July 27, 1995
Securities & Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: Gerber Scientific, Inc.
Commission File No. 1-5865
Gentlemen:
Pursuant to regulations of the Securities and Exchange
Commission, submitted herewith for filing on behalf of Gerber
Scientific, Inc. (the "Company") is the Company's Annual Report
on Form 10-K for the fiscal year ended April 30, 1995.
This filing is being effected by direct transmission to the
Commission's EDGAR System.
Very truly yours,
/s/ George M. Gentile
George M. Gentile
Senior Vice President, Finance
<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One) Annual Report / X / (Fee Required) or
Transition Report / / (No Fee Required)
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended April 30, 1995 Commission File No. 1-5865
GERBER SCIENTIFIC, INC.
(Exact name of Registrant as specified in its charter)
Connecticut 06-0640743
------------------------------- ----------------------------- --
(State or other jurisdiction of (I.R.S. EmployerIdentification
incorporation or organization) Number)
83 Gerber Road West
South Windsor, CT 06074
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 644-1551
=======================================================================
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which registered
-------------------------------------- ---------------------------
Common Stock, par value $1.00 per share New York Stock Exchange
At June 30, 1995, 23,763,870 shares of common stock of the registrant
were outstanding. On such date the aggregate market value of the
voting stock held by non-affiliates of the registrant was approximately
$398,000,000. Excluded from this amount is voting stock having an
aggregate market value of approximately $55,300,000 (representing 13.9%
of the outstanding voting stock) which is owned by the Company's
President and Chairman of the Board of Directors and his family, and by
the other members of the Board of Directors, who are deemed affiliates
for purposes of this computation.
Securities registered pursuant to Section 12(g) of the Act: None
=======================================================================
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K. / X /.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes / X / No / /.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the documents listed below have been incorporated by
reference into the indicated parts of this report, as specified in the
responses to the item numbers involved.
(1) 1995 Annual Meeting Proxy Statement (Parts I, III, and IV).
<PAGE>2
GERBER SCIENTIFIC, INC.
Index to Annual Report
on Form 10-K
Year Ended April 30, 1995
PART I PAGE
Item l. Business . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . 10
Executive Officers of the Registrant . . . . . 10
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . 11
Item 6. Selected Financial Data . . . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . 13
Item 8. Financial Statements and Supplementary Data . . 20
Item 9. Changes in and Disagreements with Auditors
on Accounting and Financial Disclosure . . . . 43
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . 44
Item 11. Executive Compensation . . . . . . . . . . . . 45
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . 45
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . 45
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . 46
Signatures . . . . . . . . . . . . . . . . . . 48
1
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GERBER SCIENTIFIC, INC.
PART I
ITEM 1. BUSINESS.
Gerber Scientific, Inc., a Connecticut corporation incorporated
in 1948, is a holding company providing corporate management
services and financial resources to its subsidiaries. As used
herein, the term "Company" means Gerber Scientific, Inc. and,
unless the context indicates otherwise, its subsidiaries. The
Company designs, develops, manufactures, markets, and services
computer-aided design and computer-aided manufacturing
(CAD/CAM) systems to automate the design and production
processes in a broad range of industries. The Company's
principal manufacturing and administrative facilities are
located in Connecticut.
The Company conducts its business primarily through four wholly
owned operating subsidiaries. Gerber Garment Technology, Inc.
(GGT) designs, develops, manufactures, markets, and services
computer-controlled systems for marker-making (nesting),
spreading, cutting, and handling flexible materials, such as
fabrics and composites, in the apparel, aerospace, automotive,
furniture, and other industries. Gerber Scientific Products,
Inc. (GSP) designs, develops, manufactures, markets, and
services microprocessor- and PC-controlled production systems,
software, and aftermarket supplies for the signmaking, graphic
arts, and screenprinting industries. Gerber Systems
Corporation (GSC) designs, develops, manufactures, markets, and
services turnkey interactive imaging and inspection systems for
the electronics, aerospace, automotive, and printing
industries. Gerber Optical, Inc. designs, develops,
manufactures, markets, and services computer-controlled
production systems and aftermarket supplies for the ophthalmic
lens manufacturing industry.
The Company has foreign subsidiaries which provide marketing
and field service support for the Company's products. These
subsidiaries are located in Belgium, Germany, Italy, France,
Portugal, the United Kingdom, Sweden, Canada, Mexico,
Australia, New Zealand, and Hong Kong. The Company also has a
manufacturing facility in Denmark.
As of April 30, 1995, the Company had approximately 1,700
regular, full-time employees.
On March 1, 1994, the Company's GGT subsidiary purchased the
business and certain assets and liabilities of Niebuhr
Maskinfabrik A/S (Niebuhr) of Ikast, Denmark, for a total cost
of approximately $1 million. Niebuhr manufactures and markets
computer-automated fabric spreading equipment used in the
apparel and related industries. The acquisition was
accomplished through a newly formed Danish subsidiary of GGT
known as GGT-Niebuhr A/S, which has continued to manufacture,
market, and support Niebuhr equipment.
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On September 1, 1994, GGT acquired the outstanding stock of
Microdynamics, Inc. (Microdynamics) of Dallas, Texas, and
subsequently merged that company into GGT. Microdynamics was a
leading supplier of computer-aided design (CAD), graphic
design, and product management systems for the apparel,
footwear, and other sewn goods industries. GGT has continued
to develop, manufacture, market, and support the Microdynamics'
product lines.
Under terms of the acquisition agreement, the purchase price
was $12 million plus additional contingent cash consideration
based on the earnings performance of a certain acquired product
line over the three-year period following the date of
acquisition. Approximately $7.7 million of the $12 million
purchase price has been paid. Of the balance, $4 million is
contingently payable over the one-year period following the
date of acquisition based on the results of an audit of
Microdynamics' closing balance sheet and the realizability of
certain acquired assets.
In May 1993, Gerber Venture Capital Corporation (GVCC), a
wholly owned subsidiary, sold its 21 percent ownership in
Boston Digital Corporation of Milford, Massachusetts, which
designed, developed, manufactured, and marketed a line of
computer-controlled machining systems. The sale of GVCC's
ownership interest was pursuant to a merger agreement between
Boston Digital Corporation and Charterhouse Equity Partners,
L.P.
INFORMATION ABOUT INDUSTRY SEGMENTS
The Company designs, develops, manufactures, markets, and
services CAD/CAM factory automation systems for a wide range of
industries, including apparel, automotive, aerospace,
electronics, printing, optical, graphic arts, screenprinting,
and signmaking. No other segment of the Company constituted
10 percent or more of revenue or net earnings in the Company's
last three fiscal years.
The Company's principal CAD/CAM products consist of the
following: cutting, nesting, spreading, and material handling
systems; microprocessor- and PC-controlled production systems;
interactive imaging and inspection systems; and optical lens
manufacturing systems. For each of the Company's last three
fiscal years, the approximate percentage of consolidated sales
and service revenue accounted for by these classes of products
was as follows:
1993 1994 1995
---- ---- ----
Cutting, nesting, spreading, and
material handling systems 55% 51% 57%
Microprocessor- and PC-controlled
production systems 30% 33% 29%
Interactive imaging and inspection
systems 11% 11% 8%
Optical lens manufacturing systems 4% 5% 6%
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CAD/CAM CUTTING, NESTING, SPREADING, AND MATERIAL HANDLING
SYSTEMS
The Company produces computer-controlled material spreading and
cutting systems for the apparel, aerospace, automotive, and
other sewn goods industries. Material spreading systems
enhance cutting room efficiency by automating the preparation
of multiple layers of material for the cutting table. The
Company's GERBERcutters(R) are computer-controlled cutting
systems which accurately cut parts out of single and multiple
layers of flexible materials, such as textiles, vinyls,
plastics, fiberglass, and advanced composite materials,
quickly, efficiently, and with more precision than the
traditional methods of hand cutting or die cutting.
The Company also produces a line of computer-aided design,
pattern-making, and marker-making systems. These systems
automate the design, pattern-making, pattern-grading (sizing),
and marker-making (nesting) functions to improve efficiency of
material usage in the apparel, furniture, luggage, automotive,
aerospace, sheet metal, composites, and other industries.
The Company's GERBERmover(R) material handling systems are
computerized unit production systems for the apparel and
related industries. These systems use computerized instruction
to move and control the work flow among sewing operators,
thereby reducing in-process inventory as well as improving
efficiency and quality.
The Company also produces several related hardware and software
products for the sewn goods industries. Among the software
products is PDM (R), a product management system that provides
a powerful tool for developing product specifications,
controlling and managing data, and documenting the product
development process, along with production and quality
requirements.
CAD/CAM MICROPROCESSOR- AND PC-CONTROLLED PRODUCTION SYSTEMS
The Company's microprocessor- and PC-controlled production
equipment and software bring computer automation to the
signmaking, screenprinting, and graphic arts industries. The
Company produces a full range of automated lettering systems,
software, scanners, digitizers, plotters, routers, and other
output devices that permit the design and production of signs
and graphic arts on adhesive-backed vinyls and other materials.
The GERBER EDGE(TM), an output device for the sign,
screenprinting, and graphics industries, creates continuous
length, durable, professional-quality text and graphics,
including complicated halftones, multiple colors, and process
four color images directly on signmaking vinyl.
----------------
(TM) and (R) represent trademarks and registered trademarks of
the Company.
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<PAGE>6
The Company also sells aftermarket supplies to these
industries, including a wide variety of adhesive-backed vinyls,
translucent vinyl films, GERBER EDGE color cartridges,
reflective sheeting, masking film, sandblast stencil, heat
transfer flock, and specialty and screenprinting films.
CAD/CAM INTERACTIVE IMAGING AND INSPECTION SYSTEMS
The Company produces interactive computer-based photoplotting
systems that automate the production of artwork, tooling, and
documentation for printed circuit board (PCB) manufacturers.
Photoplotters draw with a beam of light on photographic film or
glass. They are used in the electronics industry for producing
master artwork and associated manufacturing aids for PCBs,
micropackaging of microchips and ultra-large scale integrated
circuits, and for various other applications requiring
accurate, high-quality graphic masters. The Company also
produces automatic optical inspection systems which are used
for quality control in PCB manufacturing. These systems
perform an on-line defect analysis by comparing a PCB or its
artwork master to the original computer-aided design database.
The Company also produces laser imaging systems for the
printing industry which are used to expose specialty printing
plates, enabling direct computer-to-plate printing. This
process eliminates the necessity to expose film in making a
plate for the printing press. The result is the elimination of
a number of steps in the printing process, providing cost
savings and faster turnaround.
The Company also produces computer-controlled drafting systems
which automate the production of engineering drawings for the
automotive, aerospace, shipbuilding, mapmaking, and other
industries.
CAD/CAM OPTICAL LENS MANUFACTURING SYSTEMS
The Company produces innovative, high-technology system
solutions used in the manufacture of prescription eyewear. The
ophthalmic manufacturing systems offered by the Company replace
a set of related manual tasks with computer-controlled
automation, reducing operator skill levels and increasing
productivity. The Company's product offerings include the
components required to process an entire prescription,
including computerized frame tracing, lens blocking, surface
generating, and lens edging. The individual systems can be
used with other manufacturing equipment or can be combined in a
complete system managed by the Company's processing software.
The markets for the Company's ophthalmic manufacturing systems
include wholesale optical laboratories and optical superstores.
RESEARCH AND DEVELOPMENT
The Company continues to emphasize technological development
with research and development programs designed to create new
software
5
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and hardware products, improve existing product lines, and
modify existing products to meet specific customer needs. The
Company's research and development expenses for the years ended
April 30, 1993, 1994, and 1995 were $21,741,000, $22,339,000,
and $26,009,000, respectively. The Company also received and
expended approximately $578,000, $1,583,000, and $3,109,000 for
the years ended April 30, 1993, 1994, and 1995, respectively,
for customer-funded research and development projects.
