Newport 10-Q 12 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Oct. 03, 2015	Oct. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	NEWPORT CORP
Entity Central Index Key	225,263
Document Type	10-Q
Document Period End Date	Oct. 3, 2015
Amendment Flag	false
Current Fiscal Year End Date	--01-02
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		38,576,708
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

Consolidated Statements of Inco

Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Consolidated Statements of Income and Comprehensive Income
Net sales	$ 147,560	$ 146,299	$ 452,192	$ 446,421
Cost of sales	85,133	80,334	255,565	245,109
Gross profit	62,427	65,965	196,627	201,312
Selling, general and administrative expense	37,730	39,122	117,029	120,413
Research and development expense	14,232	14,082	44,345	42,538
Loss (gain) on sale or other disposal of assets, net			1,088	(411)
Operating income	10,465	12,761	34,165	38,772
Interest and other expense, net	(1,353)	(958)	(3,320)	(2,592)
Income before income taxes	9,112	11,803	30,845	36,180
Income tax provision	2,009	2,330	9,308	9,769
Net income	7,103	9,473	21,537	26,411
Net income attributable to non-controlling interests		3		103
Net income attributable to Newport Corporation	7,103	9,470	21,537	26,308
Net income	7,103	9,473	21,537	26,411
Other comprehensive income (loss):
Foreign currency translation gains (losses)	673	(7,203)	(5,290)	(7,567)
Unrecognized net pension gains, net of tax	79	204	508	306
Unrealized losses on investments and marketable securities, net of tax	(13)	(155)	(122)	(177)
Other comprehensive income (loss)	739	(7,154)	(4,904)	(7,438)
Comprehensive income	7,842	2,319	16,633	18,973
Comprehensive income (loss) attributable to non-controlling interests		(5)		110
Comprehensive income attributable to Newport Corporation	7,842	2,324	16,633	18,863
Comprehensive income	$ 7,842	$ 2,319	$ 16,633	$ 18,973
Net income per share attributable to Newport Corporation:
Basic (in dollars per share)	$ 0.18	$ 0.24	$ 0.55	$ 0.66
Diluted (in dollars per share)	$ 0.18	$ 0.23	$ 0.54	$ 0.65
Shares used in per share calculations:
Basic (in shares)	38,982	39,921	39,434	39,776
Diluted (in shares)	39,374	40,612	40,066	40,546

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Current assets:
Cash and cash equivalents	$ 30,440	$ 46,883
Restricted cash	974	1,704
Marketable securities		57
Accounts receivable, net of allowance for doubtful accounts of $1,297 and $1,242 as of October 3, 2015 and January 3, 2015, respectively	103,714	96,512
Inventories	122,845	112,440
Current deferred tax assets	20,606	20,734
Prepaid expenses and other current assets	18,294	14,948
Total current assets	296,873	293,278
Property and equipment, net	84,362	82,793
Goodwill	103,854	97,524
Long-term deferred tax assets	6,049	5,005
Intangible assets, net	68,228	70,811
Investments and other assets	28,486	30,516
Total assets	587,852	579,927
Current liabilities:
Short-term borrowings	3,579	3,772
Accounts payable	31,281	31,448
Accrued payroll and related expenses	31,890	34,607
Accrued expenses and other current liabilities	30,785	31,797
Total current liabilities	97,535	101,624
Long-term debt	84,254	71,000
Pension liabilities	29,432	28,554
Long-term deferred tax liabilities	14,119	14,272
Other long-term liabilities	$ 6,881	$ 7,773
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.1167 per share, 200,000,000 shares authorized; 38,576,708 and 39,603,662 shares issued and outstanding as of October 3, 2015 and January 3, 2015, respectively	$ 4,506	$ 4,626
Capital in excess of par value	450,989	468,575
Accumulated other comprehensive loss	(22,886)	(17,982)
Accumulated deficit	(76,978)	(98,515)
Total stockholders' equity	355,631	356,704
Total Liabilities and Stockholders' equity	$ 587,852	$ 579,927

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 1,297	$ 1,242
Common stock, par value (in dollars per share)	$ 0.1167	$ 0.1167
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	38,576,708	39,603,662
Common stock, shares outstanding	38,576,708	39,603,662

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 21,537	$ 26,411
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,363	22,271
Gain on sale of assets		(411)
Provision for losses on inventories	6,115	4,429
Stock-based compensation expense	10,058	8,588
Provision for doubtful accounts	225	585
Loss on disposal of property and equipment	1,158	370
Deferred income taxes	(897)	(929)
Excess tax benefits from stock-based compensation	(2,596)	(4,403)
Increase (decrease) in cash, net of acquisition and divestiture, due to changes in:
Accounts receivable	(6,950)	(7,576)
Inventories	(15,992)	(20,183)
Prepaid expenses and other assets	(345)	27
Accounts payable	(3,105)	3,763
Accrued payroll and related expenses	(3,497)	2,569
Accrued expenses and other liabilities	816	4,447
Other long-term liabilities	490	(977)
Net cash provided by operating activities	28,380	38,981
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(15,511)	(17,993)
Restricted cash	661	600
Proceeds from divestiture of business		5,030
Acquisition of businesses, net of cash acquired	(7,865)
Refundable amounts related to acquisition of a business	(2,319)
Purchase of investments and marketable securities	(1,139)	(1,414)
Proceeds from the sale or maturity of investments and marketable securities	281	8,509
Net cash used in investing activities	(25,892)	(5,268)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt	28,000	4,000
Repayment of long-term debt and obligations under capital leases	(15,012)	(20,200)
Proceeds from short-term borrowings	1,916	5,766
Repayment of short-term borrowings	(6,123)	(5,635)
Purchases of non-controlling interests		(1,863)
Proceeds from the issuance of common stock under employee plans	1,353	4,156
Tax withholding payment related to net share settlement of equity awards	(3,419)	(2,940)
Purchases of the Company's common stock	(27,893)	(4,480)
Excess tax benefits from stock-based compensation	2,596	4,403
Net cash used in financing activities	(18,582)	(16,793)
Impact of foreign exchange rate changes on cash balances	(349)	(1,650)
Net (decrease) increase in cash and cash equivalents	(16,443)	15,270
Cash and cash equivalents at beginning of period	46,883	53,710
Cash and cash equivalents at end of period	30,440	68,980
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	1,498	1,490
Cash paid during the period for income taxes, net	7,003	4,065
Property and equipment accrued in accounts payable	$ 292	$ 123

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Oct. 03, 2015
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE 1 BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Newport Corporation and its subsidiaries (collectively referred to as the Company) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary for a fair presentation have been included. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited consolidated financial statements do not include certain footnotes and financial presentations normally required under generally accepted accounting principles (GAAP) and, therefore, should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended January 3, 2015. The results for the interim periods are not necessarily indicative of the results the Company will have for the full year ending January 2, 2016. The January 3, 2015 balances reported herein are derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2015.

