For the full fiscal year, Gerber Scientific reported earnings of $0.43 per diluted share on revenues of $512.4 million, compared with a loss of $5.42 per diluted share on revenues of $498.9 million a year ago. Excluding the impact of restructuring charges and other special items, the Company had full-year fiscal 2003 adjusted* earnings of $0.44 per diluted share compared with adjusted earnings of $0.26 per diluted share a year ago.

"Gerber Scientific's financial results for the fourth quarter and full year were in line with our expectations, as the Company's turnaround strategy continues to unfold as planned," said Marc Giles, president and chief executive officer. "Despite the effects of sustained economic and industry weakness in the markets we serve, Gerber delivered good operating results. Our performance reflected the positive impact of broad actions to reengineer and restructure the Company to a lower cost platform, as well as targeted actions to reduce costs, improve productivity, and manage working capital. Fourth-quarter cash flow was well ahead of our projections, underscoring the fundamental strengths of our businesses and the positive impact of working capital improvements. In the quarter, Gerber successfully refinanced the Company's debt, giving us the liquidity needed to support our turnaround strategy going forward."

Fourth-quarter revenue and order entry was $135.7 million and $131.1 million, respectively, compared with $125.7 million and $124.7 million a year ago. Foreign currency translation contributed approximately $12.5 million to fourth-quarter revenues compared with the prior year and increased diluted earnings per share by $0.04. The Company's backlog of orders decreased $4.6 million to $29.7 million in the fourth quarter due largely to production cycle-time improvements and the shipment of incremental Ophthalmic Lens Processing segment orders. Segment profit (defined as earnings before interest and taxes) for the quarter increased to $7.6 million, from a loss of $1.1 million in the fourth quarter of 2002. The fiscal 2003 and 2002 fourth quarters included $2.5 million and $11.9 million, respectively, of restructuring and other charges. Corporate expenses of $3.3 million in the fourth quarter were $1.4 million less than the prior year primarily due to lower legal and consulting expenses, as well as an asset write-down of $0.5 million in the prior year. The Company incurred legal and professional fees associated with a Securities and Exchange Commission investigation of approximately $0.5 million and $4.1 million for the three months and fiscal year ended April 30, 2003, respectively, versus $0.9 million and $1.9 million in the comparable prior year periods. Net interest expense decreased to $1.8 million in the fourth quarter, down $1.1 million from a year ago, due to lower debt balances and lower average interest rates. The lower debt balances were the result of steady operating cash flow generation and proceeds from non-strategic asset sales during the year. The consolidated tax rate from continuing operations was 43.1% for the fourth quarter and 27.7% for fiscal 2003 versus the statutory rate of 35.0%. The higher fourth-quarter tax rate was the result of greater than expected losses at foreign subsidiaries where utilization is unlikely.

Apparel and Flexible Materials

The Company's Apparel and Flexible Materials segment reported segment profit of $2.4 million, a decrease of $1.6 million from the comparable prior year period. Excluding the effect of $1.4 million in restructuring charges and related asset write-downs in the fourth quarter of fiscal 2003, and $0.6 million in reversals of restructuring charges recorded in the fourth quarter of the prior year, segment profit increased 11.8%, or $0.4 million.

Revenues increased 9.4%, or $3.5 million, to $40.4 million in the fourth quarter from the comparable period of the prior year due to the effect of foreign currency translation. Excluding foreign currency translation, the segment's revenue was adversely affected by the continued migration of apparel and furniture production to lower cost overseas markets and the related factory automation lag in many of those markets. In addition, the depressed economic conditions in the U.S. continued to negatively affect U.S. apparel demand. Though U.S. apparel import volumes were up, the value of such imports declined, confirming the trend of discount apparel retailers taking market share from traditional distribution outlets such as specialty retailers. These developments have led to the relatively weak worldwide spending for apparel and flexible materials manufacturing equipment. However, the Company believes that these market conditions, the apparel industry's increasing need to speed apparel designs to market, the removal of trade quotas as of January 1, 2005 and other key trends make automation even more critical to the competitiveness of the Apparel and Flexible Materials segment's end-use customers.

