July 23, 1996
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, 1996.
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>
<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, 1996 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. Employer Identification
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: (860) 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 28, 1996, 23,223,100 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
$320,600,000. Excluded from this amount is voting stock having an
aggregate market value of approximately $53,800,000 (representing 14.4%
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. / /.
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) 1996 Annual Meeting Proxy Statement (Parts I, III, and IV).<PAGE>
<PAGE>2
GERBER SCIENTIFIC, INC.
Index to Annual Report
on Form 10-K
Year Ended April 30, 1996
PART I PAGE
Item l. Business . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 9
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 . . . . . . . . 10
Item 6. Selected Financial Data . . . . . . . . . . . . 11
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . 12
Item 8. Financial Statements and Supplementary Data . . 19
Item 9. Changes in and Disagreements with Auditors
on Accounting and Financial Disclosure . . . . 42
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . 42
Item 11. Executive Compensation . . . . . . . . . . . . 43
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . 43
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . 43
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . 44
Signatures . . . . . . . . . . . . . . . . . . 46
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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 and software for product design,
marker-making (nesting), spreading, labeling, 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 interactive
imaging and inspection systems for the electronics and
commercial 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
subsidiary in Denmark which performs manufacturing operations.
As of April 30, 1996, 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. The Microdynamics
purchase price was approximately $8.5 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. 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.
INFORMATION ABOUT INDUSTRY SEGMENTS
The Company designs, develops, manufactures, markets, and
services CAD/CAM factory automation systems, software, and
related aftermarket supplies for a wide range of industries,
including apparel, automotive, aerospace, electronics,
commercial printing, ophthalmic, 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 ophthalmic 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:
1996 1995 1994
---- ---- ----
Cutting, nesting, spreading, and
material handling systems 54% 57% 51%
Microprocessor- and PC-controlled
production systems 30% 29% 33%
Interactive imaging and inspection
systems 10% 8% 11%
Ophthalmic lens manufacturing systems 6% 6% 5%
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 industries that manufacture with sewn goods. 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.
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The Company's computer-aided design, pattern-making, and
marker-making (nesting) systems automate the design, pattern-
making, pattern-grading (sizing), and marker-making functions.
This improves the 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 that move and control the
work flow among sewing operators, thereby reducing in-process
inventory as well as improving efficiency and quality in the
sewn goods industries.
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
systems and software bring computer automation to the
signmaking, screenprinting, and graphic arts industries. The
Company produces a full range of automated lettering systems,
software, 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(R), an output device produced by the Company 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.
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.
Photoplotting systems image 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.
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The Company also produces laser imaging systems for the
commercial printing industry which are used to expose digital
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 and a reduction in
waste, providing cost savings and faster turnaround.
CAD/CAM OPHTHALMIC 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 retail
chains and superstores.
RESEARCH AND DEVELOPMENT
The Company continues to emphasize technological development
with research and development programs designed to create new
software and hardware products, improve existing products, and
modify products to meet specific customer needs. The Company's
research and development expenses for the years ended April 30,
1996, 1995, and 1994 were $25,771,000, $26,009,000, and
$22,339,000, respectively. The Company also received and
expended approximately $1,373,000, $3,109,000, and $1,583,000
for the years ended April 30, 1996, 1995, and 1994,
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
----------------
(R) represents a registered trademark of the Company.
5
<PAGE>7
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.
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.
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CUSTOMERS
The Company's customers are primarily end-users, except in the
sale of microprocessor- and PC-controlled production 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 1996, 1995, or
1994. 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 $48,700,000 at April 30, 1996, compared with
$53,800,000 at April 30, 1995. Substantially all the backlog
at April 30, 1996, is scheduled for delivery in fiscal 1997.
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, 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 certain competing companies have become
significant suppliers. Certain of these 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 an 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.
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The Company also produces laser imaging systems for the
electronics and commercial printing industries. In the
electronics marketplace there are significant competitors in
the manufacture and sale of laser imaging systems. The
Company's automated optical inspection equipment also has
significant competition, primarily from foreign manufacturers.
At the present time, the Company believes its direct computer-
to-printing plate laser imaging system for the commercial
printing industry has a leading position. There is competition
in this market and the Company anticipates that additional
competition will emerge.
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 computerized surface
blocking systems, three-axis lens generating systems, and
three-axis edge polishing 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
"Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements" appearing on page 25 of this
Form 10-K.
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:
1996 1995 1994
---- ---- ----
Percentage of consolidated sales
and service revenue from
foreign customers 49% 48% 44%
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 exchange rate fluctuations. The
Company's foreign product sales have generally been made in
U.S. dollars, but for certain product lines and territories
(principally in 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.
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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 has leases for warehouse and sales and service
office space are generally on short-term bases. Rentals for
leased facilities aggregated $2,426,000 in the fiscal year
ended April 30, 1996.
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, 1996, the aggregate rental
under such leases was $1,061,000. The Company fully utilizes
such machinery and equipment.
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 "Summary of Significant Accounting Policies and
Notes to Consolidated Financial Statements" appearing on page
29 of this Form 10-K.
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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, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT.
Included in Part III, Item 10, "Directors and Executive
Officers of the Registrant", appearing on page 42 of this Form
10-K.
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
1,766 at April 30, 1996. The other information required by
Item 5 is included in Part II, Item 8, Note 17, "Quarterly
Results (Unaudited)" of the "Summary of Significant Accounting
Policies and Notes to Consolidated Financial Statements"
appearing on page 39 of this Form 10-K.
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ITEM 6. SELECTED FINANCIAL DATA.
FIVE YEAR FINANCIAL SUMMARY
In thousands except
per share amounts For years ended April 30
------------------------------------------------------
1996 1995 1994 1993 1992
Sales and service
revenue $ 359,120 $ 322,708 $ 260,734 $ 254,365 $ 249,978
Earnings before
accounting change
and patent
settlement 1,2 19,868 18,111 11,133 8,336 7,428
Net earnings 1,2 19,868 18,111 15,321 8,336 7,428
Earnings per
common share before
accounting change
and patent
settlement 1,2 .84 .76 .47 .35 .31
Net earnings per
common share 1,2 .84 .76 .64 .35 .31
Cash dividends per
common share .32 .30 .23 .20 .20
Total assets 312,988 324,428 286,443 269,981 276,912
Long-term debt 7,338 7,531 7,724 7,916 8,109
Shareholders'
equity $ 239,298 $ 237,302 $ 224,824 $ 215,460 $ 213,505
Weighted average
common shares
outstanding 23,689 23,950 23,967 23,918 23,909
(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
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
For Years Ended April 30, 1996, 1995, and 1994
------------------------------------------------------------------------
RESULTS OF OPERATIONS
Consolidated revenue in 1996 was $359.1 million, an increase of $36.4
million, or 11 percent, from $322.7 million in the prior year. The
increase in 1996 reflected higher product sales while service revenue was
substantially unchanged. Revenue in 1995 included the effect of a change
in fiscal year-end for certain of the Company's foreign subsidiaries which
added $6.7 million to the 1995 total. Excluding this amount from the
comparison, year-to-year revenue increased 14 percent from 1995 to 1996.
