UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
***
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1994
---------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to _____________
Commission File Number 0-1649
------
NEWPORT CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 094-0849175
--------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1791 Deere Avenue, Irvine, CA 92714
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 863-3144
--------------
Securities registered pursuant to Section 12(b) of the Act: None
-------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Stated Value $0.35 per Share
------------------------------------------
(Title of Class)
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 ___
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [_]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was $59,732,699 as of March 10, 1995.
The number of shares outstanding of each of the issuer's classes of common stock
as of March 10, 1995, was 8,360,358.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on June 7, 1995, are incorporated by reference into
Part III.
Page 1 of 34 Pages
Exhibit Index on Sequentially Numbered Page 13
PART I
ITEM 1 BUSINESS
------ --------
GENERAL DESCRIPTION OF BUSINESS
-------------------------------
Newport Corporation, referred to herein as the "Company" or "Newport",
operates in one business segment. It designs, develops, manufactures and markets
on a worldwide basis precision equipment for scientists and engineers who
develop and apply technology involving lasers, optics and integrated motion
control. The Company designs and manufactures a broad line of vibration
isolation systems, electronic and optical instruments and precision mechanical,
electronic and optical components and systems. These products are used
predominantly in research laboratories and test and measurement applications for
industrial, government and university customers, domestically and
internationally.
In June 1991, the Company acquired the micro-positioning business of Micro-
Controle S.A. ("Micro-Controle"), a privately held company headquartered in
Evry, France for a total purchase price of $43.0 million cash financed through
$23.9 million in debt and $19.1 million in cash, and the assumption of $16.0
million of existing liabilities. The acquisition included the purchase of the
assets and liabilities associated with the manufacture, sale, maintenance,
marketing and distribution of its high-precision mechanical components and
optics, motion devices, high stability materials and microscopy equipment.
Although Newport and Micro-Controle served similar markets, the acquired Micro-
Controle business complements the Company's geographic strengths, products,
distribution and customer bases.
For the quarter ended April 30, 1992, the Company recorded a restructuring
provision whereby $13.8 million ($11.7 million net of taxes) was charged to
operations and $7.1 million was accounted for as an increase of the goodwill
associated with the acquisition of Micro-Controle.
In response to the continued low level of sales experienced in Europe, the
Company recorded for the quarter ended December 31, 1993, restructuring and
other special charges totaling $6.3 million ($5.1 million net of taxes). The
Company anticipates that this restructuring program will reduce costs and
expenses approximately $2 million annually beginning in 1995 and will align the
Company's costs with anticipated revenues. For further discussion refer to Item
7, Management's Discussion and Analysis of Financial Condition and Results of
Operations on page 8.
The Company's products are sold to thousands of companies and institutions
throughout the world and are marketed primarily by means of a technical catalog,
a technically trained marketing staff and a worldwide network of subsidiary
sales offices and sales representatives. During 1994, the Company manufactured
its products in Irvine, California; Garden City, New York; and several locations
in France. During the first quarter of 1995 the Company relocated its New York
manufacturing operation to Irvine, California.
The Company resells some components and sub-systems purchased from other
vendors. Raw materials are purchased from several sources. These and other
sources are, and management believes will continue to be, adequate to meet its
currently foreseeable needs.
Manufacturing, sales, technical and administrative personnel employed
worldwide by Newport totaled 593 persons at December 31, 1994.
On February 28, 1995, Newport acquired all the outstanding capital stock of
RAM Optical Instrumentation, Inc. (ROI) in exchange for 1,251,000 shares of the
Company's common stock. ROI became a wholly owned subsidiary of Newport. ROI is
a manufacturer of video inspection systems. For its latest fiscal year ended
March 31, 1994, ROI had net sales of $8.7 million. The transaction will be
accounted for as a pooling of interests.
2
ITEM 1 BUSINESS (CONT'D)
------ -----------------
PRODUCTS
--------
The Company manufactures and distributes two major product groups to its
laboratory and industrial customers. These product groups are broadly defined by
the Company as Lasers Electro-Optical devices and peripherals and Precision
Systems.
Laser Electro-Optical devices and peripherals consist of Vibration Isolation
Products, Components, Optics and Instruments and account for approximately one-
half of the Company's annual revenue.
Vibration Isolation Products. Laser and certain other high technology
----------------------------
experiments and applications require a relatively vibration-free environment.
The Newport isolation systems provide a working surface for experiments and
applications with greatly reduced vibration environment due to noise, ground
motion and excitations caused by external forces or active components mounted to
the table itself. The Company's isolation systems provide dynamically rigid
surfaces using internally damped honeycomb tops mounted on pneumatic supports.
The Company also distributes active vibration isolation systems.
The Company believes that its technology and its ability to manufacture
competitively priced quality products have allowed it to become a major supplier
of isolation systems for laser research and development and other applications
requiring a high degree of stability. The Company's product line includes over
350 standard isolation systems in addition to the capability to manufacture
custom systems. While Newport products are built to rigid quality standards
using the highest grade material, they are comprised of standard materials and
consequently, there are no unusual supply requirements.
Components. Newport offers a comprehensive line of mechanical components
----------
compatible with, and complementary to, its vibration isolation systems. These
mechanical components include products such as mirror mounts, holders,
positioners, and other accessories which are basic building blocks for
experimental or prototype laser systems. The Company has developed and sells
components for fiber optics, telecommunications and sensors experimentation.
Newport's products include a micro interferometer, laser-to-fiber couplers and
fiber-optic positioners. The Company's line of fiber-optic components includes
selected products manufactured by others. While the Company encounters
substantial competition in the related accessory component area, Newport is one
of the leading suppliers of such accessory components.
Optics. The Company manufactures and markets a line of laser-quality optics
------
and optomechanical components. This includes lenses, mirrors, prisms, laser beam
expanders, collimators, attenuators, variable beamsplitters and spatial filters.
The Company has the capability to provide custom coatings for specific
applications.
Instruments. Newport offers several lines of electronic instruments to
-----------
complement its other products in serving the optical laboratory. These products
are concentrated in the areas of light measurement and control, light sources
and holography. The Company not only designs and manufactures a majority of its
electronic products but also distributes the products of others. Examples of
these products include power meters, spectrum analyzers, electronic shutters and
modulators, lasers, lamps and accessories.
Precision Systems consist primarily of Motion Control devices and sub-
systems and account for approximately one-half of the Company's annual revenues.
Motion Control Devices. The Company offers an extensive line of manually
----------------------
operated and motorized positioning devices serving both the research laboratory
and industrial application areas. Examples of these products include linear and
rotational stages; elevational devices and actuators, as well as simple and
programmable motion controllers for stepping and DC motors.
3
Motion Control Systems. Newport offers a line of positioning sub-systems,
----------------------
serving both laboratory and industrial application areas. With the acquisition
of Micro-Controle, this product line was expanded significantly, along with
increased capability in systems integration. The combination of resources
improves Newport's ability to serve application-specific research, test and
measurement, inspection and to satisfy a wide variety of industrial process
application needs. These products include ultrahigh precision automation
products including the AutoAlign/TM/ fiber alignment system.
MARKETING
---------
Although Newport believes that it is one of the leading suppliers of
products in the laser research field, no single unaffiliated customer accounted
for more than 5% of the Company's sales in the year ended December 31, 1994. The
Company has determined that approximately 35% of its 1994 sales were to domestic
industrial users, 12% to educational institutions in the United States, 3% to
domestic governmental agencies and 50% to foreign purchasers. This compares with
32%, 13%, 3% and 52% for the twelve months ended December 31, 1993, on a
corresponding basis. Foreign purchasers in 1994 were located in Europe (66%)
with about 32% of all foreign purchasers in France, Pacific Rim (25%), and other
areas of the world (9%). This compares with 70% of foreign purchasers in Europe
in the year ended December 31, 1993 (with 32% in France); Pacific Rim (19%); and
other areas of the world (11%). The market focus for products manufactured in
France has been industrial, which is complementary to the United States emphasis
on the laboratory market. The Company's ability to provide customized integrated
solutions for the industrial customer augments its capabilities in serving the
general needs of the laser laboratory market worldwide.
Newport uses a Company-employed marketing staff domestically and
internationally in France, Germany, the United Kingdom, Switzerland, Italy, the
Netherlands and Canada. Elsewhere, Newport uses approximately twenty independent
sales representatives. During 1994 the Company closed its subsidiaries in Spain
and Belgium and sold its Japanese subsidiary to its independent sales
representative in that country. The Company also opened a branch in Taiwan at
the end of the fiscal year.
The Company's products compete with products from a large number of
companies domestically and internationally, none of which has a dominant
worldwide market position.
Sales and orders for the Company's products historically were generally not
affected by seasonal demand; however, the Company anticipates that future
patterns may experience more of a seasonal variation as a significant portion of
the Company's sales and orders now come from Europe where business activity
during the summer has traditionally been slower than other times of the year.
Newport's principal marketing tool is its comprehensive catalog of products.
This document, numbering approximately 500 pages, provides detailed product
information as well as extensive technical and applications data. The catalog is
mailed to more than 100,000 potential customers worldwide. This document has
been updated and during the 1994 second quarter, Newport began distribution of
this new edition.
The Company also publishes separate short-form catalogs that emphasize
product and market areas, such as comprehensive German- and Japanese-language
catalogs, optics catalogs and components catalogs. These materials are further
augmented by new product brochures and customer newsletters. Newport advertises
in technical journals serving many technical disciplines. Selected product
literature is published in Chinese-, French-, German-, and Japanese-language
versions. Further product exposure and contact with existing and potential
clients is developed and maintained at trade shows and technical conferences.