MARKETING
Most of the Company's product sales are to end-users and are
sold through the Company's direct sales force in the United
States, subsidiaries in Europe, Canada, Mexico, Australia, New
Zealand, and the Far East, and independent sales
representatives and distributors in various parts of the world.
The Company's microprocessor- and PC-controlled production
systems are sold principally to independent distributors for
resale by them. Domestic sales personnel are located in a
number of cities, including Hartford, New York, Atlanta,
Chicago, Dallas, and Los Angeles. The Company's foreign sales
and service subsidiaries are located in Belgium, Germany,
Italy, France, Portugal, the United Kingdom, Sweden, Canada,
Mexico, Australia, New Zealand, and Hong Kong. The Company's
foreign subsidiaries act both as sales representatives on a
commission basis and as distributors, depending upon the
product line and the territory involved.
RAW MATERIALS
The Company purchases materials, such as computers, computer
peripherals, electronic parts, hardware, and sheet metal from
numerous suppliers. Many of these materials are incorporated
directly into the Company's manufactured products, while others
require additional processing. In some cases the Company uses
only one source of supply for certain materials, but to date
the Company has not experienced significant difficulties in
obtaining timely deliveries. Increased demand for these
materials or future unavailability could result in production
delays which might adversely affect the Company's business.
The Company believes that, if required, it could develop
alternative sources of supply for the materials which it uses.
PATENTS AND TRADEMARKS
The Company owns and has applications pending for a large
number of patents in the United States and other countries,
which expire from time to time, and cover many of its products
and systems. The Company has pending lawsuits in the United
States and elsewhere where the Company alleges that others are
violating one or more of its patents. While the Company
considers that such patents and patent applications as a group
are important to its operations, it does not consider that any
patent or group of them related to a specific product or system
is of such importance that the loss or expiration thereof would
have a materially adverse effect on its business considered as
a whole.
6
<PAGE>8
The Company believes that its success depends, to a significant
extent, on the innovative skills, technical competence, and
marketing abilities of its personnel.
The Company also has registered trademarks for a number of its
products. Trademarks do not expire when continued in use and
properly protected.
SEASONALITY
No portion of the Company's business is subject to significant
seasonal fluctuation.
WORKING CAPITAL
The Company's business generally does not require unusually
large amounts of working capital. The Company receives advance
payments and progress payments on customer orders for some of
its products. The Company also sells certain of its products
under leases which are financed by third-party financial
institutions. These leases are generally for three- to five-
year terms. The Company's recourse obligations for leases
which are financed by third parties are secured and
collateralized by the underlying equipment.
CUSTOMERS
The Company's customers are primarily end-users, except in the
case of microprocessor- and PC-controlled signmaking systems,
for which the Company's customers are primarily independent
distributors. No single customer accounted for 10 percent or
more of the Company's consolidated revenue in 1993, 1994, or
1995. Customer purchases of capital goods often vary from year
to year, and it is normal for the Company's customer base to
change accordingly. The Company believes that the loss of
any single customer or small group of customers would not have
a materially adverse impact on the Company's business.
BACKLOG
The Company's backlog of orders considered firm was
approximately $53,800,000 at April 30, 1995, compared with
$48,500,000 at April 30, 1994. Substantially all the backlog
at April 30, 1995, is scheduled for delivery in fiscal 1996.
The Company records as backlog firm orders from customers for
delivery at specified dates. Historically, the Company has
experienced few cancellations of orders.
COMPETITION
The Company competes in a variety of markets and with a variety
of other companies. In certain of these markets, competitors
are larger and have greater financial, marketing, and
technological resources than the Company. In the markets the
Company serves,
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<PAGE>9
the principal competitive factors are product performance,
price, and company reputation.
The Company believes that through its GERBERcutters and marker-
making systems, it is the largest worldwide supplier to the
apparel and allied industries of computer-controlled limp
material cutting systems and pattern-making, grading, and
nesting systems. There is worldwide competition in these
markets, and in parts of Europe competing companies have become
significant suppliers. Certain competitors have marketed
cutting equipment which the Company believes may have infringed
the Company's patents, and the Company has lawsuits pending
against such competitors.
In the marketplace for microprocessor- and PC-controlled
signmaking, screenprinting, and graphic arts systems, the
Company holds the predominant market position. The Company
pioneered the development of these technologies, holding
several key related patents. While there has been a
significant increase in the number of competitors marketing
software-only products, the Company believes that none have
been able to match the product, marketing, and
selling/distribution strengths offered by the Company.
The Company believes that as to some types of
computer-controlled drafting systems, it is the major supplier
in the United States and one of the major suppliers in the
world. The Company also produces laser imaging systems for the
electronics and printing industries. There are significant
competitors in the manufacture and sale of these types of laser
imaging systems in the electronics marketplace. At the present
time, the Company believes its direct computer-to-printing
plate laser imaging system for the printing industry has taken
a leading position. The Company anticipates that significant
competition will emerge in this market. The Company's
automated optical inspection equipment has significant
competition from foreign manufacturers.
The Company's ophthalmic manufacturing systems, used in the
manufacture of eyeglass lenses, face entrenched competition.
The Company believes that its leadership in technology has
enabled it to become the major supplier of high-end lens
surfacing systems and lens pattern cutting systems in the
United States.
The Company could be adversely affected if it were unable to
respond with competitive products, in a timely manner, to
pricing changes or significant new product announcements
affecting its product lines.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
The financial information required by Item 1 relating to export
sales is included in "Note 1 - Products and Operations" of
"Notes to Consolidated Financial Statements" appearing on
page 28.
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The approximate percentage of consolidated sales and service
revenue from foreign (i.e., non-U.S.) customers for each of the
last three fiscal years was as follows:
1993 1994 1995
---- ---- ----
Percentage of consolidated sales
and service revenue from
foreign customers 48% 44% 48%
The Company is subject to the usual risks involved in
international sales, such as unfavorable economic or political
conditions in foreign countries, restrictive trade policies
imposed by foreign governments, restrictions on the transfer of
funds, and foreign currency fluctuations. The Company's
foreign product sales have generally been made in U.S. dollars,
but for certain product lines and territories (principally
Western Europe), the Company has made sales in local
currencies. The Company has a program to hedge such sales
through the use of forward exchange contracts.
ITEM 2. PROPERTIES.
The Company's principal operations are conducted in the
following facilities:
Type of Facility Location
-------------------------------- -----------------
Manufacturing/office (O) South Windsor, CT
(4 sites)
Manufacturing/office (O) Tolland, CT
Manufacturing/office (O) Manchester, CT
Manufacturing/office (L) Ikast, Denmark
Service/office (O) Richardson, TX
Warehouses/sales and service
offices (L) Various
-----------------------
(O) Company owned
(L) Leased
Management believes that the Company's present facilities,
which are utilized primarily on a single-shift basis with
overtime, are well maintained and are adequate to meet the
Company's immediate requirements.
The Company's leases for warehouse and sales and service office
space are generally on short-term bases. Rentals for leased
facilities aggregated $2,155,000 in the fiscal year ended
April 30, 1995.
The Company owns substantially all of the machinery and
equipment used in its operations and leases the remainder. In
the fiscal year ended April 30, 1995 the aggregate rental under
such leases was $547,000. The Company fully utilizes such
machinery and equipment.
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ITEM 3. LEGAL PROCEEDINGS.
Various lawsuits, claims, and governmental proceedings are
pending against the Company. Certain of these matters relate
to the Company's patents. Management of the Company believes
that the ultimate resolution of these matters will not have a
materially adverse effect on the Company's consolidated
financial position or the results of its operations.
Other relevant information regarding legal proceedings is
included in Part II, Item 8, Note 10, "Deferred Litigation
Award," of the Notes to Consolidated Financial Statements
appearing on page 32 of this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the security holders
during the fourth quarter of the Company's fiscal year ended
April 30, 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT.
Included in Part III, Item 10, "Directors and Executive
Officers of the Registrant," appearing on page 44 of this Form
10-K.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock is listed on the New York Stock
Exchange under the symbol "GRB." Shareholders of record
totaled 1,941 at April 30, 1995. The other information
required by Item 5 is included in Part II, Item 8, Note 17,
"Quarterly Results (Unaudited)" of the Notes to Consolidated
Financial Statements appearing on page 42 of this Form 10-K.
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ITEM 6. SELECTED FINANCIAL DATA.
FIVE YEAR FINANCIAL SUMMARY GERBER SCIENTIFIC, INC.
In thousands except
per share amounts For years ended April 30
-------------------------------------------------- --
1995 1994 1993 1992 1991
Sales and service
revenue $ 322,708 $ 260,734 $ 254,365 $ 249,978 $ 268,367
Net earnings before
accounting change
and patent
settlement 1,2 18,111 11,133 8,336 7,428 7,961
Net earnings 1,2 18,111 15,321 8,336 7,428 7,961
Net earnings per
common share before
accounting change
and patent
settlement 1,2 .76 .47 .35 .31 .34
Net earnings per
common share 1,2 .76 .64 .35 .31 .34
Cash dividends per
common share .30 .23 .20 .20 .20
Total assets 324,428 286,443 269,981 276,912 287,727
Long-term debt 7,531 7,724 7,916 8,109 9,177
Shareholders'
equity $ 237,302 $ 224,824 $ 215,460 $ 213,505 $ 209,994
Weighted average
common shares
outstanding 23,950 23,967 23,918 23,909 23,639
(1) Net earnings for the year ended April 30, 1994 included a $788,000
gain ($.03 per share) from adopting the method of accounting for
income taxes required by Statement of Financial Accounting Standards
No. 109.
(2) In the year ended April 30, 1994, the Company received the proceeds of
a final judgment in a U.S. patent infringement case brought against
Lectra Systemes S.A. of France and its U.S. subsidiary. The judgment,
net of the 1994 expenses associated with it and after income taxes,
amounted to approximately $3,400,000, or $.14 per share.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
Condition and Results of Operations.
For Years Ended April 30, 1995, 1994, and 1993
-------------------------------------------------------------------
Results of Operations
Consolidated revenue in 1995 was $322.7 million, an increase of
$62 million, or 24 percent, from the prior year. The increase
reflected three factors: a $32.6 million year-over-year
improvement in sales from the Company's baseline operations; the
acquisition of two new businesses, Microdynamics, Inc.
(Microdynamics) and Niebuhr Maskinfabrik A/S (Niebuhr), which
together contributed $22.7 million to 1995 revenue; and a change
in the fiscal year-end for certain foreign subsidiaries which
added $6.7 million.
The sales gain in 1995 occurred in all major geographic markets
but was particularly strong in Europe. Export sales to European
customers improved significantly, up $19.5 million from the
previous year. In total, export sales from the United States
rose $29 million from the previous year and represented 38
percent of total revenue in 1995 compared with 36 percent in 1994
and 40 percent in 1993.
In terms of the Company's products, the largest sales increase in
1995 occurred in computer-controlled GERBERcutter fabric cutting
systems for the apparel and allied industries. This increase
reflected the successful introduction of a new family of
GERBERcutters, Series S-3200, S-5200, and S-7200, which are
compact, highly accurate fabric cutting systems. Product sales
gains were also realized in the Company's line of marker-making
systems for these same industries. Other significant sources of
the sales increase in 1995 were shipments of the Company's new
Step One Blocking System for the ophthalmic industry and higher
sales of aftermarket supplies to the signmaking industry.
The Niebuhr and Microdynamics acquisitions added $22.7 million to
1995 revenue. Niebuhr is a Danish-based company that
manufactures and markets computer-automated fabric spreading
equipment for the apparel and related industries. In its most
recent complete year prior to acquisition, Niebuhr had annual
sales of approximately $5 million. In 1995, Niebuhr's operations
added $10.1 million to the Company's consolidated revenue.