Each of the Company's product classes experienced sales growth in 1996,
with the largest increase occurring in microprocessor- and PC-controlled
signmaking systems. Within this class, sales of the GERBER EDGE, a four-
color process digital imaging system, were particularly strong as were
sales of related aftermarket supplies. Also contributing to the higher
sales in this product class was a new line of friction-fed plotters, which
are used to cut sign images from signmaking vinyl.
Increased sales of the Company's computer-to-plate digital imaging systems
for the commercial printing and graphic arts industries also contributed to
the 1996 sales increase. The Company invested heavily in the development
of this business in 1996, particularly in product development and
marketing, and expects to continue to do so in 1997. Management believes
the computer-to-plate systems business represents a significant growth
opportunity for the Company.
Product sales gains were also realized in 1996 in optical lens
manufacturing equipment for optical superstores and laboratories and in the
Company's line of marker-making and fabric spreading systems for the
apparel and allied industries. In the third quarter of 1996, the Company
experienced a substantial drop in order entry from the U.S. apparel
industry which affected primarily the Company's line of computer-controlled
GERBERcutter fabric cutting systems. Management believes this reflected
weakness in the domestic retail industry which caused apparel manufacturers
to reduce their orders for new production equipment. Order entry in this
product class rebounded in the fourth quarter of 1996 and appeared to
mirror an improved retail environment.
Sales gains were realized in 1996 in each of the Company's major geographic
markets. In total, export sales from the United States in 1996 rose $16.8
million, or 14 percent, from the previous year and represented 39 percent
of total revenue compared with 38 percent in 1995 and 36 percent in 1994.
Consolidated revenue in 1995 was $322.7 million, an increase of $62
million, or 24 percent, from 1994. The increase reflected three factors: a
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); and a change in the fiscal year-end
for certain foreign subsidiaries.
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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 in 1995 rose $29 million or 32 percent from
the previous year.
The Niebuhr and Microdynamics acquisitions added a total of $22.7 million
to 1995 revenue. Niebuhr was a Danish-based company that manufactures
computerized fabric spreading equipment for the apparel and related
industries. 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, graphic design, and
product management systems. Its operations added $12.6 million to the
Company's 1995 consolidated revenue.
In 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 from 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 of service
revenue from the change in year-ends for certain foreign subsidiaries
accounted for most of the remaining increase.
In terms of the Company's products, the largest sales increase in 1995
occurred in GERBERcutter fabric cutting systems for the apparel and allied
industries, reflecting the introduction of a new series of GERBERcutters.
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 a new lens blocking system for the
ophthalmic industry and higher sales of aftermarket supplies to the
signmaking industry.
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 the prior year.
Within the Company's major product classes, the largest sales increase in
1994 occurred in microprocessor- and PC-controlled systems for the
signmaking industry and was related primarily to the introduction of the
GERBER EDGE. Product sales also increased in optical lens manufacturing
systems, primarily
13
<PAGE>15
for a low-cost 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
fabric cutting systems. 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.
The consolidated gross profit margin in 1996 was 44.8 percent compared with
44.3 percent in 1995 and 44.4 percent in 1994. Gross profit margins on
product sales improved to 46.3 percent in 1996 from 45.9 percent in 1995,
while margins on service revenue declined slightly. The improvement in
product margins reflected the favorable impact of higher sales volume in
1996, although product margins continued to be pressured by price
discounting on sales of cutting and marker-making systems to the apparel
industry. Service gross margins were lower in 1996 due to less-than-
anticipated revenue growth in servicing cutting and marker-making systems.
The gross profit margins on product sales in 1995 were lower than in 1994,
while margins on service revenue improved. 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 the new GERBERcutter series and the lens
blocking system. The improved service margin in 1995 reflected the
addition of the Microdynamics' service business.
Selling, general and administrative expenses were $111.7 million or 31.1
percent of revenue in 1996. This compared with $97.5 million and $82.5
million in 1995 and 1994, which represented 30.2 percent and 31.7 percent
of revenue in the respective years. The higher selling, general and
administrative expenses in 1996 and 1995 related to the higher volume of
business, marketing expenses associated with the introduction of new
products, the additional expenses of Niebuhr and Microdynamics, and in 1995
the inclusion of two additional months of expenses for the foreign
subsidiaries whose year-end was changed. In 1996, the Company incurred
significant marketing and other expenses in furthering sales of its new
computer-to-plate systems for the commercial printing and graphic arts
industries. The Company expects to continue to incur a high level of such
expenses which will put pressure on earnings in the near future.
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.
Research and development (R&D) expenses represented 7.2 percent of revenue
in 1996 compared with 8.1 percent and 8.6 percent of revenue in 1995 and
1994, respectively. Although R&D expenses in 1996 were slightly lower than
in 1995, the pace of spending accelerated in the second half of the fiscal
year and management expects this higher expenditure rate will continue for
the near term. Among its ongoing R&D projects, the Company expects to
continue to incur significant expenses in developing newer computer-to-
plate systems for the commercial printing and graphic arts industries.
14
<PAGE>16
In each of the years 1996, 1995, and 1994, the Company's principal debt
obligations were Industrial Revenue Bonds with variable tax-exempt interest
rates. Since debt levels changed only slightly over this three-year
period, the changes in the Company's interest expense reflected primarily
the movements in short-term interest rates. The lower short-term interest
rates that prevailed in 1994 resulted in comparatively lower interest
expense in that year and with the rise in short-term interest rates that
occurred in 1995, interest expense rose.
Other income in 1996 and 1995 consisted principally of royalty income and
tax-exempt interest income from investments in municipal bonds. The lower
interest income in 1996 compared with 1995 reflected a smaller investment
portfolio, which is discussed below under "Financial Condition." In 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 (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 another 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, 1996 and 1995.
