Impact of Operating Improvements Lead to Increases in Profitability
BILLERICA, Mass., July 25 /PRNewswire-FirstCall/ -- GSI Group,
(Nasdaq: GSIG and TSX: GSI), a major supplier of precision motion components,
lasers and laser systems, today announced financial results for the second
quarter ended July 1, 2005. All data is expressed in U.S. GAAP and in U.S.
dollars.
"Sales and margins were higher in each business segment from prior
quarter. Along with improved revenues, increased orders led to the highest
book-to-bill ratio in four quarters," said Charles Winston, President and CEO
of GSI Group. "More importantly, expenses were driven down from last quarter
through a combination of materials cost reductions, favorable product mix and
absence of non-recurring charges resulting in a six point improvement in gross
margins."
EPS Increases Seven Cents from Prior Quarter, Book-to-Bill Above 1.0
* Sales were $66.9 million for the second quarter of 2005, compared to
$64.8 million in the previous quarter, an increase of 3%.
* Book-to-bill ratio was 1.04, the highest level in the past 4 quarters.
* Backlog increased 5% or $2.7 million to $61.6 million at the end of the
second quarter, compared to $58.9 million in the previous quarter.
* Bookings were $69.6 million for the quarter, an increase of $7.2
million or 12% from the previous quarter.
* Net income was $3.1 million or $0.07 per diluted share for the second
quarter, compared to net income of $0.1 million or $0.00 per diluted
share in the previous quarter.
Gross Margin Increases Six Percentage Points
* Gross margin for the quarter was 41% of sales, as compared to 35% in
the previous quarter.
Improvement in All Segments Drives Overall Growth
* Precision Motion segment reported sales of $34.2 million as compared to
$34.0 million in the previous period. Operating income was $4.9 million
for the second quarter 2005, an increase from $3.3 million in the
previous quarter. Gross margin was 42% compared to 37% in the previous
quarter.
* The Systems segment reported sales of $23.7 million, compared to $22.0
million during the previous quarter. The segment contributed an
operating profit of $3.1 million for the second quarter 2005, as
compared to $1.6 million in the previous quarter. Gross margin was 39%
as compared to 35% during the previous quarter.
* Laser segment reported sales of $11.4 million, as compared to $10.3
million during the previous quarter. The segment had operating income
of $0.8 million in the second quarter 2005 versus $0.7 million
operating loss in the previous quarter. Gross margin was 36% in the
second quarter of 2005, as compared to 25% during the previous quarter.
Other Key Metrics
* Use of cash from operations was $8.1 million for the second quarter as
compared to $1.2 million used in the previous quarter. This was
primarily driven by an $8 million increase in accounts receivable due
to timing issues from several major semiconductor accounts and an
increase in demo inventory in the systems segment for planned new
account penetration.
* Cash, cash equivalents and marketable investments totaled $78.3
million.
Geographic Sales Increase in Asia-Pacific
Geographically, sales for the second quarter of 2005 were as follows:
approximately 44% in the Americas, 39% in Asia & Japan and 17% in Europe.
Dial In: July 26th at 8:30am EDT
GSI Group will host a conference call for investors at 8:30 p.m. Eastern
Time on July 26th. To participate, call 913-981-5581. A replay of the call
will be available by dialing 888-203-1112. Access code: 4633999. The
conference call also will be broadcast live over the Internet in listen-only
mode at http://www.gsig.com.
Analyst Day
GSI will be hosting an analyst day on September 22nd in New York at the
Crowne Plaza Times Square. Anyone interested in attending, please register on
our website at: http://www.gsig.com/investors.
About GSI Group
GSI Group supplies precision motion control products, lasers and laser-
based advanced manufacturing systems to the global medical, semiconductor,
electronics, and industrial markets. GSI Group' common shares are listed on
Nasdaq (GSIG) and The Toronto Stock Exchange (GSI).
Certain statements in this news release may constitute forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995, Section 27A of the United States Securities Act
of 1933 and Section 21E of the United States Securities Exchange Act of 1934.
