10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 2, 2015

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-35083

GSI Group Inc.

(Exact name of registrant as specified in its charter)

New Brunswick, Canada	98-0110412
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
125 Middlesex Turnpike Bedford, Massachusetts, USA	01730
(Address of principal executive offices)	(Zip Code)

(781) 266-5700

(Registrant’s telephone number, including area code)

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 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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

As of October 30, 2015, there were 34,387,509 of the Registrant’s common shares, no par value, issued and outstanding.

GSI GROUP INC.

TABLE OF CONTENTS

Item No.		Page No.
PART I — FINANCIAL INFORMATION		1
ITEM 1.	FINANCIAL STATEMENTS	1
	CONSOLIDATED BALANCE SHEETS (unaudited)	1
	CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)	2
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)	3
	CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)	4
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 4.	CONTROLS AND PROCEDURES	31
PART II — OTHER INFORMATION		32
ITEM 1.	LEGAL PROCEEDINGS	32
ITEM 1A.	RISK FACTORS	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	32
ITEM 4.	MINE SAFETY DISCLOSURES	32
ITEM 5.	OTHER INFORMATION	32
ITEM 6.	EXHIBITS	33
SIGNATURES		34
EXHIBIT INDEX		35

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

GSI GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars or shares)

(Unaudited)

	October 2,			December 31,
	2015			2014
ASSETS
Current Assets
Cash and cash equivalents	$	80,089		$	51,146
Accounts receivable, net of allowance of $311 and $282, respectively		56,050			51,494
Inventories		61,268			62,943
Income taxes receivable		5,662			5,906
Deferred tax assets		3,820			5,971
Prepaid expenses and other current assets		5,361			5,081
Assets of discontinued operations		—			631
Total current assets		212,250			183,172
Property, plant and equipment, net		37,596			40,088
Deferred tax assets		1,293			2,912
Other assets		12,163			12,134
Intangible assets, net		64,240			67,242
Goodwill		98,358			90,746
Total assets	$	425,900		$	396,294
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt	$	7,374		$	7,345
Accounts payable		27,507			25,592
Income taxes payable		3,009			1,189
Deferred tax liabilities		202			208
Accrued expenses and other current liabilities		21,894			19,401
Liabilities of discontinued operations		—			324
Total current liabilities		59,986			54,059
Long-term debt		100,084			105,030
Deferred tax liabilities		2,509			35
Income taxes payable		5,861			7,097
Other liabilities		17,477			18,819
Total liabilities		185,917			185,040
Commitments and Contingencies (Note 13)
Stockholders’ Equity:
Common shares, no par value; Authorized shares: unlimited;    Issued and outstanding: 34,341 and 34,219, respectively		423,856			423,856
Additional paid-in capital		29,471			28,590
Accumulated deficit		(195,653	)		(225,165	)
Accumulated other comprehensive loss		(17,691	)		(16,456	)
Total GSI Group Inc. stockholders’ equity		239,983			210,825
Noncontrolling interest		—			429
Total stockholders’ equity		239,983			211,254
Total liabilities and stockholders’ equity	$	425,900		$	396,294

The accompanying notes are an integral part of these consolidated financial statements.

1

GSI GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars or shares, except per share amounts)

(Unaudited)

	ThreeMonths Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2015			2014			2015			2014
Revenue	$	92,271		$	94,656		$	283,379		$	270,694
Cost of revenue		52,361			54,973			162,118			160,255
Gross profit		39,910			39,683			121,261			110,439
Operating expenses:
Research and development and engineering		7,693			7,735			23,748			21,117
Selling, general and administrative		19,979			21,512			62,969			62,540
Amortization of purchased intangible assets		1,852			2,843			5,593			7,463
Restructuring, acquisition and divestiture related costs		1,379			771			4,232			1,949
Total operating expenses		30,903			32,861			96,542			93,069
Operating income from continuing operations		9,007			6,822			24,719			17,370
Interest income (expense), net		(1,248	)		(1,453	)		(4,020	)		(3,665	)
Foreign exchange transaction gains (losses), net		383			1,030			(2,253	)		950
Other income (expense), net		878			733			21,641			1,733
Income from continuing operations before income taxes		9,020			7,132			40,087			16,388
Income tax provision		2,452			2,013			10,562			5,007
Income from continuing operations		6,568			5,119			29,525			11,381
Loss from discontinued operations, net of tax		—			(273	)		(13	)		(4,817	)
Loss on disposal of discontinued operations, net of tax		—			(321	)		—			(321	)
Consolidated net income		6,568			4,525			29,512			6,243
Less: Net income attributable to noncontrolling interest		—			—			—			(10	)
Net income attributable to GSI Group Inc.	$	6,568		$	4,525		$	29,512		$	6,233
Earnings per common share from continuing operations:
Basic	$	0.19		$	0.15		$	0.85		$	0.33
Diluted	$	0.19		$	0.15		$	0.84		$	0.33
Loss per common share from discontinued operations:
Basic	$	—		$	(0.02	)	$	(0.00	)	$	(0.15	)
Diluted	$	—		$	(0.02	)	$	(0.00	)	$	(0.15	)
Earnings per common share attributable to GSI Group Inc.:
Basic	$	0.19		$	0.13		$	0.85		$	0.18
Diluted	$	0.19		$	0.13		$	0.84		$	0.18
Weighted average common shares outstanding—basic		34,599			34,389			34,578			34,333
Weighted average common shares outstanding—diluted		35,055			34,793			35,027			34,725

The accompanying notes are an integral part of these consolidated financial statements.