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Oct. 03, 2015
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS	NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS In September 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-16, Simplifying the Accounting for Measurement Period Adjustments . ASU No. 2015-16 requires an acquirer in a business combination to recognize adjustments to the provisional amounts that are identified during the measurement period to be reported in the period in which the adjustment amounts are determined. In addition, the effect on earnings of changes in depreciation or amortization, or other income effects (if any) as a result of the change to the provisional amounts, calculated as if the accounting had been completed as of the acquisition date, must be recorded in the reporting period in which the adjustment amounts are determined. ASU No. 2015-16 will be effective for fiscal years and interim periods beginning after December 15, 2015, and is required to be applied prospectively. Early adoption is permitted for financial statements that have not been issued prior to the effective date of this update. The Company’s adoption of ASU No. 2015-16 is not expected to have a material impact on the Company’s financial position or results of operations.

ACQUISITION OF FEMTOLASERS

ACQUISITION OF FEMTOLASERS	9 Months Ended
	Oct. 03, 2015
ACQUISITION OF FEMTOLASERS
ACQUISITION OF FEMTOLASERS	NOTE 3 ACQUISITION OF FEMTOLASERS On February 11, 2015, the Company acquired all of the capital stock of FEMTOLASERS Produktions GmbH (FEMTOLASERS). The initial purchase price of €9.1 million was paid in cash at closing and is subject to a net asset adjustment. The Company has estimated a net asset adjustment of €2.1 million, resulting in a purchase price of €7.0 million (approximately $7.9 million). The final amount of this net asset adjustment is currently under negotiation between the Company and the FEMTOLASERS selling shareholders. Of the initial purchase price, €2.3 million was deposited at closing into escrow until 30 months after closing, to secure certain obligations of the FEMTOLASERS selling shareholders under the share purchase agreement, including the net asset adjustment. The Company incurred $0.4 million in transaction costs, which have been expensed as incurred and are included in selling, general and administrative expense in the statements of income and comprehensive income. FEMTOLASERS expands the Company’s offering of ultrafast laser products and enhances its technology base in this area. The results of FEMTOLASERS have been included in the results of the Company’s Lasers Group as of the acquisition date. Immediately following the closing of the acquisition, the Company repaid €3.6 million (approximately $4.0 million) of FEMTOLASERS’ outstanding loans that were assumed as part of the acquisition. The consideration paid by the Company for the acquisition of FEMTOLASERS 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. As discussed above, the Company has not yet finalized the purchase price. Any changes during the measurement period may have a further impact on goodwill. October 3, 2015 Purchase Price Allocation Assets acquired and liabilities assumed: Cash $ Accounts receivable Inventories Deferred tax assets Other assets Goodwill Developed technology In-process research and development Other intangible assets Accounts payable ) Debt ) Deferred tax liabilities ) Other liabilities ) $ The goodwill related to the acquisition of FEMTOLASERS has been allocated to the Company’s Lasers Group and will not be deductible for tax purposes. The actual net sales and net income (loss) of FEMTOLASERS from February 11, 2015, the closing date of the acquisition, were included in the Company’s consolidated statements of income and comprehensive income for the three and nine months ended October 3, 2015, and 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 the three and nine months ended October 3, 2015 and September 27, 2014, including the results of FEMTOLASERS as though the acquisition had occurred at the beginning of 2014. 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 2014. Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (Unaudited, in thousands) 2015 2014 2015 2014 Actual: Net sales $ $ — $ $ — Net income (loss) attributable to Newport Corporation $ $ — $ ) $ — Supplemental pro forma information: Net sales $ $ $ $ Net income attributable to Newport Corporation $ $ $ $ Net income per share Basic $ $ $ $ Diluted $ $ $ $ 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 that amortization of acquired intangible assets began at the beginning of 2014 rather than on February 11, 2015. The result is a net increase in amortization expense of $0.1 million and $0.4 million for the three and nine months ended September 27, 2014, respectively. Transaction costs totaling $0.4 million, which were incurred prior to the closing of the acquisition, are excluded from pro forma net income.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Oct. 03, 2015
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	NOTE 4 FAIR VALUE MEASUREMENTS Accounting Standards Codification (ASC) 820-10, Fair Value Measurements, requires the fair value of any assets and liabilities stated at fair value on a recurring basis in the Company’s financial statements to be measured based on the price that would be received from selling such an asset or paid to transfer such a liability in an orderly transaction between market participants at the measurement date. Level 1 asset and liability values are derived from quoted prices in active markets for identical assets and liabilities, and Level 2 asset and liability values are derived from quoted prices in inactive markets or based on other observable inputs. The Company’s assets and liabilities measured at fair value on a recurring basis are categorized in the table below based upon their level within the fair value hierarchy as of October 3, 2015. Fair Value Measurements at Reporting Date Using (In thousands) Description October 3, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Restricted Cash $ $ $ — $ — Derivative assets: Option contracts — — Funds in investments and other assets: Israeli pension funds — — Group insurance contracts — — — — $ $ $ $ — Liabilities: Derivative liabilities: Option contracts — — The Company’s assets and liabilities measured at fair value on a recurring basis are categorized in the table below based upon their level within the fair value hierarchy as of January 3, 2015. Fair Value Measurements at Reporting Date Using (In thousands) Description January 3, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Restricted Cash $ $ $ — $ — Marketable securities: Money market funds — — Certificates of deposit — — — Derivative assets: Option contracts — — Funds in investments and other assets: Israeli pension funds — Group insurance contracts — — — — $ $ $ $ — Liabilities: Derivative liabilities: Option contracts $ $ — $ $ — The Company’s other financial instruments include short-term borrowings and long-term debt. The fair value of these financial instruments was estimated based on current rates for similar issues or on the current rates offered to the Company for debt of similar remaining maturities. The estimated fair values of these financial instruments were as follows: October 3, 2015 January 3, 2015 Carrying Carrying (In thousands) Amount Fair Value Amount Fair Value Short-term borrowings $ $ $ $ Long-term debt $ $ $ $

SUPPLEMENTAL FINANCIAL INFORMAT

SUPPLEMENTAL FINANCIAL INFORMATION	9 Months Ended
	Oct. 03, 2015
SUPPLEMENTAL FINANCIAL INFORMATION
SUPPLEMENTAL FINANCIAL INFORMATION	NOTE 5 SUPPLEMENTAL FINANCIAL INFORMATION Inventories Inventories that are expected to be sold within one year are classified as current inventories and are included in inventories in the accompanying consolidated balance sheets. Such inventories were as follows: October 3, January 3, (In thousands) 2015 2015 Raw materials and purchased parts $ $ Work in process Finished goods Short-term inventories $ $ Inventories that are not expected to be sold within one year are classified as long-term inventories and are included in investments and other assets in the accompanying consolidated balance sheets. Such inventories were as follows: October 3, January 3, (In thousands) 2015 2015 Raw materials and purchased parts $ $ Finished goods Long-term inventories $ $ Accrued Warranty Obligations Unless otherwise stated in the Company’s product literature or in its agreements with customers, products sold by the Company’s Photonics and Optics Groups generally carry a one-year warranty from the original invoice date on all product materials and workmanship, other than filters and gratings products, which generally carry a 90-day warranty, and laser beam profilers and dental CAD/CAM scanners, which generally carry a two-year warranty. Products sold by the Photonics and Optics Groups to original equipment manufacturer (OEM) customers carry warranties generally ranging from 15 to 19 months. Products sold by the Company’s Lasers Group carry warranties that vary by product and product component, but generally range from 90 days to two years. In certain cases, such warranties for Lasers Group products are limited by either a set time period or a maximum amount of hourly usage of the product, whichever occurs first. Defective products will be either repaired or replaced, generally at the Company’s option, upon meeting certain criteria. The Company accrues a provision for the estimated costs that may be incurred for warranties relating to a product (based on historical experience) as a component of cost of sales. Short-term accrued warranty obligations, which expire within one year, are included in accrued expenses and other current liabilities and long-term warranty obligations are included in other long-term liabilities in the accompanying consolidated balance sheets. The activity in accrued warranty obligations was as follows: Nine Months Ended October 3, September 27, (In thousands) 2015 2014 Balance at beginning of year $ $ Additions charged to cost of sales Warranty claims ) ) Balance at end of period $ $ Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities were as follows: October 3, January 3, (In thousands) 2015 2015 Deferred revenue $ $ Deferred lease liability Short-term accrued warranty obligations Accrued third party commissions Accrued income taxes Other $ $ Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consisted of the following: October 3, January 3, (In thousands) 2015 2015 Cumulative foreign currency translation losses $ ) $ ) Unrecognized net pension losses, net of tax ) ) Unrealized gains on investments and marketable securities, net of tax $ ) $ )

