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)
August 3, 2011
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
(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:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | 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 August 3, 2011, Newport Corporation (the Registrant) announced its financial results for the second quarter and six months ended July 2, 2011, and its financial outlook for the third quarter and full year of 2011. 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 are described below. 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.
The Registrant has provided non-GAAP measures of net income and net income per diluted share for the three and six months ended July 2, 2011 and July 3, 2010, which exclude a number of items that management considers to be outside of the Registrants core operating results. The items excluded from these non-GAAP measures are summarized below, and a table detailing the excluded items and reconciling such non-GAAP results with the Registrants GAAP results is included following the statements of income that are a part of the press release.
For the three months ended July 2, 2011, the non-GAAP measures have been adjusted to exclude (1) acquisition-related costs resulting primarily from the Registrants pending acquisition of Ophir Optronics Ltd. and recent acquisition of High Q Technologies GmbH, which closed on July 29, 2011; (2) a gain associated with the recovery of amounts related to a previously divested business; and (3) the income tax impact related to the foregoing excluded amounts. For the six months ended July 2, 2011, the non-GAAP measures have been adjusted to exclude (1) acquisition-related costs as described in the foregoing sentence; (2) the gain described in the foregoing sentence; (3) a gain recorded in the first quarter of 2011 resulting from a non-recurring currency translation adjustment; and (4) the income tax impact of the foregoing excluded amounts.
For the three and six months ended July 3, 2010, the non-GAAP measures have been adjusted to exclude a loss on the sale of assets and related costs associated with the divestiture of the Registrants Hilger Crystals business and the income tax impact of such loss.
The Registrant has provided these non-GAAP results and guidance with the intent of providing both management and investors with a more complete understanding of the Registrants underlying operational results and performance trends and a more meaningful basis for comparison of the Registrants results with its historical and future financial results. 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description | |
99.1 |
Press Release dated August 3, 2011 (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.
August 3, 2011 | NEWPORT CORPORATION | |||||||
By: | /s/ Jeffrey B. Coyne | |||||||
Jeffrey B. Coyne | ||||||||
Senior Vice President, General Counsel and | ||||||||
Corporate Secretary |
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 |
Press Release dated August 3, 2011 (furnished pursuant to Item 2.02 and not deemed filed). |
Exhibit 99.1
Press Release
Contact:
Charles F. Cargile, 949/863-3144
Newport Corporation, Irvine, CA
investor@newport.com
or
Dan Peoples, 858/552-8146
Makinson Cowell (US)
NEWPORT CORPORATION REPORTS
SECOND QUARTER AND FIRST HALF 2011 RESULTS
Record Quarterly Orders of $143.7 Million
16.6% Sales Growth Over First Half of 2010
Increased Cash Balance to $214.2 Million
Irvine, California August 3, 2011 Newport Corporation (NASDAQ: NEWP) today reported financial results for its second quarter and six months ended July 2, 2011. The company noted the following highlights regarding its second quarter results:
| $143.7 million in new orders; |
| $130.1 million in net sales; |
| Net income of $13.9 million, or $0.36 per diluted share, when measured according to generally accepted accounting principles (GAAP); |
| Net income of $15.3 million, or $0.39 per diluted share, when measured on a non-GAAP basis excluding certain expenses related to recent acquisition activities and a gain resulting from the recovery of assets related to previously discontinued operations; and |
| An increase in its cash, cash equivalents and marketable securities balances by $17.8 million during the quarter, to $214.2 million. |
Robert J. Phillippy, Newports President and Chief Executive Officer, stated, Our sales in the second quarter were the second highest level we have achieved in any quarter in our
history, and we continued to demonstrate excellent profit leverage, with solid gross margin, net income and earnings per diluted share. Our gross margin of 45.9% represented the second consecutive quarter we have exceeded our target of 45% and was approximately 250 basis points higher than our gross margin in the second quarter of 2010. In addition, we delivered a strong cash generation performance in the quarter, increasing our cash, cash equivalents and marketable securities balances to $214.2 million.
Sales and Orders
Sales in the second quarter of 2011 were $130.1 million, an increase of 13.6% compared with the $114.6 million recorded in the second quarter of 2010. Sales for the first half of 2011 were $258.5 million, a 16.6% increase over the $221.8 million recorded in the first half of 2010.
New orders received in the second quarter of 2011 were $143.7 million, an increase of 14.5% compared with the $125.5 million received in the second quarter of 2010 and the highest quarterly level in the companys history, resulting in a book-to-bill ratio of 1.10. First half orders were $273.4 million, an increase of 9.3% compared with the $250.2 million in orders received in the first half of 2010.
