Gerber Technology Reports Solid Profit Growth

From: ASAP

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Gerber Technology reported revenue of $160.1 million and segment operating profits of $19.2 million for its fiscal year ended April 30, 2004, compared with revenue of $154.1 million and profits of $13.4 million in the prior year. During the year the company continued to support established retail, apparel and industrial markets in North America and Western Europe with key new software releases, two new leather cutting systems and expanded customer service. Gerber also grew its leadership position in China with the launch of its first locally-manufactured product designed specifically for the Chinese market. “This fiscal year successfully concludes Gerber Technology’s three-year turnaround strategy,” said James Arthurs, President of Gerber Technology. “We have improved profitability and are now on a solid path to renewed growth. In the past 12 months Gerber Technology’s sales were at the highest level in three years. Product sales in North America alone increased 30 percent over last year, reinforcing our company’s standing as the undeniable leader in this region with an increasing market share. We continue to increase our market share in developing markets, especially in China, Turkey, Southwest Asia and Latin America where we remain the clear leader. We again proved ourselves pioneers in China as we took the leap to manufacture our first local product there. By sourcing and manufacturing in China, we can pass along savings in freight, shipping costs, and import duties directly to our customers there as they strive to keep up with rapidly increasing domestic and export apparel production.” Company Cements Leadership Position in China Throughout the year, Gerber Technology continued to expand operations globally to meet the needs of rapidly developing markets, particularly in China. The company designed and engineered the Infinity™ AE, a state-of-the-art inkjet plotter, at its world headquarters in Connecticut, U.S.A., and built it locally in China through its wholly-owned subsidiary, Gerber Scientific (Shanghai) Co., Ltd. According to Arthurs, “We designed this product specifically for the Chinese market. We’re manufacturing it in China for China.” Gerber plans to launch additional locally-manufactured models for the Chinese market later this year. In addition to the standard sales and support organization, Gerber Technology also has a fully-staffed engineering organization in place in Shanghai to support the new Infinity AE plotter and future additions to GERBERsuite. The company currently has 130 personnel in Greater China with plans to grow to 180 within 12 months. Most recently Gerber Technology has been chosen as part of the “Size China” project being carried out by the Apparel Cyber Tech Center (ACTC) at the College of Textile & Garment of Guangzhou University. The ultimate goal of the “Size China” project is to manufacture better fitting garments. Body data is captured by 3D laser scanner and transformed into real-size Alvaform® models made by Alvanon of Hong Kong/USA. The students participating in the project are being trained by a team from Institut TPC Hong Kong/Paris. They will use Gerber’s AccuMark™ V8 software installed on 110 CAD workstations. The study is supported by the central government in Beijing which has declared the profession of fashion designers to be important for China’s future economy. Gerber Technology has installed more than $135 million worth of systems in China. The company serves more than 1,500 customers operating over 5,000 systems and workstations in Greater China through a network of 21 fully-staffed sales and service offices. The company plans to open two additional offices in China in the coming months.

New Product Introductions This year Gerber launched several key new products including Taurus™ XD and Taurus XM leather cutting systems. The new, two-station Taurus XD delivers increased speed, accuracy and reliability for the lowest cost per cut unit in the industry. The new, single-station Taurus XM is the most affordable automated leather cutting system designed to cut full hides. Taurus XM is designed for companies with lower volume leather cutting demands, including those that do small order production cutting, production recuts, and aftermarket service and repair cuts. The XM is also the perfect solution for engineering and product development departments that make frequent sample and prototype cuts. Recent installations include Donto of Argentina, LeatherTrend of Mexico, Distinctive Designs of Canada, Bentley Motors of U.K. and Ligne Roset of France.

A new release of the company’s WebPDM™ product lifecycle management software delivers leading-edge features to enable brand owners, retailers and manufacturers to more effectively manage the challenges of offshore sourcing and manufacturing. WebPDM 4.1 offers expanded browser capability giving remote users access to the most current product data from any internet-ready computer. WebPDM is the product lifecycle management standard for the retail and apparel industry and has captured more than 60 percent market share with 12,000 seats installed. This year the company also signed an agreement with ICICI Infotech, a leading provider of end-to-end IT solutions, to distribute WebPDM in India. Under the agreement, ICICI Infotech markets WebPDM along with its existing range of technology solutions for the apparel industry. During the year the company added more than 50 new sizeable WebPDM customers to its existing user base including Kellwood, Urban Outfitters, Disney Resorts, Charming Shoppes, Brooks Brothers, Carter’s, and Li & Fung, among others.

The company’s new AccuMark Product Introduction Program (PIP) was also well received by industry leaders. The PIP program is a key component in the development of the newest release of Gerber’s AccuMark pattern design, grading and marker making/nesting software. More than 30 companies, including Johnson Controls, Coppley Apparel Group, Lear, Maconde, Haggar Clothing Co., Jones Apparel Group, Limited Brands, Intier Automotive and Safariland Body Armor, are collaborating with Gerber on the strategic direction for future AccuMark releases.