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS	9 Months Ended
	Oct. 03, 2015
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS	N OTE 6 GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amounts of goodwill were as follows: Photonics Lasers Optics (In thousands) Group Group Group Total Balance at January 3, 2015: Goodwill Accumulated impairment losses ) ) ) ) Goodwill allocated to acquisition — — Foreign currency impact — ) — ) Balance at October 3, 2015: Goodwill Accumulated impairment losses ) ) ) ) $ $ $ $ As of October 3, 2015, acquisition related intangible assets were as follows: Amortization Gross Accumulated Carrying (In thousands) Period Value Amortization Value Intangible assets subject to amortization: Developed technology 10-20 years $ $ ) $ Customer relationships up to 10 years ) In-process research and development 10 years ) Other 3 months-10 years ) ) Intangible assets not subject to amortization: Trademarks and trade names — Intangible assets $ $ ) $ As of October 3, 2015, the gross values and accumulated amortization shown in the table above for intangible assets subject to amortization exclude amounts related to the Company’s acquisition of Spectra-Physics, Inc. (and certain related entities), as the purchased intangible assets related to that acquisition have been fully amortized. As of January 3, 2015, acquisition related intangible assets were as follows: Amortization Gross Accumulated Carrying (In thousands) Period Value Amortization Value Intangible assets subject to amortization: Developed technology 10-20 years $ $ ) $ Customer relationships up to 10 years ) In-process research and development 10 years ) Other 3 months-10 years ) ) Intangible assets not subject to amortization: Trademarks and trade names — Intangible assets $ $ ) $ Amortization expense related to intangible assets totaled $2.1 million and $1.9 million for the three months ended October 3, 2015 and September 27, 2014, respectively, and $6.3 million and $6.8 million for the nine months ended October 3, 2015 and September 27, 2014, respectively. Estimated aggregate amortization expense for future fiscal years is as follows: (In thousands) Estimated Aggregate Amortization Expense 2015 (remaining) $ 2016 2017 2018 2019 Thereafter $ The Company has excluded $3.0 million of estimated amortization expense related to certain in-process research and development from the table above, as it was uncertain as of October 3, 2015 when the technology will be completed and when the amortization will begin.

INTEREST AND OTHER EXPENSE, NET

INTEREST AND OTHER EXPENSE, NET	9 Months Ended
	Oct. 03, 2015
INTEREST AND OTHER EXPENSE, NET
INTEREST AND OTHER EXPENSE, NET	NOTE 7 INTEREST AND OTHER EXPENSE, NET Interest and other expense, net, was as follows: Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Interest expense $ ) $ ) $ ) $ ) Interest and dividend income Derivative (loss) gain, net ) ) ) Bank and portfolio asset management fees ) ) ) ) Other (expense) income, net ) ) $ ) $ ) $ ) $ )

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Oct. 03, 2015
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION	NOTE 8 STOCK-BASED COMPENSATION During the nine months ended October 3, 2015, the Company granted 0.5 million restricted stock units and 0.5 million stock-settled stock appreciation rights with weighted average grant date fair values of $19.06 and $7.60, respectively. The total stock-based compensation expense included in the Company’s consolidated statements of income and comprehensive income was as follows: Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Cost of sales $ $ $ $ Selling, general and administrative expense Research and development expense $ $ $ $ At October 3, 2015, the total compensation cost related to unvested stock-based awards granted to employees, officers and directors under the Company’s stock-based benefit plans that had not yet been recognized was $18.3 million, net of estimated forfeitures. This future compensation expense will be amortized over a weighted-average period of 1.9 years using the straight-line attribution method. The actual compensation expense that the Company will recognize in the future related to unvested stock-based awards outstanding at October 3, 2015 will be adjusted for actual forfeitures and will be adjusted based on the Company’s determination as to the extent to which performance conditions applicable to any stock-based awards have been or will be achieved. At October 3, 2015, the Company’s outstanding and exercisable stock options and stock appreciation rights, and the weighted average exercise price or base value, the weighted average remaining contractual life and the aggregate intrinsic value thereof, were as follows: Weighted Average Weighted Exercise Average Aggregate Number of Price or Remaining Intrinsic Shares Base Contractual Value (In thousands) Value Life (Years) (In thousands) Stock options outstanding and exercisable $ $ — Stock appreciation rights outstanding $ $ Stock appreciation rights exercisable $ $

DEBT AND LINES OF CREDIT

DEBT AND LINES OF CREDIT	9 Months Ended
	Oct. 03, 2015
DEBT AND LINES OF CREDIT
DEBT AND LINES OF CREDIT	NOTE 9 DEBT AND LINES OF CREDIT Total short-term borrowings were as follows: October 3, January 3, (In thousands) 2015 2015 Japanese revolving lines of credit $ $ Japanese receivables financing facilities Israeli loans due October 2015 Total short-term borrowings $ $ Total long-term debt was as follows: October 3, January 3, (In thousands) 2015 2015 U.S. revolving line of credit expiring July 2018 $ $ Austrian loans due through March 2019 — $ $

