Exhibit 99.1
GSI GROUP REPORTS THIRD QUARTER RESULTS
BILLERICA, MA October 25, 2005. GSI Group Inc., (Nasdaq: GSIG and TSX: GSI), a
major supplier of precision motion components, lasers and laser systems, today
announced financial results for the third quarter ended September 30, 2005. All
data is expressed in U.S. GAAP and in U.S. dollars.
"GSI increased cash and investments by $15M this quarter, while gross margins
and EPS remained relatively strong, on a lower revenue base indicative of our
increased operating leverage" said Charles Winston, President and CEO of GSI
Group Inc. "Although the semiconductor equipment segment of our business slowed
this quarter, we are encouraged by stronger order activity and recent reports of
industry utilization of IC equipment at 98% for test and assembly in September."
GROSS MARGINS AND EPS REMAIN STRONG ON A LOWER REVENUE BASE
o Sales were $62.6 million for the third quarter of 2005, compared to
$66.9 million in the previous quarter.
o Gross margin for the quarter was 39% of sales compared with 41% in the
prior quarter.
o Net income was $2.0 million or $0.05 per diluted share for the third
quarter, compared to net income of $3.1 million or $0.07 per diluted
share in the previous quarter.
SEGMENTS MAINTAIN LEVERAGE BY MANAGING COSTS EFFECTIVELY
o Precision Motion segment reported sales of $36.5 million, compared to
$34.2 million in the previous quarter. Operating income was $5.5
million for the third quarter, an increase from $4.9 million in the
previous quarter. Gross margin was 41% compared to 42% in the previous
quarter.
o The Systems segment reported sales of $17.9 million, compared to $23.7
million during the previous quarter. The segment contributed an
operating profit of $0.7 million for the third quarter, as compared to
$3.1 million in the previous quarter. Gross margin was 35% as compared
to 39% during the previous quarter.
o Laser segment reported sales of $10.0 million, compared to $11.4
million during the previous quarter. The segment had operating income
of $0.1 million in the third quarter versus $0.8 million in the
previous quarter. Gross margin was 34% in the third quarter, compared
to 36% during the previous quarter.
OTHER KEY METRICS
o Cash, cash equivalents and marketable investments increased $15.2
million to $93.5 million, from $78.3 million in the prior quarter.
This was primarily driven by the collection of $8.6 million in
accounts receivable from several major semiconductor accounts and $5.8
million from the sale of a facility in Michigan.
o Book to bill ratio was .97, down slightly from 1.04 in the prior
quarter.
o Backlog decreased 3% to $59.8 million, compared to $61.6 million in
the previous quarter.
o Bookings were $60.8 million for the quarter, a decrease of $8.8
million from the previous quarter.
o Geographically, sales for the third quarter of 2005 were as follows:
approximately 38% in the Americas, 43% in Asia & Japan and 19% in
Europe.
GSI VOLUNTARILY DELISTS FROM TSX
GSI Group Inc. is also voluntarily withdrawing the listing of its
stock under the ticker symbol GSI, from the Toronto Stock Exchange.
The delisting will be effective as of the close of trading on November
1, 2005. The move was prompted by the recent cost containment
initiative and the fact that the company no longer maintains offices,
division personnel or operations in Canada. GSI Group Inc. will remain
as a Canadian domiciled company and shares will continue to be able to
be purchased and sold on the Nasdaq exchange under the existing ticker
symbol GSIG.
DIAL IN: OCTOBER 26TH AT 8:00AM EDT
GSI Group will host a conference call for investors at 8:00 a.m. Eastern Time on
October 26th. To participate, call (913) 981-5543. A replay of the call will be
available by dialing (719) 457-0820. Access code: 3414989. The conference call
also will be broadcast live over the Internet in listen-only mode at
www.gsig.com.
ABOUT GSI GROUP INC.