2

GSI GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands of U.S. dollars)

(Unaudited)

	ThreeMonths Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2015			2014			2015			2014
Consolidated net income	$	6,568		$	4,525		$	29,512		$	6,243
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax (1)		(1,624	)		(3,845	)		(2,172	)		(2,902	)
Pension liability adjustments, net of tax (2)		517			435			937			449
Total other comprehensive income (loss)		(1,107	)		(3,410	)		(1,235	)		(2,453	)
Total consolidated comprehensive income (loss)		5,461			1,115			28,277			3,790
Less: Comprehensive income attributable to    noncontrolling interest		—			—			—			(10	)
Comprehensive income (loss) attributable to GSI Group Inc.	$	5,461		$	1,115		$	28,277		$	3,780

⁽¹⁾ The tax effect on this component of comprehensive income was $0.2 million for the three and nine months ended October 2, 2015. The impact was $0.4 million and $0.2 million for the three and nine months ended September 26, 2014, respectively.

⁽²⁾ The tax effect on this component of comprehensive income was not material for all periods presented. See Note 4 for the total amount of pension liability adjustments reclassified out of accumulated other comprehensive income (loss).

The accompanying notes are an integral part of these consolidated financial statements.

3

GSI GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

	Nine Months Ended
	October 2,			September 26,
	2015			2014
Cash flows from operating activities:
Consolidated net income	$	29,512		$	6,243
Less: Loss from discontinued operations, net of tax		13			5,138
Income from continuing operations		29,525			11,381
Adjustments to reconcile income from continuing operations to    net cash provided by operating activities of continuing operations:
Depreciation and amortization		14,088			17,495
Provision for inventory excess and obsolescence		1,303			704
Share-based compensation		3,494			3,412
Deferred income taxes		3,782			(1,653	)
Earnings from equity-method investment		(2,007	)		(1,707	)
Gain on disposal of business		(19,633	)		—
Non-cash restructuring and acquisition related charges		511			944
Other		897			1,478
Changes in assets and liabilities which (used) provided cash, excluding    effects from businesses purchased or classified as discontinued operations:
Accounts receivable		(6,996	)		(835	)
Inventories		(5,352	)		116
Income taxes receivable, prepaid expenses and other current assets		1,244			911
Accounts payable, income taxes payable, accrued expenses    and other current liabilities		6,602			1,706
Other non-current assets and liabilities		(1,982	)		463
Cash provided by operating activities of continuing operations		25,476			34,415
Cash used in operating activities of discontinued operations		(13	)		(761	)
Cash provided by operating activities		25,463			33,654
Cash flows from investing activities:
Purchases of property, plant and equipment		(4,111	)		(3,783	)
Acquisition of businesses, net of cash acquired and escrow recovery		(13,048	)		(88,238	)
Proceeds from sale of business, net of transaction costs		29,570			—
Proceeds from the sale of property, plant and equipment		123			57
Cash provided by (used in) investing activities of continuing operations		12,534			(91,964	)
Cash provided by investing activities of discontinued operations		—			4,344
Cash provided by (used in) investing activities		12,534			(87,620	)
Cash flows from financing activities:
Borrowings under revolving credit facility		13,000			77,000
Repayments of long-term debt and revolving credit facility		(18,625	)		(26,625	)
Payments for debt issuance costs		—			(712	)
Payments of withholding taxes from stock-based awards		(1,431	)		(1,605	)
Capital lease payments		(414	)		(938	)
Repurchase of common stock		(997	)		—
Other financing activities		23			471
Cash provided by (used in) financing activities of continuing operations		(8,444	)		47,591
Cash provided by financing activities of discontinued operations		—			—
Cash provided by (used in) financing activities		(8,444	)		47,591
Effect of exchange rates on cash and cash equivalents		(610	)		(1,056	)
Increase (decrease) in cash and cash equivalents		28,943			(7,431	)
Cash and cash equivalents, beginning of period		51,146			60,980
Cash and cash equivalents, end of period	$	80,089		$	53,549
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,939		$	2,644
Cash paid for income taxes	$	6,071		$	3,944
Income tax refunds received	$	63		$	150

The accompanying notes are an integral part of these consolidated financial statements.

