BEDFORD, Mass., July 31 /PRNewswire-FirstCall/ -- GSI Group Inc.,
(NASDAQ: GSIG), a supplier of precision technology and
semiconductor systems, today announced financial results for the
second quarter ended June 27, 2008. Second quarter revenue was
$66.0 million, compared to $71.7 million in the first quarter of
2008 and $73.1 million for the second quarter of 2007. Excluding
restructuring charges, operating profit was $1.6 million in the
second quarter versus $1.5 million in the first quarter and $5.4
million in the second quarter of 2007. GAAP net income for the
quarter was $1.1 million, or $0.03 per diluted share, compared to
the first quarter results of $2.1 million, or $0.05 per diluted
share, and $3.3 million, or $0.08 per diluted share in the second
quarter of 2007. Second quarter bookings were $51.2 million,
compared to $56.1 million in the first quarter of 2008. The
book-to-bill ratio was 0.78. The backlog as of June 27, 2008 was
$60.0 million, compared with $74.8 million in the first quarter of
2008. The backlog as of June 27, 2008 includes deferred revenue of
$10.6 million. Dr. Sergio Edelstein, President and CEO commented,
"Although GSI's overall slower business levels mirror the current
state of the semiconductor industry, our laser, scanner and encoder
product lines continue to perform well. I am particularly pleased
with the market's increasing acceptance of our new Lightning
Scanners, JK and Fiber Lasers, and Mercury II Encoders." "In
addition, we have recently announced the execution of a definitive
agreement to acquire Excel Technology," Dr. Edelstein continued.
"This transaction will nearly double the revenues from our
Precision Technology segment. Going forward, we expect the
Precision Technology segment of our business will approach 80% of
GSI's total revenue, and will expand our presence in several of our
most attractive target markets." Gross margin was 38.5% in the
second quarter, versus 38.1% in the first quarter of 2008.
Operating expenses, excluding restructuring charges, were $23.8
million in the second quarter compared to $25.9 million in the
first quarter. Stock based compensation was $0.7 million in the
second quarter versus $0.8 million in the first quarter of 2008.
Cash and cash equivalents were $183.3 million, an increase of $12.6
million from the first quarter. Second quarter cash usage includes
disbursements of $3.3 million in connection with the Company's
previously announced stock buyback program. GSI launched a tender
offer to purchase the outstanding shares of Excel Technology on
July 23, 2008 and it is expected to remain open until August 19,
2008. The Company continues to expect that both the US Optics and
Excel Technology transactions will close in the third quarter. For
more information, please refer to our recent filings with the
Securities and Exchange Commission. Dial In: July 31st at 8:30 a.m.
ET GSI Group will host a conference call for investors at 8:30 a.m.
Eastern time on July 31, 2008. Participants are invited to join by
dialing (706) 634-5123 with an access code: 57330611. The replay
will be available for two weeks by dialing (706) 645-9291 with the
replay passcode: 57330611. The conference call also will be
broadcast live over the Internet at http://www.gsig.com/. About GSI
Group Inc. GSI Group Inc. supplies precision technology to the
global medical, electronics, and industrial markets and
semiconductor systems. GSI Group Inc.'s common shares are listed on
Nasdaq (GSIG). Forward Looking Information 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 include, but are not
limited to, anticipated financial performance; management's plans
and objectives for achieving more stable revenues and predictable
growth, including as a result of the pending acquisition of Excel
Technology (Excel); business prospects; industry trends; and market
conditions. 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. Such statements
are based on our management's beliefs and assumptions and on
information currently available to our management and are subject
to risks, uncertainties and changes in condition, significance,
value and effect. Some of the risks and uncertainties that may
cause actual results and events to differ materially from those set
forth in the forward- looking statements include the following: our
management's ability to maintain or accurately forecast revenue
growth or to anticipate and accurately forecast a decline in
revenue from any of our products or services; our ability to
compete in an intensely competitive market; its ability to develop
and introduce new products or enhancements on schedule and that
respond to customer requirements and rapid technological change;
new product introductions and enhancements by competitors; our
ability to select and implement appropriate business models; plans
and strategies and efforts to execute on them; our ability to
identify, hire, train, motivate, and retain highly qualified
management/other key personnel and its ability to manage changes
and transitions in management/other key personnel; the impact of
global economic conditions on GSI's business; unauthorized use or
misappropriation of its intellectual property; as well as the risk
factors discussed previously and in periodic reports filed by us
with the SEC or with securities regulatory authorities in Canada.