The Company has initiated a number of new marketing efforts aimed both
inside and outside the traditional laboratory market. One such initiative is a
telemarketing initiative. This new program targets new product brochures to
potential customers, coordinates new order leads with salesmen and utilizes
focused mailing lists for selected niche markets. In addition, the Company is
focusing advertising effort into new market niches related to high growth, high
technology industries such as fiber optic communications for which the Company
has developed the AutoAlign/TM/ fiber alignment system.
4
RESEARCH AND PRODUCT DEVELOPMENT
--------------------------------
The Company is developing a number of new products and product enhancements
to complement its AutoAlign/TM/ fiber alignment system for the fiber optic
communication market. Management is committed to continued product development
and intends to increase R&D spending by approximately one million dollars in
1995 over 1994 for development of new products and product improvements.
PATENTS
-------
The Company has a number of patents, trademarks, exclusive marketing rights
and licenses. Although these rights are considered to have value and the Company
intends to defend such rights vigorously, the Company believes that its business
relies primarily on its product performance, experience and marketing skill, and
is not dependent upon patent rights.
BACKLOG
-------
The consolidated backlog of all the Company's products was $12.3 million,
$10.6 million and $9.7 million at December 31, 1994, 1993, and 1992.
Approximately 55% of the consolidated backlog at December 31, 1994 is
attributable to orders of products manufactured in France.
A significant portion of the products manufactured by the Company are
manufactured for inventory with the goal of being able to make shipments upon
receipt of an order. The balance of manufactured products are made to order with
typical lead times of three to six weeks. Because of these short response times
and because orders are cancelable with little or no penalty, the Company does
not believe that its backlog of orders at any particular date is a meaningful
indicator of the Company's sales for any succeeding period.
OPERATIONS BY GEOGRAPHIC AREA
-----------------------------
Upon the acquisition of the micro-positioning business of Micro-Controle,
the existing Company European operations were supplemented by the Micro-Controle
manufacturing operations in France and sales offices in France, Germany, the
United Kingdom, Belgium, Italy and Spain. The Company began distributing its
products in Spain through a distributor and closed its Spanish subsidiary during
the fourth quarter of 1994. The Company also closed its subsidiary in Belgium
during the fourth quarter of 1994 and is serving those customers with its sales
personnel in the Netherlands and France. During the fourth quarter of 1994 the
Company opened a branch office in Taiwan.
The Newport European Distribution Company ("NEDCO") was established in the
Netherlands in May 1991 to serve as a centralized distribution service for
customers in Europe. In addition, the Company has a subsidiary in Canada, which
operates primarily as a sales office. The Company reached an agreement with
Hakuto Company, Limited, for the distribution of its products in Japan and as a
consequence, the Company closed its sales office in Japan during the second
quarter of 1994.
For information regarding the Company's operations by geographic area refer
to Note 14 of Notes to Consolidated Financial Statements on page 28.
INVESTMENTS
-----------
The Company, as part of its cash management program, maintains cash and
marketable securities. Cash consists of cash-on-hand and cash equivalents
(short-term certificates of deposit and other securities readily convertible to
cash). Marketable securities at December 31, 1994 and 1993 consist of shares of
common stock of publicly traded companies which are available for sale. The
shares are stated at fair market value in accordance with Statement of Financial
Accounting Standards 115, Accounting for Certain Investments in Debt and Equity
Securities (refer to Note 9 of Notes to Consolidated Financial Statements on
page 24). Apart from the ownership of subsidiaries detailed in
5
Exhibit 21 of this Form 10-K, Newport has minority ownership interests in
several domestic companies involved in manufacturing laser-related and other
high technology products.
ITEM 2 PROPERTIES
------ ----------
The Company's headquarters and California manufacturing operations are
located at 1791 Deere Avenue, Irvine, California. The Company entered into a
fifteen-year lease for the Deere Avenue property commencing in March 1992. The
company leases sales offices in Germany, England, Switzerland, Italy, the
Netherlands, Canada and Taiwan, with leases expiring at various dates through
2011. The Company's centralized European distribution center is also located at
leased facilities in the Netherlands. In addition to its leased properties, the
Company acquired, on June 28, 1991, in connection with the acquisition of Micro-
Controle a building and land in Garden City, New York. As a result of the
acquisition of Micro-Controle on September 18, 1991, the Company owns or leases
with options to purchase, several properties and buildings at various locations
in France. During the first quarter of 1995 the Company relocated its New York
manufacturing operations to Irvine, California and has leased the Garden City,
New York property.
ITEM 3 LEGAL PROCEEDINGS
------ -----------------
The Company is not a party to any material legal proceedings other than
ordinary routine litigation incidental to its business.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------ ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1994.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY
------ --------------------------------------------------------------
HOLDER MATTERS
--------------
Price Range of Common Stock
---------------------------
The Company's common stock is traded on the NASDAQ National Market System
under NASDAQ symbol NEWP. As of December 31, 1994, the Company had 1,780 common
stockholders of record. Refer to Note 16, Supplementary Quarterly Consolidated
Financial Data (Unaudited), of Notes to Consolidated Financial Statements on
page 29 for quarterly share price and dividend payments.
6
ITEM 6 SELECTED FINANCIAL DATA
------ -----------------------
The following table presents selected financial data of the Company and its
subsidiaries as of and for the years ended December 31, 1994 and 1993, the five
months ended December 31, 1992 and the years ended July 31, 1992, 1991 and 1990
(In thousands, except percent, per share and employment information):
1994 1993 1992T* 1992 1991 1990
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR:
Net sales $85,637 $84,147 $36,070 $ 87,801 $59,724 $58,807
Cost of sales 47,142 47,153 20,116 49,753 32,938 33,018
Selling, general and administrative 28,900 28,306 12,930 32,076 18,770 16,583
Research and development 4,650 4,773 2,365 6,049 4,010 4,344
Restructuring expense and other special charges - 6,263 - 13,795 - -
--------------------------------------------------------------------------------------------------------------
Income (loss) from operations 4,945 (2,348) 659 (13,872) 4,006 4,862
Other income (expense) 117 (831) (622) (873) 834 1,988
--------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 5,062 (3,179) 37 (14,745) 4,840 6,850
Provision (benefit) for taxes 1,723 567 685 (505) 1,307 2,192
--------------------------------------------------------------------------------------------------------------
Net income (loss) $ 3,339 $(3,746) $ (648) $(14,240) $ 3,533 $ 4,658
--------------------------------------------------------------------------------------------------------------
Percent to sales:
Cost of sales 55.0 56.0 55.8 56.7 55.2 56.1
Selling, general and administrative 33.8 33.6 35.8 36.5 31.4 28.2
Research and development 5.4 5.7 6.6 6.9 6.7 7.4
Income (loss) from operations 5.8 (2.8) 1.8 (15.8) 6.7 8.3
Net income (loss) 3.9 (4.5) (1.8) (16.2) 5.9 7.9
--------------------------------------------------------------------------------------------------------------
PER SHARE:
Earnings (loss) per share $ 0.47 $ (0.53) $ (0.09) $ (2.04) $ 0.50 $ 0.59
Dividends paid per share 0.04 0.04 0.04 0.16 0.16 0.14
Equity per share 6.34 5.93 6.56 6.72 9.16 8.82
--------------------------------------------------------------------------------------------------------------
AT YEAR END:
Cash and marketable securities $ 3,620 $ 4,268 $ 3,389 $ 6,598 $20,416 $28,651
Customer receivables 17,067 15,543 17,557 19,882 15,362 10,520
Inventories 20,294 20,254 23,698 26,637 19,691 15,267
Other current assets 4,491 4,921 5,924 7,567 6,098 4,947
--------------------------------------------------------------------------------------------------------------
Current assets 45,472 44,986 50,568 60,684 61,567 59,385
Investments and other assets 4,412 5,088 5,169 5,065 12,321 7,889
Assets held for sale - 372 - - - -
Property, plant and equipment 22,724 23,446 30,148 30,948 14,029 8,450
Goodwill, net 8,846 8,852 9,747 10,893 - -
--------------------------------------------------------------------------------------------------------------
Total assets $81,454 $82,744 $95,632 $107,590 $87,917 $75,724
--------------------------------------------------------------------------------------------------------------
Current liabilities 25,276 $22,829 $28,605 $ 34,052 $18,560 $ 9,866
Deferred taxes 267 2,299 2,078 2,049 1,531 1,547
Long-term debt 11,117 16,005 19,222 24,674 4,000 -
Stockholders' equity 44,794 41,611 45,727 46,815 63,826 64,311
--------------------------------------------------------------------------------------------------------------
Total liabilities and equity $81,454 $82,744 $95,632 $107,590 $87,917 $75,724
--------------------------------------------------------------------------------------------------------------
MISCELLANEOUS STATISTICS
Working capital $20,196 $22,157 $21,963 $ 26,632 $43,007 $49,519
Average equivalent shares 7,063 7,006 6,966 6,966 7,050 7,956
Common stock outstanding 7,062 7,021 6,966 6,966 6,966 7,291
Worldwide employment at end of period 593 619 686 748 495 421
Sales per employee (annualized) $ 140 $ 126 $ 124 $ 112 $ 144 $ 140
--------------------------------------------------------------------------------------------------------------
* Transition period of five months ended December 31, 1992 due to change in year
end.
7
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The following is management's discussion and analysis of certain significant
factors which have affected the earnings and financial position of the Company
during the period included in the accompanying financial statements. This
discussion should be read in conjunction with the financial statements and
associated notes.
