such period.

The Registrant has provided these non-GAAP results and guidance in addition to its GAAP results with the intent of providing both management and investors with a more complete understanding of the Registrant’s core operating results and performance trends, and a more meaningful basis for comparison of the Registrant’s results with its historical and future financial results, as well as with the results of other companies that may report non-GAAP measures that exclude similar items.  The Registrant believes that the items excluded from these non-GAAP measures generally do not reflect the ongoing operating performance of the Registrant’s business.  In addition, these adjusted non-GAAP measures are among the primary indicators that management uses as a basis for its planning and forecasting and may also be used by management for other purposes including its evaluation of performance to determine the achievement of goals under the Registrant’s incentive plans.

However, the presentation of this additional information is not meant to be considered in isolation or as a substitute for the Registrant’s financial measures prepared in accordance with GAAP.  These non-GAAP measures exclude items that may have a material impact on the Registrant’s operating results calculated in accordance with GAAP, which impact is included in the Registrant’s GAAP financial statements.  Although the Registrant believes it is useful for investors to view the Registrant’s core operating results in the absence of the excluded items, certain of these excluded items represent actual expenses that impact the cash available to the Registrant for other uses.  To gain a comprehensive understanding of all impacts on the Registrant’s income from any and all events, management also relies upon the Registrant’s GAAP financial statements, and investors should as well.  Further, the Registrant notes that non-GAAP measures may be defined and calculated differently among companies, or from period to period by the same company, which may limit the usefulness of the non-GAAP information to an investor.

The Registrant expects to incur stock-based compensation expense, amortization of intangible assets, and acquisition-related costs in future periods, and may also incur other items, such as significant gains or losses from contingencies.  Additionally, the Registrant may be impacted by significant tax matters in future periods.  The Registrant may present non-GAAP financial measures for such future periods that exclude any or all of the foregoing items, if it believes that doing so is consistent with the goal of providing useful information to investors and management.

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Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No.	Description
99.1	Press Release dated July 31, 2013 (furnished pursuant to Item 2.02 and not deemed filed).

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SIGNATURES

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 hereunto duly authorized.

July 31, 2013	NEWPORT CORPORATION
		By:	/s/ Jeffrey B. Coyne
			Jeffrey B. Coyne
			Senior Vice President, General Counsel and Corporate Secretary

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated July 31, 2013 (furnished pursuant to Item 2.02 and not deemed filed).

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EX-99.1

Exhibit 99.1

Press Release

Contact:

Charles F. Cargile, 949/863-3144

Newport Corporation, Irvine, CA

investor@newport.com

or

Rob Fink, 212/896-1206

KCSA Strategic Communications

newport@kcsa.com

NEWPORT CORPORATION REPORTS

SECOND QUARTER AND FIRST HALF 2013 RESULTS

Irvine, California — July 31, 2013 — Newport Corporation (NASDAQ: NEWP) today reported financial results for its second quarter and six months ended June 29, 2013, and its outlook for the remainder of 2013.  The company noted the following regarding the second quarter results:

·    Net sales of $134.2 million;

·    New orders of $147.6 million;

·    Net income attributable to Newport of $2.7 million, or $0.07 per diluted share, when measured according to generally accepted accounting principles (GAAP);

·Non-GAAP net income attributable to Newport of $7.8 million, or $0.20 per diluted share, excluding the amortization of intangible assets, stock-based compensation expense, integration, restructuring and severance costs, and the tax impact of the excluded amounts; and

·    Cash generated from operations of $21.8 million, and a reduction in debt of $10.2 million.

Commenting on the results, Robert J. Phillippy, Newport’s President and Chief Executive Officer, stated, “We are very encouraged by the rebound in new orders during the second quarter.  Our new orders increased 10.5% sequentially to $147.6 million and our book-to-bill ratio was greater than 1.0 in all of our target end markets.  As expected, our net sales and non-GAAP income increased slightly on a sequential basis.  In addition, we strengthened our balance sheet by generating $21.8 million in cash from operations and using $10.2 million of that cash to reduce our outstanding debt.”

