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Previous: GENERAL MOTORS ACCEPTANCE CORP, 424B3, 1998-07-16 |
Next: GOODYEAR TIRE & RUBBER CO /OH/, 10-Q, 1998-07-16 |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 5, 1998
GERBER SCIENTIFIC, INC.
-----------------------------------
(Exact name of Registrant as specified in its charter)
CONNECTICUT 1-5865 06-0640743
- --------------------------------- ------------- -------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
83 Gerber Road West, South Windsor, Connecticut 06074
-------------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (860) 644-1551
---------------
Not applicable
-----------------------
(Former name or former address, if changed since last report)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
Item 2. Acquisition or Disposition of Assets. 2
Item 7(a). Financial Statements of Business Acquired. 2
Item 7(b). Pro Forma Financial Information. 21
Signatures 28
-1-
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On May 5, 1998, Gerber Scientific Inc. (Gerber or the Company) announced the
successful completion of its cash tender offer for the acquisition of UK-based
Spandex PLC (Spandex), Europe and North America's largest distributor of
signmaking systems and supplies. In its results for the year ended December 31,
1997, Spandex reported sales of [pound sterling]101.3 million ($167 million).
The acquisition of Spandex and the results of its operations will be accounted
for in the Company's new fiscal year, which began May 1, 1998.
Operating out of 13 countries in Europe, Canada and the U.S., Spandex is engaged
in three main activities: the distribution of signmaking systems, the
distribution of signmaking materials, and the manufacturing of signmaking
materials. In signmaking systems, the company markets, distributes, and supports
computer-controlled signmaking equipment such as vinyl cutting plotters,
specialist sign printers, and routers manufactured by Gerber Scientific
Products, Inc., a wholly owned subsidiary of Gerber. In signmaking materials,
the company supplies a comprehensive range of products including self-adhesive
vinyls, banner materials, specialist signmaking films, application tapes, and
sign blanks and substrates, as well as extruded aluminum sign systems and
plastic components. In materials manufacturing, the company, through its
wholly-own subsidiary Ultramark Adhesive Products Limited, manufactures
self-adhesive vinyl films for the sign and allied industries in addition to
labeling films for the packaging markets. Gerber will continue to market,
distribute and support the Spandex product lines.
The tender price for the shares valued Spandex at approximately [pound sterling]
106.4 million ($173 million). In addition, Spandex had bank debt outstanding at
the time of acquisition of approximately [pound sterling]6.2 million
($10 million). The acquisition of the shares and the refinancing of the Spandex
debt was funded from a new $235 million multi-currency syndicated credit
facility which the Company recently negotiated with a bank group.
Item 7(a). Financial Statements of Business Acquired.
The following financial statements have been prepared in accordance with
generally accepted accounting principles in the United Kingdom. Material
variations in the accounting principles, practices, and methods include
differences in the treatment of acquisition goodwill and the date dividend
declarations are recorded. A reconciliation of net income and balance sheet line
items to United States generally accepted accounting principles follows the
audited financial statements included below.
-2-
<PAGE>
The Board of Directors and Shareholders of
Spandex PLC:
We consent to the inclusion of our report dated July 16, 1998, with respect to
the audited consolidated balance sheets of Spandex PLC (a United Kingdom
corporation) as of December 31, 1996, and 1997, and the related consolidated
profit and loss accounts, reconciliation of movements in shareholders' funds
and cash flows for each of the three years in the period ended 31 December 1997,
which report appears in the Form 8-K of Gerber Scientific Inc. dated July 16,
1998.
/s/ Deloitte & Touche
Chartered Accountants
Bristol
England
July 16, 1998
-3-
<PAGE>
To the Board of Directors and Shareholders of
Spandex PLC
We have examined the accompanying audited consolidated balance sheets of Spandex
PLC (a United Kingdom corporation) as of December 31, 1996, and 1997, and the
related consolidated profit and loss accounts, reconciliation of movements in
shareholders' funds and cashflows for each of the three years in the period
ended 31 December 1997 set out on pages 5 to 16. These financial statements
are the responsibility of Spandex PLC's management. Our responsibility is to
express an opinion on these financial statements based on audits performed.
The audits were conducted in accordance with generally accepted auditing
guidelines in the United Kingdom, which are substantially the same as auditing
standards generally accepted in the United States. Those standards require that
audits are planned and performed to obtain all reasonable assurance about
whether 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 the
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Spandex PLC and
subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles in
the United Kingdom.
/s/ Deloitte & Touche
Chartered Accountants
Bristol
England
July 16, 1998
-4-
<PAGE>
1. CONSOLIDATED PROFIT AND LOSS ACCOUNTS
The following table summarises the consolidated profit and loss accounts of
Spandex PLC for the three financial years ended 31 December 1995, 1996 and 1997.
<TABLE>
<CAPTION>
Year ended 31 December
1997 1996 1995
CONSOLIDATED PROFIT AND LOSS ACCOUNTS [pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
TURNOVER 101,347 98,455 85,765
Cost of sales 63,824 60,285 53,032
---------- --------- ---------
GROSS PROFIT 37,523 38,170 32,733
---------- --------- ---------
Distribution costs 18,107 18,576 15,473
Administrative expenses 9,878 9,114 8,169
---------- --------- ---------
27,985 27,690 23,642
OPERATING PROFIT 9,538 10,480 9,091
Interest receivable and similar income 61 103 115
Interest payable and similar charges (591) (708) (686)
---------- --------- ---------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 9,008 9,875 8,520
Tax on profit on ordinary activities 3,392 3,563 3,254
---------- --------- ---------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 5,616 6,312 5,266
Dividends paid and proposed 1,201 1,038 923
---------- --------- ---------
PROFIT RETAINED, TRANSFERRED TO RESERVES 4,415 5,274 4,343
EARNINGS PER ORDINARY SHARE 17.3p 19.5p 16.3p
</TABLE>
Notes to these consolidated financial statements are set out in section 6.