RESTRUCTURING In response to the low level of sales experienced in Europe, the
-------------
Company recorded for the quarter ended December 31, 1993, restructuring and
other special charges totaling $6.3 million ($5.1 million after taxes, $0.73 per
share) aimed primarily at its European operations. These charges included $3.3
million to revalue surplus real estate in the U.S. and Europe, $2.2 million for
severance and related costs for approximately 50 employees and $0.8 million for
equipment relocation costs, facility carrying costs and selling expenses
associated with the real estate. Non-cash items totaled $3.3 million for
revaluing the real estate. Cash items totaled $3.0 million of which $1.3 million
has been incurred during the twelve months ended December 31, 1994 primarily for
severance and other related payroll liabilities for 34 employees and costs to
close facilities. It is expected that the balance, $1.7 million, will be used
primarily to close facilities and will be substantially incurred by December 31,
1995.
The Company anticipates that the restructuring program will reduce costs and
expenses by approximately $2 million annually beginning in 1995 and believes
this restructuring program will align the Company's costs with anticipated
revenues. However, if sales in domestic or international markets decline,
further actions may be necessary. Long-term improvement in profitability is
dependent upon a strengthening of domestic and international markets and the
successful implementation of revenue growth strategies.
For the quarter ended April 30, 1992, the Company recorded restructuring charges
which resulted in a $13.8 million pre-tax charge to operations and $7.1 million
accounted for as an increase of the goodwill associated with the acquisition of
Micro-Controle. Cash items totaled $12.0 million and non-cash items accounted
for $8.9 million. During the twelve months ended December 31, 1994, cash charges
amounted to $0.5 million for severance and other payroll related liabilities,
$0.3 million representing lease payments and $1.1 million for costs to close
facilities. For the twenty months ended December 31, 1993, the Company charged
against this reserve $4.7 million representing severance and other payroll
related liabilities, $1.7 million representing lease payments on abandoned
facilities and $3.0 million representing costs to close facilities. It is
expected that the $0.7 million balance, principally for severance and costs to
close facilities, will be spent during the first half of 1995.
NET SALES For the years ended December 31, 1994 and 1993, the Company's net
---------
sales totaled $85.6 million and $84.1 million, respectively. The increase of
$1.5 million (1.8%) represented an increase of $2.1 million in domestic markets
offset by declines in international markets. Sales for the five-month transition
period ended December 31, 1992 and the 1992 fiscal year totaled $36.1 million
and $87.8 million, respectively. Because the Company switched to a calendar
fiscal year effective January 1, 1993, these prior year periods are not strictly
comparable. However, average monthly sales for the two periods totaled $7.2
million and $7.3 million, respectively.
Domestic sales totaled $42.4 million, $40.3 million, $17.8 million and $44.3
million for years ended December 31, 1994 and 1993, the five months ended
December 31, 1992 and the year ended July 31, 1992, respectively. Sales for the
twelve months ended December 31, 1994 increased $2.1 million (5.2 percent)
compared with the sales for the twelve months ended December 31, 1993. The
increase is attributable principally to the strengthening of sales of core
precision micropositioning systems and continued improvement in newer growth
markets. Average monthly domestic sales for the year ended December 31, 1993,
the five month transition period ended December 31, 1992 and the year ended July
31, 1992 were $3.4 million, $3.6 million and $3.7 million per month,
respectively.
International sales totaled $43.2 million, $43.8 million, $18.3 million and
$43.5 million for the years ended December 31, 1994 and 1993, the five-month
transition period ended December 31, 1992 and the year ended July 31, 1992.
International sales for the twelve months ended December 31, 1994 decreased
modestly compared with the twelve months ended December 31, 1993. The decrease
is attributable principally to weak market conditions in certain European
countries. Average monthly international sales
8
for the year ended December 31, 1993, the five month transition period ended
December 31, 1992 and the year ended July 31, 1992 were $3.7 million, $3.7
million and $3.6 million per month, respectively.
The order rate in the U.S. showed signs of moderate strength in the latter part
of 1994 and early 1995 in response to the increasing sales and marketing
emphasis on newer growth markets; however, the domestic order rate, as well as
Japan, has weakened somewhat toward the end of 1995's first quarter. Overall,
management anticipates modest sales growth through the end of calendar year 1995
from an improving US economy and increased sales of ultrahigh precision
positioning products.
OPERATING INCOME Total costs and expenses for the years ended December 31, 1994
----------------
and 1993, the five-month transition period ended December 31, 1992 and the year
ended July 31, 1992 were $80.7 million, $86.5 million, $35.4 million and $101.7
million respectively. Excluding the restructuring and other special charges
mentioned previously, these costs and expenses totaled $80.7 million, $80.2
million, $35.4 million and $87.9 million for the respective periods.
Cost of sales when stated as a percentage of sales were 55.0%, 56.0%, 55.8% and
56.7% for the years ended December 31, 1994 and 1993, the five-month transition
period ended December 31, 1992 and the year ended July 31, 1992, respectively.
The decrease in 1994 from the year ended December 31, 1993, is attributable
primarily to lower costs resulting from the restructuring activities mentioned
previously. Management anticipates that these expenses as a percent of sales
will be reduced further in 1995 as a result of increased sales volume and
continued productivity improvements which are anticipated to offset recent
material price increases.
Selling, general and administrative (SG&A) expenses totaled $28.9 million, $28.3
million, $12.9 million and $32.1 million for the years ended December 31, 1994
and 1993, the five-month transition period ended December 31, 1992 and the year
ended July 31, 1992, respectively. SG&A expenses represented 33.8%, 33.6%, 35.8%
and 36.5% of net sales in 1994, 1993, the transition period and 1992,
respectively. The increase in 1994 was attributable to the costs associated
with strengthening the operating management of the Company. The decrease in 1993
and the transition period from fiscal year 1992 was attributable primarily to
lower costs resulting from the 1992 restructuring program. Management
anticipates SG&A expenses in total will increase in 1995 but as a percent of
sales will be reduced further as a result of increased sales volume.
Research and development (R&D) expenses totaled $4.7 million, $4.8 million, $2.4
million and $6.0 million for the years ended December 31, 1994 and 1993, the
five-month transition period ended December 31, 1992 and the year ended July 31,
1992, respectively. R&D expenses represented 5.4%, 5.7%, 6.6% and 6.9% of net
sales in 1994, 1993, the transition period and 1992, respectively. The decrease
in R&D expenses in 1994 compared with 1993 was attributable primarily to lower
costs resulting from the restructuring programs. Management believes that
increases in the level of R&D expenditures are required for the development of
new products and product improvements principally related to AutoAlign/TM/ and
related ultrahigh precision positioning products and intends to increase annual
R&D expenditures in 1995 by approximately one million dollars over amounts
expended in 1994.
Excluding the restructuring and other special charges mentioned previously,
operating income (loss) totaled $4.9 million, $3.9 million, $0.7 million and
$(0.1) million for the years ended December 31, 1994 and 1993, the five-month
transition period ended December 31, 1992 and the year ended July 31, 1992,
respectively. Operating income (loss) excluding restructuring and other special
charges represented 5.8%, 4.7%, 1.8% and (0.1)% of net sales in 1994, 1993, the
transition period and 1992, respectively. Management anticipates that operating
income will improve further as the restructuring programs mentioned previously
are completed.
INTEREST EXPENSE Interest expense totaled $1.8 million, $2.3 million, $1.5
----------------
million and $2.9 million for the years ended December 31, 1994 and 1993, the
five-month transition period ended December 31, 1992 and the year ended July
31, 1992, respectively. The decrease in interest expense for the year ended
December 31, 1994, compared with the year ended December 31, 1993 is
attributable to a reduction in the average debt outstanding. The Company
anticipates that recent increases in the interest rates will result in higher
interest expense in 1995. The Company is actively seeking alternate sources of
9
financing which if successful could reduce the net after tax financing cost for
the Company. There is no assurance, however, that the Company will be
successful in obtaining alternate financing.
OTHER INCOME (EXPENSE) Interest and dividend income totaled $0.1 million, $0.2
----------------------
million, $0.3 million and $0.8 million for the twelve months ended December 31,
1994 and 1993, the five-month transition period ended December 31, 1992 and the
twelve months ended July 31, 1992, respectively.
Realized exchange gains (losses) totaled $0.2 million, $(0.2 million), $(0.2
million) and $0.6 million for the twelve months ended December 31, 1994 and
1993, the five-months ended December 31, 1992 and the twelve months ended July
31, 1992, respectively. The gains in 1994 and the losses in 1993 and the 1992
transition period were attributable primarily to the strengthening, in 1994, and
weakening, in 1993 and the transition period, of the European currencies
compared with the U.S. dollar on current receivables denominated in European
currencies.
The Company recorded investment gains totaling $1.4 million, $1.3 million, $0.2
million, and $0.9 million in the years ended December 31, 1994 and 1993, the
five-month transition period ended December 31, 1992 and the year ended July 31,
1992. The gains were attributable primarily to the sale of marketable and
non-marketable investments.
TAXES BASED ON INCOME The tax provisions for the 1994 and 1993 fiscal years and
---------------------
the 1992 transition period of $1.7 million, $0.6 million and $0.7 million,
respectively, were recorded on profits earned in the US. Prior to 1994, net
losses, principally in Europe, did not have a tax benefit recorded; in 1994
approximately $0.4 million foreign income tax benefit was recorded due to the
utilization of net loss carryforwards. The tax benefit for the 1992 fiscal year,
$0.5 million, was attributable principally to restructuring charges that were
carried back to offset taxable income of prior years.