4

GSI GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF OCTOBER 2, 2015

(Unaudited)

1. Basis of Presentation

GSI Group Inc. and its subsidiaries (collectively referred to as the “Company”, “we”, “us”, “our”) design, develop, manufacture and sell precision photonic and motion control components and subsystems to Original Equipment Manufacturers (“OEMs”) in the medical and advanced industrial markets. The Company is a leader in highly engineered enabling technologies, including CO2 laser sources, laser scanning and beam delivery products, optical data collection and machine vision technologies, medical visualization and informatics solutions, and precision motion control products. The Company specializes in collaborating with OEM customers to adapt its component and subsystem technologies to deliver highly differentiated performance in their applications.

The accompanying unaudited interim consolidated financial statements have been prepared in U.S. dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim financial statements. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements and notes included in this report should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, these interim consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim periods are not necessarily indicative of results to be expected for the full year or for any future periods.

During the second quarter ended July 3, 2015, the Company deconsolidated its 50% owned joint venture, Excel Laser Technology Private Limited (the “India JV”), as a result of an agreement executed in June 2015 to sell 100% of the Company’s interest in the India JV. The accounts of the India JV were previously included in discontinued operations in the consolidated financial statements.

The Company owns 41% of Laser Quantum Ltd. (“Laser Quantum”), a privately held company located in the United Kingdom. The Company records the results of this entity under the equity method as it does not have a controlling interest in the entity.

The Company’s unaudited interim financial statements are prepared on a quarterly basis ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates based on historical experience, current conditions and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which they are deemed to be necessary. Actual results could differ significantly from those estimates.

Recent Accounting Pronouncements

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 provides guidance on determining when disposals can be presented as discontinued operations. ASU 2014-08 requires that only disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results should be presented as discontinued operations. A strategic shift may include a disposal of a major line of business, a major equity method investment or a major part of an entity. Additionally, ASU 2014-08 requires expanded disclosures regarding discontinued operations. ASU 2014-08 is effective prospectively for reporting periods beginning after December 15, 2014. The Company adopted this pronouncement in January 2015.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires debt issuance related costs to be presented in the balance sheet as a direct reduction to the carrying amount of the associated debt

5

liability, consistent with the presentation of a debt discount. The Company adopted the provisions of ASU 2015-03 retrospectively as of the fiscal quarter ended October 2, 2015. Prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2014, $0.2 million of debt issuance costs were reclassified from prepaid expenses and other current assets to current portion of long-term debt and $2.5 million was reclassified from other long-term assets to long-term debt in the consolidated balance sheet. Other than these reclassifications, the adoption of ASU 2015-03 did not have an impact on the Company’s consolidated financial statements.

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 will be effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption permitted. Upon adoption, an entity may apply the new guidance either retrospectively or prospectively to all arrangements entered into or materially modified after the effective date. The Company is currently evaluating the impact of ASU 2015-05 on the Company’s consolidated financial statements.

Business Combinations

In September 2015, the FASB issued ASU 2015-16, “Business Combinations,” which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment had been recognized at the acquisition date. ASU 2015-16 will be effective prospectively for reporting periods beginning after December 15, 2015. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition,” and requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2016. Early adoption is not permitted. Upon adoption, an entity may apply the new guidance either retrospectively to each prior reporting period presented or retrospectively only to customer contracts not yet completed as of the date of adoption with the cumulative effect of initially applying the standard recognized in beginning retained earnings at the date of the initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers – Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 by one year, with the option of early adoption as of the original effective date. The amendment in ASU 2015-14 will result in ASU 2014-09 being effective for annual and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements.

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)," which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. ASU 2014-15 will be effective for annual reporting periods ending after December 15, 2016. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have any impact on the Company’s consolidated financial statements.

2. Business Combinations

On February 19, 2015, the Company acquired 100% of the outstanding stock of Applimotion Inc. (“Applimotion”), a Loomis, California based provider of advanced precision motor and motion control technology to OEM customers in the medical and advanced industrial markets, for a total purchase price of $14.0 million, net of working capital adjustments. The purchase price includes $13.0 million cash paid for the acquisition and $1.0 million estimated fair value of future contingent considerations payable upon the achievement of certain revenue targets for fiscal years 2015 to 2017. The undiscounted range of possible contingent considerations is zero to $4.0 million. The Company expects that the addition of Applimotion will enable the Company to offer a broader range of motion control technologies and integrated solutions to customers. The Company recognized Applimotion acquisition costs of zero

6

and $0.2 million during the three and nine months ended October 2, 2015, respectively. Acquisition-related costs are included in restructuring, acquisition and divestiture related costs in the consolidated statements of operations.