The statutory U.S. Federal income tax rate was 35 percent for 1996, 1995,
and 1994. The effective income tax provision rates were 28.7 percent, 27.9
percent, and 32.2 percent for 1996, 1995, and 1994, 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
and the tax savings derived from the Company's Foreign Sales Corporation
(FSC). The increase in the effective tax rate from 1995 to 1996 was due in
part to the expiration and non-extension of the U.S. research and
development tax credit.
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.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," requires the Company either to adopt a method of
accounting for stock options at "fair value" in its financial statements or
to retain its existing method and disclose the pro forma effects of this
15
<PAGE>17
"fair value" method beginning in fiscal year 1997. The Company intends to
retain its existing method of accounting for stock options and to include
the required pro forma disclosures in the notes to its consolidated
financial statements. Accordingly, Statement No. 123 will have no effect
on the Company's consolidated financial position or results of operations.
FINANCIAL CONDITION
The Company's short-term liquidity at April 30, 1996 was lower than in
preceding years but adequate for the Company's requirements. Cash and
short-term cash investments totaled $8.7 million at April 30, 1996 compared
with $10.2 million at April 30, 1995 and $15.6 million at April 30, 1994.
Net working capital increased to $101.7 million at April 30, 1996 from
$78.5 million and $87.8 million at April 30, 1995 and 1994, respectively.
The working capital ratio at April 30, 1996 was 2.8 to 1 compared with 2.1
to 1 and 3.1 to 1 at April 30, 1995 and 1994, respectively.
The Company's longer-term investment portfolio of tax-exempt municipal
securities totaled $58.9 million at April 30, 1996, down from $82.7 million
at April 30, 1995. The lower portfolio in 1996 resulted primarily from the
use of funds for working capital requirements, fixed asset additions, and
purchases of the Company's common stock. The securities in the investment
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, 1996.
These investments are classified in the consolidated balance sheet as a
long-term asset. 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 pre-tax equivalent
yield on this portfolio was approximately 6.8 percent at April 30, 1996.
Operating activities provided $5.9 million in cash in 1996. The cash
generated by earnings and by the non-cash charges against earnings for
depreciation and amortization was substantially offset by growth in
accounts receivable and inventories related to the higher volume of
business, and by a reduction in accounts payable related primarily to the
timing of vendor payments. Significant non-operating uses of cash in 1996
were for additions to property, plant and equipment ($12.6 million); open
market purchases of the Company's common stock ($11.3 million); and
dividends on common stock ($7.5 million).
The additions to property, plant and equipment of $12.6 million in 1996
were funded by operations and from the Company's investment portfolio. In
1995 and 1994, the Company spent $12.5 million and $4.6 million,
respectively, for additions to property, plant and equipment. The Company
expects that 1997 capital expenditures will be in the range of $12 million
and expects to fund these additions with cash on hand and cash generated by
operations.
Under a current Board of Directors' authorization, the Company may purchase
an additional 763,000 shares of its outstanding common stock as, in the
opinion of management, market conditions may warrant. In 1996, the Company
spent $11.3 million to acquire and retire 681,200 shares, at an average
purchase price of $16.64 per share. In 1995 and 1994, the Company
purchased 100,400 and 136,900 shares, respectively, for $1.4 million and
$1.7 million. These purchases were at average prices per share of $13.65
and $12.67, respectively.
16
<PAGE>18
At April 30, 1996 and 1995, the Company's long-term debt consisted entirely
of tax-exempt Industrial Revenue Bonds amounting to $7.5 million and $7.7
million, respectively, at those dates. The Company's ratio of total debt
to shareholders' equity was 3.1 percent at April 30, 1996 compared with 3.3
percent at April 30, 1995 and 3.5 percent at April 30, 1994. 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 1997 amount to $.2 million, and payment is expected to be
made with cash from operations.
In 1996, the Company entered into a formal line of credit agreement with a
major U.S. commercial bank providing for $20 million in short-term
borrowings by the Company. The Company also has a $15 million multi-
currency line of credit with a major European bank. No amounts were
borrowed against these credit lines as of April 30, 1996 and 1995. Any
such borrowings would bear interest at 1/4 percent above the London
Interbank Offered Rate (LIBOR). The lines of credit have commitment fees
of 1/8 percent of the unused amounts.
Operating activities provided $29.3 million in cash in 1995. A significant
use of this cash in 1995 was for the acquisitions 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 paid approximately $8 million
in 1995 for the Microdynamics' acquisition and repaid approximately $2.2
million of its debt.
In connection with the acquisitions, the Company recorded approximately $10
million of goodwill which is being amortized on a straight-line basis over
20 years. With regard to the Microdynamics' acquisition, the Company was
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. No additional payments were subsequently required
under this provision. 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
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 will be amortized over the remainder of the 20-year
amortization period.
In addition to the business acquisitions and the repayments of the acquired
companies' debt, other 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 tax-exempt securities ($2.2
million); and open market purchases of the Company's common stock ($1.4
million).
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. Other principal operating uses of cash
in 1994 were to fund increases in accounts receivable and inventories which
were related in
17
<PAGE>19
part to the higher volume of business. The primary non-operating uses of
cash in 1994 were for dividends and for additional investments in tax-
exempt securities.
FORWARD LOOKING STATEMENTS
This report includes forward-looking statements that describe the Company's
business prospects. Readers should keep in mind factors that could have an
adverse impact on those prospects. These include political, economic, or
other conditions, such as recessionary or expansive trends, inflation
rates, currency exchange rates, taxes and regulations and laws affecting
the business, as well as product competition, pricing, the degree of
acceptance of new products to the marketplace, and the difficulty of
forecasting sales at various times in various markets.
18
<PAGE>20
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 1996 1995 1994
-------------------------------------------------------------------------
Revenue:
Product sales $314,118 $278,451 $223,551
Service 45,002 44,257 37,183
-------- -------- --------
359,120 322,708 260,734
-------- -------- --------
Costs and Expenses:
Cost of product sales 168,710 150,637 119,699
Cost of service 29,627 29,000 25,192
Selling, general and
administrative expenses 111,666 97,452 82,543
Research and development expenses 25,771 26,009 22,339
-------- -------- --------
335,774 303,098 249,773
-------- -------- --------
Operating income 23,346 19,610 10,961
Other income 4,940 5,964 10,818
Interest expense (418) (463) (346)
-------- -------- --------
Earnings before income taxes 27,868 25,111 21,433
Provision for income taxes 8,000 7,000 6,900
-------- -------- --------
Earnings before cumulative
effect of accounting change 19,868 18,111 14,533
Cumulative effect of accounting change -- -- 788
-------- -------- --------
Net Earnings $ 19,868 $ 18,111 $ 15,321
======== ======== ========
Net Earnings Per Common Share:
Before cumulative effect of
accounting change $ .84 $ .76 $ .61
Cumulative effect of accounting change -- -- .03
-------- -------- --------
Net Earnings Per Common Share $ .84 $ .76 $ .64
======== ======== ========
See summary of significant accounting policies and notes to consolidated
financial statements.
