General Scanning Announces Third Quarter Results
21 October 1998
General Scanning Announces Third Quarter Results
WATERTOWN, Mass., Oct. 20 -- General Scanning Inc.
today announced results for the third quarter and nine months
ended October 3, 1998.
For the quarter ended October 3, 1998, General Scanning's sales totaled
$42.0 million, a 12% decrease compared to $47.6 million in sales in the third
quarter of 1997. Net loss after tax, including one-time charges, was
$711 thousand, or $0.06 per share based upon a weighted average of
12.6 million common shares outstanding in the third quarter ended October 3,
1998, compared to net income of $3.6 million, or $0.28 per diluted share based
upon a weighted average of 12.7 million common shares and dilutive potential
common shares outstanding in the quarter ended September 27, 1997.
Pro forma net loss per diluted share, excluding one-time charges, was
$0.02 for the quarter ended October 3, 1998.
For the nine months ended October 3, 1998, General Scanning's sales
totaled $141.7 million, an increase of 11% over $128.0 million in sales in the
first nine months of 1997. Net loss after tax, including one-time charges,
was $742 thousand, or $0.06 per share based upon a weighted average of
12.7 million common shares outstanding in the first nine months of 1998,
compared to net income of $7.9 million, or $0.63 per diluted share based upon
a weighted average of 12.6 million common shares and dilutive potential common
shares outstanding in the quarter ended September 27, 1997.
Pro forma net income per diluted share, excluding one-time charges, was
$0.29 for the first nine months of 1998.
Backlog at October 3, 1998 was approximately $35 million compared to
$48 million at July 4, 1998 and $44 million at December 31, 1997.
Sales of laser systems and components were $31.9 million in the quarter
ended October 3, 1998, a decrease of 21% from $40.5 million in the third
quarter of 1997. Year to date, such sales were $116.1 million, an increase of
6% over $109.1 million in the first nine months of 1997. Since early summer,
the Company has experienced a dramatic slowdown in systems sales into the
semiconductor and electronics markets, particularly in Asia. Approximately
40% of the Company's current total sales are exposed to these issues. During
1997, sales to Asia accounted for 27% of total sales by region, and sales for
semiconductor applications accounted for approximately 30% of total sales by
market. Product lines most affected by the slowdown are in the Company's
manufacturing process systems group including applications for memory repair,
component parts handling, marking of semiconductor packages and certain other
related applications. The Company is experiencing delays requested by
customers in deliveries and orders previously considered to be highly
probable. As a result, visibility for ordering and shipment of these
manufacturing process systems is more limited than has been the case in prior
time periods.
The current quarter includes a special charge amounting to approximately
$0.04 per share after tax, related to the Company's continued effort to bring
the cost structure of its operations in line with expected revenues over the
next several quarters, particularly in its systems business addressing the
semiconductor and electronics markets. The Company does not anticipate
significant improvement in sales either to Asia or the semiconductor market
until later next year. Therefore, as previously announced, the Company is
aggressively continuing its fixed expense reductions by consolidating
operations of its manufacturing process systems group, reductions in
employment worldwide, tighter controls on discretionary expenses, and lower
capital expenditures. As part of this effort, the components handling
operations at Reel-Tech are being relocated from Indianapolis into the
Company's Wilmington, MA facility. During the current quarter, the
manufacturing operations for marking systems were relocated from Arlington, MA
to the Wilmington site. The combining of these operations will make the
Company more efficient in its manufacturing. This plus restructuring costs in
selected overseas offices accounted for the one-time charges.
The Company continues to benefit from continued strong performance in its
instrument group which includes laser imaging for medical applications, the
microarray biochip reader, the recently introduced laser duplicator for
diagnostic film and the LD2000 Series Digitizer for teleradiology and PACs
applications. The Company expects that these products will provide the
opportunity for growth in the medical market during the balance of this year
and in 1999. New product introductions coming from the Company's development
activities include an advanced chip resistor trimming platform, a low-cost DPL
marker, a PCB marker, a die marker and a component placement inspection system
for populated PCBs.
