SOUTH WINDSOR, CT -- Gerber Scientific, Inc. (NYSE: GRB) today reported financial results for the fourth quarter and fiscal year ended April 30, 2001. The Company highlighted the following:

• Weaker economic conditions and a sustained strong dollar led to lower sales and a fourth quarter loss of $.04 per share before restructuring and other special charges;

• Cash flow from operations improved to $36.7 million for the fiscal year despite the lower operating results;
• Debt reduced by $25.0 million in the fiscal year to $169.9 million.

• Major fourth quarter restructuring taken; Company recorded restructuring and other special charges of $26.9 million pre-tax, $18.3 million after tax, or $.83 per share; annualized savings of $30 to $35 million expected.

• Modest revenue growth expected in fiscal year 2002 to $560 to $565 million; improved earnings in range of $.45 to $.50 per share.

Before restructuring and other special charges, the Company reported a loss of $.04 per diluted share for the fourth quarter ended April 30, 2001 on sales of $137.5 million compared with earnings of $.26 per share for the fourth quarter of last year on sales of $162.9 million. The net loss in this year's fourth quarter was $0.8 million before restructuring and other special charges, compared with net earnings of $5.8 million for the same period last year. The restructuring and other special charges in this year's fourth quarter amounted to $18.3 million after taxes, or $.83 per share and resulted in a net loss per share for the quarter of $.87. Last year's fourth quarter included a charge for $4.1 million after taxes, or $.18 per share, and resulted in net earnings per share for that quarter of $.08.

For the fiscal year, the Company reported a loss per share of $.11 before restructuring and other special charges on sales of $553.0 million. After these charges, the net loss per share for the year ended April 30, 2001 was $1.07 (note that this amount also includes a first quarter special charge). These results compared with earnings of $1.34 per diluted share before a special charge for last year on sales of $610.7 million. Diluted earnings per share for last year were $1.16 after the charge. The net loss in this fiscal year was $2.5 million before the restructuring and other special charges and $23.6 million after the charges. Net earnings were $30.0 million for last year before special charges and $25.9 million after.

Commenting on the fourth quarter results, Michael J. Cheshire, Chairman and Chief Executive Officer, said, "Fourth quarter results reflect the weakness in demand for capital equipment in each of our business segments, especially in North America. Substantial cost reductions helped narrow the loss to $.04 per share (before restructuring and other special charges) in the quarter from a $.17 per share loss in the third quarter. Working capital continued to come down and we generated over $11.0 million in cash flow in the quarter. Debt reduction continues to be a top priority. Although we remain cautious about the near term outlook for our markets and the continued strength of the dollar, the restructuring initiatives will enable Gerber Scientific to return to profitability as a leaner, more focused company."

The Company reported that asset sales and improved working capital management in the fiscal year generated improved cash flow, despite lower operating results. Cash flow from operations amounted to $36.7 million for fiscal year 2001 compared with $27.1 million in the prior year. Reductions in the Company's working capital, particularly accounts receivable and inventory, contributed to this improvement. Asset sales added to cash generation, including approximately $12.0 million received from a sale/leaseback transaction involving the Bristol, UK facility of the Company's Spandex PLC subsidiary. The Company has reduced its debt by $25.0 million since the beginning of fiscal year 2001 and is focused on generating additional cash flow to further reduce its debt level. The Company remains committed to selling certain idle facilities and is negotiating an additional sale/leaseback transaction involving its principal South Windsor, Connecticut campus. The Company also announced on February 23, 2001 that its Board of Directors voted to suspend the $.08 quarterly dividend after the February 28, 2001 payment. Suspension of the dividend will provide the Company with an additional $7.0 million per year of cash flow to be used toward lowering debt.

As in previous periods, weaker year-to-year foreign currency exchange rates affected the Company's results in the fourth quarter and fiscal year ended April 30, 2001. Revenue for this year's fourth quarter of $137.5 million reflected a $6.2 million adverse impact from foreign currency translation rates on a year-to-year basis. Holding currency values constant with the prior year, the 2001 fiscal year's revenue of $553.0 million would have been $32.5 million higher, or $585.5 million. Earnings per share were $.01 lower in this year's fourth quarter due to weaker currency translation rates and were $.23 lower in the fiscal year.

