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)
April 30, 2014
NEWPORT CORPORATION
(Exact name of registrant as specified in its charter)
Nevada |
|
000-01649 |
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94-0849175 |
(State or other jurisdiction of |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
1791 Deere Avenue, Irvine, California |
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92606 |
(Address of principal executive offices) |
|
(Zip Code) |
(949) 863-3144
(Registrants 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)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-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 April 30, 2014, Newport Corporation (the Registrant) announced its financial results for the first quarter ended March 29, 2014, and its financial outlook for the second quarter of 2014. 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 months ended March 29, 2014 and March 30, 2013, which exclude a number of items that management considers to be outside of the Registrants core operating results. A table detailing the items excluded from the non-GAAP measures and reconciling such non-GAAP results with the Registrants GAAP results is included following the consolidated statements of operations 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 second quarter of 2014. As of April 30, 2014, 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 Registrants core operating results and performance trends, and with additional measures that the Registrant believes are useful for comparing the Registrants 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 Registrants 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 Registrants incentive plans.
However, the presentation of this additional information is not meant to be considered in isolation or as a substitute for the Registrants financial measures prepared in accordance with GAAP. These non-GAAP measures exclude items that may have a material impact on the Registrants operating results calculated in accordance with GAAP, which impact is included in the Registrants GAAP financial statements. Although the Registrant believes it is useful for investors to view the Registrants 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 Registrants income from any and all events, management also relies upon the Registrants 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
|
Description |
99.1 |
|
Press Release dated April 30, 2014 (furnished pursuant to Item 2.02 and not deemed filed). |
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.
April 30, 2014 |
NEWPORT CORPORATION | |
|
| |
|
| |
|
By: |
/s/ Jeffrey B. Coyne |
|
|
Jeffrey B. Coyne |
|
|
Senior Vice President, General Counsel and Corporate Secretary |
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
FIRST QUARTER 2014 RESULTS
Irvine, California April 30, 2014 Newport Corporation (NASDAQ: NEWP) today reported financial results for its first quarter ended March 29, 2014, and its outlook for the second quarter of 2014. The company noted the following regarding the first quarter results:
· Net sales of $146.9 million;
· New orders of $147.3 million;
· Net income attributable to Newport Corporation of $7.9 million, or $0.19 per diluted share, when measured according to generally accepted accounting principles (GAAP);
· Non-GAAP net income of $11.6 million, or $0.29 per diluted share, excluding the amortization of intangible assets, stock-based compensation expense, acquisition-related, restructuring and severance costs, a gain on sale of assets and the tax impact of the excluded amounts; and
· Cash generated from operations of $9.4 million, and a reduction in debt of $12.5 million, resulting in a net debt position of $12.8 million at the end of the quarter.
Commenting on the results, Robert J. Phillippy, Newports President and Chief Executive Officer, stated, Newports positive financial results in the first quarter of 2014 reflect the continued strength we are experiencing in our business. Our first quarter sales of $146.9 million increased 10.8% year-over-year, and we leveraged this increase into a 60.5% increase in non-GAAP operating income and an 81.3% increase in non-GAAP net income per diluted share.
Sales and Orders
Newports sales and orders by end market were as follows:
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Percentage |
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Percentage |
| |||
|
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Three Months Ended |
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Change vs. |
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Change vs. |
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|
March 29, |
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December 28, |
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March 30, |
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Prior |
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Prior Year |
| |||
(In thousands, except percentages, unaudited) |
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2014 |
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2013 |
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2013 (1) |
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Quarter |
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Period |
| |||
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|
|
|
|
|
|
| |||
Sales by End Market |
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|
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|
|
|
| |||
|
|
|
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|
|
|
|
| |||
Scientific research |
|
$ |
31,881 |
|
$ |
33,077 |
|
$ |
30,902 |
|
-3.6 |
% |
3.2 |
% |
Microelectronics |
|
33,953 |
|
39,639 |
|
27,721 |
|
-14.3 |
% |
22.5 |
% | |||
Life and health sciences |
|
34,262 |
|
32,902 |
|
31,220 |
|
4.1 |
% |
9.7 |
% | |||
Defense and security |
|
11,577 |
|
13,875 |
|
15,403 |
|
-16.6 |
% |
-24.8 |
% | |||
Industrial manufacturing and other |
|
35,217 |
|
34,683 |
|
27,361 |
|
1.5 |
% |
28.7 |
% | |||
Total |
|
$ |
146,890 |
|
$ |
154,176 |
|
$ |
132,607 |
|
-4.7 |
% |
10.8 |
% |
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|
|
| |||
Orders by End Market |
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| |||
Scientific research |
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$ |
28,255 |
|
$ |
34,729 |
|
$ |
31,650 |
|
-18.6 |
% |
-10.7 |
% |
Microelectronics |
|
42,579 |
|
53,504 |
|
28,185 |
|
-20.4 |
% |
51.1 |
% | |||
Life and health sciences |
|
29,662 |
|
29,951 |
|
29,884 |
|
-1.0 |
% |
-0.7 |
% | |||
Defense and security |
|
11,325 |
|
14,111 |
|
14,927 |
|
-19.7 |
% |
-24.1 |
% | |||
Industrial manufacturing and other |
|
35,463 |
|
34,476 |
|
28,939 |
|
2.9 |
% |
22.5 |
% | |||
Total |
|
$ |
147,284 |
|
$ |
166,771 |
|
$ |
133,585 |
|
-11.7 |
% |
10.3 |
% |
Note:
(1) Certain prior period amounts have been reclassified to conform to the current period presentation.