19
<PAGE>21
CONSOLIDATED BALANCE SHEET Gerber Scientific, Inc.
April 30
---------------------
In thousands except per share amounts 1996 1995
--------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and short-term cash investments $ 8,704 $ 10,208
Accounts receivable 74,035 62,900
Inventories 63,196 59,496
Prepaid expenses 12,021 14,310
-------- --------
157,956 146,914
-------- --------
Investments and Long-Term Receivables 59,594 84,152
-------- --------
Property, Plant and Equipment 109,430 100,217
Less accumulated depreciation 54,692 49,081
-------- --------
54,738 51,136
-------- --------
Intangible Assets 48,576 48,094
Less accumulated amortization 9,327 8,435
-------- --------
39,249 39,659
-------- --------
Other Assets 1,451 2,567
-------- --------
$312,988 $324,428
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ -- $ --
Current maturities of long-term debt 193 193
Accounts payable 12,895 19,179
Accrued compensation and benefits 13,673 10,935
Other accrued liabilities 18,351 25,050
Deferred revenue and litigation award 8,512 9,318
Advances on sales contracts 2,672 3,722
-------- --------
56,296 68,397
-------- --------
Noncurrent Liabilities:
Deferred income taxes 10,056 9,541
Long-term debt 7,338 7,531
Other -- 1,657
-------- --------
17,394 18,729
-------- --------
Contingencies and Commitments (Notes 3, 5, 10, and 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 23,198,725 and
23,757,780 shares 23,199 23,758
Paid-in capital 35,218 34,885
Retained earnings 179,307 176,621
Cumulative translation component 1,574 2,038
-------- --------
239,298 237,302
-------- --------
$312,988 $324,428
======== ========
See summary of significant accounting policies and notes to consolidated
financial statements.
20
<PAGE>22
CONSOLIDATED STATEMENT OF CHANGES Gerber Scientific, Inc.
IN SHAREHOLDERS' EQUITY
Common
Stock, Cumulative
In thousands except $1 Par Paid-in Retained Translation
per share amounts Value Capital Earnings Component
--------------------------------------------------------------------------
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
Net earnings -- -- 19,868 --
Foreign currency translation
adjustment -- -- -- (464)
Dividends ($.32 per share) -- -- (7,536) --
Exercise of stock options
and related tax benefit 122 1,344 -- --
Purchase and retirement of
common stock (681) (1,011) (9,646) --
-------- -------- -------- ---------
April 30, 1996 $ 23,199 $ 35,218 $179,307 $ 1,574
======== ======== ======== =========
See summary of significant accounting policies and notes to consolidated
financial statements.
21
<PAGE>23
CONSOLIDATED STATEMENT OF CASH FLOWS Gerber Scientific, Inc.
For years ended April 30
-------------------------
In thousands 1996 1995 1994
---------------------------------------------------------------------------
Cash Provided by (Used for)
Operating Activities:
Net earnings $ 19,868 $ 18,111 $ 15,321
Adjustments to reconcile net earnings
to cash provided by operating activities:
Depreciation and amortization 10,810 11,365 9,664
Deferred income taxes 515 2,756 4,237
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 (10,048) (3,418) (7,642)
Long-term receivables (310) (412) 433
Inventories (3,489) (1,965) (1,273)
Prepaid expenses 2,289 (4,884) (685)
Accounts payable and
accrued expenses (13,708) 7,788 (4,540)
-------- -------- --------
Provided by Operating Activities 5,927 29,341 14,292
-------- -------- --------
Financing Activities:
Purchase of common stock (11,338) (1,370) (1,735)
Repayments of long-term debt (193) (693) (193)
Net short-term financing -- (2,755) (2)
Exercise of stock options 1,466 374 1,277
Dividends on common stock (7,536) (7,138) (5,472)
-------- -------- --------
(Used for) Financing Activities (17,601) (11,582) (6,125)
-------- -------- --------
Investing Activities:
Long-term debt securities 23,802 (2,224) (5,773)
Business acquisitions (486) (9,038) --
Proceeds from sale of investment in
Boston Digital Corporation -- -- 2,085
Additions to property,
plant and equipment (12,647) (12,468) (4,625)
Intangible and other assets (14) (2,085) (1,457)
Other long-term investments (485) 2,659 (99)
-------- -------- --------
Provided by (Used for)
Investing Activities 10,170 (23,156) (9,869)
-------- -------- --------
(Decrease) in Cash and Short-Term
Cash Investments (1,504) (5,397) (1,702)
Cash and Short-Term Cash Investments,
Beginning of Year 10,208 15,605 17,307
-------- -------- --------
Cash and Short-Term Cash Investments,
End of Year $ 8,704 $ 10,208 $ 15,605
======== ======== ========
See summary of significant accounting policies and notes to consolidated
financial statements.
22
<PAGE>24
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS Gerber Scientific, Inc.
----------------------------------------------------------------------
Basis of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. 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.
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 major
international financial institutions to hedge the effects 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
Product sales are generally recognized upon shipment. Sales under
production contracts are recognized on the percentage-of-completion
method of accounting. Anticipated losses on contracts, if any, are
provided for when determined. Service revenue is recognized ratably
over the contractual period or as services are performed. Royalties
are accounted for as other income as received.
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.
23
<PAGE>25
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 other
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 the
life of the patent.
Certain intangible and other long-lived assets are reviewed for
possible impairment whenever events or changes 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.
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 (23,689,000, 23,950,000, and 23,967,000 shares in 1996, 1995, and
1994, respectively).
24
<PAGE>26
Use of Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and the related disclosures. Actual results
could differ from those estimates.
New Accounting Standards
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," requires the Company either to adopt a
method of accounting for stock options at "fair value" in its
financial statements or to retain its existing method and disclose the
pro forma effects of using this "fair value" method beginning in
fiscal year 1997. The Company intends to retain its existing method
of accounting for stock options and to include the required pro forma
disclosures in the notes to its consolidated financial statements.