-5-
<PAGE>
2. CONSOLIDATED BALANCE SHEETS
The following table sets forth the consolidated balance sheets of Spandex PLC at
31 December 1996 and 1997.
<TABLE>
<CAPTION>
31 December
1997 1996
CONSOLIDATED BALANCE SHEETS [pound sterling]'000 [pound sterling]'000
<S> <C> <C>
FIXED ASSETS
Tangible assets 14,432 14,294
---------- ---------
CURRENT ASSETS
Stocks 14,617 12,611
Debtors 20,951 19,203
Cash at bank and in hand 2,170 2,425
---------- ---------
37,738 34,239
---------- ---------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans and overdrafts 4,644 4,322
Trade creditors 12,678 10,124
Other creditors including taxation and social security 8,262 8,588
Proposed dividends 1,201 1,038
---------- ---------
26,785 24,072
---------- ---------
NET CURRENT ASSETS 10,953 10,167
---------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES 25,385 24,461
Provisions for Liabilities and Charges 186 184
---------- ---------
25,199 24,277
========== =========
CAPITAL AND RESERVES
Called up share capital 3,248 3,243
Share premium 1,664 1,632
Profit and loss account 20,287 19,402
---------- ---------
TOTAL EQUITY SHAREHOLDERS' FUNDS 25,199 24,277
========== =========
</TABLE>
Notes to these consolidated financial statements are set out in section 6.
-6-
<PAGE>
3. CASHFLOW STATEMENTS OF SPANDEX
The following table sets forth the consolidated cashflow statements of Spandex
PLC for the financial years ended 31 December 1995, 1996 and 1997.
<TABLE>
<CAPTION>
Year ended 31 December
1997 1996 1995
CONSOLIDATED STATEMENTS OF CASHFLOW [pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES 9,839 11,664 8,904
--------- --------- ---------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 59 98 92
Interest paid (594) (702) (636)
--------- --------- ---------
Net cash outflow from returns on investments and servicing of finance (535) (604) (544)
--------- --------- ---------
TAXATION
Corporation tax paid (including advance corporation tax) (3,774) (3,266) (2,555)
--------- --------- ---------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (2,586) (2,966) (4,318)
Receipts from sales of tangible fixed assets 425 458 289
--------- --------- ---------
Net cash outflow for capital expenditure and financial investment (2,161) (2,508) (4,029)
--------- --------- ---------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings and businesses (2,509) (1,815) (965)
Net overdrafts acquired with subsidiaries (237) (58) (159)
--------- --------- ---------
Net cash outflow for acquisitions and disposals (2,746) (1,873) (1,124)
--------- --------- ---------
EQUITY DIVIDENDS PAID (1,038) (923) (808)
--------- --------- ---------
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (415) 2,490 (156)
--------- --------- ---------
FINANCING
Issue of ordinary share capital 37 31 73
New borrowings -- 1,433 2,101
Loan repayments (902) (4,284) (1,235)
--------- --------- ---------
Net cash (outflow)/inflow from financing (865) (2,820) 939
--------- --------- ---------
(DECREASE)/INCREASE IN CASH IN THE PERIOD (1,280) (330) 783
========= ========= =========
</TABLE>
Further details are set out in note 22
4. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
Year ended 31 December
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
THE GROUP
Profit for the financial year 5,616 6,312 5,266
Currency translation differences on foreign
currency net investments (1,371) (1,969) 536
--------- --------- ---------
TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR 4,245 4,343 5,802
========= ========= =========
</TABLE>
-7-
<PAGE>
5. COMBINED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS AND STATEMENTS
OF MOVEMENTS ON RESERVES
<TABLE>
<CAPTION>
Allotted Share Profit
share premium and loss Total
capital account account
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C> <C> <C>
THE GROUP
At 1 January 1995 3,231 1,540 14,101 18,872
Profit for the
financial year -- -- 5,266 5,266
Dividends paid and
proposed -- -- (923) (923)
Currency translation
differences on
foreign currency
net investments -- -- 536 536
Goodwill on
acquisition -- -- (834) (834)
Options exercised 9 64 -- 73
-------- -------- --------- ---------
At 1 January 1996 3,240 1,604 18,146 22,990
Profit for the
financial year -- -- 6,312 6,312
Dividends paid and
proposed -- -- (1,038) (1,038)
Currency translation
differences on
foreign currency
net investments -- -- (1,969) (1,969)
Goodwill on
acquisition -- -- (2,049) (2,049)
Options exercised 3 28 -- 31
-------- -------- --------- ---------
At 1 January 1997 3,243 1,632 19,402 24,277
Profit for the
financial year -- -- 5,616 5,616
Dividends paid and
proposed -- -- (1,201) (1,201)
Currency translation
differences on
foreign currency
net investments -- -- (1,371) (1,371)
Goodwill on
acquisition -- -- (2,159) (2,159)
Options exercised 5 32 -- 37
-------- -------- --------- ---------
At 31 December 1997 3,248 1,664 20,287 25,199
======== ======== ========= =========
</TABLE>
6. NOTES TO THE FINANCIAL STATEMENT
NOTE 1. ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable
accounting standards.
The particular accounting policies adopted are described below.
(a) Accounting convention
The financial statements have been prepared under the historical cost
convention.
(b) Basis of consolidation
The group financial statements consolidate the financial statements of the
Company and all subsidiaries for the financial year ended 31 December 1997.
