Gerber Scientific Announces Fiscal 2006 Second Quarter Results

SOUTH WINDSOR, Conn., Dec. 1 /PRNewswire-FirstCall/ -- Gerber Scientific, Inc. (NYSE: GRB) today reported a second quarter fiscal 2006 loss of $0.4 million, or $0.02 per diluted share, on revenue of $134.0 million compared with a loss of $1.1 million, or $0.05 per diluted share, on revenue of $131.4 million for the quarter ended October 31, 2004. The second quarter fiscal 2006 loss included a substantially non-cash, pre-tax charge of $2.5 million, or $0.07 per diluted share, associated with the early extinguishment of the Company's former credit facility. Excluding the impact of this one-time charge, the Company would have reported earnings of $1.2 million or $0.05 per diluted share for the quarter ended October 31, 2005. Foreign currency translation had the effect of increasing revenue by $0.8 million in the second quarter of fiscal 2006 compared with the second quarter of fiscal 2005.

For the six months ended October 31, 2005, the Company reported a loss of $1.5 million, or $0.07 per diluted share on revenue of $262.7 million, compared with a loss of $0.4 million, or $0.02 per diluted share, on revenue of $259.1 million for the six months ended October 31, 2004. Excluding the impact of the debt extinguishment charge recorded in the second quarter and the effect of a $2.3 million tax charge associated with the reversal of a deferred tax asset in the United Kingdom related to a change in tax law recorded in the first quarter, the Company would have reported earnings of $2.4 million, or $0.11 per diluted share, for the first half of fiscal 2006. Foreign currency translation had the effect of increasing revenue by $2.9 million for the first six months of this fiscal year, compared with the same period in the prior year.

Commenting on the second quarter results, Marc T. Giles, president and chief executive officer said, "We are very pleased with our performance this quarter. While revenue growth was somewhat below our expectations, we generated an operating profit of $4.8 million, which was 42 percent higher than the first quarter and over 200 percent above last year's levels. We also generated $6.8 million of cash flow from operations during the second quarter, net of capital expenditures, which was our strongest performance since fiscal 2004, and was our ninth consecutive quarter of positive cash flow generation."

Giles added, "In addition, we significantly improved our capital structure by refinancing our debt with much more favorable financial terms and greater flexibility. And as a result of our strong cash performance in the quarter, we were able to reduce our net debt balance (debt less cash and cash equivalents) to $34.1 million, a $5.5 million reduction from the April 30, 2005 level."

For additional information, including segment and order entry information, please see our Quarterly Report on Form 10-Q for the quarter ended October 31, 2005, which will be filed with the Securities and Exchange Commission.

About Gerber Scientific, Inc.

Gerber Scientific, Inc. (http://www.gerberscientific.com/) is a leading international supplier of sophisticated automated manufacturing systems for sign making and specialty graphics, apparel and flexible materials, and ophthalmic lens processing. Headquartered in South Windsor, Connecticut, the Company operates through four primary businesses: Gerber Scientific Products, Spandex Ltd., Gerber Technology and Gerber Coburn.

Forward-looking Statements:

Statements contained in this news release regarding the Company's expected financial condition, revenue, cash flow, operating results, restructuring and other charges, cost savings, operational efficiencies, debt reduction, other potential benefits of its turnaround initiatives, business strategy and other planned events and expectations are forward-looking statements that involve risks and uncertainties. Actual future results or events may differ materially from these forward-looking statements. Readers are referred to the documents filed by the Company with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2005 and subsequently filed quarterly and current reports, for a discussion of important risks that could cause actual results to differ from those contained or implied in the forward-looking statements. These risks include, but are not limited to, delays in the Company's new product development and commercialization, intense competition in markets for each of the Company's operating segments that could affect the Company's pricing decisions and the timing of product introductions, the potential impact on European revenue from the Waste Electrical and Electronic Equipment Directive or the Restriction of Hazardous Substances Directive, rapid technological advances that could cause the Company's inventory to exceed its needs or become obsolete, the Company's reliance on manufacturers or suppliers to supply inventory to the Company's specifications in a timely and cost effective manner, non-recurring orders from significant customers, delays caused by facility relocations, the elimination of apparel trade quotas, fluctuations in currency exchange rates and international economic conditions that could cause the Company's financial results to be volatile, product liability claims, regulatory changes that could increase costs, the Company's indebtedness, compliance with financial covenants associated with the Company's primary credit agreements, any failure to enhance and diversify the Sign Making and Specialty Graphics segment product lines, a potential loss of market focus as the Company seeks to improve operating efficiencies, and the Company's increased focus on larger wholesale optical laboratories. The Company expressly disclaims any obligation to update any of these forward- looking statements.

