Newport Plans Cost Reductions And Reorganization
Irvine, CA, August 21, 2002 -- Citing the protracted downturn in the fiber optic communications market and the current uncertainty with respect to the pace of the recovery in the semiconductor equipment market, Newport Corporation has announced a cost reduction program and a reorganization of its business units geared toward achieving profitability during this period of weak demand.
Newport expects these actions to result in annualized savings of between $12.0 million and $14.0 million. In total, the cost cutting measures and reorganization are expected to result in one-time charges in the third quarter of 2002 of between $30.0 million and $40.0 million, of which only $4.0 million to $7.0 million will involve cash outlays, with the remaining charges involving revaluation of inventories and a write-down for impairment of long-lived assets resulting from facility consolidations.
In line with the refocusing of resources for greater profitability and growth, Newport announced that it has reorganized its two operating divisions. Effective immediately, FPD has been reorganized into the Advanced Packaging and Automation Systems Division (APAS). Its focus has been expanded to cover all automation equipment technology developed and sold into all end-markets. The primary focus of FPD in recent years has been on automation for assembly of fiber optic components.
The expanded charter of APAS now includes advanced semiconductor packaging equipment and automated systems for handling semiconductor wafers in addition to automated systems for assembly of fiber optic components. Kevin Crofton, current vice president and general manager of FPD, will continue in the same capacity with APAS. Included in APAS and under Crofton's direction will be Newport's Kensington Laboratories unit in Richmond, California, the advanced packaging operation (MRSI) in Billerica, Massachusetts, the Chandler, Arizona automation and integration facility, and the streamlined fiber optic operation in Southern California.
Newport's Industrial and Scientific Technologies Division (ISTD) will continue to be led by Bob Phillippy in the United States and Alain Danielo in Europe, with a heightened focus on product and market initiatives involving instruments and subsystems for optical, opto-mechanical, vibration isolation and motion control technologies, which are also sold into the strategic end-markets Newport serves.
Concurrent with the divisional reorganization, Newport announced further resizing initiatives, including facilities consolidation and a workforce reduction of between 225 and 275 employees. The layoffs and facilities actions are expected to result in annualized savings of $12.0 million to $14.0 million. Most of the workforce reduction will occur in the third quarter and the company expects to substantially complete the reduction by the end of 2002.
Total worldwide headcount following these actions will be between 1,125 and 1,175, more than 40% below the peak of approximately 2,000 employees in June 2001. Severance costs are expected to be in the range of $2.0 million to $4.0 million. Newport expects to realize some of these savings in the fourth quarter of 2002 and to capture the full amount of such savings in calendar year 2003.
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