The acquisition of Applimotion has been accounted for as a business combination. The allocation of the purchase price is based upon the estimated fair value of assets acquired and liabilities assumed as of the acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of Applimotion and the Company. The process for estimating the fair values of identifiable intangible assets and the contingent consideration liability requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

The total purchase price was allocated as follows (in thousands):

	PurchasePrice
	Allocation
Cash	$	317
Accounts receivable		1,821
Inventory		2,041
Prepaid expenses and other current assets		89
Property and equipment		308
Intangible assets		6,071
Goodwill		7,612
Total assets acquired		18,259
Accounts payable		964
Other liabilities		717
Deferred tax liabilities		2,248
Total liabilities assumed		3,929
Total assets acquired and liabilities assumed		14,330
Less: cash acquired		317
Total purchase price, net of cash acquired		14,013
Less: contingent consideration		965
Net cash used for acquisition of business	$	13,048

The fair value of intangible assets is comprised of the following (dollar amounts in thousands):

			Weighted Average
	Estimated Fair		Amortization
	Value		Period
Developed technology	$	2,684	10 years
Customer relationships		2,066	10 years
Non-compete covenant		684	4 years
Backlog		637	1 year
Total	$	6,071

The purchase price allocation resulted in $7.6 million of goodwill and $6.1 million of identifiable intangible assets, none of which is expected to be deductible for tax purposes. Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized. The goodwill recorded represents the anticipated incremental value of future cash flow potential attributable to: (i) Applimotion’s ability to grow their business with existing and new customers, (ii) the potential to realize cost improvements due to scale and more efficient operations, (iii) the opportunity to serve customers with integrated assemblies that feature products from both Applimotion and the Company and, (iv) the potential to sell the Company’s products into Applimotion’s customer base.

The results of the Applimotion acquisition were included in the Company’s results of operations beginning on February 19, 2015. The pro forma financial information reflecting the operating results of Applimotion, as if it had been acquired on January 1,

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2014, is not presented herein as it would not differ materially from the operating results of the Company as reported for 2014. Applimotion is included in the Company’s Precision Motion reportable segment.

3. Discontinued Operations and Divestitures

In June 2015, the Company finalized an agreement to divest its 50% owned joint venture, the India JV, and recorded a pre-tax loss of less than $0.1 million in operating loss from discontinued operations, net of tax during the nine months ended October 2, 2015. All assets, liabilities, accumulated other comprehensive income and non-controlling interest of the India JV were derecognized as of the date of the agreement.  

On April 15, 2015, the Company completed the sale of certain assets and liabilities of its JK Lasers business, previously included in the Laser Products reportable segment, for approximately $29.6 million in cash, net of the final working capital adjustments and transaction costs. During the nine months ended October 2, 2015, the Company recognized a pre-tax gain on sale of $19.6 million in other income (expense), net on the consolidated statement of operations. The JK Lasers business divestiture does not qualify for discontinued operations accounting treatment.

In July 2014, the Company completed the sale of certain assets and liabilities of its Scientific Lasers business for approximately $6.5 million in cash, net of the final working capital adjustments.  In accordance with the purchase and sale agreement, $1.5 million of the sales proceeds is held in escrow until January 2016. The $1.5 million escrow is included in prepaid expenses and other current assets on the balance sheet as of October 2, 2015 and other long-term assets as of December 31, 2014.

Assets and liabilities of discontinued operations as of December 31, 2014 included the balances of the India JV. There were no assets and liabilities of discontinued operations as of October 2, 2015. The major components of the assets and liabilities of discontinued operations as of December 31, 2014, respectively, were as follows (in thousands):

	December 31,
	2014
Accounts receivable, net	$	95
Inventories		161
Prepaid and other current assets		8
Other assets		367
Assets of discontinued operations	$	631
Accounts payable	$	16
Accrued expenses and other current liabilities		74
Other liabilities		234
Liabilities of discontinued operations	$	324

The following table presents the operating results which are reported as discontinued operations in the Company’s consolidated statements of operations (in thousands):

	ThreeMonths Ended					Nine Months Ended
	October 2,		September 26,			October 2,			September 26,
	2015		2014			2015			2014
Revenue from discontinued operations	$	—	$	225		$	—		$	10,512
Operating loss from discontinued operations, before income tax	$	—	$	(1,256	)	$	(13	)	$	(6,243	)
Operating loss from discontinued operations, net of tax	$	—	$	(273	)	$	(13	)	$	(4,817	)
Loss on disposal of discontinued operations, net of tax	$	—	$	(321	)	$	—		$	(321	)

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4. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) was as follows (in thousands):

	Total accumulated
	other			Foreign currency
	comprehensive			translation			Pension
	income (loss)			adjustments			liability
Balance at December 31, 2014	$	(16,456	)	$	(5,615	)	$	(10,841	)
Other comprehensive income (loss)		(2,223	)		(2,506	)		283
Amounts reclassified from other comprehensive income (loss) (1)		988			334			654
Balance at October 2, 2015	$	(17,691	)	$	(7,787	)	$	(9,904	)

(1) The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses and loss from discontinued operations, net of tax in the consolidated statements of operations.