EMPLOYMENT Worldwide employment of the Company totaled 593, 619, 686 and 748
----------
at December 31, 1994, 1993, 1992 and July 31, 1992, respectively. The declines
in employment at December 31, 1994, 1993 and 1992 are primarily the result of
the restructuring activities mentioned previously. Sales per employee
approximated $140,000; $126,000; $124,000 (annualized) and $112,000 during the
twelve months ended December 31, 1994 and 1993, the five-month transition period
ended December 31, 1992 and the twelve months ended July 31, 1992, respectively.
STOCKHOLDERS' EQUITY The Company paid dividends totaling $281,000, $280,000,
--------------------
$279,000 and $1,113,000 during the twelve months ended December 31, 1994 and
1993, the five-month transition period ended December 31, 1992 and the twelve
months ended July 31, 1992, respectively. This represents 4, 4, 4 and 16 cents
per share during the respective periods as the Company reduced its payout
from the 1992 fiscal year period to conserve cash in light of the restructuring
activities.
Stockholders' equity decreased from $45.7 million ($6.56 per share), at December
31, 1992 to $41.6 million ($5.93 per share) as of December 31, 1993 and
increased to $44.8 million ($6.34 per share) as of December 31, 1994. The
decrease is attributable primarily to restructuring and other special charges,
unrealized exchange losses as a result of the strengthening of the dollar and
payment of dividends. The increase in 1994 was attributable to the current year
earnings and unrealized exchange gains, offset in part by dividend payments.
WORKING CAPITAL AND LIQUIDITY Cash paid to reduce debt totaled $3.2 million,
-----------------------------
$3.4 million and $3.1 million during the years 1994, 1993 and the five month
transition period ended December 31, 1992. The debt reduction in 1994 was offset
by translation losses of $1.7 million as result of the weakening of the US
dollar versus the French franc. The Company believes its current working capital
position together with estimated cash flows from operations, its existing
financing availability, anticipated refinancing and proceeds from asset sales
are adequate for operations in the ordinary course of business, anticipated
capital expenditures as well as restructuring and debt payment requirements.
The Company has a credit agreement with a U.S. bank which provides for a line of
credit of up to $15 million, expiring in June 1996, secured by eligible accounts
receivable, inventory and fixed assets, with interest at prime plus one percent.
At December 31, 1994, amounts outstanding under the line of credit
10
aggregated $7.6 million. Additional amounts available for borrowing under the
line at that date were $1.2 million.
The Company has a line of credit with a consortium of foreign banks which, at
December 31, 1993, provided for advances up to a limit of 60 million French
francs (approximately $11.2 million) with interest at 1% above PIBOR (Paris
Interbank Offered Rate), collateralized by eligible receivables. During the
third quarter of 1994 the Company renewed this line of credit with a reduced
advance limit of 25 million French francs ($4.7 million) for a period of seven
months to March 31, 1995, all other terms and conditions remaining the same.
Borrowings outstanding under this agreement were 13.0 million French francs
(approximately $2.4 million) at December 31, 1994. Additional amounts available
for borrowing under the line at that date were 12.0 million French francs
(approximately $2.3 million). The Company anticipates that this line will be
renewed for one year under essentially the same terms and conditions.
The Company has term notes with the same consortium of foreign banks which, at
December 31, 1994 totaled 37.5 million French francs (approximately $7.0
million) with interest at 1.6% above PIBOR, secured generally by assets of the
Company's wholly-owned subsidiary, Micro-Controle. Payments are in three annual
installments commencing in October 1995. During 1994, the Company repaid the
consortium 22.5 million French francs.
Capitalized lease obligations, payable in varying installments to 1999, of 16.1
million French francs (approximately $3.0 million) at December 31, 1994 relate
to real estate and equipment.
CAPITAL EXPENDITURES Net capital expenditures for plant improvements and
--------------------
new equipment, excluding funds used to acquire Micro-Controle and its former
subsidiaries, aggregated $1.6 million, $1.6 million, $2.4 million and $4.4
million for the years ended December 31, 1994 and 1993, the five-month
transition period ended December 31, 1992 and the year ended July 31, 1992,
respectively. The Company does not anticipate significant increases in net
capital expenditures in 1995 compared to 1994.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------ -------------------------------------------
Consolidated financial statements of the Company at December 31, 1994 and 1993
and for the years ended December 31, 1994 and 1993, the five months ended
December 31, 1992 and the year ended July 31, 1992, the report of independent
auditors thereon and the Company's unaudited quarterly financial data for the
twenty-four month period ended December 31, 1994 are referenced in Item 14
herein.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
11
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------- --------------------------------------------------
The information required hereunder is incorporated by reference from the
Company's Proxy Statement to be filed within 120 days of December 31, 1994 in
connection with its June 7, 1995, Annual Meeting of Stockholders.
ITEM 11 EXECUTIVE COMPENSATION
------- ----------------------
The information required hereunder is incorporated by reference from the
Company's Proxy Statement to be filed within 120 days of December 31, 1994 in
connection with its June 7, 1995, Annual Meeting of Stockholders.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------- --------------------------------------------------------------
The information required hereunder is incorporated by reference from the
Company's Proxy Statement to be filed within 120 days of December 31, 1994 in
connection with its June 7, 1995, Annual Meeting of Stockholders.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
------- ----------------------------------------------
There were no relationships or transactions required to be reported under
Item 404 of Regulation S-K.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
------- ---------------------------------------------------------------
(a) 1. Financial Statements and Financial Statement Schedules
---------------------------------------------------------
Report of Independent Auditors 15
FINANCIAL STATEMENTS:
--------------------
Consolidated statement of operations for the years ended
December 31, 1994 and 1993, the five months ended
December 31, 1992 and the year ended July 31, 1992 16
Consolidated balance sheet at December 31, 1994 and 1993 17
Consolidated statement of cash flows for the years ended
December 31, 1994 and 1993, the five months ended
December 31, 1992 and the year ended July 31, 1992 18
Consolidated statement of stockholders' equity for the years
ended December 31, 1994 and 1993, the five months
ended December 31, 1992 and the year ended July 31, 1992 19
Notes to consolidated financial statements 20 - 30
FINANCIAL STATEMENT SCHEDULES:
-----------------------------
II - Consolidated valuation accounts 31
All other schedules are omitted as the required information is not present
or is not present in amounts sufficient to require submission of the schedule,
or because the information required is included in the consolidated financial
statements and notes thereto.
12
2. Exhibits
-----------
The exhibits set forth below are filed as part of this Annual Report:
Exhibit 3.1 Restated Articles of Incorporation of Newport
Corporation, a Nevada corporation, as amended to date
(incorporated by reference to exhibit in the Company's
1987 Proxy Statement).
Exhibit 3.2 Restated Bylaws of Newport Corporation, a Nevada
corporation, as amended to date (incorporated by reference
to Exhibit 3.2 of the Company's Annual Report on Form 10-K
for the year ended July 31, 1992).
Exhibit 10.1 Lease Agreement dated March 27, 1991, as amended,
pertaining to premises located in Irvine, California
(incorporated by reference to Exhibit 10.1 of the
Company's Annual Report on Form 10-K for the year ended
July 31, 1992).
Exhibit 10.3 1992 Stock Incentive Plan (incorporated by reference to
exhibit in the Company's 1992 Proxy Statement).
Exhibit 10.4 Loan and Security Agreement dated June 23, 1993, with
exhibits and Promissory Note (incorporated by reference to
Exhibit 10.4 of the Company's Form 10-Q for the quarter
ended June 30, 1993).
Exhibit 10.5 Acquisition of subsidiaries of Micro-Controle S.A., with
exhibits (incorporated by reference to Form 8-K filed June
28, 1991, and amended July 23, 1992).
Exhibit 10.6 Acquisition of Micro-Controle S.A., with exhibits
(incorporated by reference to Form 8-K filed September 18,
1991, and amended July 23, 1992).
Exhibit 10.7 Form of Severance Compensation Agreement between Newport
Corporation and certain Executive Officers. (incorporated
by reference to Exhibit 10.7 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1993).
Exhibit 10.8 Severance Compensation Agreement dated as of April 1,
1994, between Newport Corporation, a Nevada Corporation,
and Edmund K. Langley, Executive Vice President and Chief
Operating Officer (incorporated by reference to Exhibit
10.8 of the Company's Form 10-Q for the quarter ended June
30, 1994).
Exhibit 10.9 Addendum to the Credit Agreement Dated September 17, 1991
(incorporated by reference to Exhibit 10.9 of the
Company's Form 10-Q for the quarter ended September 30,
1994).
Exhibit 10.10 Stock Purchase Agreement dated as of February 14, 1995,
among Newport Corporation as Purchaser, RAM Optical
Instrumentation, Inc. and Mark G. Arenal, Harry J. Brown,
The Harry & Patricia Brown Living Trust 1994, John G.
Hartwell, and The John G. Hartwell Family Trust
Established 1/3/90 as Sellers (incorporated by reference
to Exhibit 2.1 of the Company's Form 8-K filed March 15,
1995).
