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)

October 30, 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:

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

oSoliciting 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 October 30, 2013, Newport Corporation (the “Registrant”) announced its financial results for the third quarter and nine months ended September 28, 2013, and its financial outlook for the fourth quarter 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 nine months ended September 28, 2013 and September 29, 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 net income per diluted share for its fourth fiscal quarter of 2013.  As of October 30, 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 this non-GAAP information in addition to its GAAP results with the intent of providing both management and investors with an enhanced understanding of the Registrant’s core operating results and performance trends, and with additional measures that the Registrant believes are useful for comparing 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 October 30, 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.

October 30, 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 October 30, 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

THIRD QUARTER 2013 RESULTS

Irvine, California — October 30, 2013 — Newport Corporation (NASDAQ: NEWP) today reported financial results for its third quarter and nine months ended September 28, 2013, and its outlook for the fourth quarter of 2013.  The company noted the following regarding its third quarter results:

·Net sales of $139.0 million;

·New orders received of $144.4 million;

·Net income attributable to Newport Corporation of $12.4 million, or $0.31 per diluted share, when measured on a non-GAAP basis, excluding $7.9 million of previously announced charges related to a loss on extinguishment of debt and a loss on the sale of a business, as well as restructuring and severance costs, the amortization of intangible assets and stock-based compensation expense, and the tax impact of such excluded amounts;

·Net income attributable to Newport Corporation of $0.4 million, or $0.01 per diluted share, when measured according to GAAP, including the charges and expenses referenced above; and

·Cash generated from operations of $10.8 million.

Commenting on the results, Robert J. Phillippy, Newport’s President and Chief Executive Officer, stated, “Our profit leverage exceeded our expectations in the third quarter, with non-GAAP operating income and net income both increasing sharply on a sequential basis.  In addition, our book-to-bill ratio of 1.04 exceeded 1.0 for the third consecutive quarter, driven primarily by new program wins and improved activity levels in our microelectronics end market.”

Sales and Orders

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

							Percentage		Percentage
	Three Months Ended						Change vs.		Change vs.
	September 28,		June 29,		September 29,		Prior		Prior Year
(In thousands, except percentages, unaudited)	2013		2013 (1)		2012 (1)		Quarter		Period
Sales by End Market
Scientific research	$	29,148	$	29,846	$	31,143	-2.3	%	-6.4	%
Microelectronics	34,699		29,017		32,798		19.6	%	5.8	%
Life and health sciences	29,220		31,308		29,390		-6.7	%	-0.6	%
Defense and security	15,578		13,764		18,691		13.2	%	-16.7	%
Industrial manufacturing and other	30,392		30,299		30,859		0.3	%	-1.5	%
Total	$	139,037	$	134,234	$	142,881	3.6	%	-2.7	%
Orders by End Market
Scientific research	$	29,713	$	30,425	$	32,321	-2.3	%	-8.1	%
Microelectronics	36,915		35,622		32,595		3.6	%	13.3	%
Life and health sciences	30,665		31,719		33,118		-3.3	%	-7.4	%
Defense and security	15,172		14,344		19,323		5.8	%	-21.5	%
Industrial manufacturing and other	31,926		35,532		26,416		-10.1	%	20.9	%
Total	$	144,391	$	147,642	$	143,773	-2.2	%	0.4	%

Notes:

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

In the third quarter of 2013, sales increased sequentially by $4.8 million, or 3.6%, but declined 2.7% compared with the prior year period.  The sequential increase was driven primarily by higher sales to customers in Newport’s microelectronics end market, which increased approximately 20% to $34.7 million.  The year-over-year decrease was due primarily to lower sales to customers in the scientific research and defense end markets resulting from government funding reductions, particularly in the United States and Europe.

New orders increased slightly compared with the third quarter of 2012, but declined by $3.3 million, or 2.2%, on a sequential basis.

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Mr. Phillippy commented, “Our sales and orders have increased significantly from the low levels we recorded at the beginning of this year.  These increases have been driven primarily by the success of our new products and recent design wins for new programs, rather than by improvement in market conditions.  These market share gains, coupled with our increasing backlog and the improving outlook of our customers, give us confidence that we will achieve strong sales and profit growth in 2014.”

Operating Income and Net Income

Newport reported operating income for the third quarter of 2013 of $6.4 million, or 4.6% of net sales, when calculated in accordance with GAAP.  On a non-GAAP basis, excluding restructuring and severance costs, the amortization of intangible assets, stock-based compensation expense and the previously announced $4.5 million loss attributable to the sale of the MRSI business, the company’s operating income for the third quarter of 2013 was $18.3 million, or 13.2% of net sales.