NET INCOME PER SHARE

NET INCOME PER SHARE	9 Months Ended
	Oct. 03, 2015
NET INCOME PER SHARE
NET INCOME PER SHARE	NOTE 10 NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share: Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands, except per share data) 2015 2014 2015 2014 Net income attributable to Newport Corporation $ $ $ $ Shares: Weighted average shares outstanding - basic Dilutive potential common shares, using treasury stock method Weighted average shares outstanding - diluted Net income per share attributable to Newport Corporation: Basic $ $ $ $ Diluted $ $ $ $ For the three and nine months ended October 3, 2015, 1.5 million stock appreciation rights, and for the three and nine months ended September 27, 2014, an aggregate of 0.7 million stock options and stock appreciation rights, were excluded from the computations of diluted net income per share, as their inclusion would have been antidilutive. For the three and nine months ended October 3, 2015, 0.5 million performance-based restricted stock units, and for the three and nine months ended September 27, 2014, 0.6 million performance-based restricted stock units, were excluded from the computations of diluted net income per share, as the performance criteria for their vesting had not been met as of the end of such periods.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Oct. 03, 2015
INCOME TAXES
INCOME TAXES	NOTE 11 INCOME TAXES Income tax expense for each of the three and nine months ended October 3, 2015 and September 27, 2014 consisted of a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company, adjusted for items which are considered discrete to a particular period. The effective tax rates for the three and nine months ended October 3, 2015 were 22.0% and 30.2%, respectively, and the effective tax rates for the three and nine months ended September 27, 2014 were 19.7% and 27.0%, respectively. The effective tax rates for the three and nine months ended October 3, 2015 were lower than the U.S. statutory rate of 35% due primarily to the benefit of income recorded in foreign jurisdictions that have tax rates that are lower than U.S. tax rates and an increased utilization of foreign tax credits that were previously unrecognized, necessitated by the completion and filing of the 2014 U.S. federal consolidated return during the third quarter, which was recorded as a discrete item. The effective tax rate for the three months ended October 3, 2015 was also favorably impacted by profitable results recorded in jurisdictions where the Company maintains a full valuation allowance. The effective tax rate for the nine months ended October 3, 2015 was unfavorably impacted by the passage of Japanese tax reform legislation on March 31, 2015, which lowered long-term corporate tax rates, necessitating a corresponding reduction of deferred tax assets applicable to the Company’s Japanese locations. The effective tax rates for the three and nine months ended September 27, 2014 were lower than the rates for the three and nine months ended October 3, 2015, respectively, due primarily to the favorable impact of an extraterritorial income exclusion benefit and a reduction of the corresponding uncertain tax position, which was recorded as a discrete item during the third quarter of 2014.

STOCKHOLDERS' EQUITY TRANSACTIO

STOCKHOLDERS' EQUITY TRANSACTIONS	9 Months Ended
	Oct. 03, 2015
STOCKHOLDERS' EQUITY TRANSACTIONS
STOCKHOLDERS' EQUITY TRANSACTIONS	NOTE 12 STOCKHOLDERS’ EQUITY TRANSACTIONS In May 2008, the Board of Directors of the Company approved a share repurchase program, authorizing the purchase of up to 4.0 million shares of the Company’s common stock. During the nine months ended October 3, 2015, the Company repurchased 1.7 million shares for a total of $27.9 million under this program. As of October 3, 2015, 1.7 million shares remained available for purchase under the program. During the nine months ended October 3, 2015, the Company cancelled 0.2 million shares of common stock underlying restricted stock units in payment by employees of taxes owed upon the vesting of restricted stock units issued to them under the Company’s stock incentive plans. The value of these restricted stock units totaled $3.4 million at the time they were cancelled.

DEFINED BENEFIT PENSION PLANS

DEFINED BENEFIT PENSION PLANS	9 Months Ended
	Oct. 03, 2015
DEFINED BENEFIT PENSION PLANS
DEFINED BENEFIT PENSION PLANS	NOTE 13 DEFINED BENEFIT PENSION PLANS The Company has defined benefit pension plans covering substantially all full-time employees in France, Germany, Israel and Japan. In addition, the Company has certain pension liabilities relating to former employees of the Company in the United Kingdom. The Company’s German plan is unfunded, as permitted under the plan and applicable laws. For financial reporting purposes, the calculation of net periodic pension costs is based upon a number of actuarial assumptions, including a discount rate for plan obligations, an assumed rate of return on pension plan assets and an assumed rate of compensation increase for employees covered by the plan. All of these assumptions are based upon management’s judgment, considering all known trends and uncertainties. Actual results that differ from these assumptions would impact future expense recognition and the cash funding requirements of the Company’s pension plans. Net periodic benefit costs for the plans in aggregate included the following components: Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Service cost $ $ $ $ Interest cost on benefit obligations Expected return on plan assets ) ) ) ) Amortization of net loss $ $ $ $

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION	9 Months Ended
	Oct. 03, 2015
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION	NOTE 14 BUSINESS SEGMENT INFORMATION The operating segments reported below are the segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Chief Executive Officer, who is the chief operating decision maker, in deciding how to allocate resources and in assessing performance. The Company develops, manufactures and markets its products within three distinct business segments: its Photonics Group, its Lasers Group and its Optics Group. The Company measured income reported for each operating segment, which included only those costs that were directly attributable to the operations of that segment, and excluded unallocated operating expenses, such as corporate overhead and intangible asset amortization, certain gains and losses, interest and other expense, net, and income taxes. (In thousands) Photonics Lasers Optics Total Three months ended October 3, 2015: Sales to external customers $ $ $ $ Segment income $ $ $ $ Three months ended September 27, 2014: Sales to external customers $ $ $ $ Segment income $ $ $ $ Nine months ended October 3, 2015: Sales to external customers $ $ $ $ Segment income $ $ $ $ Nine months ended September 27, 2014: Sales to external customers $ $ $ $ Segment income $ $ $ $ The following table reconciles segment income to consolidated income before income taxes: Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Segment income $ $ $ $ Unallocated operating expenses ) ) ) ) (Loss) gain on disposal of assets — — ) Interest and other expense, net ) ) ) ) $ $ $ $

ACQUISITIONS OF FEMTOLASERS (Ta

ACQUISITIONS OF FEMTOLASERS (Tables)	9 Months Ended
	Oct. 03, 2015
ACQUISITION OF FEMTOLASERS
Summary of the purchase price, assets acquired and liabilities assumed	October 3, 2015 Purchase Price Allocation Assets acquired and liabilities assumed: Cash $ Accounts receivable Inventories Deferred tax assets Other assets Goodwill Developed technology In-process research and development Other intangible assets Accounts payable ) Debt ) Deferred tax liabilities ) Other liabilities ) $
Summary of actual net sales and net income of acquiree and pro forma net sales and net income	Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (Unaudited, in thousands) 2015 2014 2015 2014 Actual: Net sales $ $ — $ $ — Net income (loss) attributable to Newport Corporation $ $ — $ ) $ — Supplemental pro forma information: Net sales $ $ $ $ Net income attributable to Newport Corporation $ $ $ $ Net income per share Basic $ $ $ $ Diluted $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Oct. 03, 2015
FAIR VALUE MEASUREMENTS
Summary of the Company's assets and liabilities measured at fair value on a recurring basis	Fair Value Measurements at Reporting Date Using (In thousands) Description October 3, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Restricted Cash $ $ $ — $ — Derivative assets: Option contracts — — Funds in investments and other assets: Israeli pension funds — — Group insurance contracts — — — — $ $ $ $ — Liabilities: Derivative liabilities: Option contracts — — Fair Value Measurements at Reporting Date Using (In thousands) Description January 3, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Restricted Cash $ $ $ — $ — Marketable securities: Money market funds — — Certificates of deposit — — — Derivative assets: Option contracts — — Funds in investments and other assets: Israeli pension funds — Group insurance contracts — — — — $ $ $ $ — Liabilities: Derivative liabilities: Option contracts $ $ — $ $ —
Summary of carrying amount and estimated fair values of financial instruments	October 3, 2015 January 3, 2015 Carrying Carrying (In thousands) Amount Fair Value Amount Fair Value Short-term borrowings $ $ $ $ Long-term debt $ $ $ $