Exhibit 21 Subsidiaries of Registrant 32
Exhibit 23 Consent of Independent Auditors 33
Exhibit 27 Financial Data Schedule (Article 5 of
Regulation S-X) 34
(b) Reports on Form 8-K
-------------------
The Company filed no Reports on Form 8-K during the quarter ended December
31, 1994.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
NEWPORT CORPORATION
/S/ ROBERT C. HEWITT
------------------------------------------------------------------------
Robert C. Hewitt, Vice President, Chief Financial Officer, Secretary and
Treasurer (Chief Financial Officer)
/S/ RICHARD T. TARMEY
------------------------------------------------------------------------
Richard T. Tarmey, Vice President and Controller
(Principal Accounting Officer)
Date: March 28, 1995
---------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/S/ R. JACK APLIN March 28, 1995
------------------------------------------------------------------------
R. Jack Aplin, Member of the Board Date
/S/ ROBERT L. GUYETT March 28, 1995
------------------------------------------------------------------------
Robert L. Guyett, Member of the Board Date
/S/ LOUIS B. HORWITZ March 28, 1995
------------------------------------------------------------------------
Louis B. Horwitz, Member of the Board Date
/S/ DAN L. MCGURK March 28, 1995
------------------------------------------------------------------------
Dan L. McGurk, Member of the Board Date
/S/ C. KUMAR N. PATEL March 28, 1995
------------------------------------------------------------------------
C. Kumar N. Patel, Member of the Board Date
/S/ RICHARD E. SCHMIDT March 28, 1995
------------------------------------------------------------------------
Richard E. Schmidt, Chairman of the Board Date
(Principal Executive Officer)
/S/ JOHN T. SUBAK March 28, 1995
------------------------------------------------------------------------
John T. Subak, Member of the Board Date
14
Report of Independent Auditors
The Board of Directors and Stockholders
Newport Corporation
We have audited the accompanying consolidated balance sheets of Newport
Corporation as of December 31, 1994 and 1993, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1994 and 1993, the five months ended December 31, 1992 and
the year ended July 31, 1992. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Newport
Corporation at December 31, 1994 and 1993, and the consolidated results of its
operations and its cash flows for the years ended December 31, 1994 and 1993,
the five months ended December 31, 1992 and the year ended July 31, 1992, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
Orange County, California
February 14, 1995
15
NEWPORT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except
per share amounts) Years Ended Five Months Year
December 31, Ended Ended
----------------------- December 31, July 31,
1994 1993 1992 1992
------ ------ ------- --------
Net sales $85,637 $84,147 $36,070 $ 87,801
Cost of sales 47,142 47,153 20,116 49,753
------- ------- ------- --------
Gross profit 38,495 36,994 15,954 38,048
Selling, general and administrative expense 28,900 28,306 12,930 32,076
Research and development expense 4,650 4,773 2,365 6,049
Restructuring and other special charges - 6,263 - 13,795
------- ------- ------- --------
Income (loss) from operations 4,945 (2,348) 659 (13,872)
Interest expense (1,750) (2,303) (1,537) (2,900)
Other income, net 1,867 1,472 915 2,027
------- ------- ------- --------
Income (loss) before income taxes 5,062 (3,179) 37 (14,745)
Income tax provision (benefit) 1,723 567 685 (505)
------- ------- ------- --------
Net income (loss) $ 3,339 $(3,746) $ (648) $(14,240)
======= ======= ======= ========
Net income (loss) per share $0.47 $(0.53) $(0.09) $(2.04)
======= ======= ======= ========
Number of shares used to calculate
net income (loss) per share 7,063 7,006 6,966 6,966
======= ======= ======= ========
Dividends per share $0.04 $0.04 $0.04 $0.16
======= ======= ======= ========
See accompanying notes.
16
NEWPORT CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except stated value per share)
December 31,
--------------------------------
1994 1993
------- -------
ASSETS
Current assets:
Cash and cash equivalents $ 3,010 $ 2,494
Marketable securities 610 1,774
Customer receivables, net 17,067 15,543
Other receivables 1,912 1,139
Inventories 20,294 20,254
Other current assets 2,579 3,782
------- -------
Total current assets 45,472 44,986
Assets held for sale -- 372
Investments, notes receivable and other assets 4,412 5,088
Property, plant and equipment, at cost, net 22,724 23,446
Goodwill, net 8,846 8,852
------- -------
$81,454 $82,744
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,026 $ 3,686
Accrued payroll and related expenses 4,086 2,951
Taxes based on income 1,398 --
Accrued restructuring liabilities, net 2,364 5,561
Current portion of long-term debt 10,067 6,681
Other accrued liabilities 2,335 3,950
------- -------
Total current liabilities 25,276 22,829
Deferred taxes 267 2,299
Notes payable to banks-long term 11,117 16,005
Commitments (Note 11)
Stockholders' equity:
Common stock, $.35 stated value, 20 million shares authorized;
7,062,000 shares issued and outstanding at December 31, 1994;
7,021,000 shares at December 31, 1993 2,472 2,457
Capital in excess of stated value 6,093 5,876
Unamortized deferred compensation (251) (174)
Unrealized gain on marketable securities 343 979
Unrealized translation loss (2,778) (3,384)
Retained earnings 38,915 35,857
------- -------
Total stockholders' equity 44,794 41,611
------- -------
$81,454 $82,744
======= =======
See accompanying notes.
17
NEWPORT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Years Ended Five Months Year
December 31, Ended Ended
----------------------------- December 31, July 31,
1994 1993 1992 1992
-------------- ------------- ------------ ---------
OPERATING ACTIVITIES:
Net income (loss) $ 3,339 $(3,746) $ (648) $(14,240)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,551 5,574 2,351 6,514
Net gains from sales of investments (1,685) (1,260) (217) (926)
Increase in provision for losses on
receivables, inventories and investments 1,129 1,366 1,137 125
Decrease in deferred income taxes (1,138) -- -- --
Realized foreign currency (gains) losses, net (175) 158 245 (647)
Restructuring and other special charges -- 6,263 -- 13,795
Other non cash (income) loss 79 -- (53) (132)
Changes in operating assets and liabilities:
(Increase) decrease in receivables (1,516) 1,755 4,538 (963)
(Increase) decrease in inventories (29) 2,228 1,922 (1,405)
(Increase) decrease in other current assets (514) 174 (930) 465
Decrease in accounts payable and
other accrued expenses (3,334) (7,279) (5,515) (8,943)
Increase (decrease) in taxes based on income 2,357 (102) 265 (980)
Other, net 212 (2,185) (482) (1,316)
------- ------- ------- --------
Net cash provided by (used in) operating activities 3,276 2,946 2,613 (8,653)
------- ------- ------- --------
INVESTING ACTIVITIES:
Proceeds from sales of investments
and marketable securities 2,205 1,386 3,456 8,187
Purchases of property, plant and equipment (2,079) (2,015) (3,148) (4,446)
Disposition of property, plant and equipment 434 454 784 --
Investment in Micro-Controle S.A. -- -- -- (8,629)
Other, net 87 97 -- (23)
------- ------- ------- --------
Net cash provided by (used in) investing activities 647 (78) 1,092 (4,911)
------- ------- ------- --------
FINANCING ACTIVITIES:
Proceeds from short-term borrowings, net 2,201 -- -- 7,353
Repayment of long-term borrowings, net (5,394) (3,455) (3,091) (1,026)
Cash dividends paid (281) (280) (279) (1,113)
Proceeds from common stock under
employee agreements for cash 99 91 -- 3
------- ------- ------- --------
Net cash provided by (used in)
financing activities (3,375) (3,644) (3,370) 5,217
------- ------- ------- --------
Effect of foreign exchange rate changes on cash (32) (119) (305) 381
------- ------- ------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 516 (895) 30 (7,966)
Cash and cash equivalents at beginning of period 2,494 3,389 3,359 11,325
------- ------- ------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,010 $ 2,494 $ 3,389 $ 3,359
======= ======= ======= ========
See accompanying notes.
18
NEWPORT CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Amounts in thousands, except
share and per share amounts)
Unrealized
Capital in Unamortized gain on Unrealized
Common excess of deferred marketable translation Retained
stock stated value compensation securities loss earnings Total
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1991 $2,438 $5,584 $ 0 $ 0 $ (359) $ 56,163 $ 63,826
------------------------
Cash dividends
($0.16 per share) - - - - - (1,113) (1,113)
Issuance of common stock
under employee agreements
for cash (407 shares) - 3 - - - - 3
Net loss - - - - - (14,240) (14,240)
Unrealized translation loss - - - - (1,661) - (1,661)
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1992 2,438 5,587 0 0 (2,020) 40,810 46,815
------------------------
Cash dividends
($0.04 per share) - - - - - (279) (279)
Net loss - - - - - (648) (648)
Unrealized translation loss - - - - (161) - (161)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 2,438 5,587 0 0 (2,181) 39,883 45,727
----------------------------
Cash dividends
($0.04 per share) - - - - - (280) (280)
Issuance of common stock
under employee agreements
for cash (13,750 shares) 6 85 - - - - 91
Grants of restricted
stock (37,000 shares) 13 204 (217) - - - 0
Amortization of deferred
compensation - - 43 - - - 43
Unrealized gain on marketable
equity securities, net of
income taxes - - - 979 - - 979
Net loss - - - - - (3,746) (3,746)
Unrealized translation loss - - - - (1,203) - (1,203)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 2,457 5,876 (174) 979 (3,384) 35,857 41,611
----------------------------
Cash dividends
($0.04 per share) - - - - - (281) (281)
Issuance of common stock
under employee agreements
for cash (16,750 shares) 7 92 - - - - 99
Grants of restricted
stock (32,000 shares) 11 169 (180) - - - 0
Forfeiture of restricted
stock grants (8,000 shares) (3) (44) 47 - - - 0
Amortization of deferred
compensation - - 56 - - - 56
Reduction in unrealized gain on
marketable equity securities,
net of income taxes - - - (636) - - (636)
Net income - - - - - 3,339 3,339
Unrealized translation gain - - - - 606 - 606
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 2,472 $6,093 $(251) $ 343 $(2,778) $ 38,915 $ 44,794
====================================================================================================================================
See accompanying notes.