These forward-looking statements may relate to anticipated financial
performance, management's plans and objectives for future operations, business
prospects, outcome of regulatory proceedings, market conditions, tax issues
and other matters. All statements contained in this news release that do not
relate to matters of historical fact should be considered forward-looking
statements, and are generally identified by words such as "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "objective" and other
similar expressions. Readers should not place undue reliance on the forward-
looking statements contained in this news release. Such statements are based
on management's beliefs and assumptions and on information currently available
to management and are subject to risks, uncertainties and changes in
condition, significance, value and effect. Other risks include the fact that
the Company's sales have been and are expected to continue to be dependent
upon customer capital equipment expenditures, which are, in turn, affected by
business cycles in the markets served by those customers. Other factors
include volatility in the semiconductor industry, the risk of order delays and
cancellations, the risk of delays by customers in introducing their new
products and market acceptance of products incorporating subsystems supplied
by the Company, similar risks to the Company of delays in its new products,
our ability to continue to reduce costs and capital expenditures, our ability
to focus R&D investment and integrate acquisitions and other risks detailed in
reports and documents filed by the Company with the United States Securities
and Exchange Commission and with securities regulatory authorities in Canada.
Such risks, uncertainties and changes in condition, significance, value and
effect, many of which are beyond the Company's control, could cause the
Company's actual results and other future events to differ materially from
those anticipated. The Company does not, however, assume any obligation to
update these forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
statements.
GSI-G
For more information contact: Investor Relations, 978-439-5512, Ray Ruddy,
(ext. 6170)
GSI GROUP INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(U.S. GAAP and in thousands of U.S. dollars, except share amounts)
July 1, December 31,
ASSETS 2005 2004
Current
Cash and cash equivalents $64,014 $82,334
Short-term investments 14,256 2,995
Accounts receivable, less allowance
of $1,269 (December 31, 2004 - $2,470) 61,011 60,314
Income taxes receivable 1,586 2,287
Inventories 63,977 60,319
Deferred tax assets 13,835 13,094
Other current assets 8,676 10,311
Total current assets 227,355 231,654
Property, plant and equipment,
net of accumulated depreciation of $27,482
(December 31, 2004 - $26,604) 45,261 50,220
Deferred tax assets 17,789 18,364
Other assets 2,758 2,906
Long-term investments 640 5,681
Intangible assets, net of amortization of
$3,061 (December 31, 2004 - $2,139) 16,821 18,152
Patents and acquired technology, net of
amortization of $28,191
(December 31, 2004 - $25,883) 30,001 32,837
Goodwill 26,421 26,350
$367,046 $386,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable $13,727 $18,462
Income taxes payable 1,408 4,045
Accrued compensation and benefits 8,805 13,160
Other accrued expenses 17,335 21,327
Total current liabilities 41,275 56,994
Deferred compensation 2,490 2,178
Deferred tax liabilities 10,884 11,521
Other liability 83 27
Accrued minimum pension liability 9,471 9,881
Total liabilities 64,203 80,601
Commitments and contingencies
Stockholders' equity
Common shares, no par value;
Authorized shares: unlimited;
Issued and outstanding: 41,581,447
(December 31, 2004 - 41,449,270) 309,210 308,669
Additional paid-in capital 3,199 3,289
Retained earnings (accumulated deficit) 1,266 (1,969)
Accumulated other comprehensive loss (10,832) (4,426)
Total stockholders' equity 302,843 305,563
$367,046 $386,164
GSI GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(U.S. GAAP and in thousands of U.S. dollars, except share amounts)
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2005 2004 2005 2004
Sales $66,850 $84,537 $131,691 $159,390
Cost of goods sold 39,168 49,019 81,061 94,132
Gross profit 27,682 35,518 50,630 65,258
Operating expenses:
Research and
development 6,368 6,002 12,827 10,761
Selling, general and
administrative 15,098 14,527 30,479 28,012
Amortization of
purchased intangibles 1,648 1,162 3,400 2,710
Acquired in-process
research and development -- 430 -- 430
Other 4 -- 201 --
Total operating
expenses 23,118 22,121 46,907 41,913
