8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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):    October 23, 2003

GSI LUMONICS INC.
(Exact name of registrant as specified in its charter)

New Brunswick, Canada

(State or other jurisdiction of incorporation)

000-25705	98-0110412
(Commission File Number)	(I.R.S. Employer Identification No.)

39 Manning Road, Billerica, Massachusetts 01821

(Address of principal executive offices, including zip code)

(978) 439-5511

(Registrant’s telephone number, including area code)

TABLE OF CONTENTS

	ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
SIGNATURE
EXHIBIT INDEX
EX-99.1 PRESS RELEASE ISSUED OCTOBER 23, 2003

ITEM 12.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     On October 23, 2003, GSI Lumonics Inc. (the Company) issued a press release announcing its financial position and results of operations as of and for the fiscal quarter ended September 26, 2003. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

     The information furnished pursuant to this Current Report on Form 8-K (including the press release attached as Exhibit 99.1 hereto) shall not be considered “filed” under the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.

ITEM 7.    FINANCIAL STATEMENTS AND EXHIBITS.

     (a)     Financial Statements of Businesses Acquired.

         Not required.

     (b)     Pro Forma Financial Information.

         Not required.

     (c)     Exhibits.

         99.1     Press Release issued October 23, 2003.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GSI LUMONICS INC. (Registrant)
Date:    October 23, 2003	By:	/s/  Thomas R. Swain Thomas R. Swain Vice President, Finance and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued October 23, 2003.

EX-99.1

EXHIBIT 99.1

GSI Lumonics Reports
Third Quarter 2003 Financial Results

Billerica, MA, October 23, 2003 — GSI Lumonics Inc. (Nasdaq: GSLI and TSX: LSI), a major supplier of precision components, lasers and laser systems, today announced financial results for the third fiscal quarter ended September 26, 2003. (All data are expressed in U. S. GAAP and in U. S. dollars)

• Sales of $44.9 million increased by 20%, or $7.5 million, from the third quarter of 2002.

• Net income of $550 thousand and earnings per share (fully diluted) of $0.01 for the third quarter of 2003 compared favorably to a net loss of $5.4 million and a loss per share (fully diluted) of ($0.13) for the third quarter of 2002.

• Orders of $50.1 million increased by 28%, or $11 million, from the third quarter of 2002.

• Backlog at the end of the third quarter was $47.6 million as compared to $54.1 million at the end of the third quarter in 2002.

• Gross profit as a percentage of sales increased to 37.1% from 30.2% in the third quarter of 2002.

• Cash flow generated by operations during the third quarter of 2003 was $7.8 million as compared to cash used by operations of $5.7 million in the third quarter of 2002.

Geographically, sales in the third quarter just ended were as follows: 43% in the Americas, 38% in Asia-Pacific and Japan combined, and 19% in Europe. Sales are determined by “billed to locations” and may not reflect ultimate geographic location.

“GSI Lumonics continues to report improvement in margins and profitability as a direct result of restructuring activities over the past several quarters. The gains in orders and revenue are the first solid signs of recovery in the electronics and semiconductor markets, “ stated Mr. Winston. “Additionally, both recent acquisitions have now been integrated into their respective business segments and we expect them to be accretive to earnings in the fourth quarter”.

Restructuring costs reported for the third quarter were $264 thousand primarily reflecting a loss on anticipated disposition of the Kanata facility. Also included in

the cost of goods sold and operating expenses were $300 thousand in costs associated with the transfer of the Nepean-based capability previously disclosed.

Selling, general and administrative expenses included approximately $550 thousand of additional expenses related to the proposal to shareholders to become a U.S. domiciled-corporation, that we terminated in August. Operating expenses are expected to stabilize at current levels. Some margin improvement is anticipated next quarter from reduced manufacturing overhead. Gross margin improved over the same period last year and last quarter, largely as the result of lower inventory loss provisions and completion of restructuring activities. These savings were partially offset by higher operating costs related to the acquisitions, both in the form of transition costs and some addition to the overhead structure.

Mr. Winston commented that “operating expense reductions in concert with margin improvements have us on track to operate at a breakeven point of $41 million in sales with a 38% gross margin”.