19
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation The accompanying financial statements consolidate the
accounts of the Company and its wholly owned subsidiaries. Effective
August 1, 1991 the accounts of the Company's subsidiaries in Europe and
Japan have been consolidated using a one-month lag. This accounting
change for the European and Japanese sales subsidiaries resulted in a
one-time sales reduction aggregating $1.5 million for the year ended
July 31, 1992. The impact on 1992's loss before taxes and net loss was
not material. The Company changed, by resolution of its board of
directors, its fiscal year from July 31 to December 31, effective
December 31, 1992. Management has determined that it is not practical
or cost effective to recast prior year results to the new fiscal year
because required information cannot reasonably be reconstructed. The
results of operations of the former non-French subsidiaries of Micro-
Controle S.A. (Micro-Controle) have been included effective July 1,
1991, whereas the results of operations of Micro-Controle have been
included effective October 1, 1991 (Note 3). All significant
intercompany transactions and balances have been eliminated. Certain
reclassifications have been made to prior year amounts to conform to
current year presentation. The $2 million carrying value of the
Company's facility in Garden City, New York that was held for sale at
December 31, 1993, has been reclassified to property, plant and
equipment since the Company no longer intends to sell it. In March
1995, the Company entered into a long-term agreement to lease this
facility.
Sales A sale is recorded when title passes to customers.
Income taxes The Company recognizes the amount of current and deferred
taxes payable or refundable at the date of the financial statements as
a result of all events that have been recognized in the financial
statements and as measured by the provisions of enacted laws.
Depreciation and amortization The cost of buildings, machinery and
equipment and leasehold improvements is depreciated generally using an
accelerated method based on a declining balance formula over estimated
useful lives ranging from three to thirty one and one-half years.
Leasehold improvements are generally amortized over the term of the
lease.
Net income (loss) per share Net income (loss) per share is based on
the weighted average number of shares of common stock, and for periods
with income, the dilutive effects of common stock equivalents (stock
options), determined using the treasury stock method, outstanding
during the periods.
Goodwill Goodwill is amortized on a straight line basis over its
estimated useful life of twenty years. At December 31, 1994,
accumulated amortization aggregated $1.7 million. Annually the Company
compares the undiscounted estimated future cash flows from Micro-
Controle over a ten-year period to the unamortized balance of goodwill
to determine whether any impairment exists.
Investments In May 1993 the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard (SFAS 115),
"Accounting for Certain Investments in Debt and Equity Securities"
(Note 9). As permitted under this statement, the Company elected to
adopt the provisions of the new standard as of December 31, 1993. In
accordance with SFAS 115, prior period financial statements have not
been restated to reflect the change in accounting principle. The
cumulative effect as of December 31, 1993, of adopting SFAS 115
increased shareholders' equity and working capital by $1.0 million (net
of $0.6 million in deferred income taxes) to reflect the net unrealized
gain on securities classified as available-for-sale previously carried
at the lower of cost or market.
20
Foreign currency Balance sheet accounts denominated in foreign
currency 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 $0.1 million at
December 31, 1994.
NOTE 2 RESTRUCTURING
In response to the continued low level of sales experienced in Europe,
the Company recorded for the quarter ended December 31, 1993,
restructuring and other special charges totaling $6.3 million ($5.1
million after taxes, $0.73 per share) aimed primarily at its European
operations. These charges included $3.3 million to revalue surplus real
estate in the US and Europe, $2.2 million for severance and related
costs for approximately 50 employees to be terminated and $0.8 million
for equipment relocation costs, facility carrying costs and selling
expenses associated with the real estate. Non-cash items totaled $3.3
million for revaluing the real estate. Cash items totaled $3.0 million
of which $1.3 million has been incurred during the twelve months ended
December 31, 1994 primarily for severance and other related payroll
liabilities for 34 employees and costs to close facilities. It is
expected that the balance, $1.7 million, will be used primarily to
close facilities and will be substantially incurred by December 31,
1995.
The Company anticipates that the restructuring program will reduce
costs and expenses by approximately $2 million annually beginning in
1995 and believes this restructuring program will align the Company's
costs with anticipated revenues. However, if sales in domestic or
international markets decline, further actions may be necessary. Long-
term improvement in profitability is dependent upon a strengthening of
domestic and international markets and the successful implementation of
revenue growth strategies.
For the quarter ended April 30, 1992, the Company recorded
restructuring charges which resulted in a $13.8 million pre-tax charge
to operations and $7.1 million accounted for as an increase of the
goodwill associated with the acquisition of Micro-Controle. Cash items
totaled $12.0 million and non-cash items accounted for $8.9 million.
During the twelve months ended December 31, 1994, cash charges amounted
to $0.5 million for severance and other payroll related liabilities,
$0.3 million representing lease payments and $1.1 million for costs to
close facilities. For the twenty months ended December 31, 1993, the
Company charged against this reserve $4.7 million representing
severance and other payroll related liabilities, $1.7 million
representing lease payments on abandoned facilities and $3.0 million
representing costs to close facilities. It is expected that the $0.7
million balance, principally for severance and costs to close
facilities, will be spent during the first half of 1995.
NOTE 3 ACQUISITION OF THE MICRO-POSITIONING BUSINESS OF MICRO-CONTROLE
In June 1991, the Company acquired the stock of several non-French
subsidiaries of Micro-Controle, a privately-held company with
headquarters in Evry, France, in the first step of a two-step
acquisition of Micro-Controle's micro-positioning business. The Company
completed the acquisition of the micro-positioning business of Micro-
Controle in September 1991, for $43.0 million cash, financed through
$23.9 million in debt and $19.1 million cash, and assumption of $16.0
million of existing liabilities. The acquisition has been accounted for
as a purchase. The purchase price allocation for the acquisition
resulted in costs in excess of net assets acquired (goodwill) of $11.3
million including the impact of the 1992 restructuring.
21
NOTE 4 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash-on-hand, short-term
certificates of deposit and other securities readily convertible to
cash.
NOTE 5 CUSTOMER RECEIVABLES
Customer receivables consist of the following:
(In thousands)
December 31,
-----------------------
1994 1993
------- -------
Customer receivables $17,527 $16,260
Less allowance for doubtful accounts 460 717
------- -------
$17,067 $15,543
======= =======
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.
NOTE 6 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:
(In thousands)
December 31,
-------------------
1994 1993
-------------------
Raw materials and purchased parts $ 6,223 $ 5,377
Work in process 3,536 3,069
Finished goods 10,535 11,808
------- -------
$20,294 $20,254
======= =======
NOTE 7 INCOME TAXES
The provision (benefit) for taxes based on income (loss) consists of
the following:
(In thousands)
Years Ended Five Months Year
December 31, Ended Ended
---------------- December 31, July 31,
1994 1993 1992 1992
------- ----- ------- -------
Current:
Federal $ 2,678 $ 578 $ 31 $ (55)
State (17) 3 12 65
Foreign 200 (7) (20) (59)
Net deferred:
Federal (1,123) (362) 469 (326)
State (15) 355 193 (130)
------- ----- ------- -------
$ 1,723 $ 567 $ 685 $ (505)
======= ===== ======= =======
22
The provision (benefit) for taxes based on income (loss) differs
from the amount obtained by applying the statutory tax rate as follows:
(In thousands)
Years Ended Five Months Year
December 31, Ended Ended
---------------------- December 31, July 31,
1994 1993 1992 1992
------- ------- ----- -------
Income tax provision (benefit) at statutory rate $1,721 $(1,113) $ 13 $(5,013)
Increase (decrease) in taxes resulting from:
Foreign losses not currently benefited (359) 1,508 600 4,604
Non deductible goodwill amortization 182 174 74 101
State income taxes, net of federal income tax benefit (22) 236 135 (43)
Foreign Sales Corporation income (79) (14) (49) (24)
Other, net 280 (224) (88) (130)
------ ------- ----- -------
$1,723 $ 567 $ 685 $ (505)
====== ======= ===== =======
Deferred tax assets and liabilities reflect the impact of temporary
differences between amounts of assets and liabilities for tax and
financial reporting purposes; such amounts are measured by tax laws and
the expected future tax consequences of net operating loss
carryforwards.
Temporary differences and net operating loss carryforwards which
give rise to deferred tax assets and liabilities recognized in the
balance sheet are as follows:
(In thousands)
December 31,
-----------------------
1994 1993
------- -------
Deferred tax assets:
Foreign net operating loss carryforwards $ 6,261 $ 8,211
Accrued restructuring liabilities 1,871 2,001
Accruals not currently deductible for tax purposes 846 751
Other 142 331
Valuation allowance (7,046) (9,479)
------- -------
Total deferred tax asset 2,074 1,815
Deferred tax liabilities:
Accelerated depreciation methods used for tax purposes 1,018 1,283
Unrealized gain on marketable securities 228 652
Other 402 1,016
------- -------
Total deferred tax liability 1,648 2,951
------- -------
Net deferred tax asset (liability) $ 426 $(1,136)
======= =======
The Company has foreign net operating loss carryforwards totaling
approximately $18.3 million at December 31, 1994, of which approximately
$0.3 million expires at various dates through 1996, $11.6 million expires
in 1997, and the balance expires thereafter. Approximately $3.2 million
of the valuation allowance will be allocated to reduce goodwill when
realized.