Income from operations 4,564 13,397 3,723 23,345
Other income (expense) 8 -- 8 (15)
Interest income 387 211 779 390
Interest expense (68) (26) (63) (55)
Foreign exchange
transaction gains
(losses) 325 (347) 943 (606)
Income before income
taxes 5,216 13,235 5,390 23,059
Income tax provision 2,091 1,421 2,155 2,306
Net income $3,125 $11,814 $3,235 $20,753
Net income per common
share:
Basic $0.08 $0.29 $0.08 $0.51
Diluted $0.07 $0.28 $0.08 $0.49
Weighted average
common shares
outstanding (000's) 41,522 41,059 41,493 41,009
Weighted average
common shares
outstanding for
diluted net income per
common share (000's) 41,728 42,250 41,755 42,200
GSI GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(U.S. GAAP and in thousands of U.S. dollars)
Three months ended Six months ended
July 1, July 2, July 1, July 2,
2005 2004 2005 2004
Cash flows from
operating activities:
Net income $3,125 $11,814 $3,235 $20,753
Adjustments to reconcile
net income to cash
provided by (used in)
operating activities:
Loss on disposal of assets 4 -- 201 --
Loss on sale of investments -- -- -- 15
Acquired in-process
research and development -- 430 -- 430
Stock-based compensation (28) 68 (90) 119
Depreciation and
amortization 3,522 2,855 7,100 6,601
Unrealized gain on
derivatives (93) (189) (37) (189)
Deferred income taxes (720) (3,120) (1,118) (5,690)
Changes in current assets
and liabilities:
Accounts receivable (8,652) 7,161 (2,388) (1,998)
Inventories (2,181) (4,015) (5,244) (10,896)
Other current assets (468) (1,096) 1,559 (532)
Accounts payable, accrued
expenses, and taxes
(receivable) payable (2,637) (1,303) (12,533) 10,480
Cash provided by
(used in) operating
activities (8,128) 12,605 (9,315) 19,093
Cash flows from investing activities:
Acquisition of business (71) (54,744) (71) (54,744)
Sale of assets 1,550 -- 1,550 --
Additions to property,
plant and equipment,
net (1,132) (589) (2,030) (866)
Proceeds from sales and
maturities of short-term
and long-term
investments 8,000 15,485 11,000 63,105
Purchases of short-term
and long-term
investments (9,243) (12,945) (17,219) (39,436)
(Increase) decrease in
other assets (16) (156) 86 (153)
Cash used in investing
activities (912) (52,949) (6,684) (32,094)
Cash flows from
financing activities:
Issue of share capital 273 1,309 464 1,637
Cash provided by
financing activities 273 1,309 464 1,637
Effect of exchange rates
on cash and cash
equivalents (1,579) 230 (2,785) 521
Decrease in cash and
cash equivalents (10,346) (38,805) (18,320) (10,843)
Cash and cash
equivalents,
beginning of period 74,360 91,997 82,334 64,035
Cash and cash equivalents,
end of period $64,014 $53,192 $64,014 $53,192
GSI GROUP INC.
Consolidated Analysis By Segment (unaudited)
(thousands of U.S. dollars)
Three Months Ended Six Months Ended
July 1, 2005 July 2, 2004 July 1, 2005 July 2, 2004
Sales:
Precision Motion Group $34,151 $41,854 $68,136 $75,210
Laser Group 11,426 11,677 21,686 23,243
Laser Systems Group 23,711 36,720 45,714 71,158
Intersegment sales
elimination (2,438) (5,714) (3,845) (10,221)
Total $66,850 $84,537 $131,691 $159,390
Gross profit %:
Precision Motion Group 41.9% 39.7% 39.4% 37.1%
Laser Group 36.1% 30.9% 31.0% 29.0%
Laser Systems Group 39.0% 43.3% 37.3% 44.3%
Intersegment sales
elimination (0.4%) 10.6% (0.6%) 9.0%
Total 41.4% 42.0% 38.4% 40.9%
Segment income from operations:
Precision Motion Group $4,872 $8,385 8,169 $13,478
Laser Group 803 496 92 700
Laser Systems Group 3,146 9,950 4,769 19,643
Total by segment 8,821 18,831 13,030 33,821
Unallocated amounts:
Corporate expenses 4,227 4,978 9,053 9,160
Amortization of
purchased intangibles
not allocated to
a segment 26 26 53 886
Acquired in-process
research and development -- 430 -- 430
Other 4 -- 201 --
Income from operations $4,564 $13,397 $3,723 $23,345
GSI GROUP INC.
Consolidated Sales Analysis By Geographic Region (unaudited)
(millions of U.S. dollars)
Three months ended
July 1, 2005 July 2, 2004
% of % of
Sales Total Sales Total
North America $28.9 43% $41.8 49%
Latin and South America 0.4 1 0.5 1
Europe (EMEA) 11.2 17 12.0 14
Japan 9.0 13 13.4 16
Asia-Pacific, other 17.4 26 16.8 20
Total $66.9 100% $84.5 100%
Six months ended
July 1, 2005 July 2, 2004
% of % of
Sales Total Sales Total
North America $53.9 41% $80.6 51%
Latin and South America 0.8 1 0.6 -
Europe (EMEA) 22.3 17 25.5 16
Japan 22.7 17 24.9 16
Asia-Pacific, other 32.0 24 27.8 17
Total $131.7 100% $159.4 100%
SOURCE GSI Group
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http://www.gsig.com
CONTACT:
Ray Ruddy, Investor Relations of GSI Group,
+1-978-439-5512, ext. 6170
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