Accordingly, Statement No. 123 will have no effect on the Company's
consolidated financial position or results of operations.
Note 1 - Products and Operations
The Company designs, manufactures, markets, and services
computer-aided design (CAD) and computer-aided manufacturing (CAM)
systems and sells related aftermarket supplies. No other segment of
the Company accounted for more than 10 percent of consolidated revenue
or net earnings in 1996, 1995, or 1994. No individual customer
accounted for more than 10 percent of consolidated revenue in 1996,
1995, or 1994.
The Company's primary manufacturing facilities are in the United
States, and it also manufactures in Denmark. Company sales and
service offices are in numerous United States and foreign locations.
Export sales from the United States for each year were as follows:
In thousands 1996 1995 1994
-------------------------------------------------------------
Europe $ 67,025 $ 62,417 $ 42,899
Far East 36,462 31,858 25,733
Other areas 35,180 27,584 24,010
-------- -------- --------
$138,667 $121,859 $ 92,642
======== ======== ========
25
<PAGE>27
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 1996 1995
-------------------------------------------------------------
Cash $ 1,705 $ 5,875
Time deposits 6,999 4,333
-------- --------
$ 8,704 $ 10,208
======== ========
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, 1996 was a reasonable estimate of their fair value.
Note 3 - Accounts Receivable
Included in accounts receivable were amounts earned under specific
contracts which were not billable of $7,652,000 at April 30, 1996 and
$1,919,000 at April 30, 1995. The earned but unbilled amount at April
30, 1996 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 1996 1995
-------------------------------------------------------------
Raw materials and purchased parts $ 51,493 $ 48,000
Work in process 11,703 11,496
-------- --------
$ 63,196 $ 59,496
======== ========
26
<PAGE>28
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
were included in the Company's 1995 and 1996 consolidated statement of
earnings. The pro forma effect of the Niebuhr acquisition on the
Company's prior reported results of operations was not significant.
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 approximately $8,200,000 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.
The acquisition was accounted for as a purchase, and the results of
Microdynamics' operations have been included in the Company's
consolidated statement of earnings since September 1, 1994. The
acquisition cost was 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
27
<PAGE>29
is presented on the assumption that the acquisition cost would have
been the same at the beginning of each period.
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.
Note 6 - Investments and Long-Term Receivables
Investments and long-term receivables at the end of each year were as
follows:
In thousands 1996 1995
---------------------------------------------------------
Tax-exempt municipal bonds $ 58,872 $ 82,674
Long-term receivables 89 863
Other 633 615
-------- --------
$ 59,594 $ 84,152
========= ========
The Company has purchased for investment purposes a portfolio of
investment-grade tax-exempt municipal bonds with initial maturities
ranging up to five years. At April 30, 1996, the portfolio had a
weighted average maturity of approximately one and one-half years and
a pre-tax equivalent yield of approximately 6.8 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 $59,281,000 at April 30, 1996 and $82,521,000 at April 30,
1995 based upon quoted market prices or market prices for similar
securities. At April 30, 1996, the gross unrealized gains and losses
were $417,000 and $8,000, respectively. At April 30, 1995, the gross
unrealized gains and losses were $110,000 and $263,000, respectively.
28
<PAGE>30
Note 7 - Property, Plant and Equipment
The components of property, plant and equipment at the end of each
year were as follows:
In thousands 1996 1995
-------------------------------------------------------------
Land $ 4,356 $ 4,356
Buildings 43,348 40,624
Machinery, tools, and equipment 61,375 54,599
Construction in progress 351 638
-------- --------
$109,430 $100,217
======== ========
Note 8 - Intangible Assets
The components of net intangible assets at April 30, 1996 and 1995
were as follows:
In thousands 1996 1995
--------------------------------------------------------------
Prepaid pension cost $ 19,744 $ 17,862
Patents, net of accumulated
amortization 7,507 7,141
Goodwill, net of accumulated
amortization 11,743 12,418
Other 255 2,238
-------- --------
$ 39,249 $ 39,659
======== ========
Note 9 - Notes Payable
The Company has short-term bank lines of credit which totaled
approximately $38,000,000 based upon year-end foreign exchange rates.
As of April 30, 1996 and 1995, no amounts were borrowed under these
credit lines. Included in the bank lines of credit is a $20,000,000
line of credit from a major U.S. commercial bank and 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 these lines of
credit bear interest at 1/4 percent above the London Interbank Offered
Rate (LIBOR) for the relevant currency and term. These lines of
credit have commitment fees 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.
29
<PAGE>31
Note 11 - Income Taxes
The components of the provision for income taxes for the years ended
April 30, 1996, 1995, and 1994 were as follows:
In thousands 1996 1995 1994
----------------------------------------------------
Currently payable:
Federal $ 6,300 $ 5,600 $ 3,000
State and local 600 400 600
Foreign 500 500 800
-------- -------- --------
7,400 6,500 4,400
Deferred 600 500 2,500
-------- -------- --------
$ 8,000 $ 7,000 $ 6,900
======== ======== ========
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.
Income tax payments totaled $4,179,000, $5,931,000, and $2,547,000 in
the years ended April 30, 1996, 1995, and 1994, respectively.
Reconciliations of the statutory U.S. Federal income tax rate to the
effective income tax rate for each year were as follows:
1996 1995 1994
------------------------------------------------------------------
Statutory U.S. Federal income
tax rate 35.0% 35.0% 35.0%
State income taxes, net of U.S.