Income taxes paid, net of refunds, for the twelve months ended
December 31, 1994, December 31, 1993, five months ended December 31,
1992, and twelve months ended July 31, 1992, totaled $0.2 million, $0.8
million, $0.4 million, and $1.1 million, respectively.
23
NOTE 8 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, including capitalized lease
assets, consist of the following:
(In thousands)
December 31,
---------------------
1994 1993
------- -------
Land $ 2,115 $ 1,956
Buildings 12,671 11,370
Leasehold improvements 7,157 6,655
Machinery and equipment 18,624 17,671
Office equipment 7,472 7,103
------- -------
48,039 44,755
Less accumulated depreciation 25,315 21,309
------- -------
$22,724 $23,446
======= =======
NOTE 9 INVESTMENTS, NOTES RECEIVABLE AND OTHER ASSETS
Investments, notes receivable and other assets consist of
the following:
(In thousands)
December 31,
----------------------
1994 1993
------- ------
Marketable investments available-for-sale $ 610 $1,774
Nonmarketable investments 3,840 4,468
Notes receivable 97 184
Other assets 475 436
------ ------
5,022 6,862
Less current portion 610 1,774
------ ------
$4,412 $5,088
====== ======
Marketable investments available-for-sale at December 31, 1994 and 1993
consist of shares of common stocks of publicly traded companies. They
are stated at fair market value at December 31, 1994 and 1993, which
resulted in gross unrealized gains of $0.5 million and $1.6 million,
respectively. The excess of fair market value over cost (net of
deferred income taxes of $0.2 million and $0.6 million at December 31,
1994 and 1993, respectively) is included as a separate component of
Stockholders' Equity. Gross proceeds resulting from the sale of these
securities were $1.2 million and $1.4 million for the twelve months
ended December 31, 1994 and 1993, respectively. Realized gains and
losses on sale of these securities are based on the difference between
the selling price and historical cost. Realized gains of $1.1 million
and $1.3 million are reflected as other income for the twelve months
ended December 31, 1994 and 1993, respectively.
Nonmarketable investments consist primarily of investments in
private companies, including a 25% interest in a US supplier and a 29%
interest in a company active in laser and electro-optical technology,
stated at cost, adjusted for the Company's proportionate share of
undistributed earnings or losses. The Company made purchases of
approximately $3.8 million, $4.2 million, $1.3 million and $3.4 million
from that supplier during the twelve months ended December 31, 1994 and
1993, five months ended December 31, 1992 and twelve months ended July
31, 1992. Notes receivable are carried at lower of amortized cost or
net realizable value. Other assets consist primarily of patents and
license agreements.
24
NOTE 10 NOTES PAYABLE TO BANKS
Outstanding notes payable to banks consists of the following:
(Dollar amounts in thousands)
December 31,
----------------------
1994 1993
------- -------
Credit agreements:
PIBOR + 1%, maturing March 31, 1995, payable in French francs $ 2,434 $ 884
Prime + 1%, maturing June 1996 6,378 3,193
Term notes:
PIBOR + 1.6%, maturing in annual installments
beginning October 1994, payable in French francs 7,024 10,154
Prime + 1%, maturing June 1996 1,185 1,783
Mortgages payable:
LIBOR + 2.0%, repaid July 1994 -- 2,000
Various (9.2% to 12.75%), maturing from 1995 to 1999,
payable in French francs 1,148 1,698
Capitalized lease obligations, payable in varying installments to 1999,
in French francs 3,015 2,974
------- -------
21,184 22,686
Less current portion 10,067 6,681
------- -------
$11,117 $16,005
======= =======
The Company has a credit agreement with a US bank which provides for a
line of credit of up to $15 million, expiring in June 1996, secured by
eligible accounts receivable, inventory and fixed assets, with interest
at prime plus one percent. The line has an annual facility fee of 0.5
percent and an unused line fee of 0.25 percent of the first $5 million
of unused credit and 0.5 percent of any unused credit in excess of $5
million. At December 31, 1994, amounts outstanding under the line of
credit aggregated $7.6 million and amounts available for borrowing
under the line totaled $1.2 million. The prime rate was 8.5% at
December 31, 1994. The weighted average interest rate for the years
ended December 31, 1994 and 1993 was 10.2% and 9.7%, respectively.
The Company has a line of credit with a consortium of foreign
banks which, at December 31, 1993, provided for advances up to a limit
of 60 million French francs (approximately $11.2 million) with interest
at 1% above PIBOR (Paris Interbank Offered Rate), collateralized by
eligible receivables. During the third quarter of 1994 the Company
renewed this line of credit with a reduced advance limit of 25 million
French francs ($4.7 million) for a period of seven months to March 31,
1995, all other terms and conditions remaining the same. Borrowings
outstanding under this agreement were 13.0 million French francs
(approximately $2.4 million) at December 31, 1994. Additional amounts
available for borrowing under the line at that date were 12.0 million
French francs (approximately $2.3 million). The Company anticipates
that this line will be renewed for one year under essentially the same
terms and conditions. The six-month PIBOR was 6.3% at December 31,
1994. The weighted average interest rate for the years ended December
31, 1994 and 1993, respectively, was 7.6% and 9.2%.
The Company has term notes with the same consortium of foreign
banks which, at December 31, 1994, totaled 37.5 million French francs
(approximately $7.0 million) with interest at 1.6% above PIBOR, secured
generally by assets of Micro-Controle. Repayment is in three remaining
annual installments commencing in October 1995.
Capitalized lease obligations of 16.1 million French francs
(approximately $3.0 million) relate to real estate and equipment.
25
Anticipated annual payments are as follows:
(In thousands) Capitalized Borrowings,
Lease Mortgages and
For years ending December 31, Obligations Term Notes
----------- -------------
1995 $ 499 $ 5,800
1996 477 9,663
1997 480 2,459
1998 484 129
1999 488 118
Thereafter 1,860 -
------ -------
4,288 $18,169
=======
Less interest 1,273
------
$3,015
======
The Company believes its current working capital position together
with estimated cash flows from operations, its existing financing
availability and anticipated refinancing and proceeds from asset sales
are adequate for operations in the ordinary course of business,
anticipated capital expenditures as well as restructuring and debt
payment requirements.
Interest paid during the twelve months ended December 31, 1994
and 1993, five months ended December 31, 1992, and twelve months ended
July 31, 1992, totaled $1.5 million, $2.4 million, $1.6 million, and
$2.6 million, respectively.
NOTE 11 COMMITMENTS
The Company leases certain of its manufacturing and office facilities
and equipment under non cancelable operating leases. Minimum rental
commitments under terms of these leases are as follows:
For years ending December 31, (In thousands)
1995 $ 2,327
1996 2,161
1997 2,042
1998 1,831
1999 1,739
Thereafter 11,902
The principal lease expires in 2007. Future sublease income is
estimated at $0.4 million. Rental expense under all leases totaled $2.5
million, $2.3 million, $.8 million, and $1.8 million, for the twelve
months ended December 31, 1994 and 1993, five months ended December 31,
1992, and twelve months ended July 31, 1992, respectively.
NOTE 12 STOCK OPTION PLANS
The Company adopted a stock option/restricted stock plan in 1992 to
replace the Company's then existing option plans. The stockholders
approved this plan at the annual meeting held on December 1, 1992. The
number of shares available for issuance as either stock options or
restricted stock increases on the last day of each fiscal year by an
amount equal to 2% of the then outstanding shares. Options have been
granted to directors, officers and key employees at a price not less
than fair market value at the dates of grants. Accordingly, no charges
have been made to income in accounting for these options. The tax
benefits, if any, resulting from the exercise of options are credited
to capital in excess of stated value. The fair market value of
restricted stock at date of grant is amortized to income over the
vesting period of six years.
26
The following table summarizes option plan and restricted stock
activity for the years ended December 31, 1994 and 1993:
Restricted
Stock Options Total
----------- ---------- -----------
Amounts outstanding at December 31, 1992 -- 1,048,375 1,048,375
Granted 37,000 45,000 82,000
Exercised -- (13,750) (13,750)
Canceled -- (108,725) (108,725)
-------- --------- ----------
Amounts outstanding at December 31, 1993 37,000 970,900 1,007,900
Granted 32,000 181,470 213,470
Exercised (10,250) (16,750) (27,000)
Canceled (8,000) (132,864) (140,864)
-------- --------- ----------
Amounts outstanding at December 31, 1994 50,750 1,002,756 1,053,506
======== ========= ==========
At December 31, 1994:
Exercise prices of outstanding options $5.000 to $9.625
Shares available for future grants 568,973
Options exercisable 658,418
Subject to approval by the Company's stockholders, the Company's
Employee Stock Purchase Plan (the "Purchase Plan"), was adopted by the
Board of Directors on November 15, 1994 to be effective for ten years
starting January 1, 1995. The Purchase Plan authorizes the Company to
issue and reserve for the Purchase Plan, or purchase up to an aggregate
of 250,000 shares of common stock in open market transactions for the
benefit of participating employees during the term of the Purchase
Plan. The primary purpose of the Purchase Plan is to provide employees
of the Company and selected subsidiaries with an opportunity to
purchase common stock through payroll deductions and to increase their
proprietary interest in the Company. Shares of common stock covered by
the Purchase Plan will either be issued by the Company pursuant to the
Purchase Plan or purchased in open market transactions.