Microdynamics was a Texas-based company and a leading supplier of
computer-aided design (CAD), graphic design, and product
management systems for the apparel, footwear and sewn goods
industries. In its most recent complete year prior to
acquisition, Microdynamics had annual sales of approximately $25
million. Microdynamics' operations were included in the
Company's 1995 consolidated statement of earnings for the eight
months ended April 30, 1995, during which time it added $12.6
million to the Company's consolidated revenue.
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<PAGE>15
In fiscal 1995, the year-end of certain of the Company's foreign
subsidiaries was changed from February to April to coincide with
the parent Company's year-end. Accordingly, an additional two
months of operating results for these subsidiaries was included
in the fiscal 1995 financial statements. The effect of this
change in year-ends was to increase sales and service revenue for
the fourth quarter and year ended April 30, 1995 by $6.7 million.
This change in year-ends had an insignificant effect on net
earnings and earnings per share for these periods.
Service revenue rose $7.1 million in 1995 compared with 1994.
Approximately one-half of this increase reflected the addition of
the Microdynamics' service business. The additional two-months'
revenue from the change in year-ends for certain foreign
subsidiaries accounted for most of the remaining increase.
Management does not anticipate that growth in the Company's
service business will keep pace with product sales. The trend in
the Company's product sales is toward higher unit volume, lower-
cost systems, and management believes that service contracts are
relatively less important to purchasers of lower-cost systems.
For the fiscal year ended April 30, 1994, consolidated revenue
increased $6.4 million, or 3 percent, from the prior year. The
increase reflected 4 percent growth in product sales, partially
offset by an 8 percent decline in the smaller service component
of revenue. In geographic terms, the sales increase in 1994
occurred primarily in North America and reflected an improved
domestic economic environment and strength in capital spending.
The relative weakness of foreign economies in 1994 was evident in
the Company's lower export sales, particularly export sales to
European markets which were down $12 million from 1993.
Within the Company's major product classes, the largest sales
increases in 1994 occurred in microprocessor- and PC-controlled
systems for the signmaking industry. The increased sales related
primarily to the introduction of the GERBER EDGE, an imaging
system that works with the Company's signmaking software to
produce four-color special effects directly on adhesive-backed
signmaking vinyl. Product sales also increased in optical lens
manufacturing systems, primarily for the Company's low-cost SGX
(TM) Surface Generating system which uses computer-controlled
machining to generate prescriptions in plastic eyeglass lenses.
These increases were partially offset by lower sales of computer-
controlled cutting systems for the apparel industry. The year-
to-year decrease in cutting system sales occurred in European
markets and reflected the weak state of those economies,
particularly in the first half of the fiscal year.
For the fiscal year ended April 30, 1993, consolidated revenue
increased $4.4 million, or 2 percent, from the prior year. The
increase reflected a 3 percent rise in product sales, partially
offset by a 3 percent decline in service revenue. The sales
increase in 1993 occurred primarily in North America, with Europe
and other international markets registering smaller gains.
In terms of the Company's major product classes, the largest
sales gains in 1993 occurred in computer-controlled cutting
systems for
14
<PAGE>16
the apparel industry and in optical lens manufacturing systems.
Partially offsetting these gains was a decline in sales of
microprocessor- and PC-controlled systems for the signmaking
industry. The Company encountered significant competition in
this market from software-only suppliers, and this competition
adversely affected the sales volume and profit margins of
signmaking systems. The Company responded to this competition in
a variety of ways, including promotional pricing programs,
modification of its distribution methods, introduction of new
peripheral systems such as the GERBER EDGE, and introduction of a
software-only version of its signmaking product.
The consolidated gross profit margin in 1995 was 44.3 percent
compared with 44.4 percent in 1994 and 45.3 percent in 1993.
Gross profit margins on product sales declined from 46.5 percent
in 1994 to 45.9 percent in 1995 while margins on service revenue
improved from 32.2 percent in 1994 to 34.5 percent in 1995.
Contributing to the product margin decline in 1995 were the sales
of Niebuhr fabric spreaders whose margins were significantly
below the Company's average product margin. Higher costs of
manufacturing in Denmark coupled with the relative strength of
the Danish currency versus the U.S. dollar pressured the margins
on this product. Lower product margins in 1995 also reflected
start-up costs on the early production runs of new products, the
GERBERcutter series S-3200, S-5200, and S-7200 and the Step One
Blocking System.
In each of the years ended April 30, 1995, 1994, and 1993, gross
profit margins were pressured by software-only competition in the
markets for the Company's signmaking systems and by price
discounting in the markets for computer-controlled cutting and
marker-making systems, particularly in Europe where the Company's
principal competitors in this product class are headquartered.
The decrease in service margins from 1993 to 1994 generally
reflected the lower 1994 service revenue volume while the
improved margin in 1995 reflected the addition of the
Microdynamics' service business.
Selling, general and administrative expenses were $97.5 million,
or 30.2 percent of revenue in 1995. This compared with $82.5
million and $85.6 million in 1994 and 1993, respectively, which
represented 31.7 percent and 33.7 percent of revenue in the
respective years. The higher selling, general and administrative
expenses in 1995 related to the additional expenses of Niebuhr
and Microdynamics, the higher volume of business, marketing
expenses associated with the introduction of new products, and
the inclusion of two additional months of expenses for the
foreign subsidiaries whose year-end was changed. The decline in
selling, general and administrative expenses in 1994 compared
with 1993 reflected the continuing effect of cost reduction
actions begun in earlier years in response to the then lower
level of business. These actions included cutbacks in
employment, consolidation of operating facilities, and other cost
reduction measures.
The Company has historically committed significant resources to
research and the development of new products and strives to
maintain a leading position in automation technology in the
various markets it serves. In each of the years ended April 30,
1995,
15
<PAGE>17
1994, and 1993, research and development expenses exceeded 8
percent of total revenue. The higher expenditures in 1995
compared with 1994 and 1993 reflected primarily the additional
engineering resources of Microdynamics and, to a smaller extent,
Niebuhr.
Interest expense increased in 1995 compared with 1994. The
Company's principal debt obligations were Industrial Revenue
Bonds with variable tax-exempt interest rates. Since debt levels
were substantially unchanged, changes in the Company's interest
expense reflected primarily the movements in short-term interest
rates. With the rise in short-term interest rates that occurred
in 1995, interest expense rose. Similarly, the lower short-term
interest rates that prevailed in 1994 resulted in comparatively
lower interest expense in that year.
Other income was lower in 1995 than in 1994. In 1994 the Company
received the proceeds of a final judgment in a U.S. patent
infringement case against Lectra Systemes S.A. of France (Lectra)
and its U.S. subsidiary. The judgment awarded the Company
damages for Lectra's past patent infringement in the U.S. of a
Company patent relating to its computer-controlled cutting
systems. The award, net of the 1994 expenses associated with it,
was $5.7 million and after income taxes amounted to $3.4 million,
or $.14 per share. In 1995 the Company collected a damage award
of $5.9 million in a patent infringement case related to
computer-controlled cutting equipment brought in the United
Kingdom against Lectra and its U.K. subsidiary. Lectra has
appealed this damage award, and the outcome of the litigation
remains uncertain. Accordingly, the Company has deferred the
income recognition of this award and has reflected the amount
collected as an accrued liability in its consolidated balance
sheet at April 30, 1995.
In 1995 other income consisted principally of royalty income and
tax-exempt interest income from investments in municipal bonds.
During 1993 the Company shifted its investment strategy to
longer-term tax-exempt municipal bonds to enhance the yield from
its cash investments. The higher interest income in 1994
compared with 1993 reflected the full year effect of this change
in investment strategy, as well as a larger invested balance.
Interest income in 1995 was substantially unchanged from 1994.
Royalty income rose in 1995 as a result of new license agreements
with foreign distributors of certain of the Company's signmaking
and graphic arts products.
The statutory U.S. Federal income tax rate was 35 percent for
1995 and 1994, and 34 percent for 1993. The effective income tax
provision rates were 27.9 percent, 32.2 percent, and 31.9 percent
for 1995, 1994, and 1993, respectively. Offsetting the statutory
U.S. Federal income tax rate in each year were tax-exempt
interest income from the Company's municipal bond investments,
the tax savings derived from the Company's Foreign Sales
Corporation (FSC), and in 1995, research and development tax
credits. The lower effective state income tax rate in 1995 was
also attributable to research and development tax credits.
16
<PAGE>18
In 1994 the Company adopted on a prospective basis Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The adoption of this Statement changed the Company's
method of accounting for income taxes from the deferred method to
an asset and liability approach. The change in tax accounting
resulted in a one-time gain of $.8 million ($.03 per share) which
was recognized as a cumulative effect adjustment in the 1994
consolidated statement of earnings.
Statements of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and
No. 112, "Employers' Accounting for Postemployment Benefits,"
have no impact on the Company's consolidated financial position
or results of operations. The Company does not provide
postemployment or postretirement benefits other than through its
pension plans.
FINANCIAL CONDITION
The Company's short-term liquidity at April 30, 1995 was lower
than in preceding years but adequate for the Company's
requirements. Cash and short-term cash investments totaled $10.2
million at April 30, 1995 compared with $15.6 million at April
30, 1994 and $17.3 million at April 30, 1993. Net working
capital at April 30, 1995 was $78.5 million compared with $87.8
million and $82.6 million at April 30, 1994 and 1993,
respectively. The working capital ratio at April 30, 1995 was
2.1 to 1 compared with 3.1 to 1 and 3.2 to 1 at April 30, 1994
and 1993, respectively.
The lower short-term liquidity, current ratio, and net working
capital at April 30, 1995 compared with the two prior year-ends
resulted primarily from the Company's acquisition of Niebuhr and
Microdynamics. The Company paid approximately $1 million for the
Niebuhr acquisition and repaid approximately $1.1 million of
Niebuhr's bank debt subsequent to the acquisition. The Company
has paid approximately $8 million to acquire Microdynamics and
repaid approximately $2.2 million of its debt. These amounts
were funded from the Company's cash and short-term investments.
The net working capital positions of the acquired businesses were
substantially weaker than the Company's and, when combined with
the cash payments described above, contributed to the lower
consolidated liquidity, working capital, and current ratio at
April 30, 1995.
In connection with the acquisitions, the Company has recorded
approximately $10.2 million of goodwill which is being amortized
on a straight-line basis over 20 years. With regard to the
Microdynamics' acquisition, the Company is contingently liable to
make up to $4 million in additional payments based upon
Microdynamics' closing balance sheet and the realizability of
certain of the acquired assets. The Microdynamics' acquisition
agreement also provides for additional contingent cash
consideration based on the earnings performance of a certain
acquired product line over the three-year period following the
acquisition. Any amounts due based upon the earnings-related
17
<PAGE>19
contingency would be payable at the end of the three-year period.
Any contingent amounts that become payable will be recorded as
additional goodwill and amortized over the remainder of the 20-
year amortization period.
At April 30, 1995 and 1994, the Company's portfolio of tax-exempt
municipal securities totaled $82.7 million and $80.4 million,
respectively. The securities in this portfolio had maturities
ranging up to five years in length with a weighted average
maturity of approximately one and one-half years at April 30,
1995. They are classified in the consolidated balance sheet as a
long-term investment. The Company intends to hold these
securities to maturity and, by doing so, expects to earn a higher
rate of return than that provided by short-term money market
instruments. The pretax equivalent yield on this portfolio was
approximately 6.4 percent at April 30, 1995.
Operating activities provided $29.3 million in cash in 1995. In
addition to the $12.3 million used for business acquisitions and
repayment of the acquired companies' debt discussed above,
significant uses of cash in 1995 were for additions to property,
plant and equipment ($12.5 million); dividends on common stock
($7.1 million); additional investment in municipal bonds ($2.2
million); and open market purchases of common stock
($1.4 million).
The additions to property, plant and equipment of $12.5 million
in 1995 were funded by operations and from cash on hand. The
1995 expenditures were higher than in previous years due in part
to facilities' improvements, including expenditures to
accommodate the acquired Niebuhr and Microdynamics operations.