Federal tax benefit .9 .9 3.4
Foreign tax rate differences -- .7 (.4)
Effect of tax rate changes on
deferred taxes -- -- .4
Tax-exempt interest income (3.8) (4.8) (5.6)
Foreign Sales Corporation (2.4) (.7) (.6)
Research and development tax
credits (.2) (2.3) --
Other, net (.8) (.9) --
----- ----- -----
Effective income tax rate 28.7% 27.9% 32.2%
===== ===== =====
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
employee benefit plan funding versus expense recognition; differing
valuations of inventories, accounts receivable, and other assets;
expense provisions
30
<PAGE>32
not deductible until paid; and tax operating loss carryforwards. At
April 30, 1996 and 1995, current deferred tax assets of approximately
$9,400,000 and $9,500,000, respectively, were included in prepaid
expenses in the consolidated balance sheet. Deferred tax assets and
deferred tax liabilities as of April 30, 1996 and April 30, 1995 were
as follows:
1996 1995
-------------------------- --------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
In thousands Assets Liabilities Assets Liabilities
-----------------------------------------------------------------------------
Depreciation $ -- $ 4,500 $ -- $ 5,200
Patents -- 3,000 -- 2,700
Employee benefit
plans 1,200 6,200 -- 5,500
Asset valuations 4,600 800 6,200 800
Litigation award 1,900 -- 2,300 --
Provisions for
estimated expenses 3,000 1,700 4,500 2,800
Foreign exchange
gains and losses -- 900 -- 2,600
Tax carryforwards 6,500 -- 7,100 --
Other 2,200 1,700 2,400 1,500
-------- -------- -------- --------
19,400 18,800 22,500 21,100
Valuation allowance (1,200) -- (1,400) --
-------- -------- -------- --------
$ 18,200 $ 18,800 $ 21,100 $ 21,100
======== ======== ======== ========
Consolidated earnings before income taxes included foreign pre-tax
earnings of $612,000, $2,687,000, and $2,586,000 for 1996, 1995, and
1994, respectively.
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 had U.S.
and foreign net operating loss carryforwards of approximately
$14,000,000 at April 30, 1996. Such carryforwards have various
expiration dates and begin to expire in the 1997 fiscal year.
Note 12 - Long-Term Debt
The composition of long-term debt at the end of each year was as
follows:
In thousands 1996 1995
-------------------------------------------------------------
Industrial Revenue Bonds $ 7,531 $ 7,724
Less current maturities 193 193
-------- --------
$ 7,338 $ 7,531
======== ========
31
<PAGE>33
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 4.1 percent to 5.8 percent at April
30, 1996. 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 1996 and 1995, the average interest rate on the VRDBs was 3.8
percent and 3.4 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, 1996 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, 1996, the Company was in compliance with these
covenants. Under the most restrictive of these covenants,
approximately $104,000,000 of retained earnings was not available for
dividend payments at April 30, 1996.
The aggregate annual maturities of long-term debt for each of the four
years after 1997 total $193,000 annually. Interest payments totaled
$426,000, $439,000, and $380,000 in the years ended April 30, 1996,
1995, and 1994, 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 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, 1996, 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
2,237,000
32
<PAGE>34
shares at a total cost of $38,836,000, or an average cost of $17.36
per share. The reacquired shares have been retired and under
Connecticut law constitute authorized but unissued shares. As of
April 30, 1996, the Company could purchase up to an additional 763,000
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.
In October 1995, shareholders approved amendments to the 1992 Plan
permitting the grant of performance units in conjunction with stock
option grants. The performance units become payable in cash in the
event certain pre-established performance goals are attained and the
grantee simultaneously exercises related stock options with the cash
award. The maximum number of shares of common stock available for
grant as stock options under the amended 1992 Plan is 3,000,000
shares, and the maximum number of performance units available for
grant is 2,000,000.
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 as stock
options under the 1992 Director Plan is 75,000 shares.
A summary of the stock option activity for the three years ended April
30, 1996 is set forth below:
1996 1995 1994
----------------------------------------------------------------------
Outstanding stock options,
beginning of year 699,365 665,965 692,059
Options granted 689,000 90,000 125,000
Options exercised (122,145) (29,850) (134,094)
Options canceled (57,250) (26,750) (17,000)
--------- --------- ---------
Outstanding stock options,
end of year 1,208,970 699,365 665,965
========= ========= =========
Average exercise price per
share, end of year $13.67 $11.18 $10.63
========= ========= =========
Reserved for future grants 2,231,250 1,371,000 1,450,000
========= ========= =========
33
<PAGE>35
In conjunction with the 689,000 options granted in 1996, 144,000
performance units were also granted. The average exercise price per
share was $10.74 for the 122,145 options exercised during 1996. At
April 30, 1996, options for 434,470 shares of common stock were
exercisable under the terms of the plans at an average exercise price
per share of $10.52. 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, 1996, 1995, and 1994. 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 $1,908,000, $2,293,000, and $1,317,000 for the years
ended April 30, 1996, 1995, and 1994, 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. However, for
each of the years in the three-year period ended April 30, 1996, the
Company has funded substantially more than the amount called for by
this general policy. Amounts funded totaled $3,000,000, $3,352,000,
and $8,379,000 for the years ended April 30, 1996, 1995, and 1994,
respectively. Plan assets were invested in a portfolio consisting
primarily of common stocks, fixed income securities, money market
instruments, and mutual and collective trust funds consisting of these
instruments. Pension arrangements for employees of foreign
subsidiaries were provided generally through local insurance
contracts, the costs of which were funded currently.
34
<PAGE>36
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 1996 1995
-------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested benefits $ 35,996 $ 28,222
Nonvested benefits 1,446 1,465
--------- --------
Accumulated benefit obligation 37,442 29,687
Provision for future salary increases 7,492 5,986
--------- --------
Projected benefit obligation for
services rendered to date 44,934 35,673
Plan assets available for benefits (42,986) (34,478)
--------- --------
Plan assets less than
projected benefit obligation 1,948 1,195
Unrecognized net actuarial (loss) (6,003) (3,526)
Unrecognized net transition liability (651) (744)
Unrecognized prior service cost (12,863) (13,850)
--------- --------
Net pension plan (asset) in the
consolidated balance sheet $ (17,569) $(16,925)
========= ========
The Company also maintains 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 collective 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.
35
<PAGE>37
In thousands 1996 1995
-------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested benefits $ 3,174 $ 1,962
Nonvested benefits 4 --
--------- --------
Accumulated benefit obligation 3,178 1,962
Provision for future salary increases 932 1,185
--------- --------
Projected benefit obligation for
services rendered to date 4,110 3,147
Plan assets available for benefits (3,240) (1,242)
--------- --------
Plan assets less than
projected benefit obligation 870 1,905
Unrecognized net actuarial gain (loss) (166) 228
Unrecognized prior service cost (2,879) (3,070)
Adjustment to recognize additional
minimum liability -- 1,657
--------- --------
Net supplemental pension plan liability
(asset) in the consolidated
balance sheet $ (2,175) $ 720
========= ========
The following table summarizes the components of the net periodic
pension cost for the years ended April 30, 1996, 1995, and 1994. The
pension cost associated with the supplemental pension plan was
$662,000, $108,000, and $161,000 in the years ended April 30, 1996,
1995, and 1994, respectively, and is included in the amounts shown
below.
