EXHIBIT 99.3
------------
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following pro forma combined condensed financial statements have been
prepared to give effect to the acquisition of RAM Optical Instrumentation, Inc.
(ROI) by Newport Corporation (Newport) using the pooling of interests method of
accounting.
The pro forma combined condensed balance sheet as of December 31, 1994
gives effect to the acquisition as if it had occurred at December 31, 1994 and
combines the condensed consolidated balance sheet of Newport and the condensed
balance sheet of ROI as of of December 31, 1994. The balance sheet of Newport
has been derived from its audited financial statements for the year ended
December 31, 1994 filed on Form 10-K. The balance sheet of ROI represents an
internally prepared balance sheet as of December 31, 1994 and is unaudited.
The pro forma combined condensed statements of operations combine the
historical consolidated statements of Newport and ROI for the years ended
December 31, 1994 and 1993, the five months ended December 31, 1992 and the year
ended July 31, 1992, in each case as if the acquisition had occurred at the
beginning of the earliest period presented. The statements of operations of
Newport have been derived from its audited financial statements for the year
ended December 31, 1994 filed on Form 10-K. Effective December 31, 1993 Newport
Corporation had changed its fiscal year-end from July 31 to December 31. The
statements of operation of ROI are derived from the historical financial
statements of ROI, recast to conform to Newport's reporting periods, and are
unaudited.
Newport and ROI estimate that they will incur direct transaction costs of
approximately $130,000 associated with the acquisition which will be charged to
operations during the first quarter of 1995. It is not anticipated that there
will be any additional charges to operations related to costs associated with
integrating the two companies. There can be no assurance that the combined
companies will not incur additional charges to reflect costs associated with the
acquisition or that management will be successful in its efforts to integrate
the operations of the two companies.
Such pro forma combined condensed information is presented for illustrative
purposes only and is not necessarily indicative of future financial position or
results of operations. These pro forma combined condensed financial statements
are based upon the respective historical consolidated financial statements of
Newport and ROI and should be read in conjunction with the respective historical
financial statements and notes thereto of Newport filed on Form 10-K and the
financial statements of ROI included elsewhere in this Form 8-K/A and in the
related Form 8-K filed on March 15, 1995 and do not include all benefits from
cost savings or synergies of operations of the combined company.
Page 8 of 12 Pages
EXHIBIT 99.3
------------
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
DECEMBER 31, 1994
(IN THOUSANDS)
Pro Forma Pro Forma
Newport ROI Adjustments Combined
--------- ---------- ------------ ----------
ASSETS
Current assets:
Cash and cash equivalents $ 3,010 $ 4 $ -- $ 3,014
Marketable securities 610 -- -- 610
Customer receivables, net 17,067 1,600 -- 18,667
Other receivables 1,912 -- -- 1,912
Inventories 20,294 1,082 -- 21,376
Other current assets 2,579 21 -- 2,600
------- ------ ----- -------
Total current assets 45,472 2,707 -- 48,179
Investments, notes receivable and other assets 4,412 29 -- 4,441
Property, plant and equipment, at cost, net 22,724 312 -- 23,036
Goodwill, net 8,846 -- -- 8,846
------- ------ ----- -------
$81,454 $3,048 $ -- $84,502
======= ====== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,026 $ 318 $ -- $ 5,344
Accrued payroll and related expenses 4,086 593 -- 4,679
Taxes based on income 1,398 (90) -- 1,308
Accrued restructuring liabilities, net 2,364 -- -- 2,364
Current portion of long-term debt 10,067 249 -- 10,316
Other accrued liabilities 2,335 82 130 2,547
------- ------ ----- -------
Total current liabilities 25,276 1,152 130 26,558
Deferred income taxes 267 15 -- 282
Notes payable to banks-long term 11,117 -- -- 11,117
Stockholders' equity:
Common stock 2,472 -- 438 2,910
Authorized 20,000 sh 1,000 sh (1,000) sh 20,000 sh
Issued and outstanding 7,062 sh 60 sh 1,191 sh 8,313 sh
Capital in excess of stated value 6,093 160 (438) 5,815
Unamortized deferred compensation (251) -- -- (251)
Unrealized gain on marketable securities 343 -- -- 343
Unrealized translation loss (2,778) -- -- (2,778)
Retained earnings 38,915 1,721 (130) 40,506
------- ------ ----- -------
Total stockholders' equity 44,794 1,881 (130) 46,545
------- ------ ----- -------
$81,454 $3,048 -- $84,502
======= ====== ====== =======
See accompanying notes.