Sales and Orders

Newport’s sales and orders by end market were as follows:

							Percentage		Percentage
	Three Months Ended						Change vs.		Change vs.
	June 29,		March 30,		June 30,		Prior		Prior Year
(In thousands, except percentages, unaudited)	2013		2013(1)		2012(1)		Quarter		Period
Sales by End Market
Scientific research	$	29,824	$	30,905	$	30,525	-3.5	%	-2.3	%
Microelectronics	29,017		27,730		41,189		4.6	%	-29.6	%
Life and health sciences	31,308		31,165		33,478		0.5	%	-6.5	%
Defense and security	13,764		15,404		17,154		-10.6	%	-19.8	%
Industrial manufacturing and other	30,321		27,403		31,309		10.6	%	-3.2	%
Total	$	134,234	$	132,607	$	153,655	1.2	%	-12.6	%
Orders by End Market
Scientific research	$	30,425	$	31,650	$	32,303	-3.9	%	-5.8	%
Microelectronics	35,622		28,186		41,985		26.4	%	-15.2	%
Life and health sciences	31,719		29,882		19,450		6.1	%	63.1	%
Defense and security	14,344		14,928		17,262		-3.9	%	-16.9	%
Industrial manufacturing and other	35,532		28,939		37,286		22.8	%	-4.7	%
Total	$	147,642	$	133,585	$	148,286	10.5	%	-0.4	%

Notes:

(1)Certain prior period amounts have been reclassified to conform to the current period presentation.

On a sequential basis, the company’s sales and new orders in the second quarter of 2013 increased 1.2% and 10.5%, respectively, compared with the first quarter levels, driven by increases in its microelectronics, industrial manufacturing and life and health sciences end markets, offset in part by lower sales to and orders from customers in the scientific research and defense and security end markets.  Commenting on the increase in orders, Mr. Phillippy said, “Our orders from microelectronics customers in the second quarter increased sequentially by $7.4 million, or 26.4%, over the first quarter level, despite the overall industry not yet showing signs of a full recovery.  We had a number of key design wins in the quarter that contributed to this result.  This gives us optimism that we are gaining share in this market during the current down-cycle, and will see accelerated growth from these new programs as the recovery in the semiconductor equipment industry gains momentum.”

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Operating Income and Net Income

Newport reported operating income for the second quarter of 2013 of $5.6 million when calculated in accordance with GAAP, reflecting a 26.5% sequential increase compared with the first quarter of 2013.  On a non-GAAP basis, excluding the amortization of intangible assets, stock-based compensation expense, and integration, restructuring and severance costs, the company’s operating income for the second quarter of 2013 was $12.8 million, or 9.5% of net sales, a 14.6% increase compared with the first quarter of 2013.

The company reported net income attributable to Newport for the second quarter of 2013 of $2.7 million, or $0.07 per diluted share, when calculated in accordance with GAAP.  On a non-GAAP basis, net income attributable to Newport for the second quarter of 2013 increased 26% compared with the first quarter of 2013 to $7.8 million, or $0.20 per diluted share.

The company has provided a reconciliation of its gross profit, operating income, net income and net income per diluted share calculated in accordance with GAAP and on a non-GAAP basis following the statements of income and comprehensive income included in this release.  Management believes that the supplemental presentation of non-GAAP financial information provides insight into the company’s core business results, as well as a more meaningful comparison of its financial results between periods.

Cash, Cash Equivalents and Marketable Securities

As of June 29, 2013, the company had $161.4 million in total indebtedness and $102.0 million in cash, restricted cash and marketable securities.  On July 18, 2013, Newport announced the completion of a new $275 million revolving credit facility.  As part of this refinancing, the company paid all of the outstanding obligations remaining on its prior credit facility, and the fees relating to the new facility, by using $34.2 million in cash and borrowing $120.0 million on its new revolving credit line.  The new credit facility provides the company with greater flexibility from a borrowing capacity, cash flow and covenant perspective, with lower ongoing financing costs.

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Financial Outlook

Commenting on Newport’s outlook, Mr. Phillippy said, “We expect our sales in the second half of 2013 to increase compared with the first half of the year.  In addition, we believe that our growing backlog, coupled with new business wins related to our strategic growth initiatives, will position us well for increasing sales and profitability in 2014.  In the third quarter of 2013, we expect our net sales to be in the range of $136 million to $143 million, resulting in sequential increases in our non-GAAP operating income and non-GAAP earnings per diluted share over the second quarter levels.”

