GSLI Gsi Lumonics Inc. (MM)

GSI Lumonics Announces Second Quarter 2004 Financial Results BILLERICA, Mass., Aug. 3 /PRNewswire-FirstCall/ -- GSI Lumonics Inc., (NASDAQ:GSLINASDAQ:andNASDAQ:TSX:NASDAQ:GSI), a major supplier of precision components, lasers and laser systems, today announced financial results for the second quarter ended July 2, 2004. (All data are expressed in U.S. GAAP and in U.S. dollars.) Second Quarter Results -- Sales were $84.5 million for the second quarter of 2004, compared to $44.7 million for the same period in 2003; an 89% increase -- Net income was $11.8 million in the quarter, or $0.28 per diluted share, compared to a loss of $3.6 million, or a loss $0.09 per diluted share, for the same period last year. -- Bookings were $93.7 million for the quarter, an increase of 120% over the same period in 2003 (59% of the increase is attributed to Westwind and MicroE acquisitions). Included in bookings for the quarter is $8.5 million of backlog acquired from MicroE. -- Backlog was $101.0 million at the end of the second quarter, compared to $42.4 million for the same period in 2003. ($36.9 million of the increase is attributable to Westwind and MicroE.) -- Gross margin for the quarter was 42.0% of sales, compared to 35.0% for the same period last year -- Cash flow from operations was $12.6 million for the second quarter, as compared to $1.0 million for the same quarter in 2003. -- Cash, cash equivalents and marketable securities totaled $72.1 million as of July 2, 2004. Geographically, sales for the second quarter of 2004 were as follows: approximately 50% in the Americas, 36% in Asia-Pacific, including Japan, and 14% in Europe. Operating expenses for the second quarter of 2004 were $22.1 million compared to $20.1 million for the same period last year. This increase is mostly attributed to the Westwind and MicroE acquisitions. Also included in operating expenses is an estimated charge of $0.4 million for in-process research and development associated with the MicroE acquisition, based on a preliminary purchase price allocation. The expected annualized tax rate for the fiscal year 2004 is expected to be 10%. The tax rate for the second quarter of 10.7%, an increase from 9% in Q1, reflects an adjustment to year-to-year date tax expense to the expected annualized rate for fiscal year 2004. This rate is significantly below our statutory rate, (which is in the 35-40% range) and anticipates utilization of deferred tax assets at U.S. operations that were reserved for in prior years. "We are pleased to report our second quarter performance which continues the improvements resulting from our strategic acquisitions, restructuring and overall market recovery," stated Charles Winston, GSI Lumonics' President and Chief Executive Officer. Business Segment Reporting Laser Systems Revenues in the Laser Systems segment were $36.4 million in the second quarter of 2004, compared to $19.1 million in the same period last year, led by a continuing strong demand for wafer trim equipment and general market recovery. Gross margins at 43.4 % as compared to 32.9 % over the same period last year improved as a result of higher volumes, firmer pricing, cost reductions, product mix and benefit of selling inventory that had been written down in prior years. These factors combined to generate a $9.8 million operating income for this segment, as compared to $0.6 million in the same period last year. Lasers Revenues of $11.9 million were up $ 3.3 million over the same period last year. Year-over-year improvement reflects increased revenues from the Spectron acquisition, made in May 2003, and traditional laser products. Gross margins were 31.4% as compared to 31.9% for last year. The Lasers segment reported an operating income of $0.7 million versus $0.1 million for the same period last year. Components The Components segment had revenues of $41.9 million, an increase of $24.2 million over the same period last year. This increase was primarily from the Westwind and MicroE acquisitions. Gross margin was 39.7% compared to 39.5% in the same period last year. Operating income for this segment was $9.5 million versus $3.6 million in the same period last year. Financial Condition At July 2, 2004, cash, cash