In 1994 and 1993, the Company spent $4.6 million and $6.5
million, respectively, on additions to property, plant and
equipment. The Company expects that 1996 capital expenditures
will be in the range of $6 million to $8 million and expects to
fund these additions with cash on hand and cash generated by
operations.
The Board of Directors increased the quarterly dividend on the
Company's common stock from $.06 to $.08 per share beginning with
the dividend paid in the second quarter of fiscal 1995. On an
annualized basis, this change increased the Company's dividend
payout by approximately $1.9 million to $7.6 million. For fiscal
year 1995, dividends per share totaled $.30 per share compared
with $.23 per share in 1994 and $.20 in 1993.
Under a current Board of Directors' authorization, the Company
may purchase up to 1,444,200 shares of its outstanding common
stock as, in the opinion of management, market conditions may
warrant. In 1995, 1994, and 1993, the Company purchased 100,400,
136,900, and 2,100 shares, respectively, at average prices per
share of $13.65, $12.67, and $9.94, respectively.
At April 30, 1995 and 1994, the Company's long-term debt
consisted entirely of tax-exempt Industrial Revenue Bonds which
amounted to $7.7 million and $7.9 million, respectively, at those
dates. The Company also maintains foreign currency denominated
lines of credit
18
<PAGE>20
which totaled approximately $19.4 million at April 30, 1995. No
amounts were borrowed against these lines as of April 30, 1995
and 1994. These lines of credit are available to finance the
working capital requirements of the Company's foreign
subsidiaries and to provide credit support for the Company's
commitments under forward foreign exchange contracts.
The Company's ratio of total debt to shareholders' equity was 3.3
percent at April 30, 1995 compared with 3.5 percent at April 30,
1994 and 3.8 percent at April 30, 1993. The Company believes its
low debt-to-equity ratio is an important indicator of the ability
to borrow funds should needs arise. Scheduled maturities of
long-term debt in 1996 amount to $.2 million, and payment is
expected to be made from cash on hand and cash from operations.
In 1994, operating activities provided $14.3 million in cash. A
primary use of cash in 1994 was to fund the Company's defined
benefit and supplemental pension plans. Pension funding of $9.6
million in 1994 substantially exceeded expense recognition of
$1.3 million and produced a significant income tax deduction.
This difference between pension funding and expense was the
primary reason for increases in the Company's intangible assets
and deferred income tax liabilities at April 30, 1994 compared
with the prior year-end. Other principal operating uses of cash
in 1994 were to fund increases in accounts receivable and
inventories which were related in part to the higher volume of
business. The primary nonoperating uses of cash were to pay
dividends, which increased to $.23 per share in 1994 from $.20
per share in 1993, and additions to the Company's municipal bond
portfolio.
In 1993, operating activities provided $56.9 million of cash,
including $18.7 million received in connection with the sale of a
substantial portion of the Company's lease receivables to a
financial services institution. In addition to purchasing the
lease receivables, the financial services institution began
providing lease financing to qualified purchasers of the
Company's equipment. Under recourse provisions of the lease
financing agreement, the Company has contingent liability to the
financial services institution in the event of default by the
lessee and recovery of the equipment. At April 30, 1995 the
present value of the lease receivables financed under this
agreement amounted to $28.5 million. Losses to date under these
recourse provisions have not been significant.
Cash was also generated in 1993 by substantial reductions in
accounts receivable and inventories. A significant use of cash
in 1993 was for the initial investments in tax-exempt municipal
bonds, which amounted to $73.6 million in that year.
--------------
(TM) represents a trademark of the Company.
19
<PAGE>21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS Gerber Scientific, Inc.
For years ended April 30
In thousands except per ---------------------------------
share amounts 1995 1994 1993
----------------------------------------------------------------------
Revenue:
Product sales $278,451 $223,551 $214,028
Service 44,257 37,183 40,337
-------- -------- --------
322,708 260,734 254,365
-------- -------- --------
Costs and Expenses:
Cost of product sales 150,637 119,699 112,259
Cost of service 29,000 25,192 26,854
Selling, general and
administrative expenses 97,452 82,543 85,616
Research and development
expenses 26,009 22,339 21,741
-------- -------- --------
303,098 249,773 246,470
-------- -------- --------
Operating income 19,610 10,961 7,895
Other income 5,964 10,818 4,846
Interest expense (463) (346) (505)
-------- -------- --------
Earnings before income taxes 25,111 21,433 12,236
Provision for income taxes 7,000 6,900 3,900
-------- -------- --------
Net earnings before cumulative
effect of accounting change 18,111 14,533 8,336
Cumulative effect of accounting
change -- 788 --
-------- -------- --------
Net Earnings $ 18,111 $ 15,321 $ 8,336
======== ======== ========
Net Earnings Per Common Share:
Before cumulative effect of
accounting change $ .76 $ .61 $ .35
Cumulative effect of
accounting change -- .03 --
-------- -------- --------
Net Earnings Per Common Share $ .76 $ .64 $ .35
======== ======== ========
See summary of significant accounting policies and notes to
consolidated financial statements.
20
<PAGE>22
CONSOLIDATED BALANCE SHEET Gerber Scientific, Inc.
April 30
-----------------------
In thousands except per share amounts 1995 1994
----------------------------------------------------------------------
ASSETS
Current Assets:
Cash and short-term cash investments $ 10,208 $ 15,605
Accounts receivable 62,900 53,731
Inventories 59,496 55,479
Prepaid expenses 14,310 4,962
-------- --------
146,914 129,777
-------- --------
Investments and Long-Term Receivables 84,152 82,539
-------- --------
Property, Plant and Equipment 100,217 100,066
Less accumulated depreciation 49,081 52,586
-------- --------
51,136 47,480
-------- --------
Intangible Assets 48,094 32,443
Less accumulated amortization 8,435 7,181
-------- --------
39,659 25,262
-------- --------
Other Assets 2,567 1,385
-------- --------
$324,428 $286,443
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ -- $ --
Current maturities of long-term debt 193 193
Accounts payable 19,179 9,875
Accrued compensation and benefits 10,935 7,765
Other accrued liabilities 25,050 17,838
Deferred revenue and litigation award 9,318 2,628
Advances on sales contracts 3,722 3,630
-------- --------
68,397 41,929
-------- --------
Noncurrent Liabilities:
Deferred income taxes 9,541 11,913
Long-term debt 7,531 7,724
Other 1,657 53
-------- --------
18,729 19,690
-------- --------
Contingencies and Commitments (Note 16)
Shareholders' Equity:
Preferred stock, no par value; authorized
10,000,000 shares; no shares issued -- --
Common stock, $1 par value; authorized
65,000,000 shares; issued and outstanding
23,757,780 and 23,828,330 shares 23,758 23,828
Paid-in capital 34,885 34,688
Retained earnings 176,621 166,771
Cumulative translation component 2,038 (463)
-------- --------
237,302 224,824
-------- --------
$324,428 $286,443
======== ========
See summary of significant accounting policies and notes to
consolidated financial statements.
21
<PAGE>23
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY Gerber Scientific, Inc.
Common
Stock, Cumulative
In thousands except $1 Par Paid-in Retained Translation
per share amounts Value Capital Earnings Component
---------------------------------------------------------------------------
April 30, 1992 $ 23,792 $ 33,480 $154,767 $ 1,466
Net earnings -- -- 8,336 --
Foreign currency translation
adjustment -- -- -- (1,902)
Dividends ($.20 per share) -- -- (4,762) --
Exercise of stock options and
related tax benefit 41 263 -- --
Purchase and retirement of
common stock (2) (3) (16) --
-------- -------- -------- --------
April 30, 1993 23,831 33,740 158,325 (436)
Net earnings -- -- 15,321 --
Foreign currency translation
adjustment -- -- -- (27)
Dividends ($.23 per share) -- -- (5,472) --
Exercise of stock options and
related tax benefit 134 1,143 -- --
Purchase and retirement of
common stock (137) (195) (1,403) --
-------- -------- -------- ---------
April 30, 1994 23,828 34,688 166,771 (463)
Net earnings -- -- 18,111 --
Foreign currency translation
adjustment -- -- -- 2,501
Dividends ($.30 per share) -- -- (7,138) --
Exercise of stock options and
related tax benefit 30 344 -- --
Purchase and retirement of
common stock (100) (147) (1,123) --
-------- -------- -------- ---------
April 30, 1995 $ 23,758 $ 34,885 $176,621 $ 2,038
======== ======== ======== =========
See summary of significant accounting policies and notes to consolidated
financial statements.
22
<PAGE>24
CONSOLIDATED STATEMENT OF CASH FLOWS Gerber Scientific, Inc.
For years ended April 30
-------------------------------
In thousands 1995 1994 1993
---------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR)
Operating Activities:
Net earnings $ 18,111 $ 15,321 $ 8,336
Adjustments to reconcile net earnings
to cash provided by operating activities:
Depreciation and amortization 11,365 9,664 10,213
Deferred income taxes 2,756 4,237 (951)
Equity in net losses of affiliate -- -- 450
Gain from sale of investment in
Boston Digital Corporation -- (435) --
Cumulative effect of accounting change -- (788) --
Changes in operating accounts, net of
effects of business acquisitions:
Accounts receivable (3,418) (7,642) 17,976
Long-term receivables (412) 433 14,117
Inventories (1,965) (1,273) 14,213
Prepaid expenses (4,884) (685) 822
Accounts payable and accrued
expenses 7,788 (4,540) (8,301)
-------- -------- --------
Provided by Operating Activities 29,341 14,292 56,875
-------- -------- --------
Financing Activities:
Purchase of common stock (1,370) (1,735) (21)
Repayments of long-term debt (693) (193) (1,066)
Net short-term financing (2,755) (2) (1,088)
Exercise of stock options 374 1,277 304
Dividends on common stock (7,138) (5,472) (4,762)
-------- -------- --------
(Used for) Financing Activities (11,582) (6,125) (6,633)
-------- -------- --------
Investing Activities:
Investment in long-term debt securities (2,224) (5,773) (73,638)
Business acquisitions (9,038) -- --
Proceeds from sale of investment in
Boston Digital Corporation -- 2,085 --
Additions to property, plant & equipment (12,468) (4,625) (6,491)
Intangible and other assets (2,085) (1,457) (1,158)
Other long-term investments 2,659 (99) (2,296)
-------- -------- --------
(Used for) Investing Activities (23,156) (9,869) (83,583)
-------- -------- --------
(Decrease) in Cash and Short-Term
Cash Investments (5,397) (1,702) (33,341)
Cash and Short-Term Cash Investments,
Beginning of Year 15,605 17,307 50,648
-------- -------- --------
Cash and Short-Term Cash Investments,
End of Year $ 10,208 $ 15,605 $ 17,307
-------- -------- --------
See summary of significant accounting policies and notes to consolidated
financial statements.
23
<PAGE>25
INDEPENDENT AUDITORS' REPORT KPMG Peat Marwick LLP
-------------------------------------------------------------------
To the Board of Directors and Shareholders of
Gerber Scientific, Inc.
We have audited the accompanying consolidated balance sheet of
Gerber Scientific, Inc. and subsidiaries as of April 30, 1995 and
1994 and the related consolidated statements of earnings, changes
in shareholders' equity and cash flows for each of the years in
the three-year period ended April 30, 1995. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Gerber Scientific, Inc. and subsidiaries as of
April 30, 1995 and 1994 and the results of their operations and
their cash flows for each of the years in the three-year period
ended April 30, 1995 in conformity with generally accepted
accounting principles.
As discussed in the Summary of Significant Accounting Policies
and Note 11 to the consolidated financial statements effective
May 1, 1993, the Company adopted the provisions of Statement of
Accounting Standards No. 109, "Accounting for Income Taxes."
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Hartford, Connecticut
May 24, 1995
24
<PAGE>26
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Gerber Scientific, Inc.
-----------------------------------------------------------------
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries. The Company's investments in 50
percent or less owned affiliates are accounted for under the
equity method. Intercompany accounts and transactions are
eliminated.
