GSLI Gsi Lumonics Inc. (MM)

GSI Lumonics Announces 2005 First Quarter Financial Results BILLERICA, Mass., April 28 /PRNewswire-FirstCall/ -- GSI Lumonics Inc., (NASDAQ:GSLINASDAQ:andNASDAQ:TSX:NASDAQ:GSI), a major supplier of precision motion components, lasers and laser systems, today announced financial results for the first quarter ended April 1, 2005. (All data are expressed in U.S. GAAP and in U.S. dollars.) First quarter results: -- Sales were $64.8 million for the first quarter of 2005, compared to $74.9 million for the same period in 2004, a decrease of 13% -- Net income was $0.1 million or $0.00 per diluted share for the first quarter, compared to net income of $8.9 million or $0.21 per diluted share for the same period last year. -- Bookings were $62.4 million for the quarter, a decrease of $25.9 million from the same period in 2004. -- Backlog was $58.9 million at the end of the first quarter, compared to $92.0 million for the same period in 2004, a decrease of 36%. -- Gross margin for the quarter just ended was 35.4% of sales, as compared to 39.7 % for the same period in 2004. -- Cash flow utilized in operations was $1.2 million for the first quarter as compared to $6.5 million generated in the same quarter in 2004. -- Cash, cash equivalents and marketable short and long-term investments totaled $87.3 million as of April 1, 2005. Geographically, sales for the first quarter of 2005 were as follows: approximately 39% in the Americas, 44% in Asia-Pacific, including Japan, and 17 % in Europe. For the same period in 2004, sales were distributed as follows: 52% in the Americas, 30% in Asia-Pacific, including Japan, and 18% in Europe. Margins were unfavorably impacted by lower volume and generally non- recurring or unusual expenses in the quarter. The non-recurring costs included severance pay of $0.5 million, and a provision for a European customs issue of $0.4 million. Also during the quarter was an additional inventory obsolescence provision of $0.5 million, as compared to the same quarter last year that included a benefit of $0.6 million for sales of inventory that had previously been written down. Sales and General Administrative expenses were higher than the same quarter last year due primarily to the MicroE acquisition. The Company has returned to a normal annualized effective tax rate of approximately 37% for the fiscal year 2005. "We are disappointed in these financial results," said Charles Winston, President and CEO of GSI Lumonics. "Unexpected delivery delays requested by customers within the Laser Systems segment, combined with some non-recurring costs, were the prime causes. We look for improvement in the next quarter." Business Segment Reporting The Components segment reported sales of $34.0 million for the first quarter 2005 as compared to $33.4 million for the same period last year. This quarter includes $5.7 million in additional revenue from MicroE Systems, which was acquired subsequent to the same quarter last year. Operating income was $3.3 million for the first quarter 2005, a decrease of $1.8 million from the same quarter 2004. Gross margin was 36.9% compared to 33.9% in the first quarter of 2004. The improvement in margin is attributed primarily to the addition of MicroE. The Laser Systems segment reported sales of $22.0 million, as compared to $34.0 million during the same quarter last year. The segment contributed an operating profit of $1.6 million for the first quarter 2005, as compared to $9.5 million in the same period last year. Gross margin was 35.4% in the first quarter of 2005, as compared to 45.4% during the fourth quarter 2004. Margins declined due to lower volume of sales and higher costs from warranty and inventory obsolescence. The Laser segment reported sales of $10.3 million, compared to $11.7 million during the same quarter. The segment had an operating loss of $0.7 million in the first quarter 2005 versus $0.4 million operating income in the same period last year, which is a decrease of $1.1 million. Gross margin was 25.4% as compared to 28.1% during the same period last year. Financial Condition At April 1, 2005 cash, cash equivalents and marketable short-term and long-term investments totaled $87.3 million, compared to $90.3 million at December 31, 2004. The Company continues to operate debt-free. Cash flow utilized in operations was $1.2 million for the