Page 9 of 12 Pages
EXHIBIT 99.3
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PRO FORMA CONDENSED STATEMENTS 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 $93,676 $93,216 $39,195 $ 94,547
- ---------
Cost of sales 51,577 51,589 21,803 53,220
------- ------- ------- --------
Gross profit 42,099 41,627 17,392 41,327
- ------------
Selling, general and administrative expense 32,017 31,574 14,104 34,555
Research and development expense 5,301 5,166 2,476 6,431
Restructuring and other special charges - 6,263 - 13,795
------- ------- ------- --------
Income (loss) from operations 4,781 (1,376) 812 (13,454)
- -----------------------------
Interest expense, net (1,773) (2,316) (1,538) (2,904)
Other income, net 1,839 1,463 905 2,021
------- ------- ------- --------
Income (loss) before income taxes 4,847 (2,229) 179 (14,337)
- ---------------------------------
Income tax provision (benefit) 1,653 951 744 (333)
------- ------- ------- --------
Pro forma net income (loss) $ 3,194 $(3,180) $ (565) $(14,004)
- --------------------------- ======= ======= ========
Supplemental adjustment to
- --------------------------
compensation expense:
- ---------------------
Contractual reduction to officer compensation 550
Related income taxes 149
-------
401
-------
Pro forma net income after supplemental
- ---------------------------------------
adjustments to compensation expense $ 3,595
- ----------------------------------- =======
Pro forma net income (loss) per share $0.38 $(0.39) $(0.07) $(1.70)
- ------------------------------------- ====== ======= ======= ========
Pro forma net income per share after
- ------------------------------------
supplemental adjustments to
- ---------------------------
compensation expense $0.43
- -------------------- -------
Shares used in per share calculation 8,341 8,257 8,217 8,217
- ------------------------------------ ====== ======= ======= ========
See accompanying notes.
Page 10 of 12 Pages
EXHIBIT 99.3
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NOTES TO PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
1. PRO FORMA BASIS OF PRESENTATION
These pro forma combined condensed financial statements reflect the
issuance of 1,251,000 Newport Common Shares in exchange for an aggregate of
60,000 ROI Common Shares, an exchange ratio of 20.85. An option to purchase
3,500 ROI Common Shares was exchanged for an option to purchase 72,975 Newport
Common Shares.
2. PRO FORMA COMBINED BALANCE SHEET
Newport and ROI estimate they will incur direct transaction costs of
approximately $130,000 associated with the acquisition consisting of transaction
fees for attorneys, accountants and consultants. These nonrecurring transaction
costs will be charged to operations during the first quarter of 1995. These
direct transaction costs are not reflected in the Pro Forma Combined Condensed
Statements of Operations.
3. PRO FORMA EARNINGS PER SHARE
The pro forma 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.
4. PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
The following is a summary of the historical results of operations of
Newport and ROI and their pro forma combined amounts to reflect the acquisition
as if it were effected for all periods presented below. Any benefits from cost
savings or synergies of operations of the combined company are not included.
(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
======= ======= ======= =======
Page 11 of 12 Pages
EXHIBIT 99.3
------------
NOTES TO PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS (CONT'D)
(In thousands)
Years Ended Five Months Year
December 31, Ended Ended
------------------ December 31, July 31,
1994 1993 1992 1992
------- ------- ------------ ---------
Gross Profit:
- -------------
Newport $38,495 $36,994 $15,954 $ 38,048
ROI 3,604 4,633 1,438 3,279
------- ------- ------- --------
Total $42,099 $41,627 $17,392 $ 41,327
======= ======= ======= ========
Income (loss) before taxes:
- ---------------------------
Newport $ 5,062 $(3,179) $ 37 $(14,745)
ROI (215) 950 142 408
------- ------- ------- --------
Total $ 4,847 $(2,229) $ 179 $(14,337)
======= ======= ======= ========
Net income (loss):
- ------------------
Newport $ 3,339 $(3,746) $ (648) $(14,240)
ROI (145) 566 83 236
------- ------- ------- --------
Total $ 3,194 $(3,180) $ (565) $(14,004)
======= ======= ======= ========
Earnings (loss) per share:
- --------------------------
Newport $ 0.40 $ (0.45) $ (0.08) $ (1.73)
ROI (0.02) 0.06 0.01 0.03
------- ------- ------- --------
Total $ 0.38 $ (0.39) $ (0.07) $ (1.70)
======= ======= ======= ========
Shares used in calculation
- --------------------------
Historical number of shares of Newport common stock
and common stock equivalents 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
======= ======= ======= ========
5. SUPPLEMENTAL ADJUSTMENTS TO NET INCOME
Subsequent to the acquisition of ROI by Newport, management contractually
reduced the level of bonus and other employment expenses relating to former
officers of ROI. The impact of such cost reductions on pro forma net income and
pro forma net income per share for the year ended December 31, 1994 would be to
increase pro forma net income by $401,000 to $3,595,000 and increase pro forma
net income per share by $0.05 to $0.43.
The income tax effect of the cost reductions described in the previous
paragraph has been determined using ROI's statutory tax rate for the twelve
months ended December 31, 1994.
Page 12 of 12 Pages