In thousands 1996 1995 1994
------------------------------------------------------------------
Cost related to current $ 1,792 $ 709 $ 579
service
Interest cost on projected
benefit obligation 2,980 2,175 2,040
Actual return on plan assets (6,758) (2,172) (2,371)
Net amortization and deferral 5,004 103 1,005
------- ------- -------
Net periodic pension cost $ 3,018 $ 815 $ 1,253
======= ======= =======
For 1996, 1995, and 1994, the projected benefit obligation was
determined using assumed discount rates of 7.25 percent, 7.75 percent,
and 7.5 percent, respectively, and an assumed long-term compensation
increase rate of 4.5 percent in 1996 and 5.0 percent in 1995 and 1994.
The assumed long-term rate of return on invested assets was 9.0
percent in each year.
36
<PAGE>38
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 $302,000,
$293,000, and $269,000 for the years ended April 30, 1996, 1995, and
1994, 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 1996 1995 1994
-------------------------------------------------------------------
Interest income from
investments $ 3,352 $ 3,686 $ 3,577
Royalty income 1,700 1,784 1,227
Patent litigation judgment -- -- 5,675
Other, net (112) 494 339
-------- -------- -------
$ 4,940 $ 5,964 $10,818
======== ======== =======
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.
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.
37
<PAGE>39
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 $3,487,000, $2,702,000, and $2,561,000 for the years ended
April 30, 1996, 1995, and 1994, respectively. Minimum annual rental
commitments at April 30, 1996 under long-term noncancelable operating
leases were as follows:
Building and Machinery and
In thousands Office Space Equipment Total
----------------------------------------------------------------
1997 $ 2,226 $ 265 $2,491
1998 1,890 193 2,083
1999 1,534 150 1,684
2000 737 6 743
2001 331 -- 331
After 2001 375 -- 375
------- ----- -------
$ 7,093 $ 614 $ 7,707
======= ===== =======
As of April 30, 1996, the Company was party to approximately
$20,300,000 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 counterparties to the
forward exchange contracts were major international commercial banks.
The Company continually monitors its open forward exchange contract
position and does not anticipate nonperformance by the counterparties.
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, 1996 for
future deliveries of the foreign currencies in exchange for U.S.
dollars, the hedging gain deferred at that date amounted to
approximately $900,000.
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 $34,800,000 at April 30, 1996
and $28,500,000 at April 30, 1995. 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.
38
<PAGE>40
Note 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
--------------------------------------------------------------------------
1996
Sales and service
revenue $ 88,191 $ 90,158 $ 86,884 $ 93,887 $ 359,120
Gross profit 38,976 40,892 38,896 42,019 160,783
Net earnings 4,493 5,533 5,151 4,691 19,868
Net earnings
per share .19 .23 .22 .20 .84
Dividends paid
per share .08 .08 .08 .08 .32
Stock price - High 17 5/8 19 1/2 18 17 3/4 19 1/2
- Low 15 16 3/8 15 3/8 14 1/4 14 1/4
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 change .08 .11 .25 .17 .61
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
39
<PAGE>41
REPORT OF MANAGEMENT Gerber Scientific, Inc.
----------------------------------------------------------------
To the Shareholders of Gerber Scientific, Inc.
The financial statements of Gerber Scientific, Inc. included in
this Annual Report have been prepared by the Company's
management, who are responsible for the integrity and objectivity
of the data presented. The financial statements have been
prepared in conformity with generally accepted accounting
principles appropriate in the circumstances and include amounts
based on management's best estimates and judgments. Financial
information elsewhere in this Annual Report is consistent with
the financial statements.
Management maintains a system of internal accounting controls and
procedures, supported by a program of internal auditing. This
system is intended to provide reasonable assurance, in relation
to reasonable cost, that transactions are executed in accordance
with management's authorization and are recorded properly and
accurately, that accountability for assets is maintained, and
that the financial records are reliable for preparing financial
statements.
The financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors, in accordance with generally accepted
auditing standards. Their role is to assess the accounting
principles used and the estimates made by management and to form
an independent opinion as to the fairness with which the
financial statements present the financial condition of the
Company, the results of its operations, and its cash flows. They
obtain and maintain an understanding of the Company's accounting
policies and controls and conduct such tests and related
procedures as they consider necessary to arrive at an opinion on
the fairness of the financial statements.
The Board of Directors has appointed an Audit and Finance
Committee composed of outside directors who are not employees of
the Company. The Audit and Finance Committee meets periodically
with representatives of management, the internal auditors, and
the independent auditors for the purpose of monitoring their
activities to ensure that each is properly discharging its
responsibilities. The Audit and Finance Committee reports to the
Board of Directors on its activities and findings.
40
<PAGE>42
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, 1996 and
1995 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, 1996. 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, 1996 and 1995 and the results of their operations and their
cash flows for each of the years in the three-year period ended
April 30, 1996 in conformity with generally accepted accounting
principles.
As discussed in 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
Hartford, Connecticut
May 23, 1996
41
<PAGE>43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
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 1996 Annual Meeting Proxy Statement which will be filed
within 120 days of the Company's April 30, 1996 fiscal year-end.
The information required by Item 10 relating to disclosure of
delinquent Section 16(a) filings by insiders is incorporated
herein by reference to the information contained under the
caption "Section 16(a) Reporting" in the Company's 1996 Annual
Meeting Proxy Statement.
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. 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 (72) President (1948) None
George M. Gentile (60) Senior Vice President, Treasurer
Finance
(September 8, 1977)
Fredric K. Rosen (57) Senior Vice President President, Gerber
(September 5, 1990) Garment Technology,
Inc.
Ronald B. Webster (59) Senior Vice President Vice President;
(September 4, 1991) President, Gerber
Scientific Products,
Inc.
42
<PAGE>44
Brian G. Eastman (50) Senior Vice President President, Gerber
June 4, 1996 Systems Corporation;
Senior Vice
President
Engineering, Leaf
Systems, Inc.;
General Manager,
Business Planning
and Control, AGFA
Corporation
Richard F. Treacy, Jr. (51) Senior Vice President General Counsel,
(June 1, 1994) Secretary
Gary K. Bennett (45) Vice President Treasurer and
(June 4, 1996) Corporate
Controller;
Assistant Corporate
Controller
David J. Gerber (35) Secretary Attorney
(February 1, 1995)
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 1996
Annual Meeting Proxy Statement which will be filed within 120
days of the Company's April 30, 1996 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 1996 Annual Meeting Proxy Statement which will be
filed within 120 days of the Company's April 30, 1996 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 1996 Annual Meeting
Proxy Statement which will be filed within 120 days of the
Company's April 30, 1996 fiscal year-end.