In the first quarter of 2014, the companys sales and orders both increased slightly more than 10% compared with the prior year period. The year-over-year increase in sales was driven by higher levels in all of the companys end markets, except for the defense and security end markets, which continued to be adversely impacted by government funding constraints, primarily in the United States. The year-over-year increase in orders was driven by very strong activity from customers in the companys microelectronics and industrial manufacturing and other end markets, offset by decreases in orders from customers in its scientific research and defense and security end markets.
On a sequential basis, sales and orders declined 4.7% and 11.7%, respectively. The sequential decline in sales was due primarily to lower sales to customers in the companys microelectronics, scientific research and defense and security end markets, offset by slight increases in sales to customers in its life and health sciences and industrial manufacturing and other end markets. The sequential sales decline in the microelectronics end market resulted primarily from the companys
divestiture of its MRSI business, which contributed approximately $3 million of sales to this market in the fourth quarter of 2013. The sequential decline in orders was due primarily to a $14 million order in the fourth quarter of 2013 from a microelectronics end market customer for a collaborative development program that did not repeat in the first quarter, and lower orders from customers in the scientific research and defense and security end markets. Activity levels in the scientific research and defense and security end markets continued to be adversely impacted by government funding constraints.
Operating Income and Net Income
Newport reported operating income for the first quarter of 2014 of $12.5 million, or 8.5% of net sales, when calculated in accordance with GAAP. On a non-GAAP basis, excluding the amortization of intangible assets, stock-based compensation expense, acquisition-related, restructuring and severance costs and a gain on sale of assets, the companys operating income for the first quarter of 2014 was $17.9 million, or 12.2% of net sales.
On a GAAP basis, the company reported net income attributable to Newport Corporation for the first quarter of 2014 of $7.9 million, or $0.19 per diluted share. On a non-GAAP basis, excluding the items referenced above and the tax impact of such excluded amounts, the companys net income for the first quarter of 2014 was $11.6 million, or $0.29 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 companys core business results, as well as a useful resource for comparison of its financial results between periods.
Cash, Cash Equivalents and Marketable Securities
In the first quarter of 2014, Newport generated $9.4 million in cash from operations, and reduced its total indebtedness by $12.5 million. As of March 29, 2014, the company had $76.0 million in total indebtedness and $63.2 million in cash, restricted cash and marketable securities.
Financial Outlook
Commenting on Newports outlook, Mr. Phillippy said, We are off to a good start in 2014, and our first quarter results provide us with a strong foundation to build on. In the second quarter of 2014, we expect sales to be in the range of $147 million to $153 million, which would be 9.5% to 14.0% higher than the second quarter of 2013. As a result, we also expect significant year-over-year increases in our non-GAAP operating income and non-GAAP earnings per diluted share in the second quarter of 2014. We are successfully executing on our strategic initiatives to introduce innovative new products and capture design wins with our industry-leading customers to drive sales and profit growth. In addition, we expect this strong financial performance to generate increasing levels of cash that we will use to accelerate our growth and enhance shareholder value.
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. Newports innovative solutions leverage its expertise in advanced technologies, including lasers, photonics and precision motion equipment, and optical components and sub-systems, to enhance the capabilities and productivity of its customers manufacturing, engineering and research applications. Newport is part of the Standard & Poors SmallCap 600 Index and the Russell 2000 Index.