(c) Tangible fixed assets
Depreciation is not provided on freehold land. On other tangible fixed
assets depreciation is provided on cost in equal instalments over the
estimated lives of the assets. The annual rates of depreciation are as
follows:
Freehold buildings 2%
Leasehold buildings Over period of lease
Motor vehicles 25%
Other plant and machinery 10-20%
Computer equipment 33 1/3%
Other fixtures, fittings, tools and equipment 20%
(d) Intangible fixed assets
Goodwill arising on consolidation is written off direct to reserves in the
year in which it arises.
(e) Stocks
Stocks are stated at the lower of cost and net realisable value. Cost
represents the cost of materials, direct labour and appropriate production
overheads.
-8-
<PAGE>
(f) Deferred taxation
Deferred taxation is provided at the anticipated tax rates on differences
arising from the inclusion of items of income and expenditure in taxation
computations in periods different from those in which they are included in
the financial statements to the extent that it is probable that a liability
or asset will crystallise in the future.
(g) Foreign exchange
The results of the foreign subsidiaries are translated into sterling at the
average rates of exchange for the year. The balance sheets of the foreign
subsidiaries are translated at the closing rates of exchange. Exchange
differences arising from this treatment are taken direct to reserves. Other
translation differences are dealt with in the profit and loss account.
(h) Investments
In the accounts of Spandex PLC, investments held as fixed assets are stated
at cost, or at the nominal value of the shares issued where the merger
relief provisions of the Companies Act 1985 have been applied.
(i) Leases
Rental costs under operating leases are charged to profit and loss account
in equal annual instalments over the periods of the leases.
NOTE 2. ACQUISITIONS AND GOODWILL
During the year the Group made the following acquisitions:
(a) On 4 April 1997, ND Graphic Products Limited acquired the issued share
capital of LRB Southwestern Graphic Supplies Inc. for a consideration
(including costs) of [pound sterling]133,000.
(b) On 31 July 1997, Spandex USA Inc. acquired the issued share capital of
Clarke Sign Systems Inc. for a consideration (including costs) of
[pound sterling]672,000.
(c) On 31 July 1997, Spandex France SA acquired the issued share capital of
Faaso SA for a consideration (including costs) of [pound
sterling]1,299,000.
(d) On 31 July 1997, Spandex PLC acquired the issued share capital of Syndicut
Sro for a consideration (including costs) of [pound sterling]405,000.
These acquisitions have been accounted for using the acquisition method of
accounting.
The fair values of the major categories of assets and liabilities acquired and
the cash flow effects of the acquisitions are given in note 22. There were no
significant adjustments made to the book values in arriving at these fair
values.
GOODWILL
Goodwill written off in 1997 under the accounting policy stated in note 1
amounted to [pound sterling]2,159,000 (1996: [pound sterling]2,049,000). The
cumulative amount of goodwill charged to reserves is [pound sterling]8,751,000
(1996: [pound sterling]6,592,000).
-9-
<PAGE>
NOTE 3. SEGMENTAL INFORMATION
The directors consider that the Group operates in one area of activity, namely
the supply of products to the sign and allied industries.
The geographical analysis of the Group's turnover (by origin of sale),
operating profit and net assets are as follows:
<TABLE>
<CAPTION>
Turnover Operating profit Net assets
1997 1996 1995 1997 1996 1995 1997 1996
[pound [pound [pound [pound [pound [pound [pound [pound
sterling] sterling] sterling] sterling] sterling] sterling] sterling] sterling]
'000 '000 '000 '000 '000 '000 '000 '000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Europe 86,294 89,161 85,256 8,830 9,861 9,073 25,288 24,592
North America 15,053 9,294 509 708 619 18 2,385 1,582
------- ------- ------- ------- ------- ------- ------- -------
101,347 98,455 85,765 9,538 10,480 9,091 27,673 26,174
======= ======= ======= ======= ======= =======
Net group dept (2,474) (1,897)
------- -------
25,199 24,277
======= =======
</TABLE>
Note: There is no material difference between the turnover figures shown above
and the analysis by destination of sale.
NOTE 4. STAFF COSTS AND NUMBERS
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
EMPLOYEE COSTS DURING THE YEAR
Wages and salaries 12,386 11,994 10,640
Social security costs 1,668 1,691 1,433
Other pension costs 369 364 299
--------- --------- ---------
14,423 14,049 12,372
========= ========= =========
AVERAGE NUMBERS OF PERSONS EMPLOYED
Production 155 140 125
Sales and distribution 345 326 276
Administration 132 113 105
--------- --------- ---------
632 579 506
========= ========= =========
</TABLE>
NOTE 5. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
Interest on bank loans and overdrafts wholly repayable
within five years 591 646 605
Other interest -- 62 81
--------- --------- ---------
591 708 686
========= ========= =========
</TABLE>
-10-
<PAGE>
NOTE 6. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
Profit on ordinary activities before taxation is after charging:
Rental under other operating leases 957 1,028 874
Depreciation 1,919 1,760 1,662
Auditors' remuneration -- audit fees 144 125 105
-- other services 80 73 56
======== ======== ========
</TABLE>
NOTE 7. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
United Kingdom corporation tax at 31.5%
(Years ended 31 December 1996 and 1995 33%)
Based on the profit for the year 1,945 2,288 1,890
Less relief for overseas taxation (925) (1,165) (753)
Deferred taxation 2 15 16
Overseas taxation 2,370 2,425 2,101
-------- -------- --------
3,392 3,563 3,254
======== ======== ========
</TABLE>
NOTE 8. PROFIT OF PARENT COMPANY
As permitted by Section 230 of the Companies Act 1985, the profit and loss
account of the parent company is not presented as part of these accounts. The
consolidated profit for the financial year includes [pound sterling]1,116,000
(Years ended 31 December 1996: [pound sterling]1,345,000 and 31 December 1995:
[pound sterling]1,346,000) which is dealt with in the accounts of the parent
company.
