For Immediate Release

Contact:  Jay Zager

December 1, 2005

(860) 644-1551

   

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.

 

GERBER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

    Quarter Ended
    October 31,

 Six Months Ended
 October 31,

             

In thousands (except per share amounts)

2005 

2004 

2005 

2004 

Revenue:

     Product sales

$ 118,376 

 

$ 117,059 

$ 231,793 

 

$ 229,982 

     Service sales

    15,585 

 

    14,357 

    30,932 

 

    29,120 

  133,961 

  131,416 

  262,725 

  259,102 

Costs and Expenses:

           

     Cost of products sold

84,205 

 

83,704 

164,070 

 

162,453 

     Cost of services sold

9,306 

 

9,629 

18,949 

 

19,345 

     Selling, general and administrative

29,308 

 

30,027 

58,883 

 

58,125 

     Research and development

6,518 

 

6,108 

12,830 

 

12,221 

     Restructuring charges

       (195)

 

         351 

       (231)

 

      2,245 

 

  129,142 

 

  129,819 

  254,501 

 

  254,389 

Operating income

4,819 

 

1,597 

8,224 

 

4,713 

             

Other expense, net

(866)

 

(1,238)

(1,041)

 

(1,436)

Loss on early extinguishment of debt

(2,483)

 

 ---  

(2,483)

 

 ---  

Interest expense

    (1,525)

 

    (1,673)

    (2,956)

 

    (3,750)

(Loss) Earnings before income taxes

  (55)

 

(1,314)

 1,744 

 

(473)

Provision (Benefit) for income taxes

         327 

       (226)

      3,209 

         (82)

Net loss

$    (382)

 

$  (1,088)

$  (1,465)

 

$     (391)

 

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Loss per share of common stock:

           

     Basic

$     (.02)

 

$      (.05)

$      (.07)

 

$      (.02)

     Diluted

$     (.02)

 

$      (.05)

$      (.07)

 

$      (.02)

             

Weighted average shares outstanding:

           

     Basic

22,368 

 

22,267 

22,340 

 

22,251 

     Diluted

22,368 

 

22,267 

22,340 

 

22,251 

             
 

 

 

GERBER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

       


In thousands

October 31,
     2005     

 

April 30,       2005    

Assets:

     

Current Assets:

     

     Cash and cash equivalents

$    11,847 

 

$     6,148 

     Accounts receivable, net

84,881 

 

89,800 

     Inventories

50,818 

 

52,363 

     Current deferred tax assets

9,887 

 

7,559 

     Prepaid expenses and other current assets

      4,877 

 

      5,295 

 

  162,310 

 

  161,165 

Property, Plant and Equipment

104,777 

 

122,444 

     Accumulated depreciation

  (65,686) 

 

  (82,521) 

 

    39,091 

 

    39,923 

Intangible Assets:

     

     Goodwill

51,352 

 

52,315 

     Pension intangible asset

1,692 

 

1,692 

     Patents and other intangible assets, net

      5,181 

 

      5,392 

 

    58,225 

 

    59,399 

Deferred Tax Assets

26,734 

 

29,788 

Other Assets

      3,901 

 

      6,014 

 

$ 290,261 

 

$ 296,289 

 

=======

 

=======

Liabilities and Shareholders' Equity:

     

Current Liabilities:

     

     Short-term debt

$   38,985 

 

$   29,482 

     Accounts payable

46,935 

 

47,023 

     Accrued compensation and benefits

18,736 

 

16,438 

     Other accrued liabilities

19,180 

 

20,654 

     Deferred revenue

13,941 

 

15,467 

     Income taxes payable

3,848 

 

2,822 

     Advances on sales contracts

         738 

 

         674 

  142,363 

  132,560 

       

     Accrued pension benefit liability

26,198 

 

25,264 

     Other liabilities

5,979 

 

6,399 

     Long-term debt

      6,953 

 

    16,260 

 

   39,130 

 

   47,923 

Commitments and Contingencies

     
       

Shareholders' Equity:

     

     Preferred stock

 

— 

     Common stock

 231 

 230 

     Additional paid-in capital

 66,263 

 

 66,045 

     Retained earnings

 66,420 

 

 67,885 

     Treasury stock, at cost

(13,677)

 

(13,991)

     Unamortized value of restricted stock grants

(101)

 

(130)

     Accumulated other comprehensive loss

  (10,368)

 

     (4,233)

 

  108,768 

 

  115,806 

 

$ 290,261 

 

$ 296,289 

 

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