To download Newports investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit Apples 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, April 30, 2014, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the companys results for the first quarter of 2014 and its business outlook for the remainder of 2014. 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.
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 Newports 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 8:00 p.m. Eastern time on Wednesday, April 30, 2014, and continue through 11:30 p.m. Eastern time on Wednesday, May 7, 2014. The replay passcode is 30735412.
SAFE HARBOR STATEMENT
This news release contains forward-looking statements, including without limitation statements regarding the companys expectation of continued momentum in its business; the companys expected sales level in the second quarter of 2014 and its expectation of significant year-over-year increases in non-GAAP operating income and non-GAAP earnings per diluted share in the second quarter of 2014; the companys expectation that it will drive future sales and profit growth by successfully introducing new products and capturing new design wins with industry-leading customers; and the companys expectation of generating increasing levels of cash flow to accelerate its growth and enhance shareholder value. 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 and security industries; Newports 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 Newports 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 Newports 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.
###
Newport Corporation
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
|
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Three Months Ended |
| ||||
|
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March 29, |
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March 30, |
| ||
(In thousands, except per share amounts) |
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2014 |
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2013 |
| ||
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|
| ||
Net sales |
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$ |
146,890 |
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$ |
132,607 |
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Cost of sales |
|
81,431 |
|
77,475 |
| ||
Gross profit |
|
65,459 |
|
55,132 |
| ||
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|
|
|
|
| ||
Selling, general and administrative expenses |
|
39,206 |
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37,608 |
| ||
Research and development expense |
|
14,138 |
|
13,101 |
| ||
Gain on sale of assets |
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(411 |
) |
|
| ||
Operating income |
|
12,526 |
|
4,423 |
| ||
|
|
|
|
|
| ||
Interest and other expense, net |
|
(976 |
) |
(2,137 |
) | ||
Income before income taxes |
|
11,550 |
|
2,286 |
| ||
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|
|
|
|
| ||
Income tax provision (benefit) |
|
3,609 |
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(448 |
) | ||
Net income |
|
7,941 |
|
2,734 |
| ||
Net income (loss) attributable to non-controlling interests |
|
55 |
|
(12 |
) | ||
Net income attributable to Newport Corporation |
|
$ |
7,886 |
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$ |
2,746 |
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|
| ||
Net income |
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$ |
7,941 |
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$ |
2,734 |
|
Other comprehensive income: |
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|
|
|
| ||
Foreign currency translation gains (losses) |
|
461 |
|
(2,452 |
) | ||
Unrecognized net pension gains |
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43 |
|
190 |
| ||
Unrealized gains (losses) on marketable securities |
|
20 |
|
(98 |
) | ||
Comprehensive income |
|
$ |
8,465 |
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$ |
374 |
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|
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Comprehensive income (loss) attributable to non-controlling interests |
|
$ |
69 |
|
$ |
(61 |
) |
Comprehensive income attributable to Newport Corporation |
|
8,396 |
|
435 |
| ||
Comprehensive income |
|
$ |
8,465 |
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$ |
374 |
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Net income per share attributable to Newport Corporation: |
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|
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| ||
Basic |
|
$ |
0.20 |
|
$ |
0.07 |