NOTE 13 OTHER INCOME
Other income consisted of the following:
(In thousands)
Years Ended Five Months Year
December 31, Ended Ended
---------------------- December 31, July 31,
1994 1993 1992 1992
------ ------ ----- -------
Interest and dividend income $ 143 $ 229 $ 258 $ 808
Realized foreign currency gains (losses), net 175 (158) (245) 647
Gains on sale of investments 1,404 1,260 217 926
Sale of technology -- -- 501 --
Other 145 141 184 (354)
------ ------ ----- ------
$1,867 $1,472 $ 915 $2,027
====== ====== ===== ======
27
NOTE 14 BUSINESS SEGMENT INFORMATION
The Company operates in one business segment. It designs, manufactures
and markets on a worldwide basis precision equipment for scientists and
engineers who develop and apply technology involving lasers, optics and
integrated motion control. The Company designs and manufactures a broad
line of vibration isolation systems, electronic and optical instruments
and precision mechanical, electronic and optical components and
systems. These products are used predominately in research laboratories
and test and measurement applications for industrial, government and
university customers, domestically and internationally.
Information concerning the Company's operations by geographic
segment is as follows:
(In thousands)
Years Ended Five Months Year
December 31, Ended Ended
------------------------ December 31, July 31,
1994 1993 1992 1992
-------- --------- -------- --------
Sales to unaffiliated customers:
United States $ 50,647 $ 46,043 $19,945 $ 50,540
Europe 30,926 32,595 14,538 33,734
Other areas 4,064 5,509 1,587 3,527
-------- -------- ------- --------
$ 85,637 $ 84,147 $36,070 $ 87,801
-------- -------- ------- --------
Sales between geographic areas (based on invoiced prices):
United States $ 7,784 $ 8,951 $ 3,211 $ 8,751
Europe 9,095 8,251 3,103 4,294
Intercompany eliminations (16,879) (17,202) (6,314) (13,045)
-------- -------- ------- --------
$ -- $ -- $ -- $ --
-------- -------- ------- --------
Income (loss) before taxes:
United States $ 4,358 $ 1,571 $ 2,178 $ (690)
Europe (80) (5,229) (1,803) (13,845)
Other areas 493 282 (180) (19)
Intercompany eliminations 291 197 (158) (191)
-------- -------- ------- --------
$ 5,062 $ (3,179) $ 37 $(14,745)
======== ======== ======= ========
Assets:
United States $ 87,929 $ 83,659
Europe 48,516 50,577
Other areas 720 2,145
Intercompany eliminations (55,711) (53,637)
-------- --------
$ 81,454 $ 82,744
======== ========
The Company's manufacturing facilities are located in the United
States and France. United States revenues include exports to
unaffiliated customers totaling $8.2 million, $5.7 million, $2.2
million, and $6.2 million, for the years ended December 31, 1994 and
1993, the five months ended December 31, 1992, and the year ended July
31, 1992, respectively.
28
NOTE 15 DEFINED CONTRIBUTION PLAN
The Company sponsors a defined contribution plan. Generally, all US
employees are eligible to participate and contribute in this plan.
Contributions to the plan are determined based on a percentage of
contributing employees' compensation. During September 1992 the plan
was amended to provide for an increase in the Company's contribution
rate.
Expense recognized for the plan totaled $0.6 million, $0.6 million,
$0.3 million, and $0.5 million for the years ended December 31, 1994
and 1993, the five months ended December 31, 1992, and the year ended
July 31, 1992, respectively.
NOTE 16 SUPPLEMENTARY QUARTERLY CONSOLIDATED FINANCIAL DATA
(UNAUDITED)
(In thousands, except per share amounts)
Net Net Income Dividends High Low
Net Gross Income (Loss) Per Per Share Share
Sales Profit (Loss) Share Share Price Price
---------- --------- ----------- ------- ----- ------- -------
Three months ended
DECEMBER 31, 1994 $22,715 $10,083 $ 1,004 $ 0.14 -- $8 1/8 $6 7/8
SEPTEMBER 30, 1994 20,992 9,602 743 0.11 0.02 8 1/4 5 7/8
JUNE 30, 1994 21,809 9,864 987 0.14 -- 6 1/4 5 1/4
MARCH 31, 1994 20,121 8,946 605 0.09 0.02 6 5
December 31, 1993 19,878 9,250 (4,682) (0.67) -- 8 4 7/8
September 30, 1993 19,067 7,991 417 0.06 0.02 7 7/8 5 1/2
June 30, 1993 23,174 10,273 371 0.05 -- 6 3/4 5
March 31, 1993 22,028 9,480 148 0.02 0.02 6 3/4 5 1/8
Net income (loss) per share is computed independently for each of the
quarters presented and the summation of quarterly amounts may not equal
the total net income (loss) per share reported for the year.
NOTE 17 SUBSEQUENT EVENT (UNAUDITED):
On February 28, 1995, the Company acquired all the outstanding capital
stock of Ram Optical Instrumentation, Inc. (ROI) in exchange for
1,251,000 shares of its common stock. Additionally, an option to
purchase 3,500 ROI common shares was exchanged for an option to
purchase 72,975 Newport common shares. ROI, a manufacturer of video
inspection systems, will become a wholly-owned subsidiary of Newport.
The fiscal year of ROI will be changed from March 31 to December 31 to
conform to the Company's fiscal year-end. The transaction will be
accounted for as a pooling of interests. Supplemental unaudited
earnings statement information assuming the acquisition had occurred on
August 1, 1991, is as follows:
29
(In thousands except
per share amounts)
Years Ended Five Months Year
December 31, Ended Ended
----------------------- December 31, July 31,
1994 1993 1992 1992
------- ------- ------- --------
Net sales:
Newport $85,637 $84,147 $36,070 $ 87,801
ROI 8,039 9,069 3,125 6,746
------- ------- ------- --------
Total $93,676 $93,216 $39,195 $ 94,547
======= ======= ======= ========
Gross profit:
Newport $38,495 $36,994 $15,954 $ 38,048
ROI 3,704 4,633 1,438 3,279
------- ------- ------- --------
Total $42,199 $41,627 $17,392 $ 41,327
======= ======= ======= ========
Income (loss) before taxes:
Newport $ 5,062 $(3,179) $ 37 $(14,745)
ROI (129) 950 142 408
------- ------- ------- --------
Total $ 4,933 $(2,229) $ 179 $(14,337)
======= ======= ======= ========
Net income (loss):
Newport $ 3,339 $(3,746) $ (648) $(14,240)
ROI (68) 567 82 235
------- ------- ------- --------
Total $ 3,271 $(3,179) $ (566) $(14,005)
======= ======= ======= ========
Earnings (loss) per share:
Newport $ 0.40 $ (0.46) $ (0.08) $ (1.73)
ROI (0.01) 0.07 0.01 0.03
------- ------- ------- --------
Total $ 0.39 $ (0.39) $ (0.07) $ (1.70)
======= ======= ======= ========
Shares used in calculation:
Number of shares of Newport common stock 7,063 7,006 6,966 6,966
Newly issued shares 1,251 1,251 1,251 1,251
Newly issued stock options 27 -- -- --
------- ------- ------- --------
Total 8,341 8,257 8,217 8,217
======= ======= ======= ========
The earnings per share have been calculated using the weighted average
number of shares of common stock and, for periods with income, the
dilutive effects of common stock equivalents (stock options),
determined using the treasury stock method previously reported by
Newport. These are adjusted by the number of newly issued shares, and
by the dilutive effect of newly issued stock options in those periods
with income, also using the treasury stock method.
30
NEWPORT CORPORATION
SCHEDULE II
CONSOLIDATED VALUATION ACCOUNTS
(In thousands)
Additions
Balance at Beginning Charged to Costs Other Changes Balance at End
Description of Period and Expenses Write Offs(1) Add (Deduct)(2) of Period
---------------------------- -------------------- ---------------- ------------- --------------- --------------
Year ended December 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts $ 717 $ 90 $ (203) $(144) $ 460
Reserve for inventory obsolescence 2,786 715 (313) 192 3,380
------ ------- ------- ----- ------
Total $3,503 $ 805 $ (516) $ 48 $3,840
====== ======= ======= ===== ======
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts $1,439 $ 150 $ (786) $ (86) $ 717
Reserve for inventory obsolescence 2,298 1,216 (625) (103) 2,786
------ ------- ------- ----- ------
Total $3,737 $ 1,366 $(1,411) $(189) $3,503
====== ======= ======= ===== ======
Five months ended December 31, 1992:
Deducted from asset accounts:
Allowance for doubtful accounts $1,297 $ 120 $ 39 $ (17) $1,439
Reserve for inventory obsolescence 1,484 1,017 - (203) 2,298
------ ------- ------- ----- ------
Total $2,781 $ 1,137 $ 39 $(220) $3,737
====== ======= ======= ===== ======
Year ended July 31, 1992:(3)
Deducted from asset accounts:
Allowance for doubtful accounts $ 692 $ 113 $ 412 $ 80 $1,297
Reserve for inventory obsolescence 672 452 - 360 1,484
------ ------- ------- ----- ------
Total $1,364 $ 565 $ 412 $ 440 $2,781
====== ======= ======= ===== ======
(1) Amounts are net of recoveries and acquisitions.
(2) Amounts reflect the effect of exchange rate changes on translating
valuation accounts of foreign subsidiaries in accordance with FASB
Statement No. 52, "Foreign Currency Translation" and certain
reclassifications between balance sheet accounts.
(3) 1992 includes the effect of the acquisition of Micro-Controle effective
September 18, 1991.
31