SUPPLEMENTAL FINANCIAL INFORM22

SUPPLEMENTAL FINANCIAL INFORMATION	9 Months Ended
	Oct. 03, 2015
SUPPLEMENTAL FINANCIAL INFORMATION
Schedule of inventories	October 3, January 3, (In thousands) 2015 2015 Raw materials and purchased parts $ $ Work in process Finished goods Short-term inventories $ $
Schedule of long-term inventories	October 3, January 3, (In thousands) 2015 2015 Raw materials and purchased parts $ $ Finished goods Long-term inventories $ $
Schedule of activity in accrued warranty obligations	Nine Months Ended October 3, September 27, (In thousands) 2015 2014 Balance at beginning of year $ $ Additions charged to cost of sales Warranty claims ) ) Balance at end of period $ $
Schedule of accrued expenses and other current liabilities	October 3, January 3, (In thousands) 2015 2015 Deferred revenue $ $ Deferred lease liability Short-term accrued warranty obligations Accrued third party commissions Accrued income taxes Other $ $
Schedule of accumulated other comprehensive loss	October 3, January 3, (In thousands) 2015 2015 Cumulative foreign currency translation losses $ ) $ ) Unrecognized net pension losses, net of tax ) ) Unrealized gains on investments and marketable securities, net of tax $ ) $ )

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS (Tables)	9 Months Ended
	Oct. 03, 2015
GOODWILL AND INTANGIBLE ASSETS
Schedule of changes in the carrying amount of goodwill	Photonics Lasers Optics (In thousands) Group Group Group Total Balance at January 3, 2015: Goodwill Accumulated impairment losses ) ) ) ) Goodwill allocated to acquisition — — Foreign currency impact — ) — ) Balance at October 3, 2015: Goodwill Accumulated impairment losses ) ) ) ) $ $ $ $
Schedule of intangible assets, excluding goodwill	As of October 3, 2015, acquisition related intangible assets were as follows: Amortization Gross Accumulated Carrying (In thousands) Period Value Amortization Value Intangible assets subject to amortization: Developed technology 10-20 years $ $ ) $ Customer relationships up to 10 years ) In-process research and development 10 years ) Other 3 months-10 years ) ) Intangible assets not subject to amortization: Trademarks and trade names — Intangible assets $ $ ) $ As of January 3, 2015, acquisition related intangible assets were as follows: Amortization Gross Accumulated Carrying (In thousands) Period Value Amortization Value Intangible assets subject to amortization: Developed technology 10-20 years $ $ ) $ Customer relationships up to 10 years ) In-process research and development 10 years ) Other 3 months-10 years ) ) Intangible assets not subject to amortization: Trademarks and trade names — Intangible assets $ $ ) $
Schedule of estimated aggregate amortization expense for future fiscal years	(In thousands) Estimated Aggregate Amortization Expense 2015 (remaining) $ 2016 2017 2018 2019 Thereafter $

INTEREST AND OTHER EXPENSE, N24

INTEREST AND OTHER EXPENSE, NET (Tables)	9 Months Ended
	Oct. 03, 2015
INTEREST AND OTHER EXPENSE, NET
Interest and other expense, net	Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Interest expense $ ) $ ) $ ) $ ) Interest and dividend income Derivative (loss) gain, net ) ) ) Bank and portfolio asset management fees ) ) ) ) Other (expense) income, net ) ) $ ) $ ) $ ) $ )

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Oct. 03, 2015
STOCK-BASED COMPENSATION
Schedule of total stock-based compensation expense included in the Company's consolidated statements of income and comprehensive income	Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Cost of sales $ $ $ $ Selling, general and administrative expense Research and development expense $ $ $ $
Schedule of stock options and Stock appreciation rights exercisable and outstanding	Weighted Average Weighted Exercise Average Aggregate Number of Price or Remaining Intrinsic Shares Base Contractual Value (In thousands) Value Life (Years) (In thousands) Stock options outstanding and exercisable $ $ — Stock appreciation rights outstanding $ $ Stock appreciation rights exercisable $ $

DEBT AND LINES OF CREDIT (Table

DEBT AND LINES OF CREDIT (Tables)	9 Months Ended
	Oct. 03, 2015
DEBT AND LINES OF CREDIT
Schedule of short-term borrowings	October 3, January 3, (In thousands) 2015 2015 Japanese revolving lines of credit $ $ Japanese receivables financing facilities Israeli loans due October 2015 Total short-term borrowings $ $
Schedule of long-term debt	October 3, January 3, (In thousands) 2015 2015 U.S. revolving line of credit expiring July 2018 $ $ Austrian loans due through March 2019 — $ $

NET INCOME PER SHARE (Tables)

NET INCOME PER SHARE (Tables)	9 Months Ended
	Oct. 03, 2015
NET INCOME PER SHARE
Schedule of basic and diluted net income per share	Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands, except per share data) 2015 2014 2015 2014 Net income attributable to Newport Corporation $ $ $ $ Shares: Weighted average shares outstanding - basic Dilutive potential common shares, using treasury stock method Weighted average shares outstanding - diluted Net income per share attributable to Newport Corporation: Basic $ $ $ $ Diluted $ $ $ $

DEFINED BENEFIT PENSION PLANS (

DEFINED BENEFIT PENSION PLANS (Tables)	9 Months Ended
	Oct. 03, 2015
DEFINED BENEFIT PENSION PLANS
Aggregate net periodic benefit costs for the plans	Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Service cost $ $ $ $ Interest cost on benefit obligations Expected return on plan assets ) ) ) ) Amortization of net loss $ $ $ $

BUSINESS SEGMENT INFORMATION (T

BUSINESS SEGMENT INFORMATION (Tables)	9 Months Ended
	Oct. 03, 2015
BUSINESS SEGMENT INFORMATION
Schedule of selected segment financial information	(In thousands) Photonics Lasers Optics Total Three months ended October 3, 2015: Sales to external customers $ $ $ $ Segment income $ $ $ $ Three months ended September 27, 2014: Sales to external customers $ $ $ $ Segment income $ $ $ $ Nine months ended October 3, 2015: Sales to external customers $ $ $ $ Segment income $ $ $ $ Nine months ended September 27, 2014: Sales to external customers $ $ $ $ Segment income $ $ $ $
Schedule of reconciliation of segment income to consolidated income before income taxes	Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, (In thousands) 2015 2014 2015 2014 Segment income $ $ $ $ Unallocated operating expenses ) ) ) ) (Loss) gain on disposal of assets — — ) Interest and other expense, net ) ) ) ) $ $ $ $

ACQUISITION OF FEMTOLASERS (Det

ACQUISITION OF FEMTOLASERS (Details) - FEMTOLASERS € in Millions, $ in Millions	Feb. 11, 2015EUR (€)	Feb. 11, 2015USD ($)	Oct. 03, 2015EUR (€)	Oct. 03, 2015USD ($)
ACQUISITIONS OF FEMTOLASERS
Initial purchase price	€ 9.1
Revised net asset adjustment			€ 2.1
Adjusted purchase price			€ 7	$ 7.9
Purchase price deposited at closing into escrow account	€ 2.3
Time period for depositing into escrow from the date of closing	30 months	30 months
Repayment of outstanding loan	€ 3.6	$ 4
Selling, general and administrative expense
ACQUISITIONS OF FEMTOLASERS
Transaction costs incurred | $		$ 0.4