Business Segment Reporting

In comparing the third quarter sales of 2003 with the same period in 2002:

- Laser Systems segment was $20.0 million versus $15.1 million, an increase of 32%;

- Laser segment was $8.5 million versus $6.0 million, an increase of 42%;

- Components segment was $18.0 million versus $16.7 million, an increase of 8%.

Growth in sales in the Laser Systems segment was primarily from semiconductor memory systems. The Laser segment sales increase consisted of $1.9 million from the Spectron acquisition and $587 thousand from existing-product revenue growth. The Components segment consists of an increase of $2.0 million from the DRC Encoder acquisition, partially offset by a decline of $713 thousand in existing-product sales.

The Laser Systems segment generated a profit from operations of $2.7 million for the third quarter of 2003, compared to a loss of $7.1 million in the third quarter of 2002. This was the result of improvements in gross margin and operating expense reductions. The Laser segment profit from operations was $507 thousand for the third quarter of 2003, as compared to a loss of $1.4 million in the third quarter of 2002. The improvement in the Laser segment profit from operations was driven by a combination of higher revenues and lower fixed costs. The Components business profit from operations was $3.5 million for the third quarter of 2003, compared to $4.4 million in the third quarter of 2002. This was mostly due to lower gross margins caused by the Encoder acquisition and product mix.

Financial Condition

At September 26, 2003, cash, cash equivalents, short-term investments and other long-term investments totaled $ 132 million as compared to $122.6 million on June 27, 2003. Cash flow generated by operations during the quarter was $7.8 million with inventory and receivable reductions and increased accounts payables as key contributors. The Company continues to operate debt-free.

GSI Lumonics supplies precision motion control components, lasers and laser-based advanced manufacturing systems to the global medical, semiconductor, electronics, and industrial markets. GSI Lumonics’ common shares are listed on Nasdaq (GSLI) and The Toronto Stock Exchange (LSI). The Company’s web site address is www.gsilumonics.com.

Following the announcement, GSI Lumonics will host a conference call for investors at 5:00 p.m. Eastern Time. To participate, call 800-299-9630 (within the US and Canada), or 617-786-2904 (for international callers), no earlier than 4:50 p.m. Eastern Time and no later than 4:55 p.m. Eastern Time and identify yourself to the operator; participant pass code is 70529918. A replay of the call will be available one hour after the call ends through November 2, 2003 at midnight 888-286-8010 or 617-801-6888 for international callers, pass code 87834641.

The conference call also will be broadcast live over the Internet in listen-only mode. For live webcasting, go to: http://www.firstcallevents.com/service/ajwz389851464gf12.html.

at least 15 minutes prior to the call in order to register, download and install any necessary software. The call will be archived on the above web site until November 23, 2003.

For more information:
Tom Swain
GSI Lumonics Inc.
978-439-5511
Ext. 6102

Certain statements in this news release may constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 (the Reform Act), Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities and Exchange Act of 1934. These forward-looking statements may relate to anticipated financial performance, management’s plans and objectives for future operations, business

prospects, outcome of regulatory proceedings, market conditions, tax issues and other matters. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “anticipate,’’ “believe,’’ “estimate,’’ “expect,’’ “intend,’’ “plan’’ and “objective’’ and other similar expressions. Readers should not place undue reliance on the forward-looking statements contained in this news release. Such statements are based on management’s beliefs and assumptions and on information currently available to management and are subject to risks, uncertainties and changes in condition, significance, value and effect. Other risks include the fact that the Company’s sales have been and are expected to continue to be dependent upon customer capital equipment expenditures, which are, in turn, affected by business cycles in the markets served by those customers. Other factors include volatility in the semiconductor industry, the risk of order delays and cancellations, the risk of delays by customers in introducing their new products and market acceptance of products incorporating subsystems supplied by the Company, similar risks to the Company of delays in its new products, our ability to continue to reduce costs and capital expenditures, our ability to focus R&D investment and other risks detailed in reports and documents filed by the Company with the United States Securities and Exchange Commission and with securities regulatory authorities in Canada. Such risks, uncertainties and changes in condition, significance, value and effect, many of which are beyond the Company’s control, could cause the Company’s actual results and other future events to differ materially from those anticipated. The Company does not, however, assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