NOTE 9. DIVIDENDS
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
Interim dividend at 1.2p per share
(1996: 1.1p and 1995: 1.0p) 389 357 323
Proposed final dividend at 2.5p per share
(1996: 2.1p and 1995: 1.85p) 812 681 600
-------- -------- -------
1,201 1,038 923
======== ======== =======
</TABLE>
NOTE 10. EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on profits of
[pound sterling]5,616,000 (Years ended 31 December 1996:
[pound sterling]6,312,000 and 31 December 1995: [pound sterling]5,266,000) and
on the average of 32,451,576 (Years ended 31 December 1996: 32,415,576 and
31 December 1995: 32,352,576) ordinary shares in issue during the year.
No material dilution of earnings per share arises as a result of the potential
exercise of all outstanding share options.
-11-
<PAGE>
NOTE 11. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Land and Fixtures
Land and buildings and fittings
buildings Short Plant and tools and
Total Freehold Leasehold machinery equipment
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000 [pound sterling]'000 [pound sterling]'000
THE GROUP
COST
<S> <C> <C> <C> <C> <C>
At 1 January 1997 22,924 10,340 617 7,048 4,919
Additions on acquisition of
businesses 393 26 72 175 120
Additions 2,630 281 52 1,467 830
Disposals (969) -- (20) (558) (391)
Foreign exchange translation
differences (679) (178) (48) (209) (244)
--------- --------- ------- -------- --------
At 31 December 1997 24,299 10,469 673 7,923 5,234
========= ========= ======= ======== ========
ACCUMULATED DEPRECIATION
At 1 January 1997 8,630 731 280 4,394 3,225
Additions on acquisition of
businesses 195 10 21 102 62
Additions 1,919 152 74 898 795
Disposals (584) -- (12) (280) (292)
Foreign exchange translation
differences (293) (8) (19) (119) (147)
--------- --------- ------- -------- --------
At 31 December 1997 9,867 885 344 4,995 3,643
========= ========= ======= ======== ========
NET BOOK VALUE
At 31 December 1997 14,432 9,584 329 2,928 1,591
--------- --------- ------- -------- --------
At 31 December 1996 14,294 9,609 337 2,654 1,694
========= ========= ======= ======== ========
</TABLE>
NOTES 12. STOCKS
<TABLE>
<CAPTION>
The Group
1997 1996
[pound sterling]'000 [pound sterling]'000
<S> <C> <C>
Raw Materials 1,034 724
Work in Progress 333 386
Finished Goods and Goods for Resale 13,250 11,501
--------- ---------
14,617 12,611
========= =========
</TABLE>
-12-
<PAGE>
NOTE 13. DEBTORS
<TABLE>
<CAPTION>
The Group
1997 1996
[pound sterling]'000 [pound sterling]'000
<S> <C> <C>
Trade debtors due within one year 17,097 15,884
Other debtors:
Amounts falling due within one year 3,554 3,059
Amounts falling due after more than one year 300 260
--------- ---------
20,951 19,203
========= =========
</TABLE>
Included in other debtors falling due within one year is an amount of
[pound sterling]2,583,000 (1996: [pound sterling]2,160,000) which relates to
the capital value of leases entered into by customers of the Group's Canadian
subsidiary and in respect of which the finance company has a right of recourse
to the Group. This treatment is required by Financial Reporting Standard
Number Five. The right of recourse exists only in those cases of default by
the customer and where the finance company is able to return the leased
equipment to the Group. In the opinion of the directors no significant
liability is likely to arise under these arrangements. A similar amount of
[pound sterling]2,583,000 is included in other creditors.
NOTE 14. OTHER CREDITORS INCLUDING TAXATION AND SOCIAL SECURITY
<TABLE>
<CAPTION>
The Group
1997 1996
[pound sterling]'000 [pound sterling]'000
<S> <C> <C>
This heading includes:
Taxation and social security 2,098 2,733
========= =========
</TABLE>
NOTE 15. PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation
The amounts of deferred taxation provided and unprovided in the accounts are:
<TABLE>
<CAPTION>
Provided Unprovided
1997 1996 1997 1996
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C> <C>
THE GROUP:
Capital allowances in excess of depreciation 130 136 -- --
Other timing differences 56 48 -- --
Gain deferred by rollover relief -- -- 250 250
------- ------- ------- -------
186 184 250 250
======= ======= ======= =======
</TABLE>
-13-
<PAGE>
NOTE 16. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
Number 1997 Number 1996
of shares [pound sterling]'000 of shares [pound sterling]'000
<S> <C> <C> <C> <C>
Authorised:
Ordinary shares of 10p each 19,672,000 1,967 19,672,000 1,967
'A' Ordinary shares of 10p each 17,828,000 1,783 17,828,000 1,783
------------- -------- ------------- --------
37,500,000 3,750 37,500,000 3,750
============= ======== ============= ========
Called up, allotted and fully paid:
Ordinary shares of 10p each 14,651,076 1,465 14,603,076 1,460
'A' Ordinary shares of 10p each 17,828,000 1,783 17,828,000 1,783
------------- -------- ------------- --------
32,479,076 3,248 32,431,076 3,243
============= ======== ============= ========
</TABLE>
The movement in share capital during the year relates to the exercise of
options over 48,000 Spandex Ordinary Shares by members of the Executive Share
Option Scheme. The Spandex 'A' Shares rank pari passu with the Spandex
Ordinary Shares save that they are not listed on any stock exchange and there
are restrictions as to their transfer.