The companys sales and orders by end market in the second quarter and first six months of 2011 were as follows:
(In thousands, except percentages, unaudited) | Three Months Ended | Six Months Ended | Percentage Change vs. Prior Year Period |
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Second | First | |||||||||||||||||||||||||
July 2, | July 3, | July 2, | July 3, | Quarter | Half | |||||||||||||||||||||
2011 | 2010 ¹ | 2011 | 2010 ¹ | 2011 | 2011 | |||||||||||||||||||||
Sales by End Market |
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Scientific research, aerospace and defense/security |
$ | 39,870 | $ | 39,128 | $ | 81,252 | $ | 79,787 | 1.9 | % | 1.8 | % | ||||||||||||||
Microelectronics |
44,146 | 36,885 | 85,743 | 65,140 | 19.7 | % | 31.6 | % | ||||||||||||||||||
Life and health sciences |
24,884 | 23,061 | 51,091 | 44,150 | 7.9 | % | 15.7 | % | ||||||||||||||||||
Industrial manufacturing and other |
21,232 | 15,526 | 40,457 | 32,673 | 36.8 | % | 23.8 | % | ||||||||||||||||||
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Total |
$ | 130,132 | $ | 114,600 | $ | 258,543 | $ | 221,750 | 13.6 | % | 16.6 | % | ||||||||||||||
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Orders by End Market |
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Scientific research, aerospace and defense/security |
$ | 41,664 | $ | 36,411 | $ | 83,465 | $ | 75,254 | 14.4 | % | 10.9 | % | ||||||||||||||
Microelectronics |
56,915 | 43,522 | 98,526 | 91,079 | 30.8 | % | 8.2 | % | ||||||||||||||||||
Life and health sciences |
26,081 | 26,403 | 52,070 | 50,089 | -1.2 | % | 4.0 | % | ||||||||||||||||||
Industrial manufacturing and other |
19,037 | 19,213 | 39,358 | 33,760 | -0.9 | % | 16.6 | % | ||||||||||||||||||
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Total |
$ | 143,697 | $ | 125,549 | $ | 273,419 | $ | 250,182 | 14.5 | % | 9.3 | % | ||||||||||||||
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Notes:
1 | Certain prior period amounts have been reclassified to conform to the current period presentation. |
2
The company noted the following points regarding its sales and orders results:
| Sales increased in the second quarter of 2011 compared with the second quarter of 2010 across all of Newports end markets. This growth was led by significantly higher sales to customers in the companys Industrial Manufacturing and Other end markets, and to semiconductor equipment customers, which are included in the companys Microelectronics end market. |
| Orders were higher in the second quarter of 2011 compared with the second quarter of 2010, driven primarily by significant increases in orders from customers in the companys Microelectronics and Scientific Research, Aerospace and Defense/Security end markets. The company noted that orders from customers in the Microelectronics end market included a $14.8 million order from a semiconductor original equipment manufacturing customer that is scheduled to ship over the next three years. |
Net Income
Newport reported net income of $13.9 million, or $0.36 per diluted share, in the second quarter of 2011 when calculated in accordance with GAAP, compared with net income of $8.3 million, or $0.22 per diluted share, in the second quarter of 2010. Included in the current year period were acquisition-related costs of $2.0 million after tax, or $0.05 per diluted share, resulting primarily from the acquisitions announced by the company in July 2011, and a gain of $0.6 million after tax, or $0.02 per diluted share, associated with a recovery of amounts related to a previously divested business. Without these expenses and gain, the company would have recorded net income of $15.3 million, or $0.39 per diluted share. The prior year period included a loss on sale of assets and related costs of $0.7 million after tax, or $0.02 per diluted share, associated with the divestiture of Newports Hilger Crystals business. Without this expense, the company would have recorded net income in the second quarter of 2010 of $9.0 million, or $0.24 per diluted share. A reconciliation between the companys net income and net income per diluted share calculated in accordance with GAAP and on a non-GAAP basis is provided following the statements of income included in this release. The company noted that its non-GAAP net income in the second quarter was 70% greater than its non-GAAP net income recorded in the second quarter of 2010, due primarily to the companys higher sales level and continued strong operational execution in the 2011 period.
3
Update Regarding Pending Acquisitions and Financing
In July of 2011, the company announced that it had entered into agreements to acquire two companies, Ophir Optronics Ltd., headquartered in Jerusalem, Israel, and High Q Technologies GmbH, headquartered in Rankweil, Austria. On July 29, 2011, the company completed the acquisition of High Q Technologies and, accordingly, the results of High Q Technologies will be consolidated with Newports financial results beginning immediately following that date and for all future periods. The company is working with Ophir to fulfill the closing conditions for that acquisition, and remains confident that the transaction will close in the fourth quarter of 2011. Ophirs financial results will be included with Newports results after the closing of the transaction.