5. Earnings per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. For diluted earnings per common share, the denominator also includes the dilutive effect of outstanding restricted stock units determined using the treasury stock method. Dilutive effects of contingently issuable shares are included in the weighted average dilutive share calculation when the contingencies have been resolved. For periods in which net losses are generated, the dilutive potential common shares are excluded from the calculation of diluted earnings per share as the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share amounts):

	ThreeMonths Ended					Nine Months Ended
	October 2,		September 26,			October 2,			September 26,
	2015		2014			2015			2014
Numerators:
Income from continuing operations	$	6,568	$	5,119		$	29,525		$	11,381
Loss from discontinued operations		—		(594	)		(13	)		(5,138	)
Less: Income attributable to noncontrolling interest		—		—			—			(10	)
Loss from discontinued operations attributable to GSI Group Inc.		—		(594	)		(13	)		(5,148	)
Net income attributable to GSI Group Inc.	$	6,568	$	4,525		$	29,512		$	6,233
Denominators:
Weighted average common shares outstanding— basic		34,599		34,389			34,578			34,333
Dilutive potential common shares		456		404			449			392
Weighted average common shares outstanding— diluted		35,055		34,793			35,027			34,725
Antidilutive common shares excluded from above		—		—			—			29
Basic Earnings (Loss) per Common Share:
From continuing operations	$	0.19	$	0.15		$	0.85		$	0.33
From discontinued operations	$	—	$	(0.02	)	$	(0.00	)	$	(0.15	)
Basic earnings per share attributable to GSI Group Inc.	$	0.19	$	0.13		$	0.85		$	0.18
Diluted Earnings (Loss) per Common Share:
From continuing operations	$	0.19	$	0.15		$	0.84		$	0.33
From discontinued operations	$	—	$	(0.02	)	$	(0.00	)	$	(0.15	)
Diluted earnings per share attributable to GSI Group Inc.	$	0.19	$	0.13		$	0.84		$	0.18

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Common Stock Repurchases

In October 2013, the Company’s Board of Directors authorized a share repurchase plan under which the Company may repurchase outstanding shares of the Company’s common stock up to an aggregate amount of $10.0 million. The shares may be repurchased from time to time, at the Company’s discretion, based on ongoing assessment of the capital needs of the business, the market price of the Company’s common stock, and general market conditions. Shares may also be repurchased through an accelerated stock purchase agreement, on the open market or in privately negotiated transactions in accordance with applicable federal securities laws. Repurchases may be made under certain SEC regulations, which would permit common stock to be purchased when the Company would otherwise be prohibited from doing so under insider trading laws. The share repurchase plan does not obligate the Company to acquire any particular amount of common stock. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time. As of December 31, 2014, the Company had cumulatively repurchased 50 thousand shares of its common stock for an aggregate amount of $0.5 million. During the third quarter of 2015, the Company repurchased 77 thousand shares in the open market for an aggregate purchase price of $1.0 million at an average price of $13.03 per share.

6. Fair Value Measurements

ASC 820, “Fair Value Measurements,” establishes a fair value hierarchy based on the following three levels of inputs:

· Level 1: Quoted prices for identical assets or liabilities in active markets which the Company can access.

· Level 2: Observable inputs other than those described in Level 1.

· Level 3: Unobservable inputs.

The Company’s cash equivalents are investments in money market accounts, which represent the only asset the Company measures at fair value on a recurring basis. The Company determines the fair value of our cash equivalents using a market approach based on quoted prices in active markets which is classified as Level 1. The contingent consideration is classified as Level 3 as the fair value is based on unobservable inputs. The fair values of cash, accounts receivable, income taxes receivable, accounts payable, income taxes payable, accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

The following table summarizes the fair values of our financial assets and liabilities as of October 2, 2015 (in thousands):

			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	521	$	521	$	—	$	—
Liabilities
Contingent consideration	$	965	$	—	$	—	$	965

The following table summarizes the fair values of our financial assets as of December 31, 2014 (in thousands):

			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	2,255	$	2,255	$	—	$	—

Contingent consideration relates to the Company’s acquisition of Applimotion on February 19, 2015. The former shareholders of Applimotion are eligible to receive contingent consideration based on the achievement of certain revenue targets for fiscal years 2015 to 2017. If such targets are achieved, the contingent consideration will be payable in cash in two installments in 2017 and 2018, respectively. The estimated fair value of the contingent consideration was determined based on the Monte Carlo valuation method and has been recorded as part of the purchase price as of the acquisition date. Subsequent changes in the estimated fair value of this contingent liability will be recorded in the consolidated statement of operations as acquisition related costs until the liability is fully

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settled. There have been no changes to the fair value of the contingent consideration since the acquisition date. The estimated fair value of the contingent consideration is reported as a long-term liability in the consolidated balance sheet.

See Note 9 to Consolidated Financial Statements for a discussion of the estimated fair value of the Company’s outstanding debt.

7. Goodwill and Intangible Assets

Goodwill

Goodwill is recorded when the consideration for a business combination exceeds the fair value of net tangible and identifiable intangible assets acquired. The Company tests its goodwill balances annually for impairment as of the beginning of the second quarter or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The Company performed its annual goodwill impairment test as of the beginning of the second quarter of 2015 and noted no impairment of goodwill.