The company reported net income attributable to Newport Corporation for the third quarter of 2013 of $0.4 million, or $0.01 per diluted share, when calculated in accordance with GAAP.  On a non-GAAP basis, excluding the items referenced above, as well as the previously announced $3.4 million loss on extinguishment of debt relating to the refinancing of the company’s credit facility and the tax impact of such excluded amounts, net income attributable to Newport Corporation for the third quarter of 2013 was $12.4 million, or $0.31 per diluted share.

The company has provided a reconciliation of its gross profit, operating income, net income attributable to Newport Corporation 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 helps to provide insight into the company’s core business results, as well as a more meaningful comparison of its financial results between periods.

Cash and Debt

In the third quarter of 2013, Newport established a new $275 million revolving credit facility.  As part of this refinancing, the company repaid 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.  During the quarter, the company reduced its outstanding borrowings under the new facility by an additional $19 million, to $101 million.  At the end of the third quarter of 2013, Newport

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had $56.1 million of cash, cash equivalents, restricted cash and marketable securities.  The company generated $10.8 million of operating cash flow in the third quarter.  In the first nine months of 2013, Newport has generated $40.1 million of cash from operations and reduced its net debt position by $31.8 million, to $52.4 million.

Financial Outlook

The company expects its sales in the fourth quarter of 2013 to be in the range of $139 million to $145 million.  However, the company expects its fourth quarter non-GAAP operating and net income per diluted share to be slightly lower than the third quarter level, due primarily to a modest sequential increase in operating expenses.

Mr. Phillippy concluded, “We are pleased with our results in the third quarter, and particularly the strong profit leverage.  We continue to win new business in our key end markets during this prolonged period of tepid macro-economic conditions.  In addition, we expect our orders to outpace sales again in the current quarter, marking the fourth consecutive quarter that our book-to-bill ratio exceeds 1.0.  We remain confident in our ability to execute our strategy, and believe we are building the foundation for a strong 2014 in terms of sales growth, profit leverage and increasing cash generation.”

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, industrial manufacturing and defense and security 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, Chief Financial Officer and Treasurer will host an investor conference call today, October 30, 2013, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company’s results for the third quarter of 2013 and its outlook for the fourth quarter of 2013.  The call will be open to all

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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.

The webcast will be archived on the Newport website and can be reached through the same link.  A telephonic playback of the conference call also will be available by calling 855-859-2056 within the U.S. and Canada and 404-537-3406 from abroad.  The playback will be available beginning at 6:00 p.m. Eastern time today and continue through 11:59 p.m. Eastern time on Wednesday, November 6, 2013.  The replay passcode is 87562451.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, including without limitation statements regarding Newport’s expectation of strong sales and profit growth in 2014, its expected lower ongoing financing costs under its new credit facility, its anticipated levels of sales and non-GAAP operating and net income per diluted share in the fourth quarter of 2013, its expected book-to-bill ratio in the fourth quarter of 2013, and its expectation of strong profit leverage and increasing cash generation in 2014.  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,  the strength of business conditions in the industries Newport serves, particularly the semiconductor and defense/security industries; Newport’s ability to successfully penetrate and increase sales to its targeted end markets; the levels of private and governmental research funding worldwide; 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 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						Nine Months Ended
	September 28,			September 29,			September 28,			September 29,
(In thousands, except per share amounts)	2013			2012			2013			2012
Net sales	$	139,037		$	142,881		$	405,878		$	453,703
Cost of sales	79,306			80,073			233,778			255,943
Gross profit	59,731			62,808			172,100			197,760
Selling, general and administrative expenses	35,649			37,320			111,324			123,267
Research and development expense	13,129			12,869			39,807			40,319
Loss on sale of assets	4,517			—			4,517			—
Operating income	6,436			12,619			16,452			34,174
Gain on sale of investment	—			950			—			6,248
Loss on extinguishment of debt	(3,355		)	—			(3,355		)	—
Interest and other expense, net	(1,293		)	(2,082		)	(5,472		)	(7,097		)
Income before income taxes	1,788			11,487			7,625			33,325
Income tax provision	1,199			3,955			1,697			10,144
Net income	589			7,532			5,928			23,181
Net income (loss) attributable to non-controlling interests	152			(104		)	83			(201		)
Net income attributable to Newport Corporation	$	437		$	7,636		$	5,845		$	23,382
Net income	$	589		$	7,532		$	5,928		$	23,181
Other comprehensive income:
Foreign currency translation gains (losses)	2,995			1,399			1,320			(499		)
Unrecognized net pension gains (losses)	(67		)	10			161			96
Unrealized gains (losses) on marketable securities	22			(13		)	(126		)	(120		)
Comprehensive income	$	3,539		$	8,928		$	7,283		$	22,658
Comprehensive income (loss) attributable to non-controlling interests	$	154		$	(94	)	$	8		$	(209	)
Comprehensive income attributable to Newport Corporation	3,385			9,022			7,275			22,867
Comprehensive income	$	3,539		$	8,928		$	7,283		$	22,658
Net income per share attributable to Newport Corporation:
Basic	$	0.01		$	0.20		$	0.15		$	0.61
Diluted	$	0.01		$	0.20		$	0.15		$	0.60
Shares used in the computation of net income per share:
Basic	39,121			38,264			38,935			38,072
Diluted	39,657			38,645			39,426			38,825
Other operating data:
New orders received during the period	$	144,391		$	143,773		$	425,617		$	478,163
Backlog at the end of period scheduled to ship within 12 months							$	170,611		$	154,972