equivalents, and marketable investments totaled $72.1 million, compared to $113.6 million at April 2, 2004 and $106.7 million at December 31, 2003. In the second quarter of 2004, the Company used $54.7 million for the acquisition of MicroE. Amortization expense based on current valuation estimates for MicroE was $0.4 million for the second quarter of 2004 and will increase to $0.8 million in the third quarter of 2004, reflecting a full quarter of MicroE amortization. The amortization for MicroE , along with the in-process research and development charge is based on a preliminary allocation of the purchase price and is subject to change. The Company continues to operate debt-free. Inventory turns were 3.4 for the quarter compared to 3.5 last quarter. Days sales outstanding in receivables decreased from 78 last quarter to 64 at the end of the second quarter of 2004. ------------------------------------------------- GSI Lumonics will host a conference call for investors on August 3, 2004 at 5:00 p.m. Eastern Time. To participate, call 800-901-5241 (within the US and Canada) and 617-786-2963 (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 51932215. A replay of the call will be available one hour after the call ends to midnight, August 18, 2004 by dialing 888-286-8010 (within the US and Canada) or 617-801-6888 (for international callers). The access code is 19983845. 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?c=75037&p=IROL- eventDetails&EventId=915294 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, August 18, 2004. 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. GSI LUMONICS INC. CONSOLIDATED BALANCE SHEETS (unaudited) (U.S. GAAP and in thousands of U.S. dollars, except share amounts) July 2, December 31, 2004 2003 ASSETS Current Cash and cash equivalents $53,192 $64,035 Short-term investments 17,954 39,562 Accounts receivable, less allowance of $4,185 (December 31, 2003 - $4,465) 59,720 53,040 Income taxes receivable - 4,839 Inventories 57,194 43,916 Deferred tax assets 12,620 5,507 Other current assets 8,817 8,048 Total current assets 209,497 218,947 Property, plant and equipment, net of accumulated depreciation of $24,421 (December 31, 2003 - $22,305) 50,926 52,982 Deferred tax assets 8,013 8,521 Other assets 2,487 2,297 Long-term investments 1,644 3,743 Intangible assets, net of amortization of $24,652 (December 31, 2003 - $21,924) 53,839 23,985 Goodwill 31,094 - $357,500 $310,475 LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable $23,809 $18,218 Income taxes payable 829 - Accrued compensation and benefits 10,170 7,424 Other accrued expenses 20,137 18,451 Total current liabilities 54,945 44,093 Deferred compensation 2,127 2,162 Deferred tax liability 13,735 1,879 Other liability 30 - Accrued minimum pension liability 1,595 1,553 Total liabilities 72,432 49,687 Commitments and contingencies Stockholders' equity Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 41,191,885 (December 31, 2003 - 40,927,499) 307,149 305,512 Additional paid-in capital 2,919 2,800 Accumulated deficit (22,687) (43,440) Accumulated other comprehensive loss (2,313) (4,084) Total stockholders' equity 285,068 260,788 $357,500 $310,475 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 Six months ended July 2, June 27, July 2, June 27, 2004 2003 2004 2003 Sales $84,537 $44,682 $159,390 $85,801 Cost of goods sold 49,019 29,043 94,132 55,422 Gross profit 35,518 15,639 65,258 30,379 Operating expenses: Research and development 6,002 3,523 10,761 6,832 Selling, general and administrative 14,527 13,201 28,012 25,039 Amortization of purchased intangibles 1,162 1,369 2,710 2,647 Acquired in-process research and development 430 - 430 - Restructuring - 1,559 - 2,187 Other - 485 - 841 Total operating expenses 22,121 20,137 41,913 37,546 Income (loss) from operations 13,397 (4,498) 23,345 (7,167) Other income (expense) - 64 (15) 64 Interest income 211 687 390 1,328 Interest expense (26) (95) (55) (150) Foreign exchange transaction gains (losses) (347) 287 (606) 704 Income (loss) before income taxes 13,235 (3,555) 23,059 (5,221) Income tax provision 1,421 - 2,306 - Net income (loss) $11,814 $(3,555) $20,753 $(5,221) Net income (loss) per common share: Basic $0.29 $(0.09) $0.51 $(0.13) Diluted $0.28 $(0.09) $0.49 $(0.13) Weighted average common shares outstanding (000's) 41,059 40,797 41,009 40,793 Weighted average common shares outstanding and dilutive potential common shares (000's) 42,250 40,797 42,200 40,793 GSI LUMONICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (U.S. GAAP and in thousands of U.S. dollars) Three months ended Six months ended July 2, June 27, July 2, June 27, 2004 2003 2004 2003 Cash flows from operating activities: Net income (loss) $11,814 $(3,555) $20,753 $(5,221) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Loss on disposal of assets - 421 - 421 Loss on sale of investments - - 15 - Acquired in-process research and development 430 - 430 - Stock-based compensation 68 - 119 - Depreciation and amortization 2,855 2,386 6,601 4,928 Unrealized loss (gain) on derivatives - (491) - 13 Deferred income taxes (3,120) - (5,690) - Changes in current assets and liabilities: Accounts receivable 7,161 (139) (1,998) (4,740) Inventories (4,015) 1,781 (10,896) 4,614 Other current assets (1,285) (1,771) (721) (693) Accounts payable, accrued expenses, and taxes (receivable) payable (1,303) 2,367 10,480 815 Cash provided by operating activities 12,605 999 19,093 137 Cash flows from investing activities: Acquisitions of businesses (54,744) (9,553) (54,744) (9,553) Purchase of leased buildings - (18,925) - (18,925) Sale of assets - 847 - 847 Additions to property, plant and equipment, net (589) (306) (866) (904) Proceeds maturities and sales of short-term and long-term investments 15,485 101,184 63,105 142,328 Purchases of short-term and long-term investments (12,945) (86,123) (39,436) (112,404) (Increase) Decrease in other assets (156) 107 (153) 149 Cash provided by (used in) investing activities (52,949) (12,769) (32,094) 1,538 Cash flows from financing activities: Issue of share capital 1,309 106 1,637 114 Cash provided by financing activities 1,309 106 1,637 114 Effect of exchange rates on cash and cash equivalents 230 (64) 521 328 Increase (decrease) in cash and cash equivalents (38,805) (11,728) (10,843) 2,117 Cash and cash equivalents, beginning of period 91,997 97,478 64,035 83,633 Cash and cash equivalents, end of period $53,192 $85,750 $53,192 $85,750 GSI LUMONICS INC. Consolidated Analysis By Segment (unaudited) (thousands of U.S. dollars) Three months ended Six months ended Sales: July 2, 2004 June 27, 2003 July 2, 2004 June 27, 2003 Components $41,854 $17,610 $75,210 $34,265 Laser Group 11,924 8,654 23,624 15,642 Laser Systems 36,364 19,089 70,367 36,915 Intersegment sales elimination (5,605) (671) (9,811) (1,021) Total $84,537 $44,682 $159,390 $85,801 Gross profit %: Components 39.7% 39.5% 37.1% 42.0% Laser Group 31.4 31.9 29.8 32.1 Laser Systems 43.4 32.9 44.4 31.2 Intersegment sales elimination 10.8 53.8 9.4 56.5 Total 42.0% 35.0% 40.9% 35.4% Segment income (loss) from operations: Components $9,456 $3,611 $15,204 $8,466 Laser Group 698 82 1,095 (389) Laser Systems 9,812 575 19,346 174 Total by segment 19,966 4,268 35,645 8,251 Unallocated amounts: Corporate expenses 4,977 5,353 9,160 9,743 Amortization of purchased intangibles 1,162 1,369 2,710 2,647 Acquired in-process research and development 430 - 430 - Restructuring and other - 2,044 - 3,028 Income (loss) from operations $ 13,397 $ (4,498) $23,345 $ (7,167) GSI LUMONICS INC. Consolidated Sales Analysis By Geographic Region (unaudited) (millions of U.S. dollars) Three months ended July 2, 2004 June 27, 2003 % of % of Sales Total Sales Total North America $41.8 49% $27.9 63% Latin and South America 0.5 1 0.5 1 Europe (EMEA) 12.0 14 5.5 12 Japan 13.4 16 7.6 17 Asia-Pacific, other 16.8 20 3.2 7 Total $84.5 100% $44.7 100% Six months ended July 2, 2004 June 27, 2003 % of % of Sales Total Sales Total North America $80.6 51% $48.8 57% Latin and South America 0.6 - 0.7 1 Europe (EMEA) 25.5 16 11.0 13 Japan 24.9 16 17.1 20 Asia-Pacific, other 27.8 17 8.2 9 Total $159.4 100% $85.8 100% For more information contact: Investor Relations, 613-224-4868, Ann Dempsey, (ext. 2#) DATASOURCE: GSI Lumonics Inc. CONTACT: Ann Dempsey, Investor Relations, GSI Lumonics Inc., +1-613-224-4868, ext. 2# Company News On-Call: http://www.prnewswire.com/comp/107189.html

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