ABOUT NEWPORT CORPORATION

Newport Corporation is a leading global supplier of advanced-technology products and systems to customers in the scientific research, microelectronics, life and health sciences, defense and security, and industrial manufacturing markets.  Newport’s innovative solutions leverage its expertise in advanced photonics, optics, and laser technologies to enhance the performance and productivity of its customers’ manufacturing, engineering and research applications.  Newport is part of the Standard & Poor’s SmallCap 600 Index and the Russell 2000 Index.

To download Newport’s investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit Apple’s App Store for the iPhone and iPad or Google Play for Android mobile devices.

INVESTOR CONFERENCE CALL

Robert J. Phillippy, President and Chief Executive Officer, and Charles F. Cargile, Senior Vice President and Chief Financial Officer, will host an investor conference call today, July 31, 2013, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company’s results for the second quarter of 2013 and its business outlook for the remainder of 2013.  The call will be open to all interested investors through a live audio web broadcast via the Internet at www.newport.com/investors.  The call also will be available to investors and analysts by dialing 877-375-4189 within the U.S. and Canada or 973-935-2046 from abroad.

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The webcast will be archived on the Newport website and can be reached through the same link.  An archived webcast will also be available on Newport’s investor relations app.  A telephonic playback of the conference call will be available by calling 855-859-2056 within the U.S. and Canada and 404-537-3406 from abroad.  Playback will be available beginning at 6:00 p.m. Eastern time on Wednesday, July 31, 2013, and continue through 11:59 p.m. Eastern time on Wednesday, August 7, 2013.  The replay passcode is 18161599.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, including without limitation statements regarding the company’s optimism that it is gaining share in the microelectronics market and that its new design wins will lead to accelerated growth once conditions in the semiconductor equipment industry gain upward momentum; the expectation that its new credit facility will provide greater flexibility from a borrowing capacity, cash flow and covenant perspective and lower on-going financing costs; its expectation of increasing sales in the second half of 2013 compared with the first half of the year; the expectation that growing backlog and new business wins related to its strategic growth initiatives will position the company for increasing sales and profitability in 2014; the company’s anticipated net sales in the third quarter of 2013, and its expectation of sequential increases in non-GAAP operating income and non-GAAP earnings per diluted share in the third quarter of 2013.  Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.  Assumptions relating to the foregoing involve judgments and risks with respect to, among other things, Newport’s ability to achieve expected benefits from the integration of acquired businesses and its other cost savings initiatives; the strength of business conditions in the industries Newport serves, particularly the semiconductor and defense and security industries; the levels of private and governmental research funding worldwide; Newport’s ability to successfully penetrate and increase sales to its targeted end markets; potential order cancellations and push-outs; future economic, competitive and market conditions, including those in Europe and Asia and those related to its strategic markets; whether its products will continue to achieve customer acceptance; and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Newport.  Certain of these judgments and risks are discussed in more detail in Newport’s periodic reports filed with the Securities and Exchange Commission.  Although

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Newport believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized.  In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Newport or any other person that Newport’s objectives or plans will be achieved.  Newport undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

###

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Newport Corporation

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	Three Months Ended						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
(In thousands, except per share amounts)	2013			2012			2013			2012
Net sales	$	134,234		$	153,655		$	266,841		$	310,822
Cost of sales	76,997			86,772			154,472			175,870
Gross profit	57,237			66,883			112,369			134,952
Selling, general and administrative expenses	38,067			41,887			75,675			85,947
Research and development expense	13,577			13,651			26,678			27,450
Operating income	5,593			11,345			10,016			21,555
Gain on sale of investment	—			5,298			—			5,298
Interest and other expense, net	(2,042		)	(2,828		)	(4,179		)	(5,015		)
Income before income taxes	3,551			13,815			5,837			21,838
Income tax provision	946			4,754			498			6,189
Net income	2,605			9,061			5,339			15,649
Net loss attributable to non-controlling interests	(57		)	(93		)	(69		)	(97		)
Net income attributable to Newport Corporation	$	2,662		$	9,154		$	5,408		$	15,746
Net income	$	2,605		$	9,061		$	5,339		$	15,649
Other comprehensive income:
Foreign currency translation gains (losses)	777			(3,485		)	(1,675		)	(1,898		)
Unrecognized net pension gains	38			102			228			86
Unrealized losses on marketable securities	(50		)	(140		)	(148		)	(107		)
Comprehensive income	$	3,370		$	5,538		$	3,744		$	13,730
Comprehensive loss attributable to non-controlling interests	$	(85	)	$	(69	)	$	(146	)	$	(115	)
Comprehensive income attributable to Newport Corporation	3,455			5,607			3,890			13,845
Comprehensive income	$	3,370		$	5,538		$	3,744		$	13,730
Net income per share attributable to Newport Corporation:
Basic	$	0.07		$	0.24		$	0.14		$	0.41
Diluted	$	0.07		$	0.24		$	0.14		$	0.40
Shares used in the computation of net income per share:
Basic	39,085			38,220			38,843			37,975
Diluted	39,361			38,898			39,311			38,915
Other operating data:
New orders received during the period	$	147,642		$	148,286		$	281,227		$	334,390
Backlog at the end of period scheduled to ship within 12 months							$	151,056		$	168,706