Printer sales were $10.2 million in the third quarter of 1998, an increase
of 44% over $7.0 million in the third quarter of last year, primarily the
result of sales of photo finishing systems for point-of-sale applications, a
product introduced in the fall of 1997. Year to date, printer sales were
$25.6 million, a 35% increase over sales for the comparable period in 1997.
As with the third quarter, most all of the growth is attributable to the new
photo finishing product. Having delivered most of the units required for the
upcoming holiday season, the Company expects printer sales to return to prior
normalized levels during the final quarter of this year.
General Scanning continues to implement its strategy to expand the number
of markets and applications for its laser systems including laser imaging for
medical applications, SMT assembly inspection systems, photo finishing for
retail point-of-sale locations, and new applications initiatives in general
purpose, high accuracy metrology.
To the extent this news release discusses financial projections,
information or expectations about General Scanning's products or markets, or
otherwise makes statements about the future, such statements are forward
looking and are subject to a number of risks and uncertainties that could
cause actual results to differ materially from the statements made. These
factors 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 continued volatility in Asia and 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 product introductions and market acceptance
of its new products, and other risks detailed in the Company's Annual Report
on Form 10-K with respect to the 1997 fiscal year and the Quarterly Report on
Form 10-Q with respect to the fiscal second quarter 1998.
General Scanning Inc., headquartered in Watertown, Massachusetts, develops
and manufactures a broad line of laser systems for a wide range of
applications in the semiconductor, electronics, aircraft and medical
industries. In addition, the Company produces a line of laser subsystems and
components which are used in the Company's own systems as well as sold to
other manufacturers of laser systems. General Scanning also designs and
manufactures under ISO 9001 certification a line of printers for leading
medical instrument companies. For more information about General Scanning,
visit the Company on the Internet at http:/www.genscan.com.
Condensed consolidated statements of income and balance sheets for the
Company are attached.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
Three months ended Nine months ended
Oct. 3, 1998 Sept. 27, 1997 Oct. 3, 1998 Sept. 27, 1997
Net sales
Laser systems
and components $31,877 $40,515 $116,134 $109,128
Printers 10,163 7,041 25,550 18,859
Total sales 42,040 47,556 141,684 127,987
Costs and expenses:
Cost of sales 24,077 24,715 75,858 67,255
Research and
product
development 6,139 6,126 20,869 16,056
Selling,
general and
administrative 12,211 11,357 39,031 32,781
Restructuring,
litigation
settlement and
other charges 717 - 6,789 -
Total costs
and expenses 43,144 42,198 142,547 116,092
Income (loss)
from operations (1,104) 5,358 (863) 11,895
Other income
(expense), net 11 (92) (283) 72
Income (loss) before
income taxes (1,093) 5,266 (1,146) 11,967
Income taxes
(benefit) (382) 1,685 (404) 4,030
Net income (loss) ($711) $3,581 ($742) $7,937
Net income (loss) per common share:
Basic ($0.06) $0.30 ($0.06) $0.66
Diluted ($0.06) $0.28 ($0.06) $0.63
Weighted average
common shares outstanding
and dilutive potential
common shares 12,637 12,739 12,693 12,585
Net income (loss)
excluding restructuring,
litigation settlement
and other charges ($245) $3,581 $3,667 $7,937
Diluted net income
(loss) per
common share ($0.02) $0.28 $0.29 $0.63
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Oct. 3, 1998 Dec. 31, 1997
ASSETS
Cash and cash equivalents $4,423 $8,418
Accounts receivable 38,659 44,425
Inventories 37,848 34,051
Property, plant and
equipment, net 15,428 14,611
Other assets 17,099 13,537
Total assets $113,457 $115,042
LIABILITIES and STOCKHOLDERS' EQUITY
Accounts payable and
accrued expenses $24,349 $28,854
Notes payable,
long-term debt and
deferred compensation 10,555 7,959
Total liabilities 34,904 36,813
Total stockholders' equity 78,553 78,229
Total liabilities and
stockholders' equity $113,457 $115,042