Newport Corporation Affirms Second-Quarter Expectations
Announces Actions in Response to Market Conditions
Annualized Savings Estimated at $5 Million to $7 Million
IRVINE, Calif.--(BUSINESS WIRE)--July 9, 2001--Newport Corporation (Nasdaq:NEWP - news) today affirmed its revenue and earnings expectations for the second quarter ended June 30, 2001.
At the same time, the company announced that, in response to the continuing downturn in its key markets, it is taking actions designed to bring staffing and overall cost structure in line with its current business outlook.
For the second quarter, Newport expects to report revenues in line with its earlier guidance of $95 million to $100 million and diluted earnings per share in line with the current consensus of analysts' estimates as reported by First Call of $0.32. In the second quarter of 2000, the company reported $61.1 million in revenues and diluted earnings per share of $0.20.
``We are pleased that, despite the difficult economic climate, we expect to report approximately 60 percent year-over-year growth in revenue and earnings for the quarter. However, we are concerned with the steep decline in new orders received, especially in our fiber optic communications business,'' said Robert G. Deuster, chairman and chief executive officer.
Newport indicated that in the second quarter of 2001, total new orders received were approximately $54 million and were offset by approximately $13 million in cancellations. This compares with total orders received in the first quarter of 2001 of $90.9 million and from the year-earlier second quarter of $102.2 million.
Orders from the fiber optic communications market were approximately $11 million in the second quarter of 2001, compared with $35.1 million in the first quarter of 2001 and $43.2 million in the prior-year second quarter. Orders from the semiconductor capital equipment market, Newport's other primary end market, were approximately $17 million in the second quarter of 2001 compared with $20.2 million in the first quarter of 2001 and $32.7 million recorded in the prior-year second quarter.
``This steep downturn in orders, especially from our customers in the fiber optic communications segment, has been more severe than anticipated. The sharp reduction in telecommunications carrier spending has caused many of our customers to suspend a significant portion of their capital spending plans, and the uncertainty in this market continues to limit our visibility going forward,'' Deuster said.
``Given these conditions, we have instituted staff reductions and other cost containment programs designed to bring Newport's expense structure in line with our current business outlook and to maximize our profitability despite the difficult environment.''
Deuster continued: ``We firmly believe that, notwithstanding the current downturn, there will be a continuing need for fiber optic and semiconductor manufacturers to improve their process efficiencies and yields through automation.
``Accordingly, we will continue to focus on the development of future products and enhancements to maintain our position as a leading supplier of manufacturing and automation solutions to the fiber optic communications, semiconductor capital equipment and general metrology markets.''
The company said that the actions taken are aimed at achieving total cost savings of $5 million to $7 million on an annualized basis. Headcount is being reduced by 180 to 200 people, or approximately 10 percent of Newport's workforce. Layoffs will be primarily in manufacturing and support capacities within Newport's Fiber Optics and Photonics Division. The company expects to record a charge in the third quarter of 2001 of approximately $1.0 million to $1.5 million for employee severance.
In addition, as a result of the changing market demand, the company said that it has recently begun an evaluation of certain product lines and the carrying value of certain inventory items. This evaluation is expected to result in a third-quarter 2001 non-cash charge for writing down certain assets, which may include inventory, goodwill and fixed assets.
A precise calculation as to the total amount of the charge cannot be made until completion of the evaluation, but it is expected to be in the range of $6 million to $10 million.
Deuster added: ``While we do not currently anticipate any meaningful recovery in customer order patterns through the second half of 2001, we nevertheless expect to deliver double-digit growth in revenues and earnings before non-recurring charges over our record-breaking performance in 2000.
``We believe that our revenues for the full-year 2001 will be between $350 million and $360 million, which is within the range of analysts' estimates currently reported by First Call. Also, diluted earnings per share for the full year, excluding non-recurring charges, is expected to be in the range of $1.10 to $1.15.''
The company will discuss specific details related to its second-quarter results, full-year outlook and cost-reduction actions in a conference call on July 18, 2001.
Newport Corporation is a global leader in the design, manufacture and marketing of high precision components, instruments and integrated systems to the fiber optic communications, semiconductor equipment, aerospace and research and industrial metrology markets.
The company's innovative products are designed to enhance productivity and capabilities in test and measurement and automated assembly for precision manufacturing, engineering and research applications. Customers include Fortune 500 corporations, technology companies and research laboratories in commercial, academic and government sectors worldwide.
This news release contains forward-looking statements, including without limitation the statements made by Robert G. Deuster, that are based on current expectations and involve risks and uncertainties. Without limiting the generality of the foregoing, words such as ``may,'' ``will,'' ``expect,'' ``believe,'' ``anticipate,'' ``intend,'' ``could,'' ``estimate'' or ``continue'' or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. As discussed in Newport's Annual Report on Form 10-K for the year ended Dec. 31, 2000, and its subsequent SEC reports, assumptions relating to the foregoing involve judgments and risks with respect to, among other things, future economic, competitive and market conditions, including those in Europe and Asia and those related to its strategic markets, whether its products, particularly those targeting the company's strategic markets, will continue to achieve customer acceptance, the ability of Newport to successfully integrate its acquired and to-be-acquired companies and the contributions of those companies to Newport's operating results, the risks of power interruptions and electricity rate increases and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Newport. Although Newport believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Newport or any other person that Newport's objectives or plans will be achieved. Newport undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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Contact:
Newport Corporation, Irvine
Charles F. Cargile, 949/253-1273
investor@newport.com
www.newport.com
or
PondelWilkinson MS&L, Los Angeles
Cecilia A. Wilkinson, 310/207-9300
investor@pondel.com
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