first quarter in 2005 as compared to $6.5 million provided in cash during the same period last year. GSI Lumonics will host a conference call for investors at 6:00 p.m. Eastern Time. To participate, call 800-591-6942 (within the US and Canada) and 617-614-4909 (for international callers) no earlier than 5:50 p.m. Eastern Time and no later than 5:55 p.m. Eastern Time and identify yourself to the operator with the participant code of 10112209. A replay of the call will be available one hour after the call ends to midnight, May 5, 2005 by dialing 888-286-8010 (within the US and Canada) or 617-801-6888 (for international callers). The access code is 36333377. The conference call also will be broadcast live over the Internet in listen-only mode. For live webcasting, go to: http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=75037&eventID=1020123 at least 15 minutes prior to the call in order to register, download and install any necessary software. The call will be archived on the above web site until midnight, May 5, 2005. GSI Lumonics supplies precision motion control components, lasers and laser-based advanced manufacturing systems to the global medical, semiconductor, electronics, and industrial markets. GSI Lumonics' common shares are listed on Nasdaq (GSLI) and The Toronto Stock Exchange (GSI). 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 may relate to anticipated financial performance, management's plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, tax issues and other matters. 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. Readers should not place undue reliance on the forward- looking statements contained in this news release. Such statements are based on management's beliefs and assumptions and on information currently available to management and are subject to risks, uncertainties and changes in condition, significance, value and effect. Other risks include the fact that the Company's sales have been and are expected to continue to be dependent upon customer capital equipment expenditures, which are, in turn, affected by business cycles in the markets served by those customers. Other factors include volatility in the semiconductor industry, the risk of order delays and cancellations, the risk of delays by customers in introducing their new products and market acceptance of products incorporating subsystems supplied by the Company, similar risks to the Company of delays in its new products, our ability to continue to reduce costs and capital expenditures, our ability to focus R&D investment and integrate acquisitions and other risks detailed in reports and documents filed by the Company with the United States Securities and Exchange Commission and with securities regulatory authorities in Canada. Such risks, uncertainties and changes in condition, significance, value and effect, many of which are beyond the Company's control, could cause the Company's actual results and other future events to differ materially from those anticipated. The Company does not, however, assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements. For more information contact: Investor Relations, 613-224-4868, Ann Dempsey, (ext. 2#) GSI LUMONICS INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. GAAP and in thousands of U.S. dollars, except share amounts) April 1, December 31, 2005 2004 ASSETS Current Cash and cash equivalents $74,360 $82,334 Short-term investments 7,959 2,995 Accounts receivable, less allowance of $1,500 (December 31, 2004 - $2,470) 53,341 60,314 Income taxes receivable 3,665 2,287 Inventories 62,783 60,319 Deferred tax assets 14,897 13,094 Other current assets 8,130 10,311 Total current assets 225,135 231,654 Property, plant and equipment, net of accumulated depreciation of $27,889 (December 31, 2004 - $26,604) 48,558 50,220 Deferred tax assets 16,696 18,364 Other assets 2,775 2,906 Long-term investments 5,667 5,681 Intangible assets, net of amortization of $2,581 (December 31, 2004 - $2,139) 17,571 18,152 Patents and acquired technology, net of amortization of $27,145 (December 31, 2004 - $25,883) 31,396 32,837 Goodwill 26,350 26,350 $374,148 $386,164 LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable $16,176 $18,462 Income taxes payable 1,959 4,045 Accrued compensation and benefits 9,891 13,160 Other accrued expenses 19,088 21,327 Total current liabilities 