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Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

	Three Months Ended						Nine Months Ended
(In thousands, except per share amounts)	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Net sales	$	139,037		$	142,881		$	405,878		$	453,703
Cost of sales:
Cost of sales - GAAP	$	79,306		$	80,073		$	233,778		$	255,943
Amortization of intangible assets	922			1,071			2,737			1,431
Stock-based compensation expense	233			189			656			490
Integration-related, restructuring and severance costs	521			—			924			808
Non-GAAP cost of sales	77,630			78,813			229,461			253,214
Non-GAAP gross profit	$	61,407		$	64,068		$	176,417		$	200,489
Non-GAAP gross profit as a percentage of net sales	44.2		%	44.8		%	43.5		%	44.2		%
Operating income:
Operating income - GAAP	$	6,436		$	12,619		$	16,452		$	34,174
Amortization of intangible assets	2,550			4,615			7,751			14,823
Stock-based compensation expense	2,445			2,173			6,590			6,265
Integration-related, restructuring and severance costs	2,365			1,756			6,926			6,188
Loss (gain) on sale of assets	4,517			—			4,517			(166		)
Non-GAAP operating income	$	18,313		$	21,163		$	42,236		$	61,284
Non-GAAP operating income as a percentage of net sales	13.2		%	14.8		%	10.4		%	13.5		%
Net income attributable to Newport Corporation:
Net income - GAAP	$	437		$	7,636		$	5,845		$	23,382
Amortization of intangible assets	2,550			4,615			7,751			14,823
Stock-based compensation expense	2,445			2,173			6,590			6,265
Integration-related, restructuring and severance costs	2,365			1,756			6,926			6,188
Loss (gain) on sale of assets	4,517			(950		)	4,517			(6,414		)
Loss on extinguishment of debt	3,355			—			3,355			—
Release of valuation allowance against certain deferred tax assets	—			(424		)	—			(1,815		)
Income tax provision on non-GAAP adjustments	(3,227		)	(1,129		)	(8,624		)	(4,994		)
Non-GAAP net income	$	12,442		$	13,677		$	26,360		$	37,435
Net income per diluted share attributable to Newport Corporation:
Net income - GAAP	$	0.01		$	0.20		$	0.15		$	0.60
Total non-GAAP adjustments	0.30			0.15			0.52			0.36
Non-GAAP net income per diluted share	$	0.31		$	0.35		$	0.67		$	0.96

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Newport Corporation

Consolidated Balance Sheets

(Unaudited)

	September 28,		December 29,
(In thousands)	2013		2012
ASSETS
Current assets:
Cash and cash equivalents	$	47,328	$	88,767
Restricted cash	3,405		3,107
Marketable securities	5,318		8,498
Accounts receivable, net	94,737		90,981
Inventories, net	105,841		108,728
Deferred income taxes	19,811		19,872
Prepaid expenses and other current assets	22,591		17,727
Total current assets	299,031		337,680
Property and equipment, net	79,190		82,843
Goodwill	78,698		79,586
Deferred income taxes	5,502		5,646
Intangible assets, net	69,857		77,446
Investments and other assets	34,455		37,760
	$	566,733	$	620,961
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings, net	$	5,614	$	32,985
Accounts payable	31,657		31,061
Accrued payroll and related expenses	28,596		29,096
Accrued expenses and other current liabilities	41,054		34,696
Total current liabilities	106,921		127,838
Long-term debt, net	102,069		150,758
Accrued pension liabilities	28,316		27,764
Other liabilities	22,809		23,783
Total stockholders’ equity of Newport	305,224		289,432
Non-controlling interests	1,394		1,386
Total stockholders’ equity	306,618		290,818
	$	566,733	$	620,961

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