Segment gross margin of 45.8% in the fourth quarter of fiscal 2003 was down 5.0 percentage points from the corresponding period of the prior year due primarily to pricing pressure, a shift in the product mix toward multi-ply cutting equipment (vs. higher margin single-ply cutting equipment) and a shift in the geographic mix of sales to international markets where the segment often sells through its external distribution channel.

Segment new order entry in the fourth quarter was $38.9 million, an increase of 2.5% from the prior year due largely to the effect of foreign currency translation. Backlog decreased 4.0% from the beginning of the current year to $26.2 million primarily as a result of production cycle time improvements.

Sign Making and Specialty Graphics

The Sign Making and Specialty Graphics segment reported segment profit of $3.5 million, an increase of $10.3 million compared with the comparable prior year period. Excluding the effect of $1.1 million in restructuring and other charges recorded in the fourth quarter of fiscal 2003 and $12.6 million in restructuring and other charges recorded in the fourth quarter of the prior year, segment profit decreased 19.7%, or $1.1 million.

Revenues increased 9.0%, or $5.9 million, to $71.1 million. Foreign currency translation represented $9.1 million of the fourth quarter fiscal 2003 revenue figure. Excluding the effects of foreign currency translation, the lower fourth quarter revenue reflected the difficult market conditions, which have resulted in shrinking advertising budgets, put pressure on the segment's sign and screen printing shops, graphic arts professionals and other customers and, in turn, contributed to the relatively weak demand for the segment's capital equipment products, particularly in North America, as well as a sales shift from higher quality proprietary aftermarket supplies to lower priced, more cost-competitive supplies. Given the current market conditions, the segment recognizes a heightened need to continuously enhance and diversify its product lines in order to make sign and specialty graphic manufacturing more efficient, productive and cost effective.

Segment gross margin of 27.8% for the quarter was up 10.5 percentage points from the same period of the prior year due to approximately $7.0 million in inventory write-downs in the prior year that were charged to cost of sales. Excluding the write-down, the gross margin percentage decreased due to the lower volume noted above, an unfavorable sales mix (specifically, a shift from higher margin thermal digital imaging systems to lower priced, lower margin inkjet imaging systems), and unfavorable factory overhead absorption due to the lower business volume.

Ophthalmic Lens Processing

The Ophthalmic Lens Processing segment reported segment profit of $1.8 million, an increase of $0.1 million from the comparable prior year period.

Revenues increased 3.0%, or $0.7 million, to $24.2 million in the fourth quarter from the comparable period of the prior year. The effect of foreign currency translation was not significant. The increased sales volume was primarily the result of incremental sales of lens finishing equipment to a large retail eyewear chain. This offset the effect of lower industry prescription volumes for spectacle lens eyewear, particularly at the wholesale lab level, which affected both sales of the segment's capital equipment products to wholesale lens production laboratories and aftermarket products.

Segment gross margin decreased to 31.9% for the quarter, down 1.4 percentage points from the corresponding period of the prior year. The lower gross margin was the result of a product sales mix favoring lower margin lens finishing equipment products, which the Company distributes on an original equipment manufacturer (OEM) basis, and the unfavorable absorption of factory overhead costs.

On July 1, 2002, the Company completed the sale of Stereo Optical Company, Inc., which was included in the Ophthalmic Lens Processing segment. Both the gain on disposition and the discontinued Company's results from operations are excluded from the Ophthalmic Lens Processing segment's operating results reported above.