The following table summarizes changes in goodwill during the nine months ended October 2, 2015 (in thousands):

Balance at beginning of the period	$	90,746
Goodwill acquired from the Applimotion acquisition		7,612
Balance at end of the period	$	98,358

Goodwill acquired from the Applimotion acquisition is reflected in the Precision Motion segment. Goodwill by reportable segment as of October 2, 2015 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	33,903		$	249,587
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	16,857		$	98,358

Goodwill by reportable segment as of December 31, 2014 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	26,291		$	241,975
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	9,245		$	90,746

Intangible Assets

Intangible assets as of October 2, 2015 and December 31, 2014, respectively, are summarized as follows (in thousands):

	October 2, 2015							December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		GrossCarrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and acquired technologies	$	80,695	$	(65,236	)	$	15,459	$	78,253	$	(62,010	)	$	16,243
Customer relationships		65,030		(35,581	)		29,449		63,029		(31,531	)		31,498
Customer backlog		2,447		(2,265	)		182		1,810		(1,641	)		169
Non-compete covenant		2,514		(747	)		1,767		1,830		(366	)		1,464
Trademarks and trade names		10,160		(5,804	)		4,356		10,205		(5,364	)		4,841
Amortizable intangible assets		160,846		(109,633	)		51,213		155,127		(100,912	)		54,215
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	173,873	$	(109,633	)	$	64,240	$	168,154	$	(100,912	)	$	67,242

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All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining useful life. Amortization expense for customer relationships and definite-lived trademarks, trade names and other intangiblesis included in operating expenses in the accompanying consolidated statements of operations. Amortization expense for patents and acquired technologies is included in cost of revenue in the accompanying consolidated statements of operations. Amortization expense reported in the consolidated statements of operations is summarized as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Amortization expense – cost of revenue	$	1,175	$	1,614	$	3,468	$	4,529
Amortization expense – operating expenses		1,852		2,843		5,593		7,463
Total amortization expense	$	3,027	$	4,457	$	9,061	$	11,992

Estimated amortization expense for each of the five succeeding years and thereafter as of October 2, 2015 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2015 (remainder of year)	$	1,175	$	1,851	$	3,026
2016		3,550		7,256		10,806
2017		3,229		6,634		9,863
2018		1,754		6,000		7,754
2019		1,487		4,008		5,495
Thereafter		4,264		10,005		14,269
Total	$	15,459	$	35,754	$	51,213

8. Supplementary Balance Sheet Information

The following tables provide the details of selected balance sheet items as of the periods indicated (in thousands):

Inventories

	October 2, 2015		December 31, 2014
Raw materials	$	39,005	$	38,934
Work-in-process		10,624		9,899
Finished goods		9,673		11,945
Demo and consigned inventory		1,966		2,165
Total inventories	$	61,268	$	62,943

Accrued Expenses and Other Current Liabilities

	October 2, 2015		December 31, 2014
Accrued compensation and benefits	$	8,602	$	7,741
Accrued warranty		3,529		3,044
Accrued professional services		1,332		1,827
Other		8,431		6,789
Total	$	21,894	$	19,401

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Accrued Warranty

	Nine Months Ended
	October 2, 2015			September 26, 2014
Balance at beginning of the period	$	3,044		$	3,315
Provision charged to cost of revenue		1,878			1,361
Acquisition related warranty accrual		94			90
Use of provision		(1,084	)		(1,529	)
Divestiture of JK Lasers		(392	)		—
Foreign currency exchange rate changes		(11	)		(14	)
Balance at end of period	$	3,529		$	3,223

Other Long Term Liabilities

	October 2, 2015		December 31, 2014
Capital lease obligations	$	9,100	$	9,507
Accrued pension liabilities		4,805		6,037
Other		3,572		3,275
Total	$	17,477	$	18,819

9. Debt

Debt consisted of the following (in thousands):

	October 2, 2015			December 31, 2014
Senior Credit Facilities – term loan	$	7,500		$	7,500
Less: unamortized debt issuance costs		(126	)		(155	)
Total current portion of long-term debt	$	7,374		$	7,345
Senior Credit Facilities – term loan	$	21,875		$	27,500
Senior Credit Facilities – revolving credit facility		80,000			80,000
Less: unamortized debt issuance costs		(1,791	)		(2,470	)
Total long-term debt	$	100,084		$	105,030
Total Senior Credit Facilities	$	107,458		$	112,375

Senior Credit Facilities

The Company’s amended and restated senior secured credit agreement (the “Amended and Restated Credit Agreement”) provides for a $50.0 million, 5-year term loan facility due in quarterly installments of $1.9 million beginning in January 2013 and a $175.0 million, 5-year revolving credit facility (collectively, the “Senior Credit Facilities”) that matures in December 2017. Quarterly installments due in the next twelve months under the term loan amount to $7.5 million and are classified as a current liability in the consolidated balance sheet. The Company adopted the provisions of ASU 2015-03 during the fiscal quarter ended October 2, 2015. The adoption of ASU 2015-03 resulted in the reclassification of unamortized debt issuance costs related to the Senior Credit Facilities from other assets to debt in the consolidated balance sheet.