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Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

	Three Months Ended						Six Months Ended
(In thousands, except per share amounts)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net Sales	$	134,234		$	153,655		$	266,841		$	310,822
Cost of sales:
Cost of sales - GAAP	$	76,997		$	86,772		$	154,472		$	175,870
Amortization of intangible assets	920			180			1,815			360
Stock-based compensation expense	244			184			453			301
Integration-related, restructuring and severance costs	—			—			403			808
Non-GAAP cost of sales	75,833			86,408			151,801			174,401
Non-GAAP gross profit	$	58,401		$	67,247		$	115,040		$	136,421
Non-GAAP gross profit as a percentage of net sales	43.5		%	43.8		%	43.1		%	43.9		%
Operating income:
Operating income - GAAP	$	5,593		$	11,345		$	10,016		$	21,555
Amortization of intangible assets	2,615			5,031			5,201			10,208
Stock-based compensation	1,876			1,878			4,145			4,092
Integration-related, restructuring and severance costs	2,693			1,947			4,567			4,432
Gain on sale of assets	—			—			—			(166		)
Non-GAAP operating income	$	12,777		$	20,201		$	23,929		$	40,121
Non-GAAP operating income as a percentage of net sales	9.5		%	13.1		%	9.0		%	12.9		%
Net income attributable to Newport Corporation:
Net income - GAAP	$	2,662		$	9,154		$	5,408		$	15,746
Amortization of intangible assets	2,615			5,031			5,201			10,208
Stock-based compensation	1,876			1,878			4,145			4,092
Integration-related, restructuring and severance costs	2,693			1,947			4,567			4,432
Gain on sale of assets	—			(5,298		)	—			(5,464		)
Release of valuation allowance against certain deferred tax assets	—			—			—			(1,391		)
Income tax provision on non-GAAP adjustments	(2,082		)	(1,096		)	(5,397		)	(3,865		)
Non-GAAP net income	$	7,764		$	11,616		$	13,924		$	23,758
Net income per diluted share attributable to Newport Corporation:
Net income - GAAP	$	0.07		$	0.24		$	0.14		$	0.40
Total non-GAAP adjustments	0.13			0.06			0.21			0.21
Non-GAAP net income per diluted share	$	0.20		$	0.30		$	0.35		$	0.61

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Newport Corporation

Consolidated Balance Sheets

(Unaudited)

	June 29,		December 29,
(In thousands)	2013		2012
ASSETS
Current assets:
Cash and cash equivalents	$	90,186	$	88,767
Restricted cash	3,220		3,107
Marketable securities	8,574		8,498
Accounts receivable, net	86,467		89,445
Notes receivable, net	1,128		1,536
Inventories, net	107,946		108,728
Deferred income taxes	19,812		19,872
Prepaid expenses and other current assets	20,867		17,727
Total current assets	338,200		337,680
Property and equipment, net	81,220		82,843
Goodwill	79,489		79,586
Deferred income taxes	5,426		5,646
Intangible assets, net	72,171		77,446
Investments and other assets	35,504		37,760
	$	612,010	$	620,961
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings, net	$	32,767	$	32,985
Accounts payable	31,181		31,061
Accrued payroll and related expenses	29,242		29,096
Accrued expenses and other current liabilities	38,612		34,696
Total current liabilities	131,802		127,838
Long-term debt, net	128,647		150,758
Accrued pension liabilities	27,731		27,764
Other liabilities	22,850		23,783
Total stockholders’ equity of Newport	299,740		289,432
Non-controlling interests	1,240		1,386
Total stockholders’ equity	300,980		290,818
	$	612,010	$	620,961

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