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BILLERICA, Mass., April 30 /PRNewswire-FirstCall/ — GSI Group Inc., , a supplier of precision technology and semiconductor systems, today announced financial results for the first quarter ended March 28, 2008.
First quarter revenue was $71.7 million, compared to $86.5 million in the fourth quarter of 2007 and $74.2 million for the first quarter of 2007. Excluding restructuring charges, operating profit was $1.5 million in the first quarter versus $7.7 million in the fourth quarter and $6.1 million in the first quarter of 2007. GAAP net income for the quarter was $2.1 million, or $0.05 per diluted share, compared to the fourth quarter results of $4.7 million, or $0.11 per diluted share, and $3.2 million, or $0.08 per diluted share in the first quarter of 2007.
First quarter bookings were $56.1 million, compared to $87.5 million in the fourth quarter of 2007 and $76.9 million in the first quarter of 2007. The book-to-bill ratio was 0.78.
The backlog as of March 28, 2008 was $74.8 million, compared with $79.3 million in the first quarter of 2007. The backlog as of March 28, 2008 includes deferred revenue of $11.7 million.
Dr. Sergio Edelstein, President and CEO commented, “I am pleased with the gains we have made in our Precision Technology segment. The semiconductor and printed circuit board markets softened during the first quarter and we are using this cyclical period to position ourselves for the next upturn and to gain greater operational efficiency. We remain focused on executing our strategy of market penetration, new product launches, building our presence in Asia and integrating our company to optimize efficiency.”
Gross margin was 38.1% in the first quarter, versus 38.0% in the fourth quarter 2007. Operating expenses, excluding restructuring charges were $25.9 million in the first quarter compared to $25.2 million in the fourth quarter. Stock based compensation was $0.8 million in the first quarter versus $0.7 million in the fourth quarter 2007.
Cash and cash equivalents were $170.7 million, down $1.1 million from the fourth quarter. First quarter cash usage includes disbursements of $3.1 million in connection with the Company’s previously announced stock buyback program.
The Company anticipates the following for the second quarter of 2008:
— Revenue to be in the range of $64.0 million to $68.0 million
— Diluted earnings per share, including restructuring charges, at
approximately breakeven.

Dial In: May 1st at 8:30 a.m. ET

GSI Group will host a conference call for investors at 8:30 a.m. Eastern on May 1st. Participants are invited to join by dialing (706) 634-5123 with an access code: 43049719. The replay will be available for two weeks by dialing (706) 645-9291 with the replay passcode: 43049719. The conference call also will be broadcast live over the Internet at .
About GSI Group Inc.
GSI Group Inc. supplies precision technology to the global medical, electronics, and industrial markets and semiconductor systems. GSI Group Inc.’s common shares are listed on Nasdaq (GSIG). 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, risks of currency fluctuations, 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, changes in applicable accounting standards, tax regulations or other external regulatory rules and standards, 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. 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)

March 28, December 31,
ASSETS 2008 2007
Current Assets
Cash and cash equivalents $170,652 $171,714
Accounts receivable, less allowance of
$408 (December 31, 2007 - $372) 72,629 73,527
Income taxes receivable 13,129 12,241
Inventories 66,926 65,522
Deferred tax assets 8,264 8,249
Other current assets 6,926 7,394

Total current assets 338,526 338,647
Property, plant and equipment, net of
accumulated depreciation of $33,103
(December 31, 2007 - $32,263) 33,439 30,817
Deferred tax assets 9,982 9,887
Other assets 1,051 713
Long-term investments 975 854
Intangible assets, net of amortization
of $9,203 (December 31, 2007 - $8,603) 12,349 12,817
Patents and acquired technology, net of
amortization of $41,348 (December 31,
2007 - $40,122) 18,993 20,054
Goodwill 26,421 26,421
Total Assets $441,736 $440,210

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable $14,505 $17,504
Income taxes payable 1,018 1,411
Accrued compensation and benefits 8,537 10,369
Deferred revenue 11,688 9,949
Deferred tax liabilities 286 286
Other accrued expenses 9,729 9,353

Total current liabilities 45,763 48,872
Deferred tax liabilities 7,645 7,589
Accrued long term restructuring 1,019 938
Income taxes payable 3,253 3,537
Accrued pension liability 4,681 4,481
Other long term liabilities 1,106 676

