GSLI Gsi Lumonics Inc. (MM)

GSI Lumonics Announces Fourth Quarter and Fiscal 2003 Financial Results BILLERICA, Mass., Feb. 26 /PRNewswire-FirstCall/ -- GSI Lumonics Inc., , a major supplier of precision components, lasers and laser systems, today announced financial results for the fourth quarter and for the twelve months ended December 31, 2003. (All data are expressed in U.S. GAAP and in U.S. dollars.) Fourth Quarter Results * Sales were $54.9 million for the fourth quarter of 2003, compared to $45.1 million for the same period in 2002; an increase of 21.7% * Net income was $2.5 million, or $0.06 per diluted share for the fourth quarter, compared with a loss of $4.6 million, or $0.11 per diluted share, for the same period last year. * Bookings were $56.3 million (excluding Westwind) for the quarter, an increase of 72% over the same period in 2002 * Backlog was $74.6 million at the end of the fourth quarter, compared to $41.8 million for the same period in 2002. The Westwind acquisition contributed $23.1 million to the backlog at the end of December, 2003. * Gross margin for the quarter just ended 2003 was 39.1% of sales, compared to 29.7% for the same period in 2002. * Cash flow from operations was $13.9 million for the fourth quarter, as compared to $9.6 million for the same quarter in 2002. * Cash and investments totaled $107.3 million as of December 31, 2003. The December 2003 acquisition of Westwind Air Bearings Ltd., a manufacturer of high precision rotary motion components, contributed $2.5 million of revenue for the fourth quarter. "The Westwind acquisition is expected to be accretive to earnings in the first quarter of 2004," said Charles Winston, President and CEO. "Its significant presence in PCB manufacturing has been beneficial as the electronics industry is growing." Geographically, sales for the fourth quarter of 2003 were as follows: approximately 47% in the Americas, 39% in Asia-Pacific, including Japan, and 14% in Europe. For the same period in2002, sales were distributed as follows: 50% in the Americas, 34% in Asia-Pacific, including Japan, and 16% in Europe. "We are experiencing improved demand in all three segments of our business in this most recent quarter," said Mr. Winston. "There appears to be a gradual economic recovery driven initially by the consumer electronic markets, and more recently joined by the business sector stimulating demand for manufacturing equipment which requires our components, lasers and systems. We are maintaining a cautiously optimistic approach to the recovery as we continue to focus on cost controls and operational efficiency improvements." For the fiscal year 2003, sales rose 16.7% to $185.6 million from $159.1 million in 2002. The 2003 net loss of $2.2 million, or $0.05 per diluted share was an improvement of $25.5 million over the loss of $27.7 million, or $0.68 per diluted share for 2002. Increased revenues, combined with operating expense reductions of $13.9 million were the primary factors to this performance improvement. Operating expenses for the fourth quarter 2003 included $0.7 million for a pension plan underfunding (the plan was frozen in 2003) and $0.7 million reported as restructuring costs for excess facilities in Munich, Germany. The Company expensed $0.4 million related to the resolution of a legal matter. As of December 31, 2003, headcount was 1,067, up from 793 at year-end 2002. This increase was mainly due to the acquisitions of Spectron laser product lines, DRC's Encoder division and Westwind Air Bearings. Business Segment Reporting In comparing the fourth quarter sales in 2003 with the same period in 2002: * Laser Systems' increase of $5.1 million is attributed mostly to trim and test equipment. * The Laser group increase of $2.7 million was from JK series product and the acquired Spectron products. * The Components segment increase of $3.6 million was generated from the Westwind and DRC acquisitions. The Laser Systems segment contributed an operating profit of $5.1 million for the fourth quarter 2003, as compared to a loss of $2.4 million in the same period last year. This improvement was generated by a combination of higher sales volume, margin improvements and lower operating expensesin the fourth quarter 2003, as compared to the same period in 2002. Operating expenses were $1.5 million lower in the Laser Systems segment in the fourth quarter 2003 compared to the same quarter in 2002. The Laser group had operating income of $1.0 million in the fourth quarter 2003 versus a loss of $0.5 million in the same period last year, driven primarily by increased sales volume and margin improvement. The Components