<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
***
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
-------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission File Number 0-1649
------------------
NEWPORT CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 94-0849175
- --------------------------------------------------------------------------------
(State or other Jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1791 Deere Avenue, Irvine, CA 92606
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 863-3144
--------------------
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
The number of shares outstanding of each of the issuer's classes of common stock
as of June 30, 1998, was 9,112,310.
Page 1 of 13
Exhibit Index on Sequentially Numbered Page 12
<PAGE>
NEWPORT CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1: Financial Statements:
Consolidated Statement of Income and Condensed
Consolidated Statement of Stockholders' Equity for
the Three and Six Months ended June 30, 1998 and 1997. 3
Consolidated Balance Sheet at June 30, 1998 and
December 31, 1997. 4
Consolidated Statement of Cash Flows for the Three and Six
Months ended June 30, 1998 and 1997. 5
Notes to Condensed Consolidated Financial Statements. 6-8
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations. 9-12
PART II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders. 12
Item 6: Exhibits and Reports on Form 8-K. 12
SIGNATURE 12
Page 2
<PAGE>
NEWPORT CORPORATION
Consolidated Income Statement and
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except Three Months Ended Six Months Ended
per share amounts) June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $33,833 $31,861 $67,496 $62,912
Cost of sales 18,670 17,920 37,853 35,452
------- ------- ------- -------
Gross profit 15,163 13,941 29,643 27,460
Selling, general and administrative expense 8,419 8,827 16,731 17,593
Research and development expense 3,180 2,341 5,952 4,465
------- ------- ------- -------
Income from operations 3,564 2,773 6,960 5,402
Interest expense (485) (494) (993) (1,004)
Other income (expense), net 139 (59) 202 (269)
------- ------- ------- -------
Income before income taxes 3,218 2,220 6,169 4,129
Income tax provision 1,029 755 1,974 1,404
------- ------- ------- -------
Net income $ 2,189 $ 1,465 $ 4,195 $ 2,725
======= ======= ======= =======
Net income per share
Basic $ 0.24 $ 0.17 $ 0.47 $ 0.31
Diluted $ 0.23 $ 0.16 $ 0.44 $ 0.30
Number of shares used to calculate net
income per share
Basic 9,032 8,834 8,978 8,822
Diluted 9,497 9,088 9,441 9,084
Stockholders' equity, beginning of period $63,736 $57,232 $60,658 $57,429
Net income 2,189 1,465 4,195 2,725
Dividends (183) (179) (183) (179)
Unrealized translation gain (loss) 328 (624) (127) (2,165)
Unamortized deferred compensation 59 51 (148) (73)
Repurchase of common stock (1,387) (1,118) (1,387) (1,343)
Issuance of common stock 751 1,335 2,485 1,768
------- ------- ------- -------
Stockholders' equity, end of period $65,493 $58,162 $65,493 $58,162
======= ======= ======= =======
</TABLE>
See accompanying notes
Page 3
<PAGE>
NEWPORT CORPORATION
Consolidated Balance Sheet
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)
June 30, December 31,
1998 1997
----------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,795 $ 7,456
Customer receivables, net 21,570 23,372
Other receivables 822 979
Inventories 30,622 28,326
Deferred tax assets 3,248 3,256
Other current assets 2,307 2,065
-------- --------
Total current assets 69,364 65,454
Investments and other assets 4,838 5,830
Property, plant and equipment, at cost, net 21,526 22,994
Goodwill, net 9,727 10,133
-------- --------
$105,455 $104,411
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,750 $ 6,082
Accrued payroll and related expenses 4,666 5,855
Taxes based on income 2,096 2,056
Current portion of long-term debt 1,869 2,380
Other accrued liabilities 3,323 4,766
-------- --------
Total current liabilities 17,704 21,139
Long-term debt 20,673 21,027
Other liabilities 1,585 1,587
Commitments and contingencies
Stockholders' equity:
Common stock, $.35 stated value, 20,000,000 shares
authorized; 9,112,000 shares issued and
outstanding at June 30, 1998; 8,951,000 shares at
December 31, 1997 3,189 3,132
Capital in excess of stated value 9,067 8,026
Unamortized deferred compensation (667) (519)
Unrealized translation loss (5,163) (5,036)
Retained earnings 59,067 55,055
-------- --------