Employees held options over the Company's Ordinary Shares at 31 December 1997
as follows:
<TABLE>
<CAPTION>
No of shares Option price Closing date of option
<S> <C> <C> <C>
Executive Share Option Scheme: 77,499 216p 10 May 2004
151,667 320p 16 March 2005
146,835 353p 28 December 2005
153,333 366p 11 March 2006
104,667 255p 23 September 2007
Sharesave Scheme: 173,550 271p 28 February 2003
304,209 206p 30 June 2005
------------
1,111,760
============
</TABLE>
NOTE 17. CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
The Group
1997 1996
[pound sterling]'000 [pound sterling]'000
<S> <C> <C>
Contracted for but not provided in the financial statements 120 130
======= =======
</TABLE>
NOTE 18. OPERATING LEASE COMMITMENTS
At 31 December 1997 the Group was committed to making the following
payments during the next year in respect of operating leases:
<TABLE>
<CAPTION>
Land and
buildings Other
[pound sterling]'000 [pound sterling]'000
<S> <C> <C>
Leases which expire:
Within one year 151 71
Within two to five years 670 33
After five years 115 --
------- -------
936 104
======= =======
</TABLE>
NOTE 19. PENSIONS SCHEMES
The Group operates defined contribution pension schemes in respect of certain
employees, based on a fixed percentage of salaries. Pension contributions are
charged to the profit and loss account in the period in which they are incurred.
The pension cost for the year was [pound sterling]369,000 (1996:
[pound sterling]364,000).
-14-
<PAGE>
NOTE 20. RELATED PARTY TRANSACTIONS
(A) During the year, the Group purchased services to the value of [pound
sterling]439,080 (1996: [pound sterling]393,709) from Ultraflex Plastics
Limited, a company controlled by G. M. Bateson, a director of the Company.
These were in respect of distribution and other services for Ultramark
Adhesive Products Limited, and are on normal commercial terms. The amount
owed to Ultraflex as at 31 December 1997 was [pound sterling]29,429 (1996:
[pound sterling]23,550).
(b) Mr. N. C. P. Cockcroft was a partner in Wansbroughs Willey Hargrave from
the beginning of the year up to 31 October 1997. During that period the
Company incurred professional fees of [pound sterling]21,967 in respect of
legal services provided by that firm.
(c) On 6 January 1997 the Company made an interest free advance to Mr. N. C. P.
Cockcroft of [pound sterling]20,000 for the purchase of a car. This amount
was repaid on 26 February 1997.
NOTE 21. SUBSIDIARY COMPANIES
The Company has the following subsidiary companies:
Ultramark Adhesive Products Limited (incorporated in England)
Spandex Benelux BV (incorporated in Holland)
Spandex (Deutschland) GmbH (incorporated in Germany)
H. Brunner GmbH (incorporated in Germany)
Spandex Espana SA (incorporated in Spain)
Spandex Benelux NVSA (incorporated in Belgium)
Spandex Srl (incorporated in Italy)
Spandex AG (incorporated in Switzerland)
Spandex Ges.mbH (incorporated in Austria)
Spandex Kft (incorporated in Hungary)
Spandex France SA (incorporated in France)
Spandex USA Inc. (incorporated in the USA)
Spandex Unifol Sro (incorporated in Slovakia)
Zecco Sro (incorporated in Slovakia)
Spandex Canada Inc. (incorporated in Canada)
ND Graphic Products Limited* (incorporated in Canada)
Faaso SA* (incorporated in France)
Clarke Sign Systems, Inc.* (incorporated in USA)
Spandex Syndicut Sro (incorporated in Czech Republic)
All subsidiaries are wholly owned and operate in the same general trade as
that of the parent company.
*Subsidiaries marked are indirectly owned through other subsidiaries.
NOTE 22. CASH FLOW STATEMENT
(a) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
Operating profit 9,538 10,480 9,091
Depreciation charges 1,919 1,760 1,662
Profit on sale of fixed assets (40) (38) (44)
Increase in stocks (1,579) (511) (1,697)
Increase in debtors (1,380) (531) (1,638)
Increase in creditors 1,381 504 1,530
-------- --------- --------
Net cash inflow from operating activities 9,839 11,664 8,904
======== ========= ========
</TABLE>
-15-
<PAGE>
(b) Acquisition of subsidiary undertakings and businesses
Net Assets acquired:
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
Fixed assets 198 102 98
Cash at bank and in hand 156 -- 27
Stocks 1,226 1,621 318
Debtors 971 1,469 425
Creditors (1,808) (1,647) (513)
Bank overdrafts (393) (58) (186)
Borrowings -- (1,721) --
Goodwill 2,159 2,049 834
-------- -------- --------
Total consideration 2,509 1,815 1,003
======== ======== ========
Satisfied by:
Cash 2,509 1,815 965
Deferred consideration -- -- 38
-------- -------- --------
2,509 1,815 1,003
======== ======== ========
</TABLE>
(c) Reconciliation of net cashflow to movement in net debt
<TABLE>
<CAPTION>
1997 1996 1995
[pound sterling]'000 [pound sterling]'000 [pound sterling]'000
<S> <C> <C> <C>
(Decrease)/increase in cash in the year (1,280) (330) 783
Cash outflow/(inflow) from decrease in debt 902 2,851 (866)
--------- --------- ---------
Change in net debt resulting from cash flows (378) 2,521 (83)
Loans acquired with subsidiary -- (1,721) --
Translation difference (199) (320) 91
--------- --------- ---------
Movement in net debt in year (577) 480 8
Net debt at beginning of year (1,897) (2,377) (2,385)
--------- --------- ---------
Net debt at end of year (2,474) (1,897) (2,377)
========= ========= =========
</TABLE>
(d) Analysis of net debt
<TABLE>
<CAPTION>
Acquisition
At 1 At 31 At 1 (excl cash At 31
January Exchange December January and Exchange December
1997 Cashflow movement 1997 1996 Cashflow overdrafts movement 1996
[pound [pound [pound [pound [pound [pound [pound [pound [pound
sterling] sterling] sterling] sterling] sterling] sterling] sterling] sterling] sterling]
'000 '000 '000 '000 '000 '000 '000 '000 '000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash at bank
and in hand 2,425 (55) (200) 2,170 2,786 47 -- (408) 2,425
Bank overdrafts (920) (1,225) 1 (2,144) (568) (377) -- 25 (920)
Loans due within
one year (3,402) 902 -- (2,500) (2,818) 1,129 (1,721) 8 (3,402)
Loans due after
one year -- -- -- -- (1,777) 1,722 -- 55 --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(1,897) (378) (199) (2,474) (2,377) 2,521 (1,721) (320) (1,897)
========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
-16-
<PAGE>
SPANDEX PLC RECONCILATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
RECONCILIATION OF NET INCOME TO U.S. GAAP
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
1997 1996 1995
---- ---- ----
[pound [pound [pound
sterling] sterling] sterling]
'000 '000 '000
Net income as shown in the financial
statements 5,616 6,312 5,266
Description of items having the
effect of decreasing reported
income:
Amortization of goodwill (A) (350) (264) (182)
----- ----- -----
Net income according to generally
accepted accounting principles in
the United States 5,266 6,048 5,084
===== ===== =====
(A) Represents the amortization of acquisition goodwill in accordance with U.S.