GSI Group Inc. supplies precision motion control products, lasers and
laser-based advanced manufacturing systems to the global medical, semiconductor,
electronics, and industrial markets. GSI Group Inc's common shares are listed on
Nasdaq (GSIG) 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-G
For more information contact: Investor Relations, 978-439-5511, Ray Ruddy, (ext.
6170)
GSI GROUP INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(U.S. GAAP and in thousands of U.S. dollars, except share amounts)
SEPTEMBER JULY 1,
30, 2005 2005
---------- ----------
ASSETS
Current
Cash and cash equivalents $ 84,170 $ 64,014
Short-term investments 9,283 14,256
Accounts receivable, less allowance of $1,327 (July 1, 2005 -- $1,269) 51,751 61,011
Income taxes receivable 1,280 1,586
Inventories 63,010 63,977
Deferred tax assets 11,813 13,835
Other current assets 14,183 8,676
---------- ----------
Total current assets 235,490 227,355
Property, plant and equipment, net of accumulated
depreciation of $20,716 (July 1, 2005 -- $27,482) 38,263 45,261
Deferred tax assets 19,994 17,789
Other assets 2,846 2,758
Long-term investments 626 640
Intangible assets, net of amortization of $3,550 (July 1, 2005 -- $3,061) 16,199 16,821
Patents and acquired technology, net of
amortization of $29,271 (July 1, 2005 -- $28,191) 28,759 30,001
Goodwill 26,421 26,421
---------- ----------
$ 368,598 $ 367,046
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable $ 13,471 $ 13,727
Income taxes payable 2,021 1,408
Accrued compensation and benefits 9,621 8,805
Other accrued expenses 16,718 17,335
---------- ----------
Total current liabilities 41,831 41,275
Deferred compensation 2,530 2,490
Deferred tax liabilities 10,566 10,884
Other liability 27 83
Accrued minimum pension liability 9,278 9,471
---------- ----------
Total liabilities 64,232 64,203
Commitments and contingencies
Stockholders' equity
Common shares, no par value; Authorized shares:
unlimited; Issued and outstanding:
41,614,421 (July 1, 2005 -- 41,581,447) 309,430 309,210
Additional paid-in capital 3,305 3,199
Retained earnings (accumulated deficit) 3,308 1,266
Accumulated other comprehensive loss (11,677) (10,832)
---------- ----------
Total stockholders' equity 304,366 302,843
---------- ----------
$ 368,598 $ 367,046
========== ==========
GSI GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(U.S. GAAP and in thousands of U.S. dollars, except share amounts)
THREE MONTHS ENDED
-----------------------
SEPTEMBER JULY 1,
30, 2005 2005
---------- ----------
Sales .................................................................... $ 62,600 $ 66,850
Cost of goods sold ....................................................... 37,909 39,168
---------- ----------
Gross profit ............................................................. 24,691 27,682
Operating expenses:
Research and development and engineering ............................... 6,141 6,368
Selling, general and administrative .................................... 14,375 15,098
Amortization of purchased intangibles .................................. 1,632 1,648
Other (income) expense ................................................. (322) 4
---------- ----------
Total operating expenses .............................................. 21,826 23,118
Income from operations ................................................... 2,865 4,564
Other income ........................................................... -- 8
Interest income ........................................................ 521 387
Interest expense ....................................................... (58) (68)
Foreign exchange transaction gains (losses) ............................ (352) 325
---------- ----------
Income before income taxes ............................................... 2,976 5,216
Income tax provision ..................................................... 934 2,091
---------- ----------
Net income ............................................................... $ 2,042 $ 3,125
========== ==========
Net income per common share:
Basic .................................................................. $ 0.05 $ 0.08
Diluted ................................................................ $ 0.05 $ 0.07
Weighted average common shares outstanding (000's) ....................... 41,598 41,522
Weighted average common shares outstanding for
diluted net income per common share (000's) ............................ 41,965 41,728