Total stockholders' equity 65,493 60,658
-------- --------
$105,455 $104,411
======== ========
</TABLE>
See accompanying notes
Page 4
<PAGE>
NEWPORT CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
Six Months Ended
June 30
--------------------
1998 1997
-------- ---------
<S> <C> <C>
Operating activities:
Net income $ 4,195 $ 2,725
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,083 2,813
Increase in provision for losses
on receivables and inventories 894 994
Deferred income taxes - (20)
Other non-cash items, net (222) 24
Changes in operating assets and liabilities:
Receivables 1,873 1,365
Inventories (3,229) (1,121)
Other current assets (705) (581)
Other assets 320 356
Accounts payable and other accrued expenses (2,925) (2,211)
Taxes based on income 41 (42)
Other, net (1) 1
------- -------
Net cash provided by operating activities 3,324 4,303
------- -------
Investing activities:
Purchases of property, plant and equipment, net (2,946) (2,493)
Disposition of property, plant and equipment, net 2,395 282
Acquisition of businesses, net of cash acquired - (879)
Proceeds from sale of investment 720 -
Other, net 31 (157)
------- -------
Net cash provided by (used in) investing activities 200 (3,247)
------- -------
Financing activities:
Decrease in short-term borrowings (493) (279)
Decrease in long-term borrowings (346) (320)
Cash dividends paid (180) (177)
Repurchase of common stock (1,387) (1,343)
Issuance of common stock under employee
agreements, including associated tax benefit 2,217 1,593
------- -------
Net cash used in financing activities (189) (526)
------- -------
Effect of foreign exchange rate changes on cash 4 212
------- -------
Net increase in cash and cash equivalents 3,339 742
Cash and cash equivalents at beginning of period 7,456 3,375
------- -------
Cash and cash equivalents at end of period $10,795 $ 4,117
======= =======
Cash paid in the period for:
Interest $ 1,004 $ 1,025
Taxes 1,293 1,437
</TABLE>
See accompanying notes
Page 5
<PAGE>
NEWPORT CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1998
(Unaudited)
1. Interim Reporting
General
The accompanying unaudited financial statements consolidate the accounts of the
Company and its wholly owned subsidiaries and have been prepared in accordance
with generally accepted accounting principles for interim financial information.
The accounts of the Company's subsidiaries in Europe have been consolidated
using a one-month lag.
In the opinion of management, all adjustments necessary for a fair presentation
of the information in the unaudited condensed consolidated financial statements
have been made and consist of only normal recurring accruals. Operating results
for the six-month period ended June 30, 1998, are not necessarily indicative of
the results that may be expected for the year ending December 31, 1998.
Although the Company believes that the disclosures in these financial statements
are adequate to make the information presented not misleading, certain
information and footnotes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to rules and regulations of the Securities and Exchange
Commission, and consequently, these statements should be read in conjunction
with the Company's consolidated financial statements and notes thereto,
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Net Income per Share
Net income per share for all periods have been presented and, where necessary,
restated to conform with the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share. Basic net income per share is based on
the weighted average number of shares of common stock outstanding during the
periods, excluding restricted stock, while diluted net income per share is based
on the weighted average number of shares of common stock outstanding during the
periods and the dilutive effects of common stock equivalents (stock options),
determined using the treasury stock method, outstanding during the periods.
Foreign Currency
Balance sheet accounts denominated in foreign currencies are translated at
exchange rates as of the date of the balance sheet and income statement accounts
are translated at average exchange rates for the period. Translation gains and
losses are accumulated as a separate component of stockholders' equity. The
Company has adopted local currencies as the functional currencies for its
subsidiaries because their principal economic activities are most closely tied
to the respective local currencies.
