GSI Group Reports on Revenue Recognition Review, Preliminary Second Quarter 2009 Bookings, Operating Expenses and Cash Balance



    


    
    BEDFORD, Mass., Aug. 31 /CNW/ -- GSI Group Inc. (Nasdaq:   GSIG, the
"Company") today announced preliminary results from its evaluation of sales
transactions of its Precision Technology Segment during fiscal years 2004
through the first six months of 2008. Based on those results, the Company
anticipates that previously reported revenues in its Precision Technology
Segment for each of those fiscal years will be adjusted.

    During the aforementioned review period, the Company previously reported
total revenues of approximately $854 million for its Precision Technology
Segment.  During the review period, the Precision Technology Segment was
comprised of seven distinct product lines. The evaluation and assessment of
potential adjustments to revenue transactions with multiple element
arrangements in this Segment entails the compilation, review, and analysis of
a database of approximately 84,000 purchase orders comprising approximately
300,000 lines of data from nine different enterprise reporting systems.  Of
the approximately $854 million of revenues previously reported by the
Precision Technology Segment during the review period, approximately $201
million of the revenues are from multiple element arrangements, which are
potentially subject to adjustments if fair value cannot be determined.  The
multiple element arrangements primarily consist of single or otherwise linked
orders with multiple product deliverables that were shipped in different
periods.  Based on the Company's preliminary analysis of that portion of the
total revenue in its Precision Technology Segment subject to potential
adjustments, the Company currently anticipates that the magnitude of the
adjustments in each period will not exceed the upper bounds shown in the
following table (unaudited - in millions):
    


    

    
                                                                Six
                                                               Months
                                                               Ended
                                      Year Ended December 31, June 27,
                                      2004  2005  2006  2007    2008  Total
    

    
    Precision Technology Segment:
      Revenue as reported             $199  $180  $197  $188     $90   $854
      Estimated revenue subject to
       adjustment                       35    34    36    64      32    201
      Estimated revenue expected to
       move to later periods            16     8    14    21      12     71

    
    The estimated revenue subject to adjustment and estimated revenues
expected to move to later periods shown in the preceding table are based upon
certain assumptions which may change. The revenues to be moved represent
errors in the timing of revenue recognized from multiple element transactions.
The Company currently estimates that on average, the revenues expected to be
moved to later periods will move between two and four quarters.  Substantially
all amounts due from customers associated with these transactions have been
paid and the Company's cash position has not been materially impacted by the
correction of the accounting errors. The Company is currently completing the
determination of the appropriate periods in which revenues should be
recognized based upon delivery of the last element in the sales arrangement. 
The actual amount of revenues that will move to later periods may differ from
the amounts shown above.

    As previously disclosed, on May 19, 2009, the Company announced that the
Company's Audit Committee of the Board of Directors (the "Audit Committee"),
with the assistance of its independent legal counsel and forensic accounting
firm, had concluded its previously announced review of sales transactions in
the Company's Semiconductor Systems Segment and other sales transactions that
contain arrangements with multiple deliverables, for fiscal years 2006, 2007
and 2008.

    On July 22, 2009, the Company announced that the Nasdaq Hearings Panel
(the "Panel") granted the Company's request for continued listing on The
Nasdaq Stock Market, conditioned on the Company (i) reporting to the Panel on
or before August 31, 2009 the status of its public disclosure about the range
of adjustments the Company expects to make to revenue transactions in its
Precision Technology Segment for 2004 through 2008 and (ii) filing on or
before November 2, 2009 its delayed periodic reports and any required
restatements.

    On June 30, 2009, the Company announced that the Company's evaluation of
sales transactions of its Semiconductor Systems Segment during fiscal years
2004 through 2008 was nearing completion, and reported approximate ranges of
restated revenues for that segment during each of those five fiscal years.  As
previously announced, the Company is working diligently to complete the
restatement of its previously issued interim and annual historical financial
statements for fiscal years 2006, 2007 and 2008.

    Today, the Company also reported bookings for the second quarter of 2009,
as well as expense reductions and cash position as of July 3, 2009:
    

    - Bookings:

    
    Bookings for the second quarter ended July 3, 2009 were approximately $40
million compared with bookings of $49 million for the comparable period in
2008. Bookings for the second quarter of 2008 include bookings of the
Company's general optics business, which was divested during the fourth
quarter of 2008, and exclude bookings of Excel Technology, Inc., which was
acquired on August 20, 2008.

    The decline in bookings was primarily due to lower demand across all
markets caused by the deterioration of the global economic conditions.  The
Semiconductor Systems Segment experienced a particularly pronounced decline in
bookings, as the semiconductor industry has been undergoing one of the most
severe downturns on record, which has had a particularly strong adverse impact
on the memory sector. Bookings for that segment in the second quarter of 2009
declined 87% compared with the same period in 2008.
    