Foreign subsidiaries are consolidated on the basis of fiscal
years ending on the last day of either February or April. In
fiscal year 1995, the year-end of certain of the Company's
foreign subsidiaries was changed from February to April to
coincide with the parent Company's year-end. Accordingly, an
additional two months of operating results for these subsidiaries
were included in the fiscal 1995 financial statements. The
effect of this change in year-ends was to increase sales and
service revenue for the fourth quarter and year ended April 30,
1995 by $6,749,000. This change did not have a significant
effect on net earnings and earnings per share for these periods.
For fiscal years 1994 and prior, the Company's consolidated
financial statements included the operations of these
subsidiaries for twelve-month periods ended on the last day of
February.
FOREIGN CURRENCY TRANSLATION AND FORWARD EXCHANGE CONTRACTS
Assets and liabilities of foreign subsidiaries are translated to
U.S. dollars at year-end exchange rates, and related revenue and
expenses are translated at average exchange rates during the
year. Translation adjustments and gains and losses on
intercompany foreign currency balances of a long-term investment
nature are deferred and accumulated in a separate component of
shareholders' equity. Transaction gains and losses are included
in earnings.
The Company enters into forward foreign exchange contracts with a
major international financial institution to hedge the effect of
exchange rate fluctuations on foreign currency commitments. The
Company does not engage in speculation. These forward exchange
contracts are accounted for as hedges of commitments, and the
gains and losses on these hedges are deferred and included in the
basis of the transaction underlying the commitment.
REVENUE
Sales under production contracts are generally recognized on the
percentage-of-completion method of accounting. Anticipated
losses on contracts, if any, are provided for when determined.
Other product sales are recognized upon shipment. Service
revenue is recognized ratably over the contractual period or as
services are performed. Royalties are accounted for as other
income as received.
25
<PAGE>27
CASH AND SHORT-TERM CASH INVESTMENTS
Short-term cash investments are stated at cost plus accrued
interest, which approximates market value. For purposes of the
statement of cash flows, the Company considers short-term, highly
liquid investments with maturities of three months or less to be
cash equivalents.
LONG-TERM INVESTMENTS
In accordance with the criteria of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," the Company's current investments
in long-term debt securities are stated at amortized cost plus
accrued interest based on the Company's ability and intention to
hold these securities to maturity.
INVENTORIES
Inventories of raw materials and purchased parts are stated at
the lower of average cost (which approximates first-in,
first-out) or market. Work in process inventory includes
materials, direct labor, and manufacturing overhead costs, less
the portion of such costs allocated to products delivered or
recognized as cost of sales under the percentage-of-completion
method of accounting.
PROPERTY, PLANT, EQUIPMENT, AND DEPRECIATION
Property, plant and equipment are stated on the basis of cost.
Major improvements and betterments to existing plant and
equipment are capitalized. Expenditures for maintenance and
repairs which do not extend the life of the applicable asset are
charged to expense as incurred. The cost and related accumulated
depreciation of properties sold or otherwise disposed of are
removed from the accounts, and any gain or loss is included in
other income.
Depreciation is provided generally on a straight-line basis.
Estimated useful lives used for calculating depreciation are 45
years for buildings and 5 to 10 years for machinery, tools, and
equipment.
INTANGIBLE ASSETS
The excess of acquisition cost over the fair values of the net
assets of businesses acquired is included in intangible assets
and is amortized generally over 20 years on a straight-line
basis. Patents are stated at cost and amortized on a straight-
line basis over 17 years from the date of issue.
Certain intangible and other long-lived assets are reviewed for
possible impairment whenever events or change in circumstances
indicate their carrying value may not be recoverable. Management
evaluates the carrying value of these assets based upon
projections of undiscounted future net cash flows of the related
business unit. An impairment loss is recognized if the carrying
value of these assets exceeds the related estimate of future cash
flows.
26
<PAGE>28
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" effective May 1, 1993.
The adoption of Statement No. 109 changed the Company's method of
accounting for income taxes from the deferred method to an asset
and liability approach. The asset and liability approach
requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and
liabilities.
EARNINGS PER SHARE
Net earnings per common share are based on the weighted average
number of common shares outstanding and common stock equivalents
during each year (23,950,000, 23,967,000, and 23,918,000 shares
in 1995, 1994, and 1993, respectively).
PRIOR YEAR RECALSSIFICATIONS
Certain amounts in the 1994 and 1993 financial statements have
been reclassified to conform with the 1995 presentation.
27
<PAGE>29
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS GERBER SCIENTIFIC, INC.
-------------------------------------------------------------------
NOTE 1 - PRODUCTS AND OPERATIONS
The Company designs, manufactures, markets, and services
computer-aided design (CAD) and computer-aided manufacturing
(CAM) systems. No other segment of the Company accounted for
more than 10 percent of consolidated revenue or net earnings in
1995, 1994, or 1993. No individual customer accounted for more
than 10 percent of consolidated revenue in 1995, 1994, or 1993.
The Company has manufacturing facilities in the United States and
Denmark, and sales and service offices in numerous United States
and foreign locations.
Export sales from the United States for each year were as
follows:
In thousands 1995 1994 1993
-----------------------------------------------------------
Europe $ 62,417 $ 42,899 $ 54,886
Far East 31,858 25,733 28,524
Other areas 27,584 24,010 18,755
-------- -------- --------
$121,859 $ 92,642 $102,165
======== ======== ========
NOTE 2 - CASH AND SHORT-TERM CASH INVESTMENTS
Cash and short-term cash investments at the end of each year were
as follows:
In thousands 1995 1994
-----------------------------------------------------------
Cash $ 5,875 $ 1,931
Time deposits 4,333 6,152
Tax-exempt variable rate
demand notes -- 7,522
------- --------
$10,208 $ 15,605
======= ========
The Company's short-term cash investments are in high quality
securities placed with major U.S. and international financial
institutions. The Company's investment policies limit the amount
of exposure to any one financial institution. Due to the
relatively short maturity of these financial instruments, their
carrying value at April 30, 1995 was a reasonable estimate of
their fair value.
28
<PAGE>30
NOTE 3 - ACCOUNTS RECEIVABLE
Included in accounts receivable were amounts earned under
specific contracts which were not billable of $1,919,000 at April
30, 1995 and $4,723,000 at April 30, 1994. The earned but
unbilled amount at April 30, 1995 is expected to be billed and
collected within the next year.
The Company sells products and services to customers in a variety
of industries and geographic areas and, accordingly, does not
have significant concentrations of credit risk. The Company
evaluates the creditworthiness of its customers prior to
extending credit and in some instances requires bank letters of
credit to support customer obligations. In addition, the
Company's lease receivables and its recourse obligations for
leases which are financed by third parties are secured and
collateralized by the underlying equipment.
NOTE 4 - INVENTORIES
The classification of inventories at the end of each year was as
follows:
In thousands 1995 1994
-----------------------------------------------------------------
Raw materials and purchased parts $ 48,000 $ 43,269
Work in process 11,496 12,210
-------- --------
$ 59,496 $ 55,479
======== ========
NOTE 5 - BUSINESS ACQUISITIONS
On March 1, 1994, Gerber Garment Technology, Inc. (GGT), a wholly
owned subsidiary of the Company, purchased the business and
certain assets and liabilities of Niebuhr Maskinfabrik A/S
(Niebuhr) of Ikast, Denmark. The acquisition cost was
approximately $1,000,000. Niebuhr manufactures and markets
computer-automated fabric spreading and cutting room equipment
used in the apparel and related industries. The acquisition was
accomplished through a newly formed Danish subsidiary of GGT
known as GGT-Niebuhr A/S, which has continued to manufacture,
market, and support Niebuhr equipment.
The acquisition was accounted for as a purchase, with the
acquisition cost allocated to the assets and liabilities acquired
based upon their fair values. The excess of acquisition cost
over the fair values of the net assets acquired was included in
intangible assets as goodwill and is being amortized on a
straight-line basis over 20 years from the date of acquisition.
The results of operations of GGT-Niebuhr A/S have been included
in the Company's 1995 consolidated statement of earnings for the
14-month period ended April 30, 1995. The pro forma effect of
the Niebuhr acquisition on the Company's prior reported results
of operations was not significant.
29
<PAGE>31
On September 1, 1994, GGT acquired the outstanding stock of
Microdynamics, Inc. (Microdynamics) of Dallas, Texas, and
subsequently merged that company into GGT. Microdynamics was a
leading supplier of computer-aided design (CAD), graphic design,
and product management systems for the apparel, footwear, and
other sewn goods industries. GGT has continued to develop,
manufacture, market, and support the Microdynamics' product
lines.
Under terms of the acquisition agreement, the Microdynamics'
purchase price was $12,000,000 plus additional contingent cash
consideration based on the earnings performance of a certain
acquired product line over the three-year period following the
date of acquisition. Approximately $7,700,000 of the $12,000,000
purchase price has been paid. Of the balance, $4,000,000 is
contingently payable over the one-year period following the date
of acquisition based on the results of an audit of Microdynamics'
closing balance sheet and the realizability of certain acquired
assets.
The acquisition has been accounted for as a purchase, and the
results of Microdynamics' operations have been included in the
Company's 1995 consolidated statement of earnings for the eight-
month period ended April 30, 1995. The acquisition cost, which
includes the purchase price paid to date, has been allocated to
the assets and liabilities acquired based upon their fair values.
The excess of acquisition cost over the fair values of the net
assets acquired was included in intangible assets as goodwill and
is being amortized on a straight-line basis over 20 years from
the date of acquisition. Any contingent consideration that is
subsequently payable will be recorded as additional acquisition
cost at the time the contingency is resolved and the amount is
determinable. Additional goodwill resulting from any
contingency-related payment will be amortized over the remainder
of the 20-year goodwill amortization period.
The following pro forma combined results of operations for the
years ended April 30, 1995 and 1994 have been prepared as if the
acquisition of Microdynamics occurred at the beginning of each of
the respective fiscal years and give effect to estimated purchase
accounting adjustments resulting from the acquisition. The pro
forma information is presented on the assumption that the
acquisition cost would have been the same at the beginning of
each period and includes only the purchase price that has been
paid to date.
In thousands (Unaudited)
(except per share amounts) 1995 1994
---------------------------------------------------------
Sales $330,433 $286,915
Net earnings 17,308 13,939
Net earnings per
common share .72 .58
The pro forma financial information presented is not necessarily
indicative of the results of operations that would have been
achieved had the acquisition of Microdynamics actually been
effective as of the beginning of each fiscal year or of future
results of the combined companies.
30
<PAGE>32
NOTE 6 - INVESTMENTS AND LONG-TERM RECEIVABLES
Investments and long-term receivables at the end of each year
were as follows:
In thousands 1995 1994
---------------------------------------------------------
Tax-exempt municipal bonds $82,674 $ 80,430
Long-term receivables 863 1,551
Other 615 558
-------- -------
$84,152 $82,539
======== =======
The Company has purchased for investment purposes a portfolio of
investment-grade tax-exempt municipal bonds with maturities
ranging up to five years. At April 30, 1995, the portfolio had a
weighted average maturity of approximately one and one-half years
and a pre-tax equivalent yield of approximately 6.4 percent. The
Company purchased these securities to earn a higher after-tax
rate of return than that provided by short-term money market
instruments. The estimated aggregate fair value of the Company's
tax-exempt municipal bonds was $82,521,000 at April 30, 1995 and
$80,300,000 at April 30, 1994 based upon quoted market prices or
market prices for similar securities. At April 30, 1995, the
gross unrealized gains and losses were $110,000 and $263,000,
respectively. At April 30, 1994, the gross unrealized gains and
losses were $248,000 and $378,000, respectively.