In addition, to the extent the forward-looking statements assume,
or are based upon, successful completion of the pending acquisition
of Excel, such statements also involve risks and uncertainties that
may cause actual results and events to differ materially from those
set forth in the statements, including the following: (a) the
occurrence of any event, change or other circumstance that could
give rise to the termination of our definitive merger agreement
with Excel Technology, Inc. (Excel), including our external
financing being unavailable due to the non-satisfaction of the
conditions contained in the financing agreements or the failure of
the investors party thereto to fulfill their obligations
thereunder; the inability to complete the acquisition of Excel due
to the failure to receive required regulatory or other approvals or
to satisfy other conditions to the transaction; the risk that the
proposed acquisition disrupts current plans and operations; the
risk that anticipated synergies and opportunities as a result of
the acquisition will not be realized; difficulties or unanticipated
expenses in connection with integrating Excel into GSI; the risk
that the acquisition does not perform as planned, including the
risk that we or Excel will not achieve revenue projections; the
risk that the substantial indebtedness we will incur to finance the
acquisition will materially and adversely affect our business by,
among other things, requiring us to apply all or substantially all
of our free cash flow to service the indebtedness and/or to dispose
of assets to obtain cash for other permitted uses; the inability to
retain key employees of either company; and changes in either
company's business between now and the closing of the acquisition.
Readers should not place undue reliance on any such forward-looking
statements, which speak only as of the date they are made.
Management and GSI disclaim any obligation to publicly update or
revise any such statement to reflect any change in its expectations
or in events, conditions, or circumstances on which any such
statements may be based, or that may affect the likelihood that
actual results and events will differ from those contained in the
forward-looking statements. CONTACT: Ray Ruddy of GSI Group Inc.,
+1-781-266-5873 GSI GROUP INC. CONSOLIDATED BALANCE SHEETS
(Unaudited) (U.S. GAAP and in thousands of U.S. dollars, except
share amounts) June 27, December 31, 2008 2007 ASSETS Current
Assets Cash and cash equivalents $183,271 $171,714 Accounts
receivable, less allowance of $374 (December 31, 2007 - $372)
57,945 73,527 Income taxes receivable 13,594 12,241 Inventories
62,640 65,522 Deferred tax assets 8,264 8,249 Other current assets
8,830 7,394 Total current assets 334,544 338,647 Property, plant
and equipment, net of accumulated depreciation of $24,877 (December
31, 2007 - $32,263) 42,401 30,817 Deferred tax assets 9,904 9,887
Other assets 821 713 Long-term investments 997 854 Intangible
assets, net of amortization of $9,713 (December 31, 2007 - $8,603)
11,722 12,817 Patents and acquired technology, net of amortization
of $42,307 (December 31, 2007 - $40,122) 17,881 20,054 Goodwill
26,421 26,421 Total Assets $444,691 $440,210 LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $15,683
$17,504 Income taxes payable 1,365 1,411 Accrued compensation and
benefits 8,848 10,369 Deferred revenue 10,629 9,949 Deferred tax
liabilities 290 286 Other accrued expenses 12,435 9,353 Total
current liabilities 49,250 48,872 Deferred compensation 608 676
Deferred tax liabilities 7,589 7,589 Accrued long term
restructuring 1,651 938 Income taxes payable 3,261 3,537 Accrued
pension liability 4,598 4,481 Deferred rent 2,938 - Total
liabilities 69,895 66,093 Commitments and contingencies
Stockholders' equity Common shares, no par value; Authorized
shares: unlimited; Issued and outstanding: 41,607,460 (December 31,
2007-42,161,592) 304,569 310,970 Additional paid-in capital 9,712
8,245 Retained earnings 51,530 48,329 Accumulated other
comprehensive income 8,985 6,573 Total stockholders' equity 374,796
374,117 Total Liabilities and Stockholders' Equity $444,691
$440,210 GSI GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (U.S. GAAP and in thousands of U.S. dollars, except per
