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For Immediate Release |
Contact: Jay Zager |
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December 1, 2005 |
(860) 644-1551 |
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GERBER SCIENTIFIC ANNOUNCES FISCAL 2006 SECOND QUARTER RESULTS SOUTH WINDSOR, CT – Gerber Scientific, Inc. (NYSE: GRB) today reported a second quarter fiscal 2006 loss of $0.4 million, or $0.02 per diluted share, on revenue of $134.0 million compared with a loss of $1.1 million, or $0.05 per diluted share, on revenue of $131.4 million for the quarter ended October 31, 2004. The second quarter fiscal 2006 loss included a substantially non-cash, pre-tax charge of $2.5 million, or $0.07 per diluted share, associated with the early extinguishment of the Company's former credit facility. Excluding the impact of this one-time charge, the Company would have reported earnings of $1.2 million or $0.05 per diluted share for the quarter ended October 31, 2005. Foreign currency translation had the effect of increasing revenue by $0.8 million in the second quarter of fiscal 2006 compared with the second quarter of fiscal 2005.For the six months ended October 31, 2005, the Company reported a loss of $1.5 million, or $0.07 per diluted share on revenue of $262.7 million, compared with a loss of $0.4 million, or $0.02 per diluted share, on revenue of $259.1 million for the six months ended October 31, 2004. Excluding the impact of the debt extinguishment charge recorded in the second quarter and the effect of a $2.3 million tax charge associated with the reversal of a deferred tax asset in the United Kingdom related to a change in tax law recorded in the first quarter, the Company would have reported earnings of $2.4 million, or $0.11 per diluted share, for the first half of fiscal 2006. Foreign currency translation had the effect of increasing revenue by $2.9 million for the first six months of this fiscal year, compared with the same period in the prior year. Commenting on the second quarter results, Marc T. Giles, president and chief executive officer said, "We are very pleased with our performance this quarter. While revenue growth was somewhat below our expectations, we generated an operating profit of $4.8 million, which was 42 percent higher than the first quarter and over 200 percent above last year's levels. We also generated $6.8 million of cash flow from operations during the second quarter, net of capital expenditures, which was our strongest performance since fiscal 2004, and was our ninth consecutive quarter of positive cash flow generation." Giles added, "In addition, we significantly improved our capital structure by refinancing our debt with much more favorable financial terms and greater flexibility. And as a result of our strong cash performance in the quarter, we were able to reduce our net debt balance (debt less cash and cash equivalents) to $34.1 million, a $5.5 million reduction from the April 30, 2005 level." For additional information, including segment and order entry information, please see our Quarterly Report on Form 10-Q for the quarter ended October 31, 2005, which will be filed with the Securities and Exchange Commission. About Gerber Scientific, Inc. Gerber Scientific, Inc. (http://www.gerberscientific.com) is a leading international 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 primary businesses: Gerber Scientific Products, Spandex Ltd., Gerber Technology and Gerber Coburn. Forward-looking Statements: Statements contained in this news release regarding the Company's expected financial condition, revenue, cash flow, operating results, restructuring and other charges, cost savings, operational efficiencies, debt reduction, other potential benefits of its turnaround initiatives, business strategy and other planned events and expectations are forward-looking statements that involve risks and uncertainties. Actual future results or events may differ materially from these forward-looking statements. Readers are referred to the documents filed by the Company with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2005 and subsequently filed quarterly and current reports, for a discussion of important risks that could cause actual results to differ from those contained or implied in the forward-looking statements. These risks include, but are not limited to, delays in the Company's new product development and commercialization, intense competition in markets for each of the Company’s operating segments that could affect the Company’s pricing decisions and the timing of product introductions, the potential impact on European revenue from the Waste Electrical and Electronic Equipment Directive or the Restriction of Hazardous Substances Directive, rapid technological advances that could cause the Company’s inventory to exceed its needs or become obsolete, the Company’s reliance on manufacturers or suppliers to supply inventory to the Company’s specifications in a timely and cost effective manner, non-recurring orders from significant customers, delays caused by facility relocations, the elimination of apparel trade quotas, fluctuations in currency exchange rates and international economic conditions that could cause the Company’s financial results to be volatile, product liability claims, regulatory changes that could increase costs, the Company’s indebtedness, compliance with financial covenants associated with the Company’s primary credit agreements, any failure to enhance and diversify the Sign Making and Specialty Graphics segment product lines, a potential loss of market focus as the Company seeks to improve operating efficiencies, and the Company’s increased focus on larger wholesale optical laboratories. The Company expressly disclaims any obligation to update any of these forward-looking statements. |
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GERBER SCIENTIFIC, INC. (Unaudited) |
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Quarter Ended |
Six Months Ended |
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In thousands (except per share amounts) |
2005 |
2004 |
2005 |
2004 |
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Revenue: |
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Product sales |
$ 118,376 |
$ 117,059 |
$ 231,793 |
$ 229,982 |
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Service sales |