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Diluted |
|
$ |
0.19 |
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$ |
0.07 |
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Shares used in the computation of net income per share: |
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Basic |
|
39,525 |
|
38,601 |
| ||
Diluted |
|
40,499 |
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39,260 |
| ||
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Other operating data: |
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|
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New orders received during the period |
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$ |
147,284 |
|
$ |
133,585 |
|
Backlog at the end of period scheduled to ship within 12 months |
|
$ |
192,122 |
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$ |
149,716 |
|
Newport Corporation
Supplemental Non-GAAP Measures
(Unaudited)
|
|
Three Months Ended |
| ||||
|
|
March 29, |
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March 30, |
| ||
(In thousands, except per share amounts) |
|
2014 |
|
2013 |
| ||
Net sales |
|
$ |
146,890 |
|
$ |
132,607 |
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|
|
|
|
|
| ||
Cost of sales: |
|
|
|
|
| ||
Cost of sales - GAAP |
|
$ |
81,431 |
|
$ |
77,475 |
|
Amortization of intangible assets |
|
962 |
|
895 |
| ||
Stock-based compensation expense |
|
212 |
|
209 |
| ||
Acquisition-related, restructuring and severance costs |
|
|
|
403 |
| ||
Non-GAAP cost of sales |
|
80,257 |
|
75,968 |
| ||
Non-GAAP gross profit |
|
$ |
66,633 |
|
$ |
56,639 |
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|
|
|
|
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| ||
Non-GAAP gross profit as a percentage of net sales |
|
45.4 |
% |
42.7 |
% | ||
|
|
|
|
|
| ||
Operating income: |
|
|
|
|
| ||
Operating income - GAAP |
|
$ |
12,526 |
|
$ |
4,423 |
|
Amortization of intangible assets |
|
2,479 |
|
2,586 |
| ||
Stock-based compensation expense |
|
2,337 |
|
2,269 |
| ||
Acquisition-related, restructuring and severance costs |
|
968 |
|
1,874 |
| ||
Gain on sale of assets |
|
(411 |
) |
|
| ||
Non-GAAP operating income |
|
$ |
17,899 |
|
$ |
11,152 |
|
|
|
|
|
|
| ||
Non-GAAP operating income as a percentage of net sales |
|
12.2 |
% |
8.4 |
% | ||
|
|
|
|
|
| ||
Net income attributable to Newport Corporation: |
|
|
|
|
| ||
Net income - GAAP |
|
$ |
7,886 |
|
$ |
2,746 |
|
Amortization of intangible assets |
|
2,479 |
|
2,586 |
| ||
Stock-based compensation expense |
|
2,337 |
|
2,269 |
| ||
Acquisition-related, restructuring and severance costs |
|
968 |
|
1,874 |
| ||
Gain on sale of assets |
|
(411 |
) |
|
| ||
Income tax provision on non-GAAP adjustments |
|
(1,691 |
) |
(3,315 |
) | ||
Non-GAAP net income |
|
$ |
11,568 |
|
$ |
6,160 |
|
|
|
|
|
|
| ||
Net income per diluted share attributable to Newport Corporation: |
|
|
|
|
| ||
Net income - GAAP |
|
$ |
0.19 |
|
$ |
0.07 |
|
Total non-GAAP adjustments |
|
0.10 |
|
0.09 |
| ||
Non-GAAP net income per diluted share |
|
$ |
0.29 |
|
$ |
0.16 |
|
Newport Corporation
Consolidated Balance Sheets
(Unaudited)
|
|
March 29, |
|
December 28, |
| ||
(In thousands) |
|
2014 |
|
2013 |
| ||
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
52,602 |
|
$ |
53,710 |
|
Restricted cash |
|
2,397 |
|
2,305 |
| ||
Marketable securities |
|
8,191 |
|
8,219 |
| ||
Accounts receivable, net |
|
96,629 |
|
96,388 |
| ||
Inventories, net |
|
105,284 |
|
103,383 |
| ||
Deferred income taxes |
|
22,521 |
|
22,437 |
| ||
Prepaid expenses and other current assets |
|
18,152 |
|
14,769 |
| ||
Total current assets |
|
305,776 |
|
301,211 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
|
81,237 |
|
80,516 |
| ||
Goodwill |
|
78,806 |
|
78,801 |
| ||
Deferred income taxes |
|
4,481 |
|
4,474 |
| ||
Intangible assets, net |
|
64,897 |
|
67,342 |
| ||
Investments and other assets |
|
32,494 |
|
32,885 |
| ||
|
|
$ |
567,691 |
|
$ |
565,229 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Short-term borrowings, net |
|
$ |
4,991 |
|
$ |
4,861 |
|
Accounts payable |
|
32,264 |
|
31,714 |
| ||
Accrued payroll and related expenses |
|
30,938 |
|
31,015 |
| ||
Accrued expenses and other current liabilities |
|
37,522 |
|
35,341 |
| ||
Total current liabilities |
|
105,715 |
|
102,931 |
| ||
|
|
|
|
|
| ||
Long-term debt, net |
|
70,988 |
|
83,646 |
| ||
Pension liabilities |
|
27,191 |
|
27,093 |
| ||
Other liabilities |
|
22,760 |
|
23,182 |
| ||
|
|
|
|
|
| ||
Total stockholders equity of Newport |
|
340,009 |
|
326,968 |
| ||
Non-controlling interests |
|
1,028 |
|
1,409 |
| ||
Total stockholders equity |
|
341,037 |
|
328,377 |
| ||
|
|
$ |
567,691 |
|
$ |
565,229 |
|