The Company may enter into foreign exchange contracts as a hedge against foreign
currency denominated receivables. It does not engage in currency speculation.
Market value gains and losses on contracts are recognized currently, offsetting
gains or losses on the associated receivables. Foreign currency transaction
gains and losses are included in current earnings. Foreign exchange contracts
totaled $4.3 million and $5.6 million at June 30, 1998, and December 31, 1997,
respectively.
Page 6
<PAGE>
NEWPORT CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1998
(Unaudited)
Adoption of Statement of Financial Accounting Standards No. 130
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income (SFAS No. 130). SFAS No. 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or stockholders' equity. SFAS No. 130 requires unrealized
gains or losses on foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity to be included in
other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
The components of comprehensive income, net of related tax, are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- ---------
(In thousands) 1998 1997 1998 1997
------- --------- ------- --------
<S> <C> <C> <C> <C>
Net Income $2,189 $1,465 $4,195 $ 2,725
Unrealized translation gain (loss) 328 (624) (127) (2,165)
------ ------ ------ -------
Comprehensive income $2,517 $ 841 $4,068 $ 560
====== ====== ====== =======
</TABLE>
Pending Adoption of Statement of Financial Accounting Standards No. 131
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS No. 131), which is effective for years
beginning after December 15, 1997. SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. SFAS No. 131 is effective for financial
statements for fiscal years beginning after December 15, 1997, and therefore the
Company will adopt the new requirements effective with the filing of its Annual
Report on Form 10-K for the year ended December 31, 1998. Management has not
completed its review of SFAS No. 131, but does expect that, while adoption of
SFAS No. 131 may result in more reported segments than are currently reported,
it will not have an impact on the Company's results of operations, financial
position or cash flow.
2. Customer Receivables
The Company maintains adequate reserves for potential credit losses. Such
losses have been minimal and within management's estimates. Receivables from
customers are generally unsecured.
Customer receivables consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1998 1997
-------- ------------
<S> <C> <C>
Customer receivables $22,026 $23,857
Less allowance for doubtful accounts 456 485
------- -------
$21,570 $23,372
======= =======
</TABLE>
Page 7
<PAGE>
NEWPORT CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1998
(Unaudited)
3. Inventories
Inventories are stated at cost, determined on either a first-in, first-out
(FIFO) or average cost basis and do not exceed net realizable value.
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1998 1997
-------- -----------
<S> <C> <C>
Raw materials and purchased parts $11,384 $10,161
Work in process 5,760 5,236
Finished goods 13,478 12,929
------- -------
$30,622 $28,326
======= =======
4. Property, Plant and Equipment
Property plant and equipment consist of the following:
<CAPTION>
June 30, December 31,
(In thousands) 1998 1997
-------- -----------
<S> <C> <C>
Land $ 1,188 $ 1,954
Buildings 6,665 12,069
Leasehold improvements 8,318 8,381
Machinery and equipment 21,714 20,620
Office equipment 10,975 10,074
------- -------
48,860 53,098
Less accumulated depreciation 27,334 30,104
------- -------
$21,526 $22,994
======= =======
</TABLE>
5. Other Income (Expense), Net
Other income (expense), net, consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
(In thousands) 1998 1997 1998 1997
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Interest and dividend income $126 $ 25 $ 212 $ 69
Exchange losses, net (87) (63) (131) (356)
Gains on sales of investments, net 134 - 134 -
Other (34) (21) (13) 18
---- ---- ----- -----
$139 $(59) $ 202 $(269)
==== ==== ===== =====
</TABLE>
Page 8
<PAGE>
NEWPORT CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1998
(Unaudited)
INTRODUCTORY NOTE
This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and the Company intends that such forward-looking
statements be subject to the safe harbors created thereby. For this purpose,
any statements contained in this Form 10-Q except for historical information may
be deemed to be forward-looking statements. 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. These forward-looking statements include (i) the existence and
development of the Company's technical and manufacturing capabilities, (ii)
anticipated competition, (iii) potential future growth in revenues and income,
(iv) potential future decreases in costs, and (v) the need for, and availability
of, additional financing.
The forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. These forward-looking
statements are based on assumptions that the Company will not lose a significant
customer or customers or experience increased fluctuations of demand or
rescheduling of purchase orders, that the Company's markets will continue to
grow, that the Company's products will remain accepted within their respective
markets and will not be replaced by new technology, that competitive conditions
within the Company's markets will not change materially or adversely, that the
Company will retain key technical and management personnel, that the Company's
forecasts will accurately anticipate market demand, that there will be no
material adverse change in the Company's operations or business, that
fluctuations in foreign currency exchange rates do not have a material adverse
impact on the Company's competitive position in international markets and that
the Company will not experience significant supply shortages with respect to
purchased components, sub-systems or raw materials. Additional factors that may
affect future operating results are discussed in more detail in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. Assumptions
relating to the foregoing involve judgments with respect to, among other things,
future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond the control of the Company. Although, the Company
believes that the assumptions underlying the forward-looking statements will be
realized. In addition, the business and operations of the Company are subject
to substantial risks that increase the uncertainty inherent in the forward-
looking statements. 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 the Company or any other person
that the objectives or plans of the Company will be achieved.
The following is management's discussion and analysis of certain significant
factors that have affected the earnings and financial position of the Company
during the period included in the accompanying financial statements. This
discussion compares the three- and six-month periods ended June 30, 1998, with
the three- and six-month periods ended June 30, 1997. This discussion should be
read in conjunction with the financial statements and associated notes.
Page 9
<PAGE>
NEWPORT CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Cont'd)
Three and Six Months Ended June 30, 1998 and 1997
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
FINANCIAL ANALYSIS Period-to-Period
Increase (decrease)
-------------------
Percentage of Net Sales Three Six
----------------------- Months Months
Three Months Ended Six Months Ended Ended Ended
June 30, June 30, June 30, June 30, June 30, June 30,
1998 1997 1998 1997 1998 1998
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 6.2% 7.3%
Cost of sales 55.2 56.2 56.1 56.4 4.2 6.8
----- ----- ----- -----
Gross margin 44.8 43.8 43.9 43.6 8.8 7.9
Selling, general and
administrative expense 24.9 27.7 24.8 28.0 (4.6) (4.9)
Research and
development expense 9.4 7.4 8.8 7.0 35.8 33.3
----- ----- ----- -----
Income from operations 10.5 8.7 10.3 8.6 28.5 28.8
Interest expense (1.4) (1.5) (1.5) (1.6) (1.8) (1.1)
Other income (expense), net 0.4 (0.2) 0.3 (0.4) - -
Income taxes (3.0) (2.4) (2.9) (2.2) 36.3 40.6
Net income 6.5% 4.6% 6.2% 4.3% 49.4 53.9
===== ===== ===== =====
</TABLE>
NET SALES
Net sales for the three- and six-month periods ended June 30, 1998 were $33.8
million and $67.5 million, respectively, compared with $31.9 million and $62.9
million for the three- and six-month periods ended June 30, 1997, increasing
6.2% and 7.3% over the respective prior year periods. Increases for the three-
and six-month periods were attributable to the strength of the U.S. market, with
domestic sales increasing $2.7 million and $5.6 million, respectively,
offsetting lower international sales in both periods. Versus the prior year
quarter, sales to the fiber optic communications market grew 78.9%, while sales
to the semiconductor and computer peripherals markets declined 2.3% and 26.4%,
respectively. For the six-month period, sales to the fiber optic communications
and semiconductor markets grew 55.9% and 11.4%, respectively, over the
corresponding 1997 period, offsetting a 16.6% decline in sales to the computer
peripherals market during the same period.