15,585 |
14,357 |
30,932 |
29,120 |
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133,961 |
131,416 |
262,725 |
259,102 |
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Costs and Expenses: |
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Cost of products sold |
84,205 |
83,704 |
164,070 |
162,453 |
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Cost of services sold |
9,306 |
9,629 |
18,949 |
19,345 |
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Selling, general and administrative |
29,308 |
30,027 |
58,883 |
58,125 |
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Research and development |
6,518 |
6,108 |
12,830 |
12,221 |
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Restructuring charges |
(195) |
351 |
(231) |
2,245 |
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129,142 |
129,819 |
254,501 |
254,389 |
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Operating income |
4,819 |
1,597 |
8,224 |
4,713 |
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Other expense, net |
(866) |
(1,238) |
(1,041) |
(1,436) |
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Loss on early extinguishment of debt |
--- |
(2,483) |
--- |
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Interest expense |
(1,525) |
(1,673) |
(2,956) |
(3,750) |
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(Loss) Earnings before income taxes |
(55) |
(1,314) |
1,744 |
(473) |
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Provision (Benefit) for income taxes |
327 |
(226) |
3,209 |
(82) |
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Net loss |
$ (382) |
$ (1,088) |
$ (1,465) |
$ (391) |
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Loss per share of common stock: |
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Basic |
$ (.02) |
$ (.05) |
$ (.07) |
$ (.02) |
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Diluted |
$ (.02) |
$ (.05) |
$ (.07) |
$ (.02) |
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Weighted average shares outstanding: |
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Basic |
22,368 |
22,267 |
22,340 |
22,251 |
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Diluted |
22,368 |
22,267 |
22,340 |
22,251 |
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GERBER SCIENTIFIC, INC. (Unaudited) |
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October 31, |
April 30, 2005 |
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Assets: |
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Current Assets: |
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Cash and cash equivalents |
$ 11,847 |
$ 6,148 |
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Accounts receivable, net |
84,881 |
89,800 |
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Inventories |
50,818 |
52,363 |
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Current deferred tax assets |
9,887 |
7,559 |
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Prepaid expenses and other current assets |
4,877 |
5,295 |
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162,310 |
161,165 |
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Property, Plant and Equipment |
104,777 |
122,444 |
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Accumulated depreciation |
(65,686) |
(82,521) |
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39,091 |
39,923 |
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Intangible Assets: |
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Goodwill |
51,352 |
52,315 |
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Pension intangible asset |
1,692 |
1,692 |
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Patents and other intangible assets, net |
5,181 |
5,392 |
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58,225 |
59,399 |
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Deferred Tax Assets |
26,734 |
29,788 |
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Other Assets |
3,901 |
6,014 |
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$ 290,261 |
$ 296,289 |
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Liabilities and Shareholders' Equity: |
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Current Liabilities: |
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Short-term debt |
$ 38,985 |
$ 29,482 |
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Accounts payable |
46,935 |
47,023 |
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Accrued compensation and benefits |
18,736 |
16,438 |
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Other accrued liabilities |
19,180 |
20,654 |
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Deferred revenue |
13,941 |
15,467 |
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Income taxes payable |
3,848 |
2,822 |
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Advances on sales contracts |
738 |
674 |
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142,363 |
132,560 |
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Accrued pension benefit liability |
26,198 |
25,264 |
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Other liabilities |
5,979 |
6,399 |
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Long-term debt |
6,953 |
16,260 |
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39,130 |
47,923 |
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Commitments and Contingencies |
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Shareholders' Equity: |
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Preferred stock |
— |
— |
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Common stock |
231 |
230 |
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Additional paid-in capital |
66,263 |
66,045 |
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Retained earnings |
66,420 |
67,885 |
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Treasury stock, at cost |
(13,677) |
(13,991) |
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Unamortized value of restricted stock grants |
(101) |
(130) |
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Accumulated other comprehensive loss |
(10,368) |
(4,233) |
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108,768 |
115,806 |
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$ 290,261 |
$ 296,289 |
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