Total liabilities 63,467 66,093
Commitments and contingencies
Stockholders’ equity
Common shares, no par value; Authorized
shares: unlimited; Issued and outstanding:
41,855,293 (December 31, 2007- 42,161,592) 307,875 310,970
Additional paid-in capital 9,043 8,245
Retained earnings 50,436 48,329
Accumulated other comprehensive income 10,915 6,573

Total stockholders’ equity 378,269 374,117

Total Liabilities and Stockholders’
Equity $441,736 $440,210

GSI GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(U.S. GAAP and in thousands of U.S. dollars, except per share amounts)

Three Months Ended
March 28, 2008 March 30, 2007
Sales $71,680 $74,204
Cost of goods sold 44,353 44,769
Gross profit 27,327 29,435
Operating expenses:
Research and development and engineering 7,875 7,657
Selling, general, administrative and other 16,317 13,939
Amortization of purchased intangibles 1,679 1,729
Restructuring expense (benefit) (317) 2,353

Total operating expenses 25,554 25,678

Income from operations 1,773 3,757
Other income (expense) 121 47
Interest income 1,166 1,545
Interest expense (18) (57)
Foreign exchange transaction (losses) gains 59 (371)

Income before income taxes 3,101 4,921
Income tax provision 994 1,721

Net income $2,107 $3,200

Net income per common share:
Basic $0.05 $0.08
Diluted $0.05 $0.08

Weighted average common shares outstanding
(000’s) 41,972 42,001
Weighted average common shares outstanding
for diluted net income per common share (000’s) 42,204 42,252

GSI GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. GAAP and in thousands of U.S. dollars)

Three Months Ended
March 28, March 30,
2008 2007
Cash flows from operating activities:
Net income for the year $2,107 $3,200
Adjustments to reconcile net income to
net cash provided by operating activities:
Earnings from equity investment (106) (47)
Depreciation and amortization 3,867 4,124
Unrealized loss on derivatives 14 53
Stock-based compensation 790 329
Deferred income taxes (53) 15
Changes in current assets and liabilities:
Accounts receivable 557 (5,107)
Inventories (870) 1,529
Other current assets 290 6,010
Accounts payable, accruals and taxes
receivable (2,660) (2,173)

Cash provided by operating activities 3,936 7,933
Cash flows (used in) from investing activities:
Other additions to property, plant and equipment (4,202) (1,842)
Other disposals to property, plant and equipment - 54
Increase in other assets (338) (2)
Decrease in other liabilities 501 18

Cash (used in) from investing activities (4,039) (1,772)
Cash flows from (used in) financing activities:
Purchase of treasury stock (3,113) (474)
Excess tax benefit of stock options - 54
Issue of share capital (net of issue costs) 18 3,233

Cash provided by (used in) financing activities (3,095) 2,813
Effect of exchange rates on cash and cash equivalents 2,136 147

Increase (decrease) in cash and cash equivalents (1,062) 9,121
Cash and cash equivalents, beginning of period 171,714 138,315

Cash and cash equivalents, end of period $170,652 $147,436

GSI GROUP INC.
Consolidated Analysis By Segment (unaudited)
(thousands of U.S. dollars)

Three Months Ended
March 28, March 30,
2008 2007
Sales:
Precision Technology business $44,035 $43,625
Semiconductor Systems business 28,767 31,857
Intersegment sales elimination (1) (1,122) (1,278)
Total $71,680 $74,204

Gross profit %:
Precision Technology business 38.4% 35.9%
Semiconductor Systems business 36.0% 43.6%
Intersegment sales elimination (6.2%) 8.2%
Total 38.1% 39.7%

(1) Sales of Precision Technology products to Semiconductor segment

Consolidated Sales Analysis By Geographic Region (unaudited)

Three Months Ended
March 28, 2008 March 30, 2007
% of % of
Sales Total Sales Total

North America $31.9 45% $24.1 32%
Latin and South America 0.1 - 0.2 -
Europe (EMEA) 12.3 17 12.8 17
Japan 12.8 18 13.8 19
Asia-Pacific, other 14.6 20 23.2 32
Total $71.7 100% $74.2 100%

GSI Group Inc.