                         GERBER SCIENTIFIC, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)

                                      Quarter Ended      Six Months Ended
                                       October 31,          October 31,
  In thousands (except per share
   amounts)                           2005       2004      2005       2004

  Revenue:
       Product sales              $118,376   $117,059  $231,793   $229,982
       Service sales                15,585     14,357    30,932     29,120
                                   133,961    131,416   262,725    259,102
  Costs and Expenses:
       Cost of products sold        84,205     83,704   164,070    162,453
       Cost of services sold         9,306      9,629    18,949     19,345
       Selling, general and
        administrative              29,308     30,027    58,883     58,125
       Research and development      6,518      6,108    12,830     12,221
       Restructuring charges          (195)       351      (231)     2,245
                                   129,142    129,819   254,501    254,389
  Operating income                   4,819      1,597     8,224      4,713

  Other expense, net                  (866)    (1,238)   (1,041)    (1,436)
  Loss on early extinguishment
   of debt                          (2,483)       ---    (2,483)       ---
  Interest expense                  (1,525)    (1,673)   (2,956)    (3,750)

  (Loss) Earnings before income
   taxes                               (55)    (1,314)    1,744       (473)
  Provision (Benefit) for income
   taxes                               327       (226)    3,209        (82)
  Net loss                           $(382)   $(1,088)  $(1,465)     $(391)

  Loss per share of common
   stock:
       Basic                         $(.02)     $(.05)    $(.07)     $(.02)
       Diluted                       $(.02)     $(.05)    $(.07)     $(.02)

  Weighted average shares
   outstanding:
       Basic                        22,368     22,267    22,340     22,251
       Diluted                      22,368     22,267    22,340     22,251



                         GERBER SCIENTIFIC, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                               (Unaudited)

                                                   October 31,    April 30,
                                                       2005          2005
  In thousands
  Assets:
  Current Assets:
       Cash and cash equivalents                      $11,847       $6,148
       Accounts receivable, net                        84,881       89,800
       Inventories                                     50,818       52,363
       Current deferred tax assets                      9,887        7,559
       Prepaid expenses and other current assets        4,877        5,295
                                                      162,310      161,165
  Property, Plant and Equipment                       104,777      122,444
       Accumulated depreciation                       (65,686)     (82,521)
                                                       39,091       39,923
  Intangible Assets:
       Goodwill                                        51,352       52,315
       Pension intangible asset                         1,692        1,692
       Patents and other intangible assets, net         5,181        5,392
                                                       58,225       59,399
  Deferred Tax Assets                                  26,734       29,788
  Other Assets                                          3,901        6,014
                                                     $290,261     $296,289

  Liabilities and Shareholders' Equity:
  Current Liabilities:
       Short-term debt                                $38,985      $29,482
       Accounts payable                                46,935       47,023
       Accrued compensation and benefits               18,736       16,438
       Other accrued liabilities                       19,180       20,654
       Deferred revenue                                13,941       15,467
       Income taxes payable                             3,848        2,822
       Advances on sales contracts                        738          674
                                                      142,363      132,560

       Accrued pension benefit liability               26,198       25,264
       Other liabilities                                5,979        6,399
       Long-term debt                                   6,953       16,260
                                                       39,130       47,923
  Commitments and Contingencies

  Shareholders' Equity:
       Preferred stock                                    ---          ---
       Common stock                                       231          230
       Additional paid-in capital                      66,263       66,045
       Retained earnings                               66,420       67,885
       Treasury stock, at cost                        (13,677)     (13,991)
       Unamortized value of restricted stock grants      (101)        (130)
       Accumulated other comprehensive loss           (10,368)      (4,233)
                                                      108,768      115,806
                                                     $290,261     $296,289