47,114 56,994 Deferred compensation 2,702 2,178 Deferred tax liabilities 11,201 11,521 Other liability 83 27 Accrued minimum pension liability 9,860 9,881 Total liabilities 70,960 80,601 Commitments and contingencies Stockholders' equity Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 41,489,107 (December 31, 2004 - 41,449,270) 308,859 308,669 Additional paid-in capital 3,227 3,289 Accumulated deficit (1,859) (1,969) Accumulated other comprehensive loss (7,039) (4,426) Total stockholders' equity 303,188 305,563 $374,148 $386,164 GSI LUMONICS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (U.S. GAAP and in thousands of U.S. dollars, except share amounts) Three Months Ended April 1, April 2, 2005 2004 Sales $64,841 $74,853 Cost of goods sold 41,893 45,113 Gross profit 22,948 29,740 Operating expenses: Research and development 6,460 4,759 Selling, general and administrative 15,380 13,484 Amortization of purchased intangibles 1,752 1,549 Other 197 - Total operating expenses 23,789 19,792 Income (loss) from operations (841) 9,948 Loss on sale of investments - (15) Interest income 392 179 Interest expense 4 (28) Foreign exchange transaction gains (losses) 618 (260) Income before income taxes 173 9,824 Income tax provision 63 885 Net income $110 $8,939 Net income per common share: Basic $0.00 $0.22 Diluted $0.00 $0.21 Weighted average common shares outstanding (000's) 41,464 40,951 Weighted average common shares outstanding for diluted net income per common share (000's) 41,825 42,114 GSI LUMONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (U.S. GAAP and in thousands of U.S. dollars, except share amounts) Three Months Ended April 1, April 2, 2005 2004 Cash flows from operating activities: Net income $110 $8,939 Adjustments to reconcile net income to net cash provided by operating activities: Loss on sale of investments - 15 Loss on long lived asset 197 - Depreciation and amortization 3,578 3,746 Unrealized loss on derivatives 56 - Stock-based compensation (62) 51 Deferred income taxes (398) (2,570) Changes in current assets and liabilities: Accounts receivable 6,264 (9,159) Inventories (3,063) (6,881) Other current assets 2,027 564 Accounts payable, accruals, taxes (receivable) payable and other liabilities (9,896) 11,783 Cash (used in) provided by operating activities (1,187) 6,488 Cash flows from investing activities: Additions to property, plant and equipment (898) (277) Proceeds from the sale and maturities of investments 3,000 47,620 Purchases of investments (7,976) (26,491) Decrease in other assets 102 3 Cash (used in) provided by investing activities (5,772) 20,855 Cash flows from financing activities: Issue of share capital from the exercise of stock options 191 328 Cash provided by financing activities 191 328 Effect of exchange rates on cash and cash equivalents (1,206) 291 (Decrease) increase in cash and cash equivalents (7,974) 27,962 Cash and cash equivalents, beginning of period 82,334 64,035 Cash and cash equivalents, end of period $74,360 $91,997 GSI LUMONICS INC. Consolidated Analysis By Segment (unaudited) (thousands of U.S. dollars) Three months ended Sales: April 1, 2005 April 2, 2004 Components $33,985 $33,357 Laser Group 10,261 11,699 Laser Systems 22,004 34,003 Intersegment sales elimination (1,409) (4,206) Total $64,841 $74,853 Gross profit %: Components 36.9% 33.9% Laser Group 25.4 28.1 Laser Systems 35.4 45.4 Intersegment sales elimination (0.8) 7.4 Total 35.4% 39.7% Segment income (loss) from operations: Components $3,297 $5,093 Laser Group (711) 364 Laser Systems 1,623 9,534 Total by segment 4,209 14,991 Unallocated amounts: Corporate expenses 4,827 4,183 Amortization of purchased intangibles not allocated to a segment 26 860 Other 197 - Income (loss) from operations $(841) $9,948 GSI LUMONICS INC. Consolidated Sales Analysis By Geographic Region (unaudited) (millions of U.S. dollars) Three months ended April 1, 2005 April 2, 2004 Sales % ofTotal Sales % ofTotal North America $25.0 39% $38.8 52% Latin and South America 0.4 - 0.1 - Europe (EMEA) 11.1 17 13.5 18 Japan 13.7 21 11.5 15 Asia-Pacific 14.6 23 11.0 15 Total $64.8 100% $74.9 100% DATASOURCE: GSI Lumonics Inc. CONTACT: Ann Dempsey, Investor Relations of GSI Lumonics Inc., +1-613-224-4868 ext. 2# Company News On-Call: http://www.prnewswire.com/comp/107189.html

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