share amounts) Three Months Ended Six Months Ended June 27, June
29, June 27, June 29, 2008 2007 2008 2007 Sales $66,010 $73,117
$137,690 $147,321 Cost of goods sold 40,623 43,362 84,976 88,131
Gross profit 25,387 29,755 52,714 59,190 Operating expenses:
Research and development and engineering 7,475 7,729 15,350 15,386
Selling, general, administrative and other 14,700 14,925 31,017
28,866 Amortization of purchased intangibles 1,601 1,690 3,280
3,419 Restructuring expense (net of benefit) 1,501 1,576 1,184
3,928 Total operating expenses 25,277 25,920 50,831 51,599 Income
from operations 110 3,835 1,883 7,591 Other income 21 47 143 94
Interest income 1,002 1,667 2,167 3,214 Interest expense (18) (24)
(36) (81) Foreign exchange transaction gains (losses) 133 (62) 192
(434) Income before income taxes 1,248 5,463 4,349 10,384 Income
tax provision (154) (2,140) (1,148) (3,861) Net income $1,094
$3,323 $3,201 $6,523 Net income per common share: Basic $0.03 $0.08
$0.08 $0.15 Diluted $0.03 $0.08 $0.08 $0.15 Weighted average common
shares outstanding (000's) 41,736 42,427 41,831 42,204 Weighted
average common shares outstanding for diluted net income per common
share (000's) 41,853 42,678 42,112 42,409 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 June
27, June 29, June 27, June 29, 2008 2007 2008 2007 Cash flows from
operating activities: Net income for the year $1,094 $3,323 $3,201
$6,523 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 3,387 4,202
7,254 8,326 Stock-based compensation 651 693 1,433 1,022 Deferred
income taxes 24 (214) (29) (199) Earnings from equity investment
(37) (47) (143) (94) Unrealized gain on derivatives (195) (460)
(181) (407) Gain on disposal of assets (1,561) - (1,561) - Non-cash
restructuring charges 558 - 558 - Changes in current assets and
liabilities: Accounts receivable 15,413 (11,143) 15,970 (16,250)
Inventories 3,823 (680) 2,953 849 Other current assets (1,761)
(173) (1,471) 5,837 Accounts payable, accruals and taxes
(receivable) payable 934 10,642 (1,726) 8,469 Cash provided by
operating activities 22,330 6,143 26,258 14,076 Cash flows used in
investing activities: Acquisition of business - (3,006) - (3,006)
Proceeds from the sale of property and equipment 3,211 - 3,211 -
Additions to property, plant and equipment (12,475) (1,495)
(16,677) (3,293) (Increase) decrease in other assets 230 - (108) -
Increase in other liabilities 3,149 11 3,650 27 Cash used in
investing activities (5,885) (4,490) (9,924) (6,272) Cash flows
provided by (used in) financing activities: Purchase of treasury
shares (3,326) (286) (6,439) (760) Excess Tax benefit of stock
options 15 204 23 258 Issue of share capital (net of issue costs)
20 3,095 38 6,328 Cash provided by (used in) financing activities
(3,291) 3,013 (6,378) 5,826 Effect of exchange rates on cash and
cash equivalents (535) 191 1,601 348 Increase in cash and cash
equivalents 12,619 4,857 11,557 13,978 Cash and cash equivalents,
beginning of period 170,652 147,436 171,714 138,315 Cash and cash
equivalents, end of period $183,271 $152,293 $183,271 $152,293 GSI
GROUP INC. Consolidated Analysis By Segment (unaudited) (In
thousands of U.S. dollars) Three Months Ended Six Months Ended June
27, June 29, June 27, June 29, 2008 2007 2008 2007 Sales: Precision
Technology Business $45,488 $46,921 $89,523 $90,545 Semiconductor
Systems Business 20,989 27,110 49,756 58,968 Intersegment sales
elimination(1) (467) (914) (1,589) (2,192) Total $66,010 $73,117
$137,690 $147,321 Gross profit %: Precision Technology Business
39.0% 38.4% 38.7% 37.2% Semiconductor Systems Business 37.0% 42.4%
36.4% 43.1% Intersegment sales elimination 20.0% (22.2)% 2.4%
(5.1)% Total 38.5% 40.7% 38.3% 40.2% (1) Sales of Precision
Technology products to Semiconductor segment Consolidated Sales
Analysis By Geographic Region (unaudited) Three Months Ended June
27, 2008 June 29, 2007 Sales % of Total Sales % of Total (In
millions) (In millions) North America $27.4 41% $19.2 26% Latin and
South America 0.1 - 0.1 - Europe (EMEA) 11.0 17 12.6 17 Japan 12.5
19 15.7 22 Asia-Pacific, other 15.0 23 25.5 35 Total $66.0 100%
$73.1 100% DATASOURCE: GSI Group Inc. CONTACT: Ray Ruddy of GSI
Group Inc., +1-781-266-5873 Web site: http://www.gsig.com/ Company
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