The Company's domestic sales totaled $23.8 million and $45.7 million for the
three- and six-month periods ended June 30, 1998, compared with $21.1 million
and $40.1 million for the three- and six-month periods ended June 30, 1997,
increases of 12.8% and 14.0% versus the respective prior year periods. Domestic
growth was driven for the most part by increased sales to the fiber optic
communications market, as mentioned previously.
The Company's international sales totaled $10.0 million and $21.8 million for
the three- and six-month periods ended June 30, 1998, compared with $10.8
million and $22.8 million for the corresponding prior year periods, decreases of
7.4% and 4.4% respectively. European sales were negatively impacted by foreign
exchange rate effects of $0.3 million and $0.9 million for the three- and six-
month periods ended June 30, 1998, respectively. Excluding the exchange rate
effects, European sales were approximately flat for the quarter, and were $0.7
million, or 5.5%, higher for the six-month period, most notably in France,
Germany, U.K. and the Netherlands. Sales to the Asian markets declined 28% for
the quarter compared to last year due almost entirely to a decrease in sales to
Korea. Six-month sales into Asia were 8% of total sales versus 10% of total
sales in the comparable 1997 period. Management anticipates that sales to the
Asian markets will continue to be down for the remainder of 1998 as economic
uncertainty and oversupply in the semiconductor and disk drive markets remain.
Order rates for the second quarter were essentially flat versus the prior year
period as an increase of 126.7% in the fiber optic communications market was
offset by declines of 31.1%, 17.0% and 8.7% in the semiconductor, computer
peripherals and research markets, respectively.
Page 10
<PAGE>
NEWPORT CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Cont'd)
Three and Six Months Ended June 30, 1998 and 1997
Overall, management anticipates that net sales in 1998 will increase over 1997;
however, such growth is dependent on many factors, including economic
uncertainty in Asia which may partially offset anticipated sales growth in other
geographic markets, and cannot be assured.
GROSS PROFIT
Gross profit increased 8.8% and 7.9% on sales increases of 6.2% and 7.3% for the
three- and six-month periods ended June 30, 1998, compared with the three- and
six-month periods ended June 30, 1997. Gross margin (gross profit as a
percentage of sales) increased to 44.8% and 43.9% of sales for the three- and
six-month periods ended June 30, 1998, compared with 43.8% and 43.6% in the
comparable 1997 periods. This increase in gross margin percentage reflects a
greater proportion of higher margin photonics product sales during the quarter.
Management anticipates that the Company's overall gross margin will improve in
1998 as a result of this product mix effect, the overall increase in sales
volume and continued productivity improvements Company-wide.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (SG&A) expenses for the three- and six-month
periods ended June 30, 1998, decreased 4.6% and 4.9% compared with the three-
and six-month periods ended June 30, 1997. SG&A expenses when stated as a
percentage of sales were 24.9% and 24.8%, compared with 27.7% and 28.0% for the
prior year periods. The decrease in SG&A expenses is primarily due a favorable
exchange rate effect and successful cost containment measures throughout the
Company.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development (R&D) expenses for the three- and six-month periods
ended June 30, 1998, increased 35.8% and 33.3% compared with the three- and six-
month periods ended June 30, 1997. As a percentage of sales, R&D expenses were
9.4% and 8.8% versus 7.3% and 7.1% for the prior year periods. The increase in
expenses is in line with management's commitment to continued product
development and enhancement of existing products.
INTEREST EXPENSE AND OTHER INCOME (EXPENSE), NET
Interest expense totaled $0.5 million and $1.0 million for the three- and six-
month periods ended June 30, 1998 and 1997. Other income (expense), net was a
$0.1 million gain versus a $0.1 million loss for the 1998 and 1997 second
quarters. Year-to-date, other income (expense), net was a $0.2 million gain for
1998 versus a $0.3 million loss in 1997. The increase in other income was
primarily attributable to a gain on the sale of an equity investment and lower
foreign exchange losses in the current year.