The company noted that with its current cash, cash equivalents and marketable securities balances, plus the cash it expects to generate in the third quarter of 2011 and the commitment received in July 2011 for a $50 million revolving line of credit, it will have more than sufficient cash available to finance the Ophir acquisition. The company is currently considering long-term financing alternatives to provide additional cash to repay its $126.8 million of subordinated convertible notes due in February 2012, as well as surplus cash to execute its strategic plan.
Financial Outlook
Commenting on the companys financial outlook, Mr. Phillippy stated, Our results for the second quarter and first half of 2011 reflect the solid financial foundation we have established. We expect to continue to deliver strong financial results in the future, and expect those results to be augmented by the sales and profits of High Q Technologies and of Ophir Optronics after that transaction closes.
Based on its current financial outlook including the addition of High Q Technologies, the company expects its sales in the third quarter of 2011 to be in the range of $131 million to $135 million, and expects its sales to increase sequentially in the fourth quarter of 2011, resulting in record sales of over $530 million for the full year of 2011. The company noted that this estimate does not include sales of Ophir Optronics, as the timing of closing that transaction, while expected to occur in the fourth quarter, remains uncertain.
Mr. Phillippy concluded, We are confident that our strong and sustainable business model will continue to produce excellent financial and operating metrics in the second half of this year. In addition, while we cannot yet predict the amount of incremental sales and profit the
4
Ophir acquisition will provide us in the fourth quarter, we remain confident that both Ophir Optronics and High Q Technologies will be immediately accretive to Newports financial results after closing.
5
ABOUT NEWPORT CORPORATION
Newport Corporation is a leading global supplier of advanced-technology products and systems to customers in the scientific research, aerospace and defense/security, microelectronics, life and health sciences and precision industrial manufacturing markets. Newports innovative solutions leverage its expertise in photonics technologies, including lasers, photonics instrumentation, sub-micron positioning systems, vibration isolation, optical components and subsystems and precision automation, 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.
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, August 3, 2011, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the companys results for the second quarter and first half of 2011 and its outlook for the remainder of 2011. The call will be open to all interested investors through a live audio web broadcast via the Internet at www.newport.com/investors and www.earnings.com. The call also will be available to investors and analysts by dialing 800-289-0569 within the U.S. and Canada or 913-981-5540 from abroad.
The webcast will be archived on both websites and can be reached through the same links. A telephonic playback of the conference call will be available beginning at 8:00 p.m. Eastern time today, August 3, 2011, and will continue through 8:00 p.m. Eastern time on Wednesday, August 10, 2011. The replay can be accessed by calling 888-203-1112 within the U.S. and Canada and 719-457-0820 from abroad. The replay passcode is 7403700.
6
SAFE HARBOR STATEMENT
This news release contains forward-looking statements, including without limitation statements regarding the expected timing of closing the Ophir Optronics acquisition, the companys expectation of generating cash in the third quarter of 2011 and having more than sufficient cash to finance the Ophir acquisition, the expected impact on Newports financial results of the High Q Technologies and Ophir Optronics acquisitions, including increased revenue and immediate accretion, Newports expected sales in the third and fourth quarters of 2011 and for the full year of 2011, and its expectation of strong business and operating metrics in the second half of 2011 and strong financial results in the future. 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, Newports ability to successfully complete the acquisition and integration of Ophir Optronics and High Q Technologies and achieve the expected benefits therefrom; the strength of business conditions in the industries Newport serves, particularly the semiconductor industry; Newports ability to successfully penetrate and increase sales to its targeted end markets, particularly the life and health sciences market; the levels of private and governmental research funding worldwide; potential order cancellations and push-outs; Newports ability to meet increasing demand with its current cost structure; 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 Form 10-K for the year ended January 1, 2011. 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.
