Gerber Scientific, Inc. Reports Sharp Rise in First Quarter Sales and Earnings; Earnings Per Share Up 93 Percent Before One-Time Gain Last Year

Business Wire, August 20, 1998

SOUTH WINDSOR, Conn.--(BUSINESS WIRE)--Aug. 20, 1998--Gerber Scientific, Inc. (NYSE:GRB) reported that for the first quarter ended July 31, 1998, it had net earnings of $6.7 million or $.29 per share on a diluted basis. This represented an increase in net earnings of 88 percent compared with $3.6 million in the first quarter of last year, before a one-time gain of $1 million from a patent litigation settlement. On a per share basis, the $.29 represented a 93 percent improvement from $.15 in the prior year period, excluding the one-time gain. Net earnings for the first quarter of last year, including the patent litigation settlement, were $4.6 million, or $.19 per diluted share.

Revenues for the first quarter were a record $153.7 million, 55 percent higher than the prior year, reflecting primarily the Company's recent acquisitions of Spandex PLC and Coburn Optical Industries, Inc., and also internal sales growth. The higher year-to-year earnings resulted from improved continuing operations, the acquisitions, and the sale of a business unit, Gerber Systems. The prior year's first quarter included the results of the Gerber Systems unit, which had been incurring losses. Gerber Systems was sold in the fourth quarter of fiscal year 1998.

Commenting on the first quarter results, Michael J. Cheshire, President and Chief Executive Officer, said, "We had a strong start to fiscal 1999 with significant earnings growth and healthy cash flow. The strong European and North American economies continued to drive our growth, and all of our businesses contributed to the sales and earnings increases in this quarter."

Cheshire continued, "The strategic re-positioning of our businesses is producing a more balanced company, less sensitive to regional fluctuations and equipment demand cycles. For example, our sales in Europe are almost equal to North American sales, and aftermarket sales now represent about 50 percent of our total volume. We like this balance."

Orders for the first quarter ended July 31, 1998 were also a record at $148.6 million, a 35 percent increase from $109.8 million last year. The increase includes additional orders originating from the Coburn and Spandex acquisitions, and also reflects the elimination of Gerber Systems business, which was included in the prior year orders. In each of the Company's core markets - sign making and specialty graphics, apparel and flexible materials, and optical lens processing - growth in order entry, aided by the recent acquisitions, strengthened the Company's leading position.

Cash generated by operations was $16 million in this year's first quarter. The strong cash flow enabled the Company to reduce its total debt outstanding from a peak of $189.1 million to $181.8 million at July 31, 1998 and end the quarter with $26.4 million in cash and investments. This equated to a net debt position of $155.4 million and a ratio of net debt to total capital of 40 percent at July 31, 1998. During the first quarter, the Company acquired Spandex PLC for cash of $175.9 million plus the assumption of $11.6 million in debt. The Spandex acquisition was financed partly by the Company's cash and notes payable, and by borrowing through a new $235 million multi-currency syndicated bank credit facility. Prior to the Spandex acquisition, the Company's total debt amounted to only $7.5 million, which consisted primarily of industrial revenue bond financing.

"This quarter was the first test of our Company's strategy to enhance our number one market position through acquisitions, new products, and geographic expansion. We're pleased with the results and continue to believe Gerber Scientific is well positioned to deliver sustainable earnings growth over the current fiscal year," said CEO Cheshire.

Gerber Scientific, Inc. (http://www.gerberscientific.com) is the world's leading supplier of sophisticated automated manufacturing systems for the optical lens processing, signmaking and specialty graphics, and apparel and flexible goods industries. Headquartered in South Windsor, Connecticut, the Company operates through four wholly-owned subsidiaries: Gerber Coburn, Gerber Technology, Gerber Scientific Products, and Spandex PLC.

In addition to the historical information contained herein, there are matters discussed that are considered to be "forward looking statements." The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. These forward looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, and services, that could significantly affect results in the future.

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