ACQUISITION OF FEMTOLASERS (D31

ACQUISITION OF FEMTOLASERS (Details 2) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Purchase price, assets acquired and liabilities assumed
Goodwill	$ 103,854	$ 97,524
FEMTOLASERS
Purchase price, assets acquired and liabilities assumed
Cash	78
Accounts receivable	1,968
Inventories	2,759
Deferred tax assets	1,019
Other assets	2,015
Goodwill	6,681
Accounts payable	(3,417)
Debt	(4,021)
Deferred tax liabilities	(1,019)
Other liabilities	(2,195)
Assets acquired and liabilities assumed, total	7,943
FEMTOLASERS | Developed technology
Purchase price, assets acquired and liabilities assumed
Intangible assets	1,811
FEMTOLASERS | In-process research and development
Purchase price, assets acquired and liabilities assumed
Intangible assets	1,721
FEMTOLASERS | Other intangible assets
Purchase price, assets acquired and liabilities assumed
Intangible assets	$ 543

ACQUISITION OF FEMTOLASERS (D32

ACQUISITION OF FEMTOLASERS (Details 3) - FEMTOLASERS - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Actual:
Net sales	$ 2,166		$ 4,489
Net income (loss) attributable to Newport Corporation	339		(1,480)
Supplemental pro forma information:
Net sales	147,560	$ 148,057	452,461	$ 453,786
Net income attributable to Newport Corporation	$ 7,121	$ 9,025	$ 21,926	$ 25,624
Net income per share
Basic	$ 0.18	$ 0.23	$ 0.56	$ 0.64
Diluted	$ 0.18	$ 0.22	$ 0.55	$ 0.63

ACQUISITION OF FEMTOLASERS (D33

ACQUISITION OF FEMTOLASERS (Details 4) - FEMTOLASERS - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
ACQUISITIONS OF FEMTOLASERS
Pro forma increase (decrease) in amortization expense	$ 0.1		$ 0.4
Transaction costs excluded from pro forma net income		$ 0.4

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Assets:
Marketable securities		$ 57
Fair Value Measurements, Recurring basis
Assets:
Restricted Cash	$ 974	1,704
Marketable securities		57
Funds in investments and other assets	17,835	17,230
Total assets	19,023	19,094
Option contracts | Fair Value Measurements, Recurring basis
Liabilities:
Derivative liabilities	266	921
Money market funds | Fair Value Measurements, Recurring basis
Assets:
Marketable securities		7
Certificates of deposit | Fair Value Measurements, Recurring basis
Assets:
Marketable securities		50
Option contracts | Fair Value Measurements, Recurring basis
Assets:
Derivative assets	214	103
Israeli pension funds | Fair Value Measurements, Recurring basis
Assets:
Funds in investments and other assets	11,926	11,090
Group insurance contracts | Fair Value Measurements, Recurring basis
Assets:
Funds in investments and other assets	5,909	6,140
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Measurements, Recurring basis
Assets:
Restricted Cash	974	1,704
Marketable securities		7
Total assets	974	1,711
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | Fair Value Measurements, Recurring basis
Assets:
Marketable securities		7
Significant Other Observable Inputs (Level 2) | Fair Value Measurements, Recurring basis
Assets:
Marketable securities		50
Funds in investments and other assets	17,835	17,230
Total assets	18,049	17,383
Significant Other Observable Inputs (Level 2) | Option contracts | Fair Value Measurements, Recurring basis
Liabilities:
Derivative liabilities	266	921
Significant Other Observable Inputs (Level 2) | Certificates of deposit | Fair Value Measurements, Recurring basis
Assets:
Marketable securities		50
Significant Other Observable Inputs (Level 2) | Option contracts | Fair Value Measurements, Recurring basis
Assets:
Derivative assets	214	103
Significant Other Observable Inputs (Level 2) | Israeli pension funds | Fair Value Measurements, Recurring basis
Assets:
Funds in investments and other assets	11,926	11,090
Significant Other Observable Inputs (Level 2) | Group insurance contracts | Fair Value Measurements, Recurring basis
Assets:
Funds in investments and other assets	$ 5,909	$ 6,140

FAIR VALUE MEASUREMENTS (Deta35

FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Carrying Amount
Carrying amount and estimated fair values of financial instruments
Short-term borrowings	$ 3,579	$ 3,772
Long-term debt	84,254	71,000
Fair Value
Carrying amount and estimated fair values of financial instruments
Short-term borrowings	3,579	3,772
Long-term debt	$ 83,497	$ 69,761

SUPPLEMENTAL FINANCIAL INFORM36

SUPPLEMENTAL FINANCIAL INFORMATION (Details) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Short-term inventories
Raw materials and purchased parts	$ 75,111	$ 68,989
Work in process	18,747	16,564
Finished goods	28,987	26,887
Short-term inventories	$ 122,845	$ 112,440

SUPPLEMENTAL FINANCIAL INFORM37

SUPPLEMENTAL FINANCIAL INFORMATION (Details 2) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Long-term Inventories
Raw materials and purchased parts	$ 2,138	$ 3,208
Finished goods	2,969	3,856
Long-term inventories	$ 5,107	$ 7,064

SUPPLEMENTAL FINANCIAL INFORM38

SUPPLEMENTAL FINANCIAL INFORMATION (Details 3)	9 Months Ended
	Oct. 03, 2015
Photonics and Optics | All products other than filters, gratings, laser beam profilers, and dental CAD/CAM scanners
Accrued Warranty Obligations
Product warranty period	1 year
Photonics and Optics | Original equipment manufacturer | Minimum
Accrued Warranty Obligations
Product warranty period	15 months
Photonics and Optics | Original equipment manufacturer | Maximum
Accrued Warranty Obligations
Product warranty period	19 months
Optics | Filters and gratings products
Accrued Warranty Obligations
Product warranty period	90 days
Photonics | Laser beam profilers, and dental CAD/CAM scanners
Accrued Warranty Obligations
Product warranty period	2 years
Lasers | Minimum
Accrued Warranty Obligations
Product warranty period	90 days
Lasers | Maximum
Accrued Warranty Obligations
Product warranty period	2 years

SUPPLEMENTAL FINANCIAL INFORM39

SUPPLEMENTAL FINANCIAL INFORMATION (Details 4) - USD ($) $ in Thousands	9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014
Accrued Warranty Obligations
Balance at beginning of year	$ 3,556	$ 3,285
Additions charged to cost of sales	2,278	2,134
Warranty claims	(2,386)	(2,487)
Balance at end of period	$ 3,448	$ 2,932

SUPPLEMENTAL FINANCIAL INFORM40

SUPPLEMENTAL FINANCIAL INFORMATION (Details 5) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Accrued Expenses and Other Current Liabilities
Deferred revenue	$ 12,246	$ 13,032
Deferred lease liability	4,743	5,094
Short-term accrued warranty obligations	3,254	3,324
Accrued third party commissions	1,551	1,395
Accrued income taxes	1,445	2,219
Other	7,546	6,733
Accrued expenses and other current liabilities, total	$ 30,785	$ 31,797