generally accepted accounting principles. Goodwill is recorded as a reduction to
shareholders' equity under generally accepted accounting principles in the
United Kingdom.
-17-
<PAGE>
RECONCILIATION OF BALANCE SHEET ITEMS TO U.S. GAAP
DECEMBER 31, 1997
Audited Adjust- Adjusted to
12/31/97 ments U.S. GAAP
-------- ------- ---------
[pound [pound [pound
sterling] sterling] sterling]
'000 '000 '000
FIXED ASSETS
Tangible Assets 14,432 -- 14,432
Intangible Assets (B) -- 7,592 7,592
------ ----- ------
14,432 7,592 22,024
------ ----- ------
CURRENT ASSETS
Stocks 14,617 -- 14,617
Debtors 20,951 -- 20,951
Cash at bank and in hand 2,170 -- 2,170
------ ----- ------
37,738 -- 37,738
------ ----- ------
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR
Bank loans and overdrafts 4,644 -- 4,644
Trade creditors 12,678 -- 12,678
Other creditors including
taxation and social security 8,262 -- 8,262
Proposed dividends (C) 1,201 (812) 389
------ ----- ------
26,785 (812) 25,973
------ ----- ------
NET CURRENT ASSETS 10,953 812 11,765
------ ----- ------
TOTAL ASSETS LESS CURRENT
LIABILITIES 25,385 8,404 33,789
Provisions for Liabilities and
Charges 186 -- 186
------ ----- ------
25,199 8,404 33,603
====== ===== ======
CAPITAL AND RESERVES
Called up share capital 3,248 -- 3,248
Share premium 1,664 -- 1,664
Profit and loss account (B)(C) 20,287 8,404 28,691
------ ----- ------
TOTAL EQUITY SHAREHOLDERS'
FUNDS 25,199 8,404 33,603
====== ===== ======
(B) Represents the adjustment to capitalize acquisition goodwill in accordance
with U.S. generally accepted accounting principles. Goodwill is recorded as a
reduction to shareholders' equity under generally accepted accounting principles
in the United Kingdom.
(C) Represents the adjustment to record dividend declarations in the period in
which they are declared. Dividend declarations are recorded in the period to
which they pertain, which may be earlier than their date of declaration, in the
United Kingdom.
-18-
<PAGE>
RECONCILIATION OF BALANCE SHEET ITEMS TO U.S. GAAP
DECEMBER 31, 1996
Audited Adjust- Adjusted to
12/31/96 ments U.S. GAAP
-------- ------- ---------
[pound [pound [pound
sterling] sterling] sterling]
'000 '000 '000
FIXED ASSETS
Tangible Assets 14,294 -- 14,294
Intangible Assets (B) -- 5,783 5,783
------ ----- ------
14,294 5,783 20,077
------ ----- ------
CURRENT ASSETS
Stocks 12,611 -- 12,611
Debtors 19,203 -- 19,203
Cash at bank and in hand 2,425 -- 2,425
------ ----- ------
34,239 -- 34,239
------ ----- ------
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR
Bank loans and overdrafts 4,322 -- 4,322
Trade creditors 10,124 -- 10,124
Other creditors including
taxation and social security 8,588 -- 8,588
Proposed dividends (C) 1,038 (681) 357
------ ----- -------
24,072 (681) 23,391
------ ----- ------
NET CURRENT ASSETS 10,167 681 10,848
------ ----- ------
TOTAL ASSETS LESS CURRENT
LIABILITIES 24,461 6,464 30,925
Provisions for Liabilities and
Charges 184 -- 184
------ ----- ------
24,277 6,464 30,741
====== ===== ======
CAPITAL AND RESERVES
Called up share capital 3,243 -- 3,243
Share premium 1,632 -- 1,632
Profit and loss account (B)(C) 19,402 6,464 25,866
------ ----- ------
TOTAL EQUITY SHAREHOLDERS'
FUNDS 24,277 6,464 30,741
====== ===== ======
(B) Represents the adjustment to capitalize acquisition goodwill in accordance
with U.S. generally accepted accounting principles. Goodwill is recorded as a
reduction to shareholders' equity under generally accepted accounting principles
in the United Kingdom.
(C) Represents the adjustment to record dividend declarations in the period in
which they are declared. Dividend declarations are recorded in the period to
which they pertain, which may be earlier than their date of declaration, in the
United Kingdom.