The Company is required to satisfy certain financial and non-financial covenants under the Amended and Restated Credit Agreement. The Company was in compliance with these covenants as of October 2, 2015.

Fair Value of Debt

As of October 2, 2015 and December 31, 2014, the outstanding balance of the Company’s debt approximated its fair value based on current rates available to the Company for debt of the same maturity.

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10. Share-Based Compensation

The table below summarizes activities relating to restricted stock units issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the nine months ended October 2, 2015:

	Restricted Stock Units (In thousands)			Weighted Average Grant Date Fair Value
Unvested at December 31, 2014		749		$	10.80
Granted		305		$	13.34
Vested		(311	)	$	11.01
Forfeited		(42	)	$	11.03
Unvested at October 2, 2015		701		$	11.80
Expected to vest as of October 2, 2015		685

The total fair value of restricted stock units that vested during the nine months ended October 2, 2015, based on the market price of the underlying stock on the date of vesting, was $3.9 million.

The table below summarizes share-based compensation expense recorded in income from continuing operations in the consolidated statements of operations (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015			September 26, 2014
Selling, general and administrative	$	849	$	886	$	3,165		$	3,156
Research and development and engineering		42		49		122			144
Cost of revenue		70		43		207			112
Restructuring, acquisition and divestiture related costs		—		268		(321	)		572
Total share-based compensation expense	$	961	$	1,246	$	3,173		$	3,984

The expense recorded during each of the nine-month periods ended October 2, 2015 and September 26, 2014, respectively, included $0.5 million related to deferred stock units granted to the members of the Company’s Board of Directors, pursuant to the Company’s Amended and Restated 2010 Incentive Plan. The expense associated with the respective deferred stock units was recognized in full on the date of grant, as the deferred stock units were fully vested and non-forfeitable upon grant.

In March 2014, the Company granted restricted stock units in an aggregate of 180,000 shares as employment inducement awards related to an acquisition. These restricted stock units are performance based awards and would vest after two years if certain financial targets and service conditions have been achieved. During the nine months ended October 2, 2015, these financial targets were no longer deemed probable and the cumulative expense was reversed.

11. Income Taxes

The Company determines its estimated annual effective tax rate at the end of each interim period based on full-year forecasted pre-tax income and facts known at that time. The estimated annual effective tax rate is applied to the year-to-date pre-tax income at the end of each interim period. The tax effect of significant unusual items is reflected in the period in which they occur. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 27.0% in the determination of the estimated annual effective tax rate.

The Company’s effective tax rate on income from continuing operations of 27.2% and 26.3%, respectively, for the three and nine month periods ended October 2, 2015 differ from the Canadian statutory rate of 27.0% primarily due to the gain from JK Lasers divestiture, the audit settlement with the U.S. Internal Revenue Service (the “IRS”), mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a full valuation allowance, and the impact of discrete items for the periods. The Company’s effective tax rate on income from continuing operations of 28.2% and 30.6%, respectively, for the three and nine month periods ended September 26, 2014 differ from the Canadian statutory rate of 27.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a valuation allowance which are not benefitted in the income tax provision during the periods, and the impact of discrete items for the periods.

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The Company maintains a valuation allowance on some of its deferred tax assets in certain jurisdictions. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.

In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of releasing the remaining valuation allowance currently in place on its deferred tax assets. A release would be reported as a reduction to income tax expense without any impact on cash flows in the quarter in which it is released.

12. Restructuring, Acquisition and Divestiture Related Costs

The following table summarizes restructuring, acquisition and divestiture related costs in the accompanying consolidated statements of operations (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015			September 26, 2014
2011 restructuring	$	300	$	233	$	953		$	139
2013 restructuring		—		—		—			(66	)
2015 restructuring		—		—		1,484			—
2016 restructuring		751		—		751			—
Total restructuring charges		1,051		233		3,188			73
Acquisition charges		282		26		546			774
Acquisition related incentive compensation		—		512		(612	)		1,102
Divestiture related charges		46		—		1,110			—
Total acquisition and divestiture related charges		328		538		1,044			1,876
Total restructuring, acquisition and divestiture related costs	$	1,379	$	771	$	4,232		$	1,949

2011 Restructuring

In November 2011, the Company announced a strategic initiative (“2011 restructuring”), which aimed to consolidate operations to reduce the Company’s cost structure and improve operational efficiency. As part of this initiative, the Company eliminated facilities through the consolidation of certain manufacturing, sales and distribution facilities and the exit of Semiconductor and Laser Systems businesses. The Company substantially completed the 2011 restructuring program by the end of 2013. Restructuring costs for the three and nine months ended October 2, 2015 included facility costs related to the Company’s vacant Orlando, Florida facility, which the Company owns and was previously occupied by the Laser Systems business. These costs were recorded in the Unallocated Corporate and Shared Services Costs segment.