segment reported operating income of $3.7 million for the fourth quarter 2003. This was a decrease of $0.2 million from the same period last year. The decrease in operating income was caused by higher material and operating costs. Financial Condition At December 31, 2003, cash, cash equivalents, short-term investments and other investments totaled $107.3 million, compared to $150.0 million at December 31, 2002. The Company continues to operate debt-free. During the fourth quarter 2003, the acquisition of Westwind Air Bearings was completed requiring a net cash outlay of $34.9 million. Cash flow from operations was $13.9 million for the fourth quarter in 2003, driven by tax refunds and increased payables and accruals. These were partially offset by growth in receivables. In the fiscal year 2003, cash flow from operations was $22.0 million versus $11.7 million in the prior year. ------------------------------------------------- GSI Lumonics will host a conference call for investors on Thursday, February 26, 2004, at 5:00 p.m. Eastern Time. To participate, call 800-901- 5226 (within the US and Canada) and 617-786-4513 (for international callers) no earlier than 4:50 p.m. Eastern Time and no later than 4:55 p.m. Eastern Time and identify yourself to the operator with the participant code of 42351320. A replay of the call will be available one hour after the call ends to midnight, March 8, 2004 by dialing 888-286-8010 (within the US and Canada) or 617-801-6888 (for international callers). The access code is 83226597. The conference call also will be broadcast live over the Internet in listen-only mode. For live webcasting, go to: http://www.firstcallevents.com/service/ajwz399482981gf12.html 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, March 8, 2004. GSI 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 (LSI). 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 objectivesfor 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. Otherrisks 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, similarrisks 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 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. 5632) GSI LUMONICS INC. CONSOLIDATED BALANCE SHEETS (unaudited) (U.S. GAAP and in thousands of U.S. dollars, except share amounts) December 31, December 31, 2003 2002 ASSETS Current Cash and cash equivalents $64,035 $83,633 Short-term investments 39,562 28,999 Accounts receivable, less allowance of $4,465 (December 31, 2002 - $2,681) 53,040 33,793 Income taxes receivable 4,839 8,431 Inventories 43,916 39,671 Deferred tax assets 5,507 9,763 Other current assets 8,048 4,448 Total current assets 218,947 208,738 Property, plant and equipment, net of accumulated depreciation of $22,305 (December 31, 2002 - $21,453) 52,982 26,675 Deferred tax assets 6,642 7,443 Other assets 2,297 3,360 Long-term investments 3,743 37,405 Intangible assets, net of amortization of $21,924 (December 31, 2002 - $16,217) 23,985 13,467 $308,596 $297,088 LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable $18,218 $9,235 Accrued compensation and benefits 7,424 6,523 Other accrued expenses 18,451 20,845 Total current liabilities 44,093 36,603 Deferred compensation 2,162 2,129 Accrued minimum pension liability 1,553 3,875 Total liabilities 47,808 42,607 Commitments and contingencies Stockholders' equity Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 40,927,499 (December 31, 2002 - 40,785,922) 305,512 304,713 Additional paid-in capital 2,800 2,592 Accumulated deficit (43,440) (41,270) Accumulated other comprehensive loss (4,084) (11,554) Total stockholders' equity 260,788 254,481 $308,596 $297,088 GSI LUMONICS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (U.S. GAAP and in thousands of U.S. dollars, except per share amounts) Three months ended Twelve months ended December 31, December 31, December 31, December 31, 2003 2002 2003 2002 Sales $54,879 $45,099 $185,561 $159,070 Cost of goods sold 33,425 31,691 117,084 109,876 Gross profit 21,454 13,408 68,477 49,194 Operating expenses: Research and development 3,441 4,335 13,895 19,724 Selling, general and administrative 13,216 12,585 48,952 56,203 Amortization of purchased intangibles 1,602 1,300 5,657 5,135 Restructuring 777 2,297 3,228 6,448 Other (10) 228 831 (1,021) Total operating expenses 19,026 20,745 72,563 86,489 Income (loss) from operations 2,428 (7,337) (4,086) (37,295) Other income (expense) 39 (424) 103 (628) Interest income 285 1,037 1,886 2,744 Interest expense (73) (161) (202) (701) Foreign exchange transaction gains (losses) (178) (550) 451 (825) Income (loss) before income taxes 2,501 (7,435) (1,848)(36,705) Income