GSI GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(U.S. GAAP and in thousands of U.S. dollars)
THREE MONTHS ENDED
-----------------------
SEPTEMBER JULY 1,
30, 2005 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,042 $ 3,125
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
(Gain) loss on disposal of assets (4) 4
Stock-based compensation 106 (28)
Depreciation and amortization 3,265 3,522
Unrealized loss (gain) on derivatives 1 (93)
Deferred income taxes (1,730) (720)
Changes in current assets and liabilities:
Accounts receivable 8,627 (8,652)
Inventories 473 (2,181)
Other current assets (5,991) (468)
Accounts payable, accrued expenses, and taxes (receivable) payable 3,232 (2,637)
---------- ----------
Cash provided by (used in) operating activities 10,021 (8,128)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of businesses -- (71)
Sale of assets 5,809 1,550
Additions to property, plant and equipment, net (881) (1,132)
Proceeds from sales and maturities of
short-term and long-term investments 9,300 8,000
Purchases of short-term and long-term investments (4,313) (9,243)
(Increase) in other assets (1) (16)
---------- ----------
Cash provided by (used in) investing activities 9,914 (912)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issue of share capital 298 273
---------- ----------
Cash provided by financing activities 298 273
---------- ----------
Effect of exchange rates on cash and cash equivalents (77) (1,579)
---------- ----------
Increase (decrease) in cash and cash equivalents 20,156 (10,346)
Cash and cash equivalents, beginning of period 64,014 74,360
---------- ----------
Cash and cash equivalents, end of period $ 84,170 $ 64,014
========== ==========
GSI GROUP INC.
CONSOLIDATED ANALYSIS BY SEGMENT (unaudited)
(thousands of U.S. dollars)
THREE MONTHS ENDED
-----------------------
SEPTEMBER JULY 1,
30, 2005 2005
---------- ----------
SALES:
- ------
Precision Motion Group ................................................... $ 36,504 $ 34,151
Laser Group .............................................................. 10,009 11,426
Laser Systems Group ...................................................... 17,898 23,711
Intersegment sales elimination ........................................... (1,811) (2,438)
---------- ----------
Total .................................................................... $ 62,600 $ 66,850
========== ==========
GROSS PROFIT %:
- ---------------
Precision Motion Group ................................................... 41.3% 41.9%
Laser Group .............................................................. 33.6% 36.1%
Laser Systems Group ...................................................... 35.1% 39.0%
Intersegment sales elimination ........................................... 1.3% (0.4)%
Total .................................................................... 39.4% 41.4%
SEGMENT INCOME FROM OPERATIONS:
- -------------------------------
Precision Motion Group ................................................... $ 5,480 $ 4,872
Laser Group .............................................................. 108 803
Laser Systems Group ...................................................... 712 3,146
---------- ----------
Total by segment ......................................................... 6,300 8,821
Unallocated amounts:
Corporate expenses ..................................................... 3,640 4,227
Amortization of purchased intangibles not allocated to a segment ....... 26 26
Other .................................................................. (231) 4
---------- ----------
Income from operations ................................................... $ 2,865 $ 4,564
========== ==========
GSI GROUP INC.
CONSOLIDATED SALES ANALYSIS BY GEOGRAPHIC REGION (unaudited)
(millions of U.S. dollars)
THREE MONTHS ENDED
-----------------------------------------
SEPTEMBER 30, 2005 JULY 1, 2005
------------------- -------------------
% OF % OF
SALES TOTAL SALES TOTAL
-------- -------- -------- --------
North America ................ $ 24.0 38% $ 28.9 43%
Latin and South America ...... 0.3 -- 0.4 1
Europe (EMEA) ................ 11.6 19 11.2 17
Japan ........................ 11.0 18 9.0 13
Asia-Pacific, other .......... 15.7 25 17.4 26
-------- -------- -------- --------
Total ..................... $ 62.6 100% $ 66.9 100%
======== ======== ======== ========