GSI LUMONICS INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(U.S. GAAP and in thousands of U.S. dollars, except share amounts)

					September 26,			December 31,
					2003			2002
				ASSETS
Current
	Cash and cash equivalents				$	74,049		$	83,633
	Short-term investments					54,186			28,999
	Accounts receivable, less allowance of $2,600 (December 31, 2002 - $2,681)					41,951			33,793
	Income taxes receivable					10,054			8,431
	Inventories					38,404			39,671
	Deferred tax assets					9,327			9,763
	Other current assets					5,626			4,448
		Total current assets				233,597			208,738
Property, plant and equipment, net of accumulated depreciation of $21,563 (December 31, 2002 - $21,453)						32,755			26,675
Deferred tax assets						7,353			7,443
Other assets						8,661			3,360
Long-term investments						3,729			37,405
Intangible assets, net of amortization of $20,296 (December 31, 2002 - $16,217)						12,063			13,467
					$	298,158		$	297,088
			LIABILITIES AND STOCKHOLDERS’ EQUITY
Current
	Accounts payable				$	14,678		$	9,235
	Accrued compensation and benefits					5,797			6,523
	Other accrued expenses					18,624			20,845
		Total current liabilities				39,099			36,603
Deferred compensation						2,141			2,129
Accrued minimum pension liability						4,032			3,875
		Total liabilities				45,272			42,607
Commitments and contingencies
Stockholders’ equity
	Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 40,880,399 (December 31, 2002 - 40,785,922)					305,220			304,713
	Additional paid-in capital					2,592			2,592
	Accumulated deficit					(45,940	)		(41,270	)
	Accumulated other comprehensive loss					(8,986	)		(11,554	)
		Total stockholders’ equity				252,886			254,481
					$	298,158		$	297,088

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

				Three months ended						Nine months ended
				September 26,			September 27,			September 26,			September 27,
				2003			2002			2003			2002
Sales				$	44,881		$	37,419		$	130,682		$	113,971
Cost of goods sold					28,237			26,109			83,659			78,185
Gross profit					16,644			11,310			47,023			35,786
Operating expenses:
	Research and development				3,297			5,242			10,454			16,116
	Selling, general and administrative				11,021			14,237			35,735			42,891
	Amortization of purchased intangibles				1,408			1,278			4,055			3,835
	Restructuring				264			—			2,451			4,152
	Other				—			(1,250	)		841			(1,250	)
			Total operating expenses		15,990			19,507			53,536			65,744
Income (loss) from operations					654			(8,197	)		(6,513	)		(29,958	)
	Other income (expense)				—			—			64			(203	)
	Interest income				293			508			1,601			1,707
	Interest expense				—			(188	)		(129	)		(541	)
	Foreign exchange transaction gains (losses)				(75	)		609			629			(275	)
Income (loss) before income taxes					872			(7,268	)		(4,348	)		(29,270	)
Income tax provision (benefit)					322			(1,853	)		322			(6,123	)
Net income (loss)				$	550		$	(5,415	)	$	(4,670	)	$	(23,147	)
Net income (loss) per common share:
		Basic		$	0.01		$	(0.13	)	$	(0.11	)	$	(0.57	)
		Diluted		$	0.01		$	(0.13	)	$	(0.11	)	$	(0.57	)
Weighted average common shares outstanding (000’s)					40,857			40,699			40,817			40,641
Weighted average common shares outstanding and dilutive potential common shares (000’s)					41,343			40,699			40,817			40,641