PROVISION FOR TAXES
The effective annual tax rate for both the three- and six-month periods ended
June 30, 1998 was 32%, compared with 34% for both corresponding 1997 periods.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities of $3.3 million for the six-month
period ended June 30, 1998 was principally attributable to the Company's net
income ($4.2 million), non-cash items, principally depreciation and amortization
($3.1 million), decreases in receivables ($1.9 million) and increases in
provisions for losses on receivables and inventory ($0.9 million). Partially
offsetting these amounts were increases in certain other operating assets,
principally inventories ($3.2 million), accounts payable ($2.9 million) and
other current assets ($0.7 million).
Net cash provided by investing activities of $0.2 million for the six-month
period ended June 30, 1998, was principally attributable to the Company's sale
of an equity investment and other property for net proceeds of $3.1 million
offset in part by the Company's purchases of property, plant and equipment.
Page 11
<PAGE>
NEWPORT CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Cont'd)
Three and Six Months Ended June 30, 1998 and 1997
Net cash used in financing activities of $0.2 million for the six-month period
ended June 30, 1998, was primarily due to the repurchase of common stock under
the Company's share repurchase program and a decrease in borrowings, partially
offset by issuance of common stock under employee agreements.
Although the Company has no present agreements or commitments with respect to
any material acquisitions of other businesses, products, product rights or
technologies, the Company continues to evaluate acquisitions of products,
technologies or companies that complement the Company's business and may make
such acquisitions in the future, and there can be no assurance that the Company
will not need to obtain additional sources of capital to finance any such
acquisitions.
The Company believes its current working capital position together with
estimated cash flows from operations and its existing credit availability are
adequate to fund operations in the ordinary course of business, anticipated
capital expenditures and debt repayment requirements over at least the next
year.
NEWPORT CORPORATION
PART II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on May 27, 1998.
(b) Set forth below is the name of each Class I director elected at the
meeting and the number of votes cast for their election, the number
of votes against their election, the number of votes abstained and
the number of broker non-votes:
<TABLE>
<CAPTION>
Number of
Number of Number of Number of Broker
Name Votes "For" Votes "Against" Votes "Abstain" "Non-Votes"
---- ----------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
R. Jack Aplin 8,588,059 0 24,160 538,115
Robert L. Guyett 8,589,836 0 22,384 538,114
</TABLE>
(c) Proposal Two to appoint Ernst & Young LLP as the Company's
independent auditors resulted in the following number of votes for,
against, abstain, withheld and non-vote:
<TABLE>
<CAPTION>
Number of
Number of Number of Number of Number of Broker
Votes "For" Votes "Against" Votes "Abstain" Votes "Withheld" "Non-Votes"
- ----------- --------------- --------------- ---------------- -----------
<S> <C> <C> <C> <C>
8,591,744 12,050 8,425 0 538,115
</TABLE>
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
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 thereunto duly authorized.
NEWPORT CORPORATION
(Registrant)
Dated: July 31, 1998
By: /S/ROBERT C. HEWITT
---------------------------------------------------
Robert C. Hewitt, Principal Financial Officer,
duly authorized to sign on behalf of the Registrant
Page 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED BALANCE SHEETS AND
CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED WITHIN THE COMPANY'S FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 10,795
<SECURITIES> 0
<RECEIVABLES> 22,026
<ALLOWANCES> 456
<INVENTORY> 30,622
<CURRENT-ASSETS> 69,364
<PP&E> 48,860
<DEPRECIATION> 27,334
<TOTAL-ASSETS> 105,455
<CURRENT-LIABILITIES> 17,704
<BONDS> 20,673
0
0
<COMMON> 3,189
<OTHER-SE> 62,304
<TOTAL-LIABILITY-AND-EQUITY> 105,455
<SALES> 67,496
<TOTAL-REVENUES> 67,496
<CGS> 37,853
<TOTAL-COSTS> 37,853
<OTHER-EXPENSES> 22,654
<LOSS-PROVISION> 29
<INTEREST-EXPENSE> 993
<INCOME-PRETAX> 6,169
<INCOME-TAX> 1,974
<INCOME-CONTINUING> 4,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,195
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.44
</TABLE>