    - Operating Expenses:

    
    Operating expenses in the second quarter of fiscal 2009, excluding
non-cash items, expenses associated with the revenue recognition review and
other non-recurring expenses, were approximately 5% lower than expenses in the
first quarter of fiscal 2009, and approximately 45% lower than pro-forma
operating expenses of GSI and Excel in the second quarter of fiscal 2008.

    On May 19, 2009, the Company announced that it had previously implemented
a number of major cost reduction initiatives, including the elimination of
executive and management layers, other job eliminations, changes to the
Company's compensation program, and savings resulting from the integration of
Excel Technology.
    

    - Cash:

    
    As of the end of the second fiscal quarter of 2009, the Company had
approximately $61 million of cash and cash equivalents, excluding
approximately $14 million of auction rate securities at fair value.

    During the second fiscal quarter of 2009, the Company paid a total of
approximately $5 million for costs associated with the revenue recognition
review of sales transactions in the Company's Semiconductor and Precision
Technology Segments and non-recurring expenses, including severance and
restructuring costs.  On August 17, 2009, the Company paid the $11.6 million
of semi-annual interest on its 11% Senior Notes.

    On May 19, 2009, the Company announced that at the end of the first
quarter of 2009, it held approximately $53 million of cash and cash
equivalents, excluding approximately $26 million of auction rate securities at
fair value.  At that time, the Company also announced that after the end of
the first quarter of 2009, the Company sold a portion of its auction rate
securities for cash proceeds of approximately $13 million.
    


    Safe Harbor and Forward Looking Information

    
    Certain statements in this release are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
are based on current expectations and assumptions that are subject to risks
and uncertainties. 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 "expect," "intend,"
"anticipate," "estimate," "plan," and other similar expressions. These
forward-looking statements include, but are not limited to, statements related
to: ranges of adjustments to Precision Technology revenue for 2004-2008; the
prior review of the Semiconductor Systems segment by the Company's Audit
Committee and the results of that review; completion of the restatement of the
Company's financial results for fiscal years 2006, 2007 and 2008; the
Company's estimates regarding bookings, operating expenses and cash position;
the delisting proceedings with Nasdaq and any conditions imposed by Nasdaq on
the Company for continued listing; and other statements that are not
historical facts. These forward looking statements contain estimates and
involve a number of risks, uncertainties, assumptions and other factors that
could affect future results and cause actual results and events to differ
materially from historical and expected results and those expressed or implied
in the forward looking statements, including, but not limited to, the
following: the highly unpredictable nature of the semiconductor and
electronics materials processing industry; deteriorating market conditions;
the effect of the current financial and economic crises on credit markets,
financial institutions, customers, suppliers and consumers; the Company's
ability to reduce operating expenses and achieve anticipated cost reductions
and savings; the Company's ability to grow and increase profitability; the
impact of bookings on current and future sales levels; future liquidity and
valuation of auction rate securities; changes in accounting standards;
failures of the Company to properly identify the timing of when revenue should
be recognized; the Company's ability to quickly increase manufacturing
capacity and promptly respond to fluctuating product demands; the Company's
need to invest in research and development; the Company's ability to develop
and deliver new competitive technology and enhancements and customer
acceptance thereof; failure to identify and manage weaknesses in internal
controls; the effects of competition; risks related to consolidation of
operations and the integration of operations and employees of acquired
businesses, including Excel; the Company's inability to recognize synergies of
acquired businesses, including Excel; the completion and outcome of the
Company's financial restatements and review of financial results; the
Company's ability to complete and file its delayed periodic reports with the
SEC on a timely basis; the Company's ability to meet the requirements for
continued listing of the Company's shares on Nasdaq; and the risks of existing
and future litigation and governmental or other regulatory inquiry or
proceedings arising out of or related to the Company's revenue recognition
practices. Other important risk factors that could affect the outcome of the
events set forth in these statements and that could affect the Company's
operating results and financial condition are discussed in the Company's
Annual Report on Form 10-K for the year ended December 31, 2007 and in the
Company's subsequent filings with the SEC made prior to or after the date
hereof. Such statements are based on the Company's management's beliefs and
assumptions and on information currently available to the Company's
management. The Company disclaims any obligation to update any forward-looking
statements as a result of developments occurring after the date of this
document. The unaudited financial information presented in this press release
is subject to change based on, among other factors, the completion of the work
attendant to the restatement of the Company's financial statements and the
completion of its delayed periodic reports herein discussed. The information
included in this press release is not intended as and should not be viewed as
a substitute for full financial statements.


    
    For more information contact:
    GSI Group Inc. Investor Relations
    Telephone: 781-266-5137
    Email: InvestorRelations@gsig.com


    




For further information:

For further information: GSI Group Inc. Investor Relations,
+1-781-266-5137, InvestorRelations@gsig.com Web Site: http://www.gsig.com

Organization Profile

GSI Group Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890