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

		Three months ended						Nine months ended
		September 26,			September 27,			September 26,			September 27,
		2003			2002			2003			2002
Cash flows from operating activities:
Net income (loss)		$	550		$	(5,415	)	$	(4,670	)	$	(23,147	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
	Loss on disposal of assets		—			—			421			62
	Reduction of long-lived assets		—			—			—			1,130
	Depreciation and amortization		2,536			2,724			7,464			8,326
	Unrealized loss (gain) on derivatives		166			—			179			—
	Deferred income taxes		—			(1,413	)		—			879
Changes in current assets and liabilities:
	Accounts receivable		988			(3,098	)		(3,752	)		5,778
	Inventories		1,923			5,592			6,537			7,037
	Other current assets		(336	)		47			(1,029	)		605
	Accounts payable, accrued expenses, and taxes (receivable) payable		1,970			(4,117	)		2,784			1,469
Cash provided by (used in) operating activities			7,797			(5,680	)		7,934			2,139
Cash flows from investing activities:
	Acquisitions of businesses		601			—			(8,952	)		—
	Purchase of leased buildings		—			—			(18,925	)		—
	Sale of assets		—			—			847			—
	Other additions to property, plant and equipment, net		(910	)		(444	)		(1,814	)		(2,431	)
	Maturities of short-term and long-term investments		20,562			29,817			162,890			88,691
	Purchases of short-term and long-term investments		(41,651	)		(47,311	)		(154,055	)		(125,656	)
	Decrease in other assets		209			75			358			2,150
Cash used in investing activities			(21,189	)		(17,863	)		(19,651	)		(37,246	)
Cash flows from financing activities:
	Proceeds (payments) of bank indebtedness		—			726			—			3,543
	Repayment of long-term debt		—			(3,000	)		—			(3,000	)
	Issue of share capital		393			82			507			802
Cash provided by (used in) financing activities			393			(2,192	)		507			1,345
Effect of exchange rates on cash and cash equivalents			1,298			(488	)		1,626			67
Decrease in cash and cash equivalents			(11,701	)		(26,223	)		(9,584	)		(33,695	)
Cash and cash equivalents, beginning of period			85,750			95,487			83,633			102,959
Cash and cash equivalents, end of period		$	74,049		$	69,264		$	74,049		$	69,264

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

		Three months ended						Nine months ended
		September 26,			September 27,			September 26,			September 27,
		2003			2002			2003			2002
Sales
Components		$	17,992		$	16,740		$	52,258		$	52,525
Laser Group			8,470			6,001			24,112			17,135
Laser Systems			19,987			15,140			56,902			45,137
Intersegment sales elimination			(1,568	)		(462	)		(2,590	)		(826	)
Total		$	44,881		$	37,419		$	130,682		$	113,971
Segment income (loss) from operations
Components		$	3,450		$	4,439		$	11,916		$	12,869
Laser Group			507			(1,428	)		118			(4,521	)
Laser Systems			2,729			(7,059	)		2,902			(16,352	)
Total by segment			6,686			(4,048	)		14,936			(8,004	)
Unallocated amounts:
	Corporate expenses		4,360			4,121			14,102			15,217
	Amortization of purchased intangibles		1,408			1,278			4,055			3,835
	Restructuring		264			—			2,451			4,152
	Other		—			(1,250	)		841			(1,250	)
Income (loss) from operations		$	654		$	(8,197	)	$	(6,513	)	$	(29,958	)

GSI LUMONICS INC.
Consolidated Sales Analysis By Geographic Region (unaudited)
(millions of U.S. dollars)

Revenues are attributed to geographic areas on the basis of the bill to customer location. Not infrequently, equipment is sold to large international companies, which may be headquartered in Asia-Pacific, but the sales of our systems are billed and shipped to locations in the United States. These sales are therefore reflected in United States totals in the table below.

		Three months ended
		September 26, 2003					September 27, 2002
(in millions)		Sales		% of Total			Sales		% of Total
North America		$	19.5		43	%	$	23.6		63	%
Latin and South America			0		0			0.2		1
Europe			8.6		19			6.0		16
Japan			7.9		18			4.6		12
Asia-Pacific, other			8.9		20			3.0		8
	Total	$	44.9		100	%	$	37.4		100	%

		Nine months ended
		September 26, 2003					September 27, 2002
(in millions)		Sales		% of Total			Sales		% of Total
North America		$	68.3		52	%	$	74.6		65	%
Latin and South America			0.7		1			0.6		1
Europe			19.6		15			18.4		16
Japan			25.0		19			11.1		10
Asia-Pacific, other			17.1		13			9.3		8
	Total	$	130.7		100	%	$	114.0		100	%

-----END PRIVACY-ENHANCED MESSAGE-----