tax expense (benefit) - (2,858) 322 (8,981) Net income (loss) $2,501 $(4,577) $(2,170) $(27,724) Net income (loss) per common share: Basic $0.06 $(0.11) $(0.05) $(0.68) Diluted $0.06 $(0.11) $(0.05) $(0.68) Weighted average common shares outstanding (000's) 40,899 40,729 40,837 40,663 Weighted average common shares outstanding and dilutive potential common shares (000's) 41,629 40,729 40,837 40,663 GSI LUMONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (U.S. GAAP and in thousands of U.S. dollars) Three months ended Twelve months ended December 31, December 31, December 31, December 31, 2003 2002 2003 2002 Cash flows from operating activities: Net income (loss) $2,501 $(4,577) $(2,170) $(27,724) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Loss (gain) on disposal of assets (39) - 382 62 Reduction of long-lived assets - 1,380 - 2,510 Depreciation and amortization 2,975 2,593 10,439 10,919 Stock based compensation 208 - 208 - Realized loss (gain) on derivatives (179) - - - Deferred income taxes 1,502 3,388 1,502 4,267 Changes in current assets and liabilities: Accounts receivable (2,464) 3,578 (6,216) 9,356 Inventories 1,734 12,595 8,271 19,632 Other current assets (18) 235 (1,047) 840 Accounts payable, accrued expenses, and taxes (receivable) payable 7,673 (9,614) 10,458 (8,145) Cash provided by operating activities 13,893 9,578 21,827 11,717 Cash flows from investing activities: Acquisitions of businesses (35,346) - (44,298) - Purchase of leased buildings - - (18,925) - Sale of assets - - 847 - Other additions to property, plant and equipment, net (885) (521) (2,699) (2,952) Maturities of short-term and long-term investments 26,100 21,323 188,990 110,014 Purchases of short-term and long-term investments (11,492) (7,221) (165,547) (132,877) (Increase) Decrease in other assets (381) (171) (23) 1,979 Cash provided by (used in) investing activities (22,004) 13,410 (41,655) (23,836) Cash flows from financing activities: Payments of bank indebtedness - (9,984) - (6,441) Repayment of long-term debt - - - (3,000) Issue of share capital 292 407 799 1,209 Cash provided by (used in) financing activities 292 (9,577) 799 (8,232) Effect of exchange rates on cash and cash equivalents (2,195) 958 (569) 1,025 Increase (decrease) in cash and cash equivalents (10,014) 14,369 (19,598) (19,326) Cash and cash equivalents, beginningof period 74,049 69,264 83,633 102,959 Cash and cash equivalents, end of period $64,035 $83,633 $64,035 $83,633 GSI LUMONICS INC. Consolidated Analysis By Segment (unaudited) (thousands of U.S. dollars) Three months ended Twelve months ended December 31, December 31, December 31, December 31, 2003 2002 2003 2002 Sales: Components $21,504 $17,912 $73,762 $70,436 Laser Group 9,300 6,612 33,412 23,748 Laser Systems 25,785 20,769 82,687 65,906 Intersegment sales elimination (1,710) (194) (4,300) (1,020) Total $54,879 $45,099 $185,561 $159,070 Segment income (loss) from operations: Components $3,748 $3,894 $15,665 $16,763 Laser Group 954 (489) 1,071 (5,010) Laser Systems 5,139 (2,381) 8,042 (18,732) Total by segment 9,841 1,024 24,778 (6,979) Unallocated amounts: Corporate expenses 5,044 4,536 19,148 19,754 Amortization of purchased intangibles 1,602 1,300 5,657 5,135 Restructuring 777 2,297 3,228 6,448 Other (10) 228 831 (1,021) Income (loss) from operations $2,428 $(7,337) $(4,086) $(37,295) GSI LUMONICS INC. Consolidated Sales Analysis By Geographic Region (unaudited) (millions of U.S. dollars) Revenues are attributed to geographic areas on the basis of the bill to customer location. Not infrequently, equipment is sold to large international companies, which may be headquartered in Asia-Pacific, but the sales of our systems are billed and shipped to locations in the United States. These sales are therefore reflected in United States totals in the table below. Three months ended December 31, 2003 December 31, 2002 (in millions) Sales % of Total Sales % of Total North America $25.0 46% $22.0 49% Latin and South America 0.4 1 0.6 1 Europe 7.9 14 7.4 16 Japan 11.1 20 12.4 28 Asia-Pacific, other 10.5 19 2.7 6 Total $54.9 100% $45.1 100% Twelve months ended December 31, 2003 December 31, 2002 (in millions) Sales % of Total Sales % of Total North America $93.4 50% $96.6 60% Latin and South America 1.1 1 1.2 1 Europe 27.4 15 25.8 16 Japan 36.1 19 23.5 15 Asia-Pacific, other 27.6 15 12.0 8 Total $185.6 100% $159.1 100% DATASOURCE: GSILumonics Inc. CONTACT: Ann Dempsey, Investor Relations of GSI Lumonics Inc., +1-613-224-4868, ext. 5632 Company News On-Call: http://www.prnewswire.com/comp/107189.html

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