SUPPLEMENTAL FINANCIAL INFORM41

SUPPLEMENTAL FINANCIAL INFORMATION (Details 6) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Accumulated Other Comprehensive Loss
Cumulative foreign currency translation losses	$ (19,846)	$ (14,556)
Unrecognized net pension losses, net of tax	(4,347)	(4,855)
Unrealized gains on investments and marketable securities, net of tax	1,307	1,429
Accumulated other comprehensive loss	$ (22,886)	$ (17,982)

GOODWILL AND INTANGIBLE ASSET42

GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Goodwill
Goodwill	$ 276,213	$ 269,883
Accumulated impairment losses	(172,359)	(172,359)
Goodwill, total	103,854	97,524
Photonics
Goodwill
Goodwill	98,808	98,808
Accumulated impairment losses	(47,458)	(47,458)
Goodwill, total	51,350	51,350
Lasers
Goodwill
Goodwill	136,091	129,761
Accumulated impairment losses	(104,562)	(104,562)
Goodwill, total	31,529	25,199
Optics
Goodwill
Goodwill	41,314	41,314
Accumulated impairment losses	(20,339)	(20,339)
Goodwill, total	$ 20,975	$ 20,975

GOODWILL AND INTANGIBLE ASSET43

GOODWILL AND INTANGIBLE ASSETS (Details 2) $ in Thousands	9 Months Ended
	Oct. 03, 2015USD ($)
Changes in the carrying amount of goodwill:
Goodwill, Beginning Balance	$ 97,524
Goodwill allocated to acquisition	6,681
Foreign currency impact	(351)
Goodwill, Ending Balance	103,854
Photonics
Changes in the carrying amount of goodwill:
Goodwill, Beginning Balance	51,350
Goodwill, Ending Balance	51,350
Lasers
Changes in the carrying amount of goodwill:
Goodwill, Beginning Balance	25,199
Goodwill allocated to acquisition	6,681
Foreign currency impact	(351)
Goodwill, Ending Balance	31,529
Optics
Changes in the carrying amount of goodwill:
Goodwill, Beginning Balance	20,975
Goodwill, Ending Balance	$ 20,975

GOODWILL AND INTANGIBLE ASSET44

GOODWILL AND INTANGIBLE ASSETS (Details 3)	9 Months Ended	12 Months Ended
	Oct. 03, 2015	Jan. 03, 2015
In-process research and development
Amortization Period
Intangible asset amortization period	10 years	10 years
Maximum | Developed technology
Amortization Period
Intangible asset amortization period	20 years	20 years
Maximum | Customer relationships
Amortization Period
Intangible asset amortization period	10 years	10 years
Maximum | Other intangible assets
Amortization Period
Intangible asset amortization period	10 years	10 years
Minimum | Developed technology
Amortization Period
Intangible asset amortization period	10 years	10 years
Minimum | Other intangible assets
Amortization Period
Intangible asset amortization period	3 months	3 months

GOODWILL AND INTANGIBLE ASSET45

GOODWILL AND INTANGIBLE ASSETS (Details 4) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Intangible assets subject to amortization:
Intangible assets, gross	$ 85,946	$ 114,395
Accumulated amortization	(36,023)	(61,889)
Intangible assets, net	49,923	52,506
Developed technology
Intangible assets subject to amortization:
Intangible assets, gross	39,888	45,646
Accumulated amortization	(11,777)	(16,782)
Intangible assets, net	28,111	28,864
Customer relationships
Intangible assets subject to amortization:
Intangible assets, gross	28,693	47,827
Accumulated amortization	(20,839)	(37,312)
Intangible assets, net	7,854	10,515
In-process research and development
Intangible assets subject to amortization:
Intangible assets, gross	15,154	13,461
Accumulated amortization	(2,075)	(1,496)
Intangible assets, net	13,079	11,965
Other intangible assets
Intangible assets subject to amortization:
Intangible assets, gross	2,211	7,461
Accumulated amortization	(1,332)	(6,299)
Intangible assets, net	$ 879	$ 1,162

GOODWILL AND INTANGIBLE ASSET46

GOODWILL AND INTANGIBLE ASSETS (Details 5) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Intangible assets subject to amortization:
Intangible assets, gross	$ 85,946	$ 114,395
Accumulated amortization	(36,023)	(61,889)
Intangible assets, net	49,923	52,506
Intangible assets not subject to amortization:
Trademarks and trade names	18,305	18,305
Intangible assets
Intangible assets, gross	104,251	132,700
Intangible assets, net	$ 68,228	$ 70,811

GOODWILL AND INTANGIBLE ASSET47

GOODWILL AND INTANGIBLE ASSETS (Details 6) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
GOODWILL AND INTANGIBLE ASSETS
Amortization expense related to intangible assets	$ 2.1	$ 1.9	$ 6.3	$ 6.8

GOODWILL AND INTANGIBLE ASSET48

GOODWILL AND INTANGIBLE ASSETS (Details 7) $ in Thousands	Oct. 03, 2015USD ($)
Estimated aggregate amortization expense
2015 (remaining)	$ 2,168
2,016	8,283
2,017	7,131
2,018	4,966
2,019	4,376
Thereafter	20,015
Total estimated future amortization expense	$ 46,939

GOODWILL AND INTANGIBLE ASSET49

GOODWILL AND INTANGIBLE ASSETS (Details 8) $ in Millions	Oct. 03, 2015USD ($)
GOODWILL AND INTANGIBLE ASSETS
Future IPR&D expense excluded from estimated future expense	$ 3

INTEREST AND OTHER EXPENSE, N50

INTEREST AND OTHER EXPENSE, NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
INTEREST AND OTHER EXPENSE, NET
Interest expense	$ (611)	$ (522)	$ (1,749)	$ (1,779)
Interest and dividend income	18	129	86	252
Derivative (loss) gain, net	(430)	(372)	103	(248)
Bank and portfolio asset management fees	(322)	(293)	(1,015)	(819)
Other (expense) income, net	(8)	100	(745)	2
Total	$ (1,353)	$ (958)	$ (3,320)	$ (2,592)

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) shares in Millions	9 Months Ended
	Oct. 03, 2015$ / sharesshares
Restricted Stock
Stock-based compensation
Granted (in shares)	0.5
Granted (in dollars per share) | $ / shares	$ 19.06
Stock appreciation rights
Stock-based compensation
Granted (in shares)	0.5
Granted (in dollars per share) | $ / shares	$ 7.60

STOCK-BASED COMPENSATION (Det52

STOCK-BASED COMPENSATION (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Total stock-based compensation expense included in the Company's consolidated statements of operations
Stock-based compensation expense	$ 3,231	$ 3,141	$ 10,058	$ 8,588
Cost of sales
Total stock-based compensation expense included in the Company's consolidated statements of operations
Stock-based compensation expense	367	271	1,048	762
Selling, general and administrative expense
Total stock-based compensation expense included in the Company's consolidated statements of operations
Stock-based compensation expense	2,490	2,508	7,812	6,809
Research and development expense
Total stock-based compensation expense included in the Company's consolidated statements of operations
Stock-based compensation expense	$ 374	$ 362	$ 1,198	$ 1,017