Profitability continued to be impacted by top-line weakness in the Company's three core businesses. Each segment realized lower year-to-year sales in both the fourth quarter and fiscal year with the most significant declines in the Apparel and Flexible Materials segment. Profitability was off substantially on a year-to-year basis in the Company's two largest operating segments, Sign Making and Specialty Graphics and Apparel and Flexible Materials, and to a lesser extent in the Optical Lens Processing segment.

As was the case in prior quarters, profitability in this year's fourth quarter was also impacted by lower gross profit margins. The weaker foreign currency values lowered gross profit margins as did changes in the sales mix, which favored higher margin products last year. Additionally, the geographic shift of sales this year to international markets had an adverse impact on margins, as the Company generally sells through distributors and agents in those markets.

New orders totaled $136.2 million for the three months ended April 30, 2001, compared with $148.3 million last year. For the fiscal year, new orders amounted to $548.2 million compared with $605.1 million last year. Each of the Company's operating segments reported lower orders in the current year, with shortfalls occurring in both the European and North American markets throughout the year. In addition, orders from other international markets declined in the fourth quarter. The relative strength of the U.S. dollar offered the Company's European competitors pricing advantages, particularly in that geographic market. Weakening economic conditions in North American markets also resulted in fewer orders, particularly for equipment. Currency weakness in certain international markets (including Turkey, Brazil, and Australia) slowed orders from those markets in the fourth quarter.

Backlog at the end of this fiscal year was $40.5 million compared with $45.2 million at the beginning of the year, with the decrease occurring primarily in the Sign Making and Specialty Graphics segment. Order entry in this segment was dampened by previously reported problems experienced in the introduction of the Gerber MAXX™, a new wide-format thermal imaging system. The Company has re-introduced MAXX units to the field in "beta" testing and has received satisfactory reports on the units' performance. However, the MAXX has not yet been released for full production and remains on technical hold.

In the fourth quarter, the Company implemented plans to reduce worldwide employment by approximately 350 employees (13 percent of its workforce), discontinue product lines, and consolidate facilities as part of its overall strategic initiative to restructure operations and reduce costs. These actions were principally in the Apparel and Flexible Materials, and Sign Making and Specialty Graphics segments, although each of the Company's operating segments was affected. These plans were the result of difficult U.S. economic conditions, general global economic uncertainty, the prolonged weakness of the Euro currency, and problems experienced in the rollout of new products. The aggregate pre-tax restructuring and other special charges were $26.9 million: $1.1 million was included in revenue (as a write-off of receivables), $10.9 million in the cost of sales, $1.8 million in selling, general and administrative expenses, and $13.1 million as restructuring charges in the consolidated statement of earnings. The aggregate charge is comprised of employee separation costs, facility exit costs, inventory write-downs, impairments of long-lived assets (principally facilities), and other charges. The goal of the restructuring actions is to reduce operating costs by $30 to $35 million on an annual basis by fiscal year 2003.

The Company previously reported that it completed its review of strategic alternatives for its optical lens processing unit, Gerber Coburn. Based on an extensive review and discussions with potential strategic and financial parties, Gerber Scientific, Inc. determined that Gerber Coburn will remain a business segment of the Company.

Given current economic conditions, the Company anticipates limited top line growth in its new fiscal year 2002, which began May 1, 2001. As previously noted, the Company currently expects sales in the range of $560 to $565 million for fiscal year 2002, a modest increase from $553 million for the fiscal year just ended. Based largely on benefits derived from the cost reduction actions taken in fiscal year 2001, the Company currently anticipates earnings per share in the range of $.45 to $.50 next fiscal year.

Gerber Scientific, Inc. (http://www.gerberscientific.com) is the world's leading supplier of sophisticated automated manufacturing systems that enable mass customization in sign making and specialty graphics, apparel and flexible goods, and optical lens processing. Headquartered in South Windsor, Connecticut, the Company operates through four wholly-owned subsidiaries: Gerber Scientific Products and Spandex PLC, 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 Reports on Form 10-Q for the quarters ended July 31, 2000, October 31, 2000, and January 31, 2001 and its Annual Report on Form 10-K for the year ended April 30, 2000, 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.

Comparison on a consolidated basis for the three months and fiscal years ended April 30, 2001 and 2000 follows:

FINANCIAL FIGURES FOR THREE MONTHS AND FISCAL YEARS ENDED APRIL 30, 2001 AND 2000