Acquisition

6 Months Ended

Jun. 30, 2012

Acquisition [Abstract]

ACQUISITION

NOTE 4 ACQUISITION

On January 13, 2012, the Company acquired all of the outstanding capital stock of ILX Lightwave Corporation (ILX) by means of a merger of a wholly owned subsidiary of the Company with and into ILX. The total purchase price for the acquisition was $9.0 million. An initial purchase price of $9.3 million was paid in cash at closing, of which $1.2 million was deposited at closing into escrow until July 12, 2013, to secure certain indemnification and other obligations of the ILX securityholders. The purchase price was subsequently reduced by $0.3 million, based on a calculation of ILX’s net assets at closing. The Company incurred $0.1 million in transaction costs, which have been expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income and comprehensive income. This acquisition expands the Company’s optical power meter and fiber optic source product offerings, and adds laser diode instrumentation and laser diode and light emitting diode (LED) burn-in, test and characterization systems to its product portfolio. ILX is now a part of the Company’s Photonics and Precision Technologies (PPT) Division.

The consideration paid by the Company for the acquisition of ILX is allocated to the assets acquired, net of the liabilities assumed, based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the estimated fair value of the assets acquired, net of the estimated fair value of the liabilities assumed, is recorded as goodwill. Below is a summary of the purchase price, assets acquired and liabilities assumed:

(In thousands)
Assets acquired and liabilities assumed:
Cash	$	44
Other assets		2,672
Goodwill		3,762
Developed technology		2,800
Customer relationships		1,100
Other intangible assets		1,090
Liabilities		(2,485	)
	$	8,983

The $3.8 million in goodwill has been allocated to the Company’s PPT Division and will not be deductible for tax purposes, as this was a merger.

The actual net sales and net income of ILX from January 13, 2012, the closing date of the acquisition, that were included in the Company’s consolidated statements of income and comprehensive income for the three and six months ended June 30, 2012 and July 2, 2011 are set forth in the table below. Also set forth in the table below are the pro forma net sales and net income of the Company during such periods, including the results of ILX as though the acquisition had occurred at the beginning of 2011. This supplemental pro forma financial information is presented for information purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had occurred as of the beginning of each reporting period.

	Three Months Ended				Six Months Ended
(In thousands)	June  30, 2012		July 2, 2011		June  30, 2012		July 2, 2011
Actual:
Net sales	$	1,778	$	—	$	3,562	$	—
Net income attributable to Newport Corporation	$	176	$	—	$	157	$	—
Supplemental pro forma information:
Net sales	$	153,655	$	132,037	$	310,862	$	261,982
Net income attributable to Newport Corporation	$	9,202	$	14,031	$	16,178	$	34,359

For the purposes of determining pro forma net income, adjustments were made to actual net income of the Company for all periods presented in the table above. The pro forma net income assumes amortization of acquired intangible assets began at the beginning of 2011 rather than on January 13, 2012. The result is a net decrease in amortization expense of $0.1 million and $0.2 million for the three and six months ended June 30, 2012, respectively, and an increase in amortization expense of $0.2 million and $0.6 million for the three and six months ended July 2, 2011, respectively. In addition, $0.1 million in charges to cost of sales related to inventory that was marked up to fair value for purchase accounting was added back to pro forma net income for the six months ended June 30, 2012 and subtracted from pro forma net income for the six months ended July 2, 2011. Transaction costs totaling $0.4 million, which were incurred prior to the closing of the acquisition, are also excluded from pro forma net income.