-19-
<PAGE>
CASH FLOW STATEMENTS: BASIS OF PREPARATION
The consolidated cash flow statements are prepared in accordance with UK
Financial Reporting Standard No. 1 (FRS 1), the objective and principles of
which are similar to those set out in SFAS No. 95, "Statement of Cash Flows".
The principal difference between the standards relates to classification. Under
FRS 1, Spandex PLC presents its cash flows for (a) operating activities; (b)
returns on investments and servicing of finance; (c) tax paid; (d) investing
activities; and (e) financing. SFAS No. 95 requires only three categories of
cash flow activity being (a) operating; (b) investing; and (c) financing.
Cash flows from returns on investments and servicing of finance and taxation
under FRS 1 would, with the exception of dividends paid, be included as
operating activities under SFAS No. 95; such distributions would be included as
a financing activity under SFAS No. 95. Under FRS 1, cash and cash equivalents
comprise cash, investments and short-term deposits which were within 3 months of
maturity when acquired and short-term borrowings repayable within 3 months from
the date of their advance. Under SFAS No. 95, short-term borrowings repayable
within 3 months of their advance would not be included within cash and cash
equivalents but movements on those borrowings would be included in financing
activities.
-20-
<PAGE>
Item 7(b). Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated statements of income of
the Company for the nine months ended January 31, 1998 and the year ended April
30, 1997 presents results for the Company as if its purchase of Spandex had
occurred as of March 31, 1996. The accompanying unaudited pro forma condensed
consolidated balance sheet as of January 31, 1998 gives effect to the purchase
as if it had occurred as of January 31, 1998. The unaudited pro forma data does
not purport to represent what the Company's financial position or results of
operations actually would have been had the purchase in fact occurred on the
dates indicated, or to project the Company's financial position or results of
operations for any future date or period. The pro forma adjustments are based on
available information and certain assumptions that the Company currently
believes are reasonable in the circumstances. Further, the pro forma adjustments
related to the pro forma condensed consolidated statements of income do not give
effect to any nonrecurring/unusual restructuring charges resulting from the
purchase. The unaudited pro forma condensed consolidated financial information
should be read in conjunction with the accompanying notes thereto, and the
separate historical financial statements of the Company as of and for the nine
months ended January 31, 1998 and for the year ended April 30, 1998, which are
contained in the Company's quarterly report on Form 10-Q for the fiscal period
ended January 31, 1998 and annual report on Form 10-K for the fiscal period
ended April 30, 1997, respectively.
The unaudited pro forma condensed consolidated balance sheet as of January 31,
1998 includes the Spandex balance sheet as of December 31, 1997. The unaudited
pro forma condensed consolidated statements of income for the nine months ended
January 31, 1998 and the year ended April 30, 1997 include Spandex's income
statements for the nine months ended December 31, 1997 and the twelve months
ended March 31, 1997, respectively.
The pro forma adjustments and pro forma amounts are provided for informational
purposes only, and the Company's financial statements will reflect the effects
of the purchase from May 5, 1998, the date of such purchase.
-21-
<PAGE>
GERBER SCIENTIFIC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JANUARY 31, 1998
($ IN MILLIONS)
<TABLE>
<CAPTION>
Histor- Spandex Other
ical (a) (b) (c) Pro Forma
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-
term receivables $ 25,743 $ 3,582 $(3,336) $ 25,989
Accounts receivable 93,489 34,584 -- 128,073
Inventories 70,520 24,128 -- 94,648
Prepaid expenses 13,411 -- -- 13,411
-------- -------- -------- --------
203,163 62,294 (3,336) 262,121
INVESTMENTS AND LONG-
TERM RECEIVABLES 17,326 -- -- 17,326
PROPERTY, PLANT AND
EQUIPMENT 129,543 40,111 2,500 172,154
Less accumulated
depreciation 62,039 16,288 -- 78,327
-------- -------- -------- --------
67,504 23,823 2,500 93,827
INTANGIBLE ASSETS 57,898 -- 126,033 183,931
Less accumulated
amortization 12,083 -- -- 12,083
-------- -------- -------- --------
45,815 -- 126,033 171,848
OTHER ASSETS 457 -- -- 457
-------- -------- -------- --------
$334,265 $ 86,117 $125,197 $545,579
======== ======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ -- $ 7,666 $ (7,666) $ --
Current maturities
of long-term debt 193 -- -- 193
Accounts payable 26,702 36,548 -- 63,250
Accrued compensation
and benefits 15,010 -- -- 15,010
Other accrued
liabilities 18,951 -- -- 18,951
Deferred revenue 6,747 -- -- 6,747
</TABLE>
-22-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Advances on sales
contracts 7,403 -- -- 7,403
-------- -------- -------- --------
75,006 44,214 (7,666) 111,554
NONCURRENT LIABILITIES:
Deferred income taxes 11,687 307 -- 11,994
Long-term debt 7,002 -- 174,459 181,461
-------- -------- -------- --------
18,689 307 174,459 193,455
SHAREHOLDERS' EQUITY:
Preferred stock -- -- -- --
Common stock 23,392 5,361 (5,361) 23,392
Paid-in capital 37,008 2,747 (2,747) 37,008
Retained earnings 198,685 33,488 (33,488) 198,685
Treasury stock (16,450) -- -- (16,450)
Cumulative
translation component (2,065) -- -- (2,065)
-------- -------- -------- --------
240,570 41,596 (41,596) 240,570
-------- -------- -------- --------
$334,265 $ 86,117 $125,197 $545,579
======== ======== ======== ========
</TABLE>
(a) Gerber Scientific Inc. balance sheet as of January 31, 1998 as
previously presented in the Company's quarterly report on Form 10-Q.
(b) Spandex balance sheet as of December 31, 1997, converted from British
pounds to U.S. dollars using the spot exchange rate at December 31,
1997.