43
<PAGE>45
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, 1996,
1995, and 1994 . . . . . . . . . . . . 19
Consolidated Balance Sheet at
April 30, 1996 and 1995 . . . . . . . 20
Consolidated Statement of Changes in
Shareholders' Equity for the years
ended April 30, 1996, 1995, and 1994 . 21
Consolidated Statement of Cash Flows
for the years ended April 30, 1996,
1995, and 1994 . . . . . . . . . . . . 22
Independent Auditors' Report . . . . . . 41
Summary of Significant Accounting
Policies . . . . . . . . . . . . . . . 23 - 25
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . 25 - 39
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.
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.
44
<PAGE>46
10.2 Gerber Scientific, Inc. 1992 Employee
Stock Plan as amended and restated as of
April 28, 1995.
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, 1996.
10.5 Consulting Agreement dated September 15,
1995 between the Company and Stanley
Simon & Associates.
11.1* Statement re Computation of Per Share
Earnings.
22.1* Subsidiaries of the Registrant.
24.1* Consent of Independent Auditors.
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the
last quarter of fiscal year 1996.
(c) See Item 14(a) 3. above.
(d) See Item 14(a) 2. above.
*Filed herewith.
45
<PAGE>47
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 23, 1996 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 23, 1996 /s/ H. Joseph Gerber President
------------- ----------------------- Director
(H. Joseph Gerber)
July 23, 1996 /s/ George M. Gentile Senior Vice President,
------------- ----------------------- Finance
(George M. Gentile) Director
July 23, 1996 /s/ Stanley Simon Director
------------- -----------------------
(Stanley Simon)
July 23, 1996 /s/ W. Jerome Vereen Director
------------- -----------------------
(W. Jerome Vereen)
July 23, 1996 /s/ A. Robert Towbin Director
------------- -----------------------
(A. Robert Towbin)
July 23, 1996 /s/ David J. Gerber Secretary
------------- ----------------------- Director
(David J. Gerber)
July 23, 1996 /s/ Edward E. Hood, Jr. Director
------------- -----------------------
(Edward E. Hood, Jr.)
July 23, 1996 /s/ Gary K. Bennett Vice President,
------------- ----------------------- Treasurer and Controller
(Gary K. Bennett)
46
<PAGE>48
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 49
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 (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 as amended and restated as of
April 28, 1995 (incorporated herein by
reference to Exhibit A to the Company's
Proxy Statement filed in connection with
the Annual Meeting of Shareholders held
October 13, 1995, 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 filed in connection with the
Annual Meeting of Shareholders held
September 24, 1992, File No. 1-5865).
*Filed herewith.
47
<PAGE>49
Exhibit Index
Number Exhibit Page
------------- ------- ----
10.4 Gerber Scientific, Inc. Profit and
Growth Incentive Bonus Plan for the
Fiscal Year Ending April 30, 1996
(incorporated herein by reference to
Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarter
ended January 31, 1996).
10.5 Consulting Agreement dated September 15,
1995 between the Company and Stanley
Simon & Associates (incorporated herein
by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q
for the quarter ended January 31, 1996).
11.1* Statement re Computation of Per Share 51
Earnings.
22.1* Subsidiaries of the Registrant. 52
24.1* Consent of Independent Auditors. 53
27 Financial Data Schedule 54
*Filed herewith.
48
<PAGE>50
EXHIBIT 11.1
GERBER SCIENTIFIC, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
---------------------------------------------------------------------------
Years ended April 30, 1996 1995 1994
---------------------------------------------------------------------------
Earnings before
cumulative effect of
accounting change $19,868,000 $18,111,000 $14,533,000
Cumulative effect of
accounting change -- -- 788,000
----------- ----------- -----------
Net earnings $19,868,000 $18,111,000 $15,321,000
=========== =========== ===========
Average common shares
outstanding 23,463,141 23,795,774 23,792,137
Common stock equivalents:
Common stock attributable
to stock options
(treasury stock method) 225,812 154,337 174,750
----------- ----------- -----------
Weighted average shares of
common stock outstanding
during the period 23,688,953 23,950,111 23,966,887
=========== =========== ===========
Net earnings per common share:
Before cumulative effect
of accounting change $ .84 $ .76 $ .61
Cumulative effect of
accounting change -- -- .03
----------- ----------- -----------
Net earnings per common share $ .84 $ .76 $ .64
=========== =========== ===========
Note:
Net earnings per common share as calculated above is presented on a primary
and fully diluted basis.
49
<PAGE>51
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
Gerber Systems Corporation Hong Kong Limited Hong Kong
Gerber Garment Technology, Inc. Connecticut
GGT Canada Ltd. Canada
GGT International (Australia) Pty. Ltd. Australia
GGT International (NZ) Pty. 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
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, 1996 and
are not listed above.
50
<PAGE>52
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 23, 1996 relating to the consolidated balance sheet of Gerber
Scientific, Inc. and subsidiaries as of April 30, 1996 and 1995
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, 1996, which report appears in
the April 30, 1996 annual report on Form 10-K of Gerber
Scientific, Inc.
/s/ KPMG PEAT MARWICK LLP
Hartford, Connecticut
July 23, 1996
51
<PAGE>53
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated Balance Sheet and Statement of Earnings of Gerber Scientific, Inc.
as of and for the year ended April 30, 1996 and is qualified in its entirety by
reference to such financail statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
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<SECURITIES> 0
<RECEIVABLES> 74,035
<ALLOWANCES> 0
<INVENTORY> 63,196
<CURRENT-ASSETS> 157,956
<PP&E> 109,430
<DEPRECIATION> 54,692
<TOTAL-ASSETS> 312,988
<CURRENT-LIABILITIES> 56,296
<BONDS> 0
0
0
<COMMON> 23,199
<OTHER-SE> 216,099
<TOTAL-LIABILITY-AND-EQUITY> 312,988
<SALES> 359,120
<TOTAL-REVENUES> 359,120
<CGS> 198,337
<TOTAL-COSTS> 335,774
<OTHER-EXPENSES> (4,940)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 418
<INCOME-PRETAX> 27,868
<INCOME-TAX> 8,000
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<EPS-PRIMARY> .84
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</TABLE>