Gerber Technology also launched the InfoMark™ Synchron, the most cost efficient labeling solution available today. Installed on the Synchron™ GERBERspreader™, label application occurs away from the cutting system so cutting efficiencies are not affected. This is the first-of-its-kind technology and was well received in the industry with strong first-year sales.

Arthurs added, “With the World Trade Organization’s cessation of trade quotas only six months away, the world will be unfettered by quotas for the first time in 40 years. This will be a phenomenon never before experienced in this modern world of global apparel trade: it will cause a disruption of volcanic proportions with countries emerging as either winners or losers. The competition will be fierce and automation will be the primary key to survival.”

Market Alliances Strengthen GERBERsuite® During the year Gerber Technology continued to strengthen alliances with “best of breed” companies to supply products that complement its core GERBERsuite offerings. These include AccuMark V-Stitcher™ by Browzwear for 3D garment design and visualization, NedGraphics’ Vision® Fashion Studio™ software for conceptual design, and Nester Software Technologies’ NESTERserver™ and NESTERpack™ for material optimization. The company continued its strong alliance with Eton Systems AB, the premier supplier of unit production systems in the world, with several cooperative appearances at key exhibitions. Gerber is also collaborating with Eton to launch a cutting-edge order tracking system that will enable customers to follow an order through the material spreading, cutting, assembly and shipping processes via an ordinary cell phone.

“Customer First” Initiative Strengthened In fiscal year 2004 Gerber Technology reinforced its “Customer First” commitment with the expansion of GERBERnet™ functionality. Among other features GERBERnet offers the ability to download the company’s latest software releases, browse a comprehensive technical library on Gerber products and place parts orders online: all of these services are available 24 hours a day.

This year, the company opened its Customer Solutions Center of the Americas to better serve customers in Latin America. Today, Gerber Technology serves more than 15,000 customers through seven Customer Solutions Centers on six continents. The company also maintains three Advanced Technology Centers in Brussels, Belgium, Connecticut, USA and Shanghai, China. The new Shanghai facility, which will open in August, is a state-of-the-art, 2,500-square-meter (27,000-square-foot) facility. The Shanghai Advanced Technology Center was the first of its kind in China when it was established five years ago.

Gerber Technology also made significant advancements in improving operational efficiencies by integrating the manufacturing, customer service, and IT operations of its parent company’s other business units. These moves have expanded service coverage and accelerated the delivery of products and parts to customers. The Gerber Service organization worldwide now totals more than 450 technicians, applications specialists and call center caregivers. This organization is supplemented by over 200 service specialists employed by Gerber Technology’s agents and distributors.

During the year, the company appointed three Customer Service Directors to oversee the regions of Europe/Middle East/Africa, Asia Pacific and the Americas.

Parent Company, Gerber Scientific, Experiences Solid Performance with Strong Cash Flow Gerber Technology is one of four businesses of Gerber Scientific, a NYSE listed company. On June 15, 2004, Gerber Scientific reported revenues of $516.8 million compared with revenues of $512.4 million one year ago and after-tax income from continuing operations of $6.0 million down from $8.3 million. Strong cash flow also enabled the company to reduce its debt significantly for the fiscal year.

AccuMark™, GERBERnet™, GERBERspreader™, GERBERsuite™, Infinity™, InfoMark™, Synchron™, Taurus™, and WebPDM™ are trademarks of Gerber Technology. Alvaform® is a registered trademark of Alvanon New York. V- Stitcher™ is a trademark of Browzwear Ltd. Vision® Fashion Studio™ is a registered trademark of NedGraphics, Inc. NESTERserver™ and NESTERpack™ are trademarks of Nester Software Technologies, Inc.

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About Gerber Technology

Gerber Technology (www.gerbertechnology.com), a business unit of $517 million corporation Gerber Scientific, Inc., develops and manufactures the world's leading brands of integrated software and hardware automation systems for manufacturers, brand owners and retailers in the sewn products and flexible materials industries. These systems automate and significantly improve the efficiency of information management, product design and development, pre-production, and production processes. The company offers specialized solutions to a variety of end-user markets including retail, apparel, transportation interiors, furniture, composites and industrial fabrics. Gerber Technology’s world headquarters are located in Tolland, Connecticut, U.S.A. with regional offices, agents and distributors in 117 countries serving a total of over 15,000 customers through seven Customer Solutions Centers on six continents. The company engineers and manufactures its products in various locations in the United States, Europe and Asia.

Established in 1968, Gerber Technology is one of four business units of Gerber Scientific, Inc. (www.gerberscientific.com) of South Windsor, Connecticut, U.S.A., a corporation listed on the New York Stock Exchange under the “GRB” symbol.

June 2004

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