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment at the end of
each year were as follows:
In thousands 1995 1994
-----------------------------------------------------------
Land $ 4,356 $ 4,350
Buildings 40,624 38,594
Machinery, tools & equipment 54,599 56,993
Construction in progress 638 129
-------- --------
$100,217 $100,066
======== ========
NOTE 8 - INTANGIBLE ASSETS
The components of net intangible assets at April 30, 1995 and
1994 were as follows:
In thousands 1995 1994
--------------------------------------------------------------
Prepaid pension cost $ 17,862 $ 15,378
Patents, net of accumulated
amortization 7,141 6,543
Goodwill, net of accumulated
amortization 12,418 2,510
Other 2,238 831
-------- --------
$ 39,659 $ 25,262
======== ========
31
<PAGE>33
NOTE 9 - NOTES PAYABLE
The Company has short-term bank lines of credit which totaled
approximately $19,400,000 based upon year-end foreign exchange
rates. As of April 30, 1995 and 1994, no amounts were borrowed
under these credit lines. Included in the bank lines of credit
is a $15,000,000 multi-currency line of credit from a major
European commercial bank. The multi-currency line of credit is
available in various sub-limits to certain of the Company's
European subsidiaries, and repayment is guaranteed by the parent
Company. Borrowings under this line of credit may be for terms
of up to six months in length and bear interest at 1/4
percent above the London Interbank Offered Rate (LIBOR) for the
relevant currency and term. The line of credit has a commitment
fee of 1/8 percent of the unused amount.
NOTE 10 - DEFERRED LITIGATION AWARD
The Company brought suit in the United Kingdom alleging Lectra
Systemes, S.A. of France and its U.K. subsidiary (Lectra)
infringed certain Company patents dealing with automated fabric
cutting equipment. The High Court of Justice, Chancery Division,
in London found that Lectra had infringed two of the Company's
patents and subsequently awarded damages to the Company of
approximately $5,868,000. Lectra paid this amount to the Company
but has appealed the damage award. As a result of this appeal,
the ultimate award remains uncertain, and the Company has
deferred income recognition until such time as the uncertainty is
resolved.
NOTE 11 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," on a prospective basis
effective May 1, 1993. This statement requires an asset and
liability approach in determining deferred income taxes. The
adoption of Statement No. 109 resulted in a favorable transition
adjustment of $788,000 ($.03 per share) which was recognized in
the 1994 consolidated statement of earnings as the cumulative
effect of an accounting change.
Consolidated earnings before income taxes included foreign pretax
earnings of $2,687,000, $2,586,000, and $3,949,000 for 1995,
1994, and 1993, respectively. The components of the provision
for income taxes for the years ended April 30, 1995, 1994, and
1993 were as follows:
32
<PAGE>34
In thousands 1995 1994 1993
--------------------------------------------------------
Currently payable:
Federal $ 5,600 $ 3,000 $ 5,000
State and local 400 600 1,100
Foreign 500 800 1,200
-------- -------- --------
6,500 4,400 7,300
Deferred 500 2,500 (3,400)
-------- -------- --------
$ 7,000 $ 6,900 $ 3,900
======== ======== ========
The sources of the timing differences between reporting for
financial statement purposes and income tax purposes and their
tax effects for the year ended April 30, 1993 were as follows:
In thousands 1993
----------------------------------------------
Inventory valuation $ (500)
Leasing (4,800)
Pension 1,400
Other 500
--------
$ (3,400)
--------
Income tax payments totaled $5,931,000, $2,547,000, and
$3,107,000 in the years ended April 30, 1995, 1994, and 1993,
respectively. Reconciliations of the statutory U.S. Federal
income tax rate to the effective income tax rate for each year
were as follows:
1995 1994 1993
--------------------------------------------------------------
Statutory U.S. Federal income
tax rate 35.0% 35.0% 34.0%
State income taxes, net of U.S.
Federal tax benefit .9 3.4 5.8
Foreign tax rate differences .7 (.4) (.7)
Effect of tax rate changes on
deferred taxes -- .4 --
Tax-exempt interest income (4.8) (5.6) (4.2)
Foreign Sales Corporation ( .7) (.6) (1.7)
Research and development tax
credits (2.3) -- --
Other, net (.9) -- (1.3)
----- ----- ----
Effective income tax rate 27.9% 32.2% 31.9%
===== ===== ====
The Company's deferred income tax balances relate principally to
differing depreciation methods for property, plant and equipment;
differing book and tax treatment of patent costs; the timing of
pension plan funding versus expense recognition; differing
valuations of inventories, accounts receivable, and other assets;
expense provisions not deductible until paid; and tax operating
loss carryforwards. At April 30, 1995 and 1994, current deferred
tax assets of approximately $9,500,000 and $2,400,000,
33
<PAGE>35
respectively, were included in prepaid expenses in the
consolidated balance sheet. Deferred tax assets and deferred tax
liabilities as of April 30, 1995 and April 30, 1994 were as
follows:
1995 1994
------------------------ -----------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
-------------------------------------------------------------------
Depreciation $ -- $ 5,200 $ -- $ 5,400
Patents -- 2,700 -- 2,500
Employee benefit
plans -- 5,500 -- 4,800
Asset valuations 6,200 800 5,000 700
Litigation award 2,300 -- -- --
Provisions for
estimated
expenses 4,500 2,800 3,200 4,000
Foreign exchange
gains and losses -- 2,600 -- 1,100
Tax carryforwards 7,100 -- 1,400 --
Other 2,400 1,500 1,900 1,400
-------- -------- -------- --------
22,500 21,100 11,500 19,900
Valuation
allowance (1,400) -- (1,000) --
-------- -------- -------- --------
$ 21,100 $ 21,100 $ 10,400 $ 19,900
======== ======== ======== ========
The increased tax carryforwards included in deferred tax assets
at April 30, 1995 reflected acquired tax net operating loss and
credit carryforwards in tax jurisdictions where the Company has
existing operations which have been and are expected to remain
profitable. The Company has not provided U.S. income taxes on
the unremitted earnings of foreign subsidiaries because such
earnings are considered to be indefinitely reinvested in those
operations. It is not practicable for the Company to estimate
the deferred tax liability that might arise on the remittance of
the earnings of these foreign subsidiaries.
For income tax reporting purposes, the Company has U.S. and
foreign net operating loss carryforwards of approximately
$15,500,000 at April 30, 1995. Such carryforwards have various
expiration dates and begin to expire in the year ending April 30,
1996.
NOTE 12 - LONG-TERM DEBT
The composition of long-term debt at the end of each year was as
follows:
34
<PAGE>36
In thousands 1995 1994
-----------------------------------------------------------
Industrial Revenue Bonds $ 7,724 $ 7,917
Less current maturities 193 193
-------- --------
$ 7,531 $ 7,724
======== ========
The Company's Industrial Revenue Bonds are collateralized by
certain property, plant and equipment and are payable to 2014 at
variable interest rates which ranged from 4.5 percent to 6.3
percent at April 30, 1995. Included therein are $6,000,000 of
Variable Rate Demand Industrial Development Bonds (VRDBs). The
interest rate payable on the VRDBs is adjusted weekly to maintain
their market value at par. During 1995 and 1994, the average
interest rate on the VRDBs was 3.4 percent and 2.4 percent,
respectively. The remaining Industrial Revenue Bonds bear
interest at 70 percent of the U.S. prime rate. The variable
interest rate feature of the Company's long-term debt allows its
repricing at current market interest rates and, accordingly, the
carrying amount of the debt at April 30, 1995 was a reasonable
estimate of its fair value.
The demand feature of the VRDBs is supported by a letter of
credit from a major U.S. commercial bank. The letter of credit
has a provision for automatic extension of an 18-month term and
carries a fee of .65 percent of the face amount. Any advances
under the letter of credit in support of the demand feature would
be repayable over the remaining letter of credit term at the
bank's prime interest rate. The bank providing the letter of
credit was also granted a mortgage and security interest in the
project property.
Covenants in the Industrial Revenue Bond agreements require the
Company to maintain certain levels of tangible net worth and
certain ratios of debt to tangible net worth and working capital,
as defined therein. At April 30, 1995, the Company was in
compliance with these covenants. Under the most restrictive of
these covenants, approximately $95,000,000 of retained earnings
was not available for dividend payments at April 30, 1995.
The aggregate annual maturities of long-term debt for each of the
four years after 1996 total $193,000 annually. Interest payments
totaled $439,000, $380,000, and $544,000 in the years ended
April 30, 1995, 1994, and 1993, respectively.
NOTE 13 - PREFERRED STOCK, COMMON STOCK, STOCK OPTION PLANS, AND
INCENTIVE BONUS PLANS
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 10,000,000
shares of preferred stock, without par value, issuable in series.
The Board of Directors is authorized to fix and determine the
terms, limitations, and relative rights and preferences of the
preferred stock, including voting rights (if any), the amount of
35
<PAGE>37
liquidation preference over the common stock, and to establish
series of preferred stock and fix and determine the various terms
among the series. As of April 30, 1995, no preferred stock had
been issued.
COMMON STOCK
The Board of Directors has authorized the Company to purchase up
to 3,000,000 shares of its outstanding common stock over an
indeterminate period of time as, in the opinion of management,
market conditions warrant. Under this authorization, the Company
has purchased 1,555,800 shares. The reacquired shares have been
retired and under Connecticut law constitute authorized but
unissued shares. As of April 30, 1995, the Company could
purchase up to an additional 1,444,200 shares under the current
Board of Directors' authorization.
STOCK OPTION PLANS
The Company's 1992 Employee Stock Plan (the 1992 Plan) was
approved by shareholders in September 1992 and provides for
incentive and nonqualified stock option grants to officers and
key employees. Stock options under the 1992 Plan are for a ten-
year term and are granted at the market price of the common stock
on the date of grant. Options granted to date are generally
exercisable in installments of 25 percent each year commencing
one year from the date of grant. The maximum number of shares of
common stock available for grant under the 1992 Plan is 1,500,000
shares.
The 1992 Non-Employee Director Stock Option Plan (1992 Director
Plan) was approved by shareholders in September 1992 and provides
for the automatic award each May 1 of options to purchase 1,000
shares of common stock to eligible members of the Board of
Directors who are not also employees of the Company. Stock
options under the 1992 Director Plan are nonqualified options
with a ten-year term and are granted at the market price of the
common stock on the date of grant. Options granted under the
1992 Director Plan are immediately exercisable. The maximum
number of shares of common stock available for grant under the
1992 Director Plan is 75,000 shares.
A summary of the stock option activity for the three years ended
April 30, 1995 is set forth below:
36
<PAGE>38
1995 1994 1993
----------------------------------------------------------------
Outstanding stock options,
beginning of year 665,965 692,059 660,202
Options granted 90,000 125,000 95,000
Options exercised (29,850) (134,094) (40,893)
Options canceled (26,750) (17,000) (22,250)
--------- --------- ---------
Outstanding stock options,
end of year 699,365 665,965 692,059
========= ========= =========
Average exercise price per
share, end of year $11.18 $10.63 $9.65
========= ========= =========
Reserved for future grants 1,371,000 1,450,000 1,575,000
========= ========= =========
The average exercise price per share was $9.82 for the 29,850
options exercised during 1995. At April 30, 1995, options for
431,115 shares of common stock were exercisable under the terms
of the plans at an average exercise price per share of $10.03.
In the event of a change in control of the Company, all
unexercised outstanding stock options become immediately
exercisable.
INCENTIVE BONUS PLANS
The Board of Directors approved cash profit incentive bonus plans
for each of the years ended April 30, 1995, 1994, and 1993. The
plans covered substantially all employees in the United States
and were based upon pretax profits of the Company's operating
subsidiaries and the consolidated group. The amounts charged to
expense under these plans totaled $2,293,000, $1,317,000, and
$1,057,000 for the years ended April 30, 1995, 1994, and 1993,
respectively. Plans for subsequent years and their criteria are
subject to the approval of the Board of Directors.
NOTE 14 - EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company has a noncontributory defined benefit pension plan
covering substantially all employees in the United States. Plan
benefits are based on years of service and an employee's annual
compensation, as defined, over the period of employment.