STOCK-BASED COMPENSATION (Det53

STOCK-BASED COMPENSATION (Details 3) $ in Millions	9 Months Ended
	Oct. 03, 2015USD ($)
Unrecognized total compensation cost
Unrecognized stock-based compensation expense related to non-vested stock-based awards	$ 18.3
Weighted-average period over which unrecognized stock-based compensation cost is expected to be recognized	1 year 10 months 24 days

STOCK-BASED COMPENSATION (Det54

STOCK-BASED COMPENSATION (Details 4) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Oct. 03, 2015USD ($)$ / sharesshares
Stock Options
Stock-based compensation
Stock options outstanding (in shares)	30
Stock options outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 13.86
Stock options outstanding, remaining contractual term	3 months 18 days
Stock options exercisable (in shares)	30
Stock options exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 13.86
Stock options exercisable, remaining contractual term	3 months 18 days
Stock appreciation rights
Stock-based compensation
Stock appreciation rights outstanding (in shares)	2,354
Stock appreciation rights outstanding, weighted average base value (in dollars per share) | $ / shares	$ 15.61
Stock appreciation rights outstanding, remaining contractual term	4 years 4 months 24 days
Stock appreciation rights outstanding, intrinsic value | $	$ 2,197
Stock appreciation rights exercisable (in shares)	1,328
Stock appreciation rights exercisable, weighted-average base value (in dollars per share) | $ / shares	$ 13.88
Stock appreciation rights exercisable, remaining contractual term	3 years 2 months 12 days
Stock appreciation rights exercisable, intrinsic value | $	$ 2,187

DEBT AND LINES OF CREDIT (Detai

DEBT AND LINES OF CREDIT (Details) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Short-term borrowings
Total short-term borrowings	$ 3,579	$ 3,772
Foreign line of credit | Revolving line of credit | Japanese revolving lines of credit
Short-term borrowings
Total short-term borrowings	3,117	3,163
Receivables financing | Japanese receivables financing facilities
Short-term borrowings
Total short-term borrowings	312	25
Loans | Israeli loans due October 2015
Short-term borrowings
Total short-term borrowings	$ 150	$ 584

DEBT AND LINES OF CREDIT (Det56

DEBT AND LINES OF CREDIT (Details 2) - USD ($) $ in Thousands	Oct. 03, 2015	Jan. 03, 2015
Long-term debt
Total long-term debt	$ 84,254	$ 71,000
Secured debt | Revolving line of credit | U.S. revolving line of credit expiring July 2018
Long-term debt
Total long-term debt	84,000	$ 71,000
Loans | Austrian loans due through March 2019
Long-term debt
Total long-term debt	$ 254

NET INCOME PER SHARE (Details)

NET INCOME PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
NET INCOME PER SHARE
Net income attributable to Newport Corporation	$ 7,103	$ 9,470	$ 21,537	$ 26,308
Shares:
Weighted average shares outstanding - basic	38,982	39,921	39,434	39,776
Dilutive potential common shares, using treasury stock method	392	691	632	770
Weighted average shares outstanding - diluted	39,374	40,612	40,066	40,546
Net income per share attributable to Newport Corporation:
Basic (in dollars per share)	$ 0.18	$ 0.24	$ 0.55	$ 0.66
Diluted (in dollars per share)	$ 0.18	$ 0.23	$ 0.54	$ 0.65

NET INCOME PER SHARE (Details 2

NET INCOME PER SHARE (Details 2) - shares shares in Millions	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Stock options and stock appreciation rights
Net income per share
Antidilutive securities excluded from computation of earnings per share, amount	1.5	0.7	1.5	0.7
Performance-Based Restricted Stock Units
Net income per share
Antidilutive securities excluded from computation of earnings per share, amount	0.5	0.6	0.5	0.6

INCOME TAXES (Details)

INCOME TAXES (Details)	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
INCOME TAXES
Effective rate	22.00%	19.70%	30.20%	27.00%
U.S. statutory rate	35.00%		35.00%

STOCKHOLDERS' EQUITY TRANSACT60

STOCKHOLDERS' EQUITY TRANSACTIONS (Details) - USD ($) $ in Thousands, shares in Millions	9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	May. 31, 2008
STOCKHOLDERS' EQUITY TRANSACTIONS
Shares of common stock authorized to be repurchased			4
Purchases made under the program	1.7
Shares repurchased, value (in dollars)	$ 27,893	$ 4,480
Remaining shares to be repurchased	1.7

STOCKHOLDERS' EQUITY TRANSACT61

STOCKHOLDERS' EQUITY TRANSACTIONS (Details 2) - Restricted stock units shares in Millions, $ in Millions	9 Months Ended
	Oct. 03, 2015USD ($)shares
Stock-based compensation
Cancelled (in shares)	0.2
Cancelled, value | $	$ 3.4

DEFINED BENEFIT PENSION PLANS62

DEFINED BENEFIT PENSION PLANS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Net periodic benefit costs
Service cost	$ 547	$ 482	$ 1,849	$ 1,740
Interest cost on benefit obligations	120	198	362	514
Expected return on plan assets	(44)	(70)	(131)	(211)
Amortization of net loss	91	44	273	134
Total	$ 714	$ 654	$ 2,353	$ 2,177

BUSINESS SEGMENT INFORMATION (D

BUSINESS SEGMENT INFORMATION (Details)	3 Months Ended
	Oct. 03, 2015segment
BUSINESS SEGMENT INFORMATION
Number of operating segments	3

BUSINESS SEGMENT INFORMATION 64

BUSINESS SEGMENT INFORMATION (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Segment Reporting Information, by Segment
Sales to external customers	$ 147,560	$ 146,299	$ 452,192	$ 446,421
Segment income	10,465	12,761	34,165	38,772
Photonics
Segment Reporting Information, by Segment
Sales to external customers	60,904	59,757	186,843	182,693
Lasers
Segment Reporting Information, by Segment
Sales to external customers	48,247	44,228	142,602	137,815
Optics
Segment Reporting Information, by Segment
Sales to external customers	38,409	42,314	122,747	125,913
Operating segments
Segment Reporting Information, by Segment
Segment income	21,720	23,627	70,449	72,846
Operating segments | Photonics
Segment Reporting Information, by Segment
Segment income	14,274	12,255	46,703	40,201
Operating segments | Lasers
Segment Reporting Information, by Segment
Segment income	4,278	6,423	10,943	18,151
Operating segments | Optics
Segment Reporting Information, by Segment
Segment income	$ 3,168	$ 4,949	$ 12,803	$ 14,494

BUSINESS SEGMENT INFORMATION 65

BUSINESS SEGMENT INFORMATION (Details 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2015	Sep. 27, 2014	Oct. 03, 2015	Sep. 27, 2014
Reconciliation of segment income to consolidated income before income taxes
Segment income	$ 10,465	$ 12,761	$ 34,165	$ 38,772
(Loss) gain on disposal of assets			(1,088)	411
Interest and other expense, net	(1,353)	(958)	(3,320)	(2,592)
Income before income taxes	9,112	11,803	30,845	36,180
Operating segments
Reconciliation of segment income to consolidated income before income taxes
Segment income	21,720	23,627	70,449	72,846
Unallocated amount to segment
Reconciliation of segment income to consolidated income before income taxes
Unallocated operating expenses	$ (11,255)	$ (10,866)	$ (35,196)	$ (34,485)