###
7
Newport Corporation
Consolidated Statements of Income
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, | July 3, | July 2, | July 3, | |||||||||||||
(In thousands, except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net sales |
$ | 130,132 | $ | 114,600 | $ | 258,543 | $ | 221,750 | ||||||||
Cost of sales |
70,460 | 64,907 | 140,995 | 129,019 | ||||||||||||
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Gross profit |
59,672 | 49,693 | 117,548 | 92,731 | ||||||||||||
Selling, general and administrative expenses |
32,739 | 29,119 | 63,212 | 55,217 | ||||||||||||
Research and development expense |
10,196 | 9,390 | 20,633 | 18,861 | ||||||||||||
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Operating income |
16,737 | 11,184 | 33,703 | 18,653 | ||||||||||||
Foreign currency translation gain from dissolution of subsidiary |
| | 7,198 | | ||||||||||||
Interest and other expense, net |
(1,624 | ) | (2,005 | ) | (4,029 | ) | (3,842 | ) | ||||||||
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Income before income taxes |
15,113 | 9,179 | 36,872 | 14,811 | ||||||||||||
Income tax provision |
1,191 | 900 | 2,191 | 1,478 | ||||||||||||
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Net income |
$ | 13,922 | $ | 8,279 | $ | 34,681 | $ | 13,333 | ||||||||
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Net income per share: |
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Basic |
$ | 0.37 | $ | 0.23 | $ | 0.93 | $ | 0.36 | ||||||||
Diluted |
$ | 0.36 | $ | 0.22 | $ | 0.89 | $ | 0.36 | ||||||||
Shares used in the computation of net income per share: |
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Basic |
37,477 | 36,691 | 37,241 | 36,529 | ||||||||||||
Diluted |
38,788 | 37,586 | 38,812 | 37,504 | ||||||||||||
Other operating data: |
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New orders received during the period |
$ | 143,697 | $ | 125,549 | $ | 273,419 | $ | 250,182 | ||||||||
Backlog at the end of period scheduled to ship within 12 months |
$ | 128,775 | $ | 124,499 |
8
Newport Corporation
Supplemental Non-GAAP Measures
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
(In thousands, except per share amounts) | July 2, 2011 |
July 3, 2010 |
July 2, 2011 |
July 3, 2010 |
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Net income: |
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Net income - GAAP |
$ | 13,922 | $ | 8,279 | $ | 34,681 | $ | 13,333 | ||||||||
Foreign currency translation gain from dissolution of subsidiary |
| | (7,198 | ) | | |||||||||||
Acquisition-related costs |
2,095 | | 2,339 | | ||||||||||||
Loss (gain) related to sale of businesses |
(619 | ) | 811 | (619 | ) | 811 | ||||||||||
Income tax provision on non-GAAP adjustments |
(79 | ) | (79 | ) | (96 | ) | (79 | ) | ||||||||
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Non-GAAP net income |
$ | 15,319 | $ | 9,011 | $ | 29,107 | $ | 14,065 | ||||||||
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Net income per diluted share: |
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Net income - GAAP |
$ | 0.36 | $ | 0.22 | $ | 0.89 | $ | 0.36 | ||||||||
Total non-GAAP adjustments |
0.03 | 0.02 | (0.14 | ) | 0.02 | |||||||||||
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Non-GAAP net income per diluted share |
$ | 0.39 | $ | 0.24 | $ | 0.75 | $ | 0.38 | ||||||||
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9
Newport Corporation
Consolidated Balance Sheets
(Unaudited)
July 2, | January 1, | |||||||
(In thousands) | 2011 | 2011 | ||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 116,651 | $ | 90,992 | ||||
Marketable securities |
97,580 | 109,192 | ||||||
Accounts receivable, net |
87,152 | 84,238 | ||||||
Notes receivable, net |
2,884 | 3,313 | ||||||
Inventories, net |
95,464 | 84,508 | ||||||
Deferred income taxes |
9,396 | 9,424 | ||||||
Prepaid expenses and other current assets |
12,131 | 10,362 | ||||||
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Total current assets |
421,258 | 392,029 | ||||||
Property and equipment, net |
46,206 | 46,160 | ||||||
Goodwill |
69,322 | 69,322 | ||||||
Deferred income taxes |
2,532 | 3,493 | ||||||
Intangible assets, net |
23,478 | 24,990 | ||||||
Investments and other assets |
19,661 | 20,396 | ||||||
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$ | 582,457 | $ | 556,390 | |||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Short-term borrowings |
$ | 133,543 | $ | 12,468 | ||||
Accounts payable |
25,444 | 31,691 | ||||||
Accrued payroll and related expenses |
25,226 | 30,804 | ||||||
Accrued expenses and other current liabilities |
30,882 | 28,416 | ||||||
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Total current liabilities |
215,095 | 103,379 | ||||||
Long-term debt, net of debt discount |
2,474 | 122,042 | ||||||
Obligations under capital leases, less current portion |
954 | 979 | ||||||
Accrued pension liabilities |
14,794 | 13,279 | ||||||
Other liabilities |
20,311 | 21,252 | ||||||
Stockholders equity |
328,829 | 295,459 | ||||||
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$ | 582,457 | $ | 556,390 | |||||
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10
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