Effective May 1, 1995, the Board of Directors approved an amended
plan benefit formula which is based on an average of an
employee's highest five consecutive years of compensation in the
last ten years of service.
The Company's general policy is to fund the Plan's normal cost
plus amounts required to amortize actuarial gains and losses and
prior service costs over periods ranging from 5 to 30 years. For
each of the years in the three-year period ended April 30, 1995,
the
37
<PAGE>39
Company funded substantially more than the minimum required
contributions. Amounts funded totaled $3,352,000, $8,379,000,
and $5,036,000 for the years ended April 30, 1995, 1994, and
1993, respectively. Plan assets were invested in a portfolio
consisting primarily of common stocks, fixed income securities,
and money market instruments. Pension arrangements for employees
of foreign subsidiaries were provided generally through local
insurance contracts, the costs of which were funded currently.
The following table summarizes the funded status of the pension
plan and the related amounts recognized in the consolidated
balance sheet at the end of each year.
In thousands 1995 1994
-------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested benefits $ 28,222 $ 27,276
Nonvested benefits 1,465 1,446
--------- --------
Accumulated benefit obligation 29,687 28,722
Provision for future salary increases 5,986 15
--------- --------
Projected benefit obligation for
services rendered to date 35,673 28,737
Plan assets available for benefits (34,478) (31,279)
--------- --------
Plan assets less than (in excess of)
projected benefit obligation 1,195 (2,542)
Unrecognized net (loss) (3,526) (2,775)
Unrecognized net transition liability (744) (838)
Unrecognized prior service cost (13,850) (8,125)
--------- --------
Net pension plan (asset) in the
consolidated balance sheet $ (16,925) $(14,280)
========= ========
In 1994 the Company adopted a nonqualified supplemental pension
plan. The supplemental pension plan provides for the pension
benefits earned under the Company's primary pension plan which
cannot be paid from such plan because of limitations imposed by
income tax regulations. The Company has established a trust to
provide funding for the benefits payable under the supplemental
pension plan. The trust is irrevocable and assets contributed to
the trust can only be used to pay such benefits, with certain
exceptions. The trust assets were invested in a bank common
trust fund whose portfolio consisted primarily of common stocks,
fixed income securities, and money market instruments.
The following table summarizes the funded status of the non-
qualified supplemental pension plan and the related amounts
recognized in the consolidated balance sheet at the end of each
year.
38
<PAGE>40
In thousands 1995 1994
-------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested benefits $ 1,962 $ 1,252
Nonvested benefits -- 9
--------- --------
Accumulated benefit obligation 1,962 1,261
Provision for future salary increases 1,185 --
--------- --------
Projected benefit obligation for
services rendered to date 3,147 1,261
Plan assets available for benefits ( 1,242) (1,208)
--------- --------
Plan assets less than (in excess of)
projected benefit obligation 1,905 53
Unrecognized net gain (loss) 228 (13)
Unrecognized prior service cost (3,070) (1,085)
Adjustment to recognize additional
minimum liability 1,657 --
--------- --------
Net supplemental pension plan liability
(asset) in the consolidated balance
sheet $ 720 $ (1,045)
========= ========
The amendment to the pension benefit formula effective May 1,
1995 caused the projected benefit obligation for the pension plan
and the supplemental pension plan to increase by $6,293,000 and
$2,106,000, respectively. These amounts have been recognized in
the tables above which summarize the funded status of the plans
as of April 30, 1995. The unrecognized prior service cost
arising from the amended benefit formula will be amortized over
15 years for the pension plan and 10 years for the supplemental
pension plan.
The following table summarizes the components of the net periodic
pension cost for the years ended April 30, 1995, 1994, and 1993.
The pension cost associated with the supplemental pension plan
was $108,000 and $161,000 in the years ended April 30, 1995 and
1994, respectively, and is included in the amounts shown below.
In thousands 1995 1994 1993
-------------------------------------------------------------------
Cost related to current service $ 709 $ 579 $ 470
Interest cost on projected
benefit obligation 2,175 2,040 1,509
Actual return on plan assets (2,172) (2,371) (1,847)
Net amortization and deferral 103 1,005 903
------- ------- -------
Net periodic pension cost $ 815 $ 1,253 $ 1,035
======= ======= =======
39
<PAGE>41
For 1995, 1994, and 1993, the projected benefit obligation was
determined using assumed discount rates of 7.75 percent, 7.5
percent, and 7.75 percent, respectively, and an assumed long-term
compensation increase rate of 5.0 percent in each year. The
assumed long-term rate of return on invested assets was 9.0
percent in each year.
401(k) PLAN
Under the Company's 401(k) Maximum Advantage Program, employees
in the United States with one year of service may contribute a
portion of their compensation to a tax-deferred 401(k) Plan. The
Company contributes an amount equal to a specified percentage of
each employee's contribution up to an annual maximum. The
Company's expense for matching contributions under this Plan was
$293,000, $269,000, and $265,000 for the years ended April 30,
1995, 1994, and 1993, respectively.
POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Statements of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and
No. 112, "Employers' Accounting for Postemployment Benefits,"
changed the practice of accounting for these benefits
(principally health care) from an expense-as-paid basis to an
accrual accounting basis. The Company does not provide
postemployment or postretirement benefits other than through its
pension plans, and as a result, Statements No. 106 and No. 112
have no impact on the Company's consolidated financial position
or results of operations.
NOTE 15 - OTHER INCOME
The components of other income for each year were as follows:
In thousands 1995 1994 1993
----------------------------------------------------------------
Interest income from
investments $ 3,686 $ 3,577 $ 2,434
Royalty income 1,784 1,227 2,589
Patent litigation judgment -- 5,675 --
Other 494 339 (177)
-------- -------- -------
$ 5,964 $ 10,818 $ 4,846
======== ======== =======
The Company's 1994 patent litigation judgment resulted from an
action in the U.S. against Lectra Systemes, S.A. of France and
its U.S. subsidiary (Lectra) charging that Lectra infringed
certain Company patents dealing with automated fabric cutting
equipment. The U.S. District Court in Northern Georgia found
that Lectra infringed three of the Company's patents and awarded
the Company damages. The U.S. Court of Appeals for the Federal
Circuit affirmed the judgment of the U.S. District Court. In
1994 Lectra paid the judgment to the Company, which amounted to
$5,675,000 net of the 1994 expenses associated with it. After
income taxes, this item amounted to approximately $3,400,000, or
$.14 per share.
40
<PAGE>41
NOTE 16 - CONTINGENCIES AND COMMITMENTS
Various lawsuits, claims, and governmental proceedings are
pending against the Company. Management of the Company believes
that the ultimate resolution of these matters will not have a
materially adverse effect on the Company's consolidated financial
position or the results of its operations.
The Company occupies space and uses certain equipment under
operating lease arrangements. The Company is not the lessee
under any significant capital leases. Rental expense under lease
arrangements was $2,702,000, $2,561,000, and $2,076,000 for the
years ended April 30, 1995, 1994, and 1993, respectively.
Minimum annual rental commitments at April 30, 1995 under
long-term noncancelable operating leases were as follows:
Building and Machinery and
In thousands Office Space Equipment Total
--------------------------------------------------------------
1996 $ 1,865 $ 145 $ 2,010
1997 1,295 91 1,386
1998 1,139 33 1,172
1999 1,025 7 1,032
2000 588 1 589
After 2000 532 -- 532
------- ----- -------
$ 6,444 $ 277 $ 6,721
======= ===== =======
As of April 30, 1995, the Company was party to approximately
$22,000,000 in forward exchange contracts providing for the sale
by the Company of various European currencies in exchange for
U.S. dollars over the succeeding 14 months. The counterparty to
the forward exchange contracts was a major international
commercial bank. The Company continually monitors its open
forward exchange contract position and does not anticipate
nonperformance by the counterparty. In management's opinion,
these financial instruments do not represent a material off-
balance sheet risk in relation to the consolidated financial
statements. Based upon market prices at April 30, 1995 for
future deliveries of the foreign currencies in exchange for U.S.
dollars, the hedging loss deferred at that date amounted to
approximately $700,000.
The Company has an agreement with a major financial services
institution to provide lease financing to purchasers of the
Company's equipment. The present value of the lease receivables
financed under this agreement amounted to approximately
$28,500,000 at April 30, 1995 and $26,400,000 at April 30, 1994.
The lease receivables are collateralized by the underlying
equipment. In the event of default by the lessee, the Company
has liability to the financial services institution under
recourse provisions. The Company's liability for uncollected
amounts financed in excess of the estimated resale value of the
equipment is limited to the extent of loss pools. These loss
pools are established as percentages of each associated group of
transactions that are financed in a calendar year and range from
five to ten percent of the amount financed. Management believes
that the allowance it has established for losses under the
recourse provisions is adequate to cover the Company's
obligations.
41
<PAGE>43
17 - QUARTERLY RESULTS (UNAUDITED)
The quarterly results of operations, the dividends paid per share, and the
market price range of the Company's common stock as reported on the New
York Stock Exchange for each quarterly period of the past three fiscal
years are set forth below.
In thousands except First Second Third Fourth
per share amounts Quarter Quarter Quarter Quarter Year
1995
Sales and service
revenue $ 70,033 $ 72,944 $ 82,810 $ 96,921 $ 322,708
Gross profit 29,793 32,262 37,738 43,278 143,071
Net earnings 3,101 4,053 4,779 6,178 18,111
Net earnings
per share .13 .17 .20 .26 .76
Dividends paid
per share .06 .08 .08 .08 .30
Stock price - High 16 3/8 15 7/8 14 3/4 15 3/8 16 3/8
- Low 13 5/8 13 11 7/8 13 1/2 11 7/8
1994
Sales and service
revenue $ 64,932 $ 63,310 $ 63,775 $ 68,717 $ 260,734
Gross profit 27,669 29,072 28,872 30,230 115,843
Net earnings:
Before cumulative
effect of
accounting change 1,886 2,623 5,984 4,040 14,533
Cumulative effect of
accounting change 788 -- -- -- 788
-------- -------- -------- -------- ---------
Net earnings 2,674 2,623 5,984 4,040 15,321
-------- -------- -------- -------- ---------
Net earnings per share:
Before cumulative
effect of accounting
accounting change .08 .11 .25 .17 .61<PAGE>
Cumulative effect of
accounting change .03 -- -- -- .03
-------- -------- -------- -------- ---------
Net earnings
per share .11 .11 .25 .17 .64
-------- -------- -------- -------- ---------
Dividends paid
per share .05 .06 .06 .06 .23
Stock price - High 13 14 3/4 14 5/8 15 3/8 15 3/8
- Low 10 7/8 12 1/8 13 1/2 14 10 7/8
1993
Sales and service
revenue $ 62,422 $ 64,336 $ 62,236 $ 65,371 $ 254,365
Gross profit 28,025 28,977 28,387 29,863 115,252
Net earnings 1,478 2,083 2,386 2,389 8,336
Net earnings
per share .06 .09 .10 .10 .35
Dividends paid
per share .05 .05 .05 .05 .20
Stock price - High 12 11 1/8 12 3/4 13 5/8 13 5/8
- Low 9 3/4 9 7/8 9 7/8 12 9 3/4
42
<PAGE>44
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
43
<PAGE>45
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by Item 10 relating to identification of
directors is incorporated herein by reference to the information
contained under the caption "Election of Directors" in the Company's
1995 Annual Meeting Proxy Statement which will be filed within 120
days of the Company's April 30, 1995 fiscal year-end. Identification
of executive officers appears below. David J. Gerber, the Secretary
and a director of the Company, is the son of H. Joseph Gerber, the
Chairman of the Board of Directors and the President of the Company.