(c) Purchase adjustment assuming the purchase of Spandex took place on
January 31, 1998. Goodwill is calculated as follows:
Purchase price $166,793
Less: Net asset value of
Spandex as of January 31, 1998 (41,596)
Adjustment to record assets at
fair market value (2,500)
Transaction costs 3,336
--------
Goodwill $126,033
========
-23-
<PAGE>
GERBER SCIENTIFIC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED JANUARY 31, 1998
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Histor- Spandex Other
ical (a) (b) (c) Pro Forma
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Product sales $274,703 $128,373 $(17,467) $385,609
Service 35,486 -- -- 35,486
-------- -------- -------- --------
310,189 128,373 (17,467) 421,095
COSTS & EXPENSES: -------- -------- -------- --------
Cost of product
sales 148,623 81,107 (17,467) 212,263
Cost of service 22,681 -- -- 22,681
Selling, general
& administrative 94,926 35,257 3,925 134,108
Research &
development 23,099 -- -- 23,099
-------- -------- -------- --------
289,329 116,364 (13,542) 392,151
-------- -------- -------- --------
Operating income 20,860 12,009 (3,925) 28,944
Other income 3,388 (69) -- 3,319
Interest expense 266 -- 9,608 9,874
-------- -------- ------- --------
Earnings before
income taxes 23,982 11,940 (13,533) 22,389
Provision for income
taxes 7,700 4,497 (4,361) 7,836
-------- -------- -------- --------
NET EARNINGS $ 16,282 $ 7,443 $ (9,172) $ 14,553
======== ======== ======== ========
PER SHARE OF COMMON
STOCK:
Basic $ 0.71 $ 0.64
Diluted $ 0.70 $ 0.62
Dividends $ 0.24 $ 0.24
AVERAGE SHARES
OUTSTANDING:
Basic 22,863 22,863
Diluted 23,354 23,354
</TABLE>
-24-
<PAGE>
(a) Gerber Scientific Inc. income statement for the nine months ended
January 31, 1998 as previously presented in the Company's quarterly
report on Form 10-Q.
(b) Spandex income statement for the nine months ended December 31, 1997,
converted from British pounds to U.S. dollars using the weighted
average exchange rate for the nine months ended December 31, 1997.
(c) Adjustment recorded to record interest expense and goodwill
amortization, as well as to eliminate intercompany sales. Interest
expense was calculated using the weighted average dealer commercial
paper rate (5.6%) for the nine months ended January 31, 1998, while
goodwill amortization was calculated assuming a 25 year amortization
period. The income tax rate used was the statutory rate of 35%.
Goodwill amortization was calculated as follows:
Purchase price $166,793
Less: Net asset value of
Spandex, as of March 31, 1996 (36,783)
Adjustment to record assets at
fair market value (2,500)
Transaction costs 3,336
--------
Goodwill 130,846
Amortization period (years) 25
--------
Annual amortization 5,234
--------
Nine months of amortization $ 3,925
========
-25-
<PAGE>
GERBER SCIENTIFIC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1997
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Histor- Spandex Other
ical (a) (b) (c) Pro Forma
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Product sales $334,990 $158,205 $(19,381) $473,814
Service 45,927 -- -- 45,927
-------- -------- -------- --------
380,917 158,205 (19,381) 519,741
COSTS & EXPENSES: -------- -------- -------- --------
Cost of product
sales 183,472 97,103 (19,381) 261,194
Cost of service 28,930 -- -- 28,930
Selling, general
& administrative 120,143 44,409 5,234 169,786
Research and
development 30,415 -- -- 30,415
-------- -------- -------- --------
362,960 141,512 (14,147) 490,325
-------- -------- -------- --------
Operating income 17,957 16,693 (5,234) 29,416
Other income 4,590 (1,537) -- 3,053
Interest expense 338 -- 9,733 10,071
-------- -------- -------- --------
Earnings before
income taxes 22,209 15,156 (14,967) 22,398
Provision for income
taxes 6,200 5,562 (3,923) 7,839
-------- -------- -------- --------
NET EARNINGS $ 16,009 $ 9,594 $(11,044) $ 14,559
======== ======== ======== ========
PER SHARE OF COMMON STOCK:
Basic $ 0.69 $ 0.63
Diluted $ 0.69 $ 0.62
Dividends $ 0.32 $ 0.32
AVERAGE SHARES
OUTSTANDING:
Basic 23,250 23,250
Diluted 23,365 23,365
</TABLE>
-26-
<PAGE>
(a) Gerber Scientific Inc. income statement for the year ended April 30,
1997 as previously presented in the Company's annual report on
Form 10-K.
(b) Spandex income statement for the twelve months ended March 31, 1997,
converted from British pounds to U.S. dollars using the weighted
average exchange rate for the twelve months ended March 31, 1997.
(c) Adjustment recorded to record interest expense and goodwill
amortization, as well as to eliminate intercompany sales. Interest
expense was calculated using the weighted average dealer commercial
paper rate (5.6%) for the twelve months ended April 30, 1997, while
goodwill amortization was calculated assuming a 25 year amortization
period. The income tax rate used was the statutory rate of 35%.
Goodwill amortization is calculated as follows:
Purchase price $166,793
Less: Net asset value of
Spandex, as of March 31, 1996 (36,783)
Adjustment to record assets at
fair market value (2,500)
Transaction costs 3,336
--------
Goodwill 130,846
Amortization period (years) 25
--------
Annual amortization $ 5,234
========
-27-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GERBER SCIENTIFIC, INC.
------------------------
(Registrant)
Date: July 16, 1998 By: / s / Gary K. Bennett
------------------ --------------------------------
Gary K. Bennett
Senior Vice President, Finance
And Principal Accounting Officer
-28-
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