The Company's total debt was reduced by $17.9 million and $42.1 million for the three-month and fiscal year periods ended April 30, 2003, respectively. This was the result of operating earnings, working capital improvements, asset sales, and lower capital expenditures. Cash generated from operating activities was $23.5 million and $42.0 million for the three-month and fiscal year periods ended April 30, 2003, respectively, compared with $7.9 million and $26.6 million for the comparable periods to the prior year. At April 30, 2003, the Company had $20.7 million in cash and cash equivalents and $85.8 million in debt. The ratio of debt to capitalization (defined as the sum of debt and equity) was 47.6% at April 30, 2003 compared with 60.3% at April 30, 2002.

At April 30, 2003, $14.8 million of the Company's debt was classified as short term and $71.0 million was classified as long term. On May 9, 2003, the Company closed on a four-year $110.0 million senior credit facility arranged by Fleet Securities, Inc. Initial borrowings under the facility were used to repay the Company's former credit facility and to pay refinancing fees and expenses. The financing consists of a $45.0 million asset-based, multi-currency revolving credit facility ("Revolver") led by Fleet Capital Corporation and two term loan facilities, each in the amount of $32.5 million ("Term Loans") led by Ableco Finance LLC, a fund affiliated with Cerberus Capital Management, L.P.

During the fourth quarter of fiscal 2003, the Company recognized a $13.7 million non-cash, after-tax charge to shareholder's equity to recognize a minimum pension liability. This charge is a reflection of deteriorating market performance over the last two years, resulting in lower market interest rates and lower plan asset returns. As a result, the Company lowered the plans' pension obligation discount rate to 6.25% and expected return on plan assets to 8.50% on April 30, 2003, the plans' measurement date. Although the Company doesn't expect to be required to make cash contributions to the defined benefit plans in fiscal year 2004, pension expense is expected to be higher next year because of these changes.

The Company continues not to anticipate meaningful improvement in the current economic outlook and demand for the Company's capital equipment products, particularly in the markets served by our Apparel and Flexible Materials and Sign Making and Specialty Graphics businesses. Additionally, fiscal 2003 benefited from incremental capital equipment sales to ophthalmic lens processing customers, which are not likely to be repeated in fiscal year 2004. Accordingly, the Company's focus continues to be implementing its cost reduction initiatives, including supply chain optimization and warehouse consolidation, to further reduce its businesses' cost structures. The Company remains committed to new product development across the organization so that it will be well positioned to take advantage of the opportunities created by a sustained recovery. Enhancing the Company's geographic diversity also continues to be a priority, particularly in the Apparel and Flexible Materials segment, as evidenced by the Company's increasing presence in Asia to better serve those growing markets.

The prolonged weak economic and business environments continue to make estimating demand for the Company's capital equipment products challenging, which has resulted in conservative forecasting. Because of this and many other risks and uncertainties, some of which are cited below and in our Annual Report on Form
10-K for the fiscal year ended April 30, 2002, it is difficult to predict future results. However, on the basis of the cost reduction actions management has already put in place and those it is currently implementing, management expects that the Company's earnings in fiscal 2004 will increase on a year-over-year basis.

The following tables display the reconciliations from reported to adjusted net earnings and adjusted earnings per diluted share:

Gerber Scientific, Inc. (http://www.gerberscientific.com) is the world's leading supplier of sophisticated automated manufacturing systems for sign making and specialty graphics, apparel and flexible materials, and ophthalmic lens processing. Headquartered in South Windsor, Connecticut, the Company operates through four businesses: Gerber Scientific Products and Spandex Ltd., Gerber Technology, and Gerber Coburn.

In addition to the historical information contained herein, there are matters discussed that are considered to be "forward-looking statements." The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. These forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, and services, that could significantly affect results in the future. For a discussion of other risk factors relating to the Company's business, see the Company's Quarterly Report on Form 10-Q for the quarters ended July 31, 2002, October 31, 2002 and January 31, 2003 and its Annual Report on Form 10-K for the year ended April 30, 2002, as filed with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date of this release, and the Company assumes no obligation to update or revise any forward-looking statements contained in this release.