Other than this relationship, there is no family relationship between
the officers and the directors of the Company. All officers serve at
the pleasure of the Board of Directors and are appointed at the Annual
Meeting of the Board of Directors. The following table presents the
name and age of each of the Company's executive officers, their
present positions with the Company and date of initial appointment
thereto, and other positions held during the past five years,
including positions held with subsidiaries of the Company.
Present Position Other Positions
and Date of Held During
Name and Age Initial Appointment Last Five Years
-------------------------------------------------------------------
H. Joseph Gerber President (1948) None
(71)
George M. Gentile Senior Vice Treasurer
(59) President,
Finance
(September 8, 1977)
Fredric K. Rosen Senior Vice President, Gerber
(56) President Garment Technology,
(September 5, 1990) Inc.
Ronald B. Webster Senior Vice Vice President
(58) President
(September 4, 1991) President, Gerber
Scientific Products,Inc.
Richard F. Treacy, Jr. Senior Vice General Counsel, Secretary
(50) President
(June 1, 1994)
Gary K. Bennett Treasurer Corporate Controller,
(44) (May 9, 1994) Assistant Corporate
Controller
David J. Gerber Secretary Attorney
(34) (January 1, 1995)
44
<PAGE>46
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by
reference to the information contained under the caption
"Executive Compensation and Transactions" in the Company's 1995
Annual Meeting Proxy Statement which will be filed within 120
days of the Company's April 30, 1995 fiscal year-end.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The information required by Item 12 is incorporated herein by
reference to the information contained under the captions "Voting
Rights and Principal Shareholders" and "Election of Directors" in
the Company's 1995 Annual Meeting Proxy Statement which will be
filed within 120 days of the Company's April 30, 1995 fiscal
year-end.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 13 is incorporated herein by
reference to the information contained under the caption
"Election of Directors" in the Company's 1995 Annual Meeting
Proxy Statement which will be filed within 120 days of the
Company's April 30, 1995 fiscal year-end.
45
<PAGE>47
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as part of this
report:
1. Financial Statements: Page
Consolidated Statement of Earnings
for the years ended April 30, 1995,
1994, and 1993 . . . . . . . . . . . . 20
Consolidated Balance Sheet at
April 30, 1995 and 1994 . . . . . . . 21
Consolidated Statement of Changes in
Shareholders' Equity for the years
ended April 30, 1995, 1994, and 1993 . 22
Consolidated Statement of Cash Flows
for the years ended April 30, 1995,
1994, and 1993 . . . . . . . . . . . . 23
Independent Auditors' Report . . . . . . 24
Summary of Significant Accounting
Policies . . . . . . . . . . . . . . . 25 - 27
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . 28 - 42
2. Financial Statement Schedules
All financial statement schedules are omitted
because they are not applicable or the required
information is shown in the consolidated financial
statements or notes thereto.
46
<PAGE>48
3. Exhibits
3.1 Restated Certificate of Incorporation of
the Company.
3.2 By-laws of the Company.
4.1* Agreement pursuant to S-K Item
601(b)(4)(iii)(A) to provide to the
Commission, upon request, copies of
certain other instruments with respect
to long-term debt where the amount of
securities authorized under each such
instrument does not exceed 10 percent of
the total assets of the Registrant and
its subsidiaries on a consolidated
basis.
10.1 Gerber Scientific, Inc. 1982 Employee
Stock Plan.
10.2 Gerber Scientific, Inc. 1992 Employee
Stock Plan.
10.3 Gerber Scientific, Inc. 1992 Non-
Employee Director Stock Option Plan.
10.4 Gerber Scientific, Inc. Profit and
Growth Incentive Bonus Plan for the
Fiscal Year Ending April 30, 1995.
10.5 Description of consulting arrangements
with certain directors of the Company.
11.1* Statement re Computation of Per Share
Earnings.
22.1* Subsidiaries of the Registrant.
24.1* Consent of Independent Auditors.
(b) No reports on Form 8-K were filed during the
last quarter of fiscal year 1995.
(c) See Item 14(a) 3. above.
(d) See Item 14(a) 2. above.
*Filed herewith.
47
<PAGE>49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GERBER SCIENTIFIC, INC.
-----------------------
(Registrant)
BY: /s/ George M. Gentile
-------------------------------
Date: July 27, 1995 George M. Gentile
------------- Senior Vice President, Finance
and Principal Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated:
Date Signature Title
---- --------- -----
July 27, 1995 /s/ H. Joseph Gerber President
------------- ----------------------- Director
(H. Joseph Gerber)
July 27, 1995 /s/ George M. Gentile Senior Vice President,
------------- ----------------------- Finance
(George M. Gentile) Director
July 27, 1995 /s/ Stanley Simon Director
------------- -----------------------
(Stanley Simon)
July 27, 1995 /s/ W. Jerome Vereen Director
------------- -----------------------
(W. Jerome Vereen)
July 27, 1995 /s/ A. Robert Towbin Director
------------- -----------------------
(A. Robert Towbin)
July 27, 1995 /s/ David J. Gerber Secretary
------------- ----------------------- Director
(David J. Gerber)
July 27, 1995 /s/ Edward E. Hood, Jr. Director
------------- -----------------------
(Edward E. Hood, Jr.)
July 27, 1995 /s/ Gary K. Bennett Treasurer and Corporate
------------- ----------------------- Controller
(Gary K. Bennett)
48
<PAGE>50
EXHIBIT INDEX
Exhibit Index
Number Exhibit Page
------------- ------- ----
3.1 Restated Certificate of Incorporation of
the Company (incorporated herein by
reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for
the year ended April 30, 1990).
3.2 By-laws of the Company (incorporated
herein by reference to Exhibit 3.2 to
the Company's Annual Report on Form 10-K
for the year ended April 30, 1990).
4.1* Agreement pursuant to S-K Item
601(b)(4)(iii)(A) to provide to the
Commission, upon request, copies of
certain other instruments with respect
to long-term debt where the amount of
securities authorized under each such
instrument does not exceed 10 percent of
the total assets of the Registrant and
its subsidiaries on a consolidated
basis. 51
10.1 Gerber Scientific, Inc. 1982 Employee
Stock Plan (incorporated herein by
reference to the Company's Registration
Statement on Form S-8, File No. 2-93695
and Post-Effective Amendment No. 1 to
the Registration Statement).
10.2 Gerber Scientific, Inc. 1992 Employee
Stock Plan (incorporated herein by
reference to Exhibit A to the Company's
Proxy Statement in connection with the
Annual Meeting of Shareholders held
September 24, 1992, File No. 1-5865).
10.3 Gerber Scientific, Inc. 1992 Non-
Employee Director Stock Option Plan
(incorporated herein by reference to
Exhibit B to the Company's Proxy
Statement in connection with the Annual
Meeting of Shareholders held September
24, 1992, File No. 1-5865).
*Filed herewith.
<PAGE>51
Exhibit Index
Number Exhibit Page
------------- ------- ----
10.4 Gerber Scientific, Inc. Profit and
Growth Incentive Bonus Plan for the
Fiscal Year Ending April 30, 1995
(incorporated herein by reference to
Exhibit 10 to the Company's Quarterly
Report on Form 10-Q for the quarter
ended July 31, 1994).
10.5 Description of consulting arrangements
with certain directors of the Company
(incorporated herein by reference to the
information contained under the caption
"Election of Directors" in the Company's
1995 Annual Meeting Proxy Statement).
11.1* Statement re Computation of Per Share
Earnings. 53
22.1* Subsidiaries of the Registrant. 54
24.1* Consent of Independent Auditors. 55
27 Financial Data Schedule. 56
*Filed herewith.
<PAGE>52
EXHIBIT 11.1
GERBER SCIENTIFIC, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
--------------------------------------------------------------------------
Years ended April 30, 1995 1994 1993
--------------------------------------------------------------------------
Net earnings before
cumulative effect of
accounting change $18,111,000 $14,533,000 $ 8,336,000
Cumulative effect of
accounting change -- 788,000 --
----------- ----------- -----------
Net earnings $18,111,000 $15,321,000 $ 8,336,000
=========== =========== ===========
Average common shares
outstanding 23,795,774 23,792,137 23,816,087
Common stock equivalents:
Common stock attributable
to stock options
(treasury stock method) 154,337 174,750 102,227
----------- ----------- -----------
Weighted average shares of
common stock outstanding
during the period 23,950,111 23,966,887 23,918,314
=========== =========== ===========
Net earnings per common share:
Before cumulative effect
of accounting change $ .76 $ .61 $ .35
Cumulative effect of
accounting change -- .03 --
----------- ----------- -----------
Net earnings per common share $ .76 $ .64 $ .35
=========== =========== ===========
Note:
Net earnings per common share as calculated above is presented on a
primary and fully diluted basis.
<PAGE>53
EXHIBIT 22.1
GERBER SCIENTIFIC, INC.
SUBSIDIARIES OF THE REGISTRANT
State or Jurisdiction
of
Incorporation or
Subsidiary Organization
---------- ----------------------
Gerber Systems Corporation Connecticut
Gerber Systems GmbH Germany
Gerber Systems Corporation S.R.L. Italy
Gerber Systems Corporation N.V. Belgium
Gerber Systems Corporation Limited United Kingdom
GST Far East, Limited Hong Kong
Gerber Garment Technology, Inc. Connecticut
GGT Canada, Ltd. Canada
GGT International (Australia) Pty. Ltd. Australia
GGT International (NZ) Ltd. New Zealand
GGT International (Far East) Ltd. Hong Kong
GGT International de Mexico, S.A. de C.V. Mexico
Gerber Garment Technology GmbH Germany
Gerber Garment Technology S.R.L. Italy
Gerber Garment Technology N.V./S.A. Belgium
Gerber Garment Technology S.A.R.L. France
Gerber Garment Technology AB Sweden
Gerber Garment Technology Ltd. United Kingdom
GGT-Niebuhr A/S Denmark
Gerber Garment Technology Systems
Computorizados LDA Portugal
M.D. "Europe" Ltd. United Kingdom
C.I.M. Microdynamics Limited United Kingdom
Microdynamics AB Sweden
Microdynamics (H.K.) Limited Hong Kong
Gerber Scientific Products, Inc. Connecticut
Gerber Scientific Products GmbH Germany
Gerber Optical, Inc. Connecticut
Gerber Venture Capital Corporation Delaware
Gerber Foreign Sales Corporation, Inc. U.S. Virgin
Islands
Other entities, considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary as of
April 30, 1995 and are not listed above.
<PAGE>54
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
Gerber Scientific, Inc.
We consent to incorporation by reference in the registration
statements No. 2-93695 and No. 33-58668 on Form S-8 and No. 33-
58670 on Form S-3 of Gerber Scientific, Inc. of our report dated
May 24, 1995 relating to the consolidated balance sheet of Gerber
Scientific, Inc. and subsidiaries as of April 30, 1995 and 1994
and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows for each of the years in the
three-year period ended April 30, 1995, which report appears in
the April 30, 1995 annual report on Form 10-K of Gerber
Scientific, Inc.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Hartford, Connecticut
July 24, 1995
<PAGE>55
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Earnings and and Cash Flows for the Fiscal year
ended April 30, 1995, and the Consolidated Balance Sheet as of April
30, 1995 of Gerber Scientific, Inc. and are qulified in there entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<CASH> 10,208
<SECURITIES> 0
<RECEIVABLES> 62,900
<ALLOWANCES> 0
<INVENTORY> 59,496
<CURRENT-ASSETS> 146,914
<PP&E> 100,217
<DEPRECIATION> 49,081
<TOTAL-ASSETS> 324,428
<CURRENT-LIABILITIES> 68,397
<BONDS> 0
<COMMON> 23,758
0
0
<OTHER-SE> 213,544
<TOTAL-LIABILITY-AND-EQUITY> 324,428
<SALES> 322,708
<TOTAL-REVENUES> 322,708
<CGS> 179,637
<TOTAL-COSTS> 303,098
<OTHER-EXPENSES> (5,964)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 463
<INCOME-PRETAX> 25,111
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 18,111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,111
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
</TABLE>