2015 Restructuring

During the first quarter of 2015, the Company implemented a program to eliminate redundant costs, as a result of acquisition and divestiture activities, to better align our operations to our strategic growth plans, to further integrate our business lines, and as a consequence of our productivity initiatives. During the nine months ended October 2, 2015, the Company incurred restructuring costs of $1.5 million related to the 2015 restructuring plan. Restructuring costs incurred during the nine months ended October 2, 2015 of $0.6 million, $0.5 million, $0.1 million and $0.3 million related to the Laser Products, Vision Technologies, Precision Motion and Unallocated Corporate and Shared Services Costs reportable segments, respectively.

2016 Restructuring

During the third quarter of 2015, the Company initiated a program targeting annualized savings of $4.5 million to $5.5 million after the program is fully executed. The 2016 restructuring program includes consolidating our manufacturing operations to optimize our facility footprint and better utilize resources, and reducing redundant costs due to productivity cost savings and business volume reductions. We expect to incur cash charges of $3.5 million to $4.5 million related to this program, which we anticipate completing

15

during the second quarter of 2016. During the three and nine months ended October 2, 2015, the Company incurred restructuring costs of $0.8 million related to the 2016 restructuring plan. Restructuring costs incurred during the three and nine months ended October 2, 2015 of $0.4 million, $0.1 million and $0.3 million related to the Vision Technologies, Precision Motion and Unallocated Corporate and Shared Services Costs reportable segments, respectively.

Rollforward of Accrued Expenses Related to Restructuring

The following table summarizes the accrual activities, by component, related to the Company’s restructuring plans recorded in the accompanying consolidated balance sheets (in thousands):

	Total			Severance			Facility			Depreciation			Other
Balance at December 31, 2014	$	231		$	102		$	105		$	—		$	24
Restructuring charges		3,188			2,021			139			832			196
Cash payments		(1,742	)		(1,438	)		(222	)		—			(82	)
Non-cash write-offs and other adjustments		(827	)		5			—			(832	)		—
Balance at October 2, 2015	$	850		$	690		$	22		$	—		$	138

13. Commitments and Contingencies

Leases

The Company leases certain equipment and facilities under operating and capital lease agreements. There have been no material changes to the Company’s leases through October 2, 2015 from those discussed in Note 15 to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.   

Purchase Commitments

There have been no material changes to the Company’s purchase commitments from those discussed in Note 15 to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Legal Proceedings

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company does not believe that the outcome of these claims will have a material adverse effect upon its financial condition or results of operations but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect upon its financial condition or results of operations.

Guarantees and Indemnifications

In the normal course of its operations, the Company executes agreements that provide for indemnification and guarantees to counterparties in transactions such as business dispositions, sale of assets, sale of products and operating leases. Additionally, the by-laws of the Company require it to indemnify certain current or former directors, officers, and employees of the Company against expenses incurred by them in connection with each proceeding in which he or she is involved as a result of serving or having served in certain capacities. Indemnification is not available with respect to a proceeding as to which it has been adjudicated that the person did not act in good faith in the reasonable belief that the action was in the best interests of the Company. Certain of our officers and directors are also a party to indemnification agreements with the Company. These indemnification agreements provide, among other things, that the director and officer shall be indemnified to the fullest extent permitted by applicable law against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such officer or director in connection with any proceeding by reason of his or her relationship with the Company. In addition, the indemnification agreements provide for the advancement of expenses incurred by such director or officer in connection with any proceeding covered by the indemnification agreement, subject to the conditions set forth therein and to the extent such advancement is not prohibited by law. The indemnification agreements also set out the procedures for determining entitlement to indemnification, the requirements relating to notice and defense of claims for which indemnification is sought, the procedures for enforcement of indemnification rights, the limitations on and exclusions from indemnification, and the minimum levels of directors’ and officers’ liability insurance to be maintained by the Company.

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14. Segment Information

The Company evaluates the performance of, and allocates resources to, its segments based on revenue, gross profit and operating profit. The Company’s reportable segments have been identified based on commonality of end markets, customers, applications and technologies amongst the Company’s individual product lines, which is consistent with the Company’s operating structure, associated management structure, and management compensation programs.

We operate in three reportable segments: Laser Products, Vision Technologies (formerly known as Medical Technologies), and Precision Motion. The reportable segments and their principal activities are summarized below.

Laser Products

The Laser Products segment designs, manufactures and markets photonics-based solutions, including CO2 laser sources, laser scanning and beam delivery products, to customers worldwide. The segment serves highly demanding photonics-based applications such as industrial material processing, and medical and life science imaging and laser procedures. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Vision Technologies

The Vision Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, thermal printers, and light and color measurement instrumentation, to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Precision Motion

The Precision Motion segment designs, manufactures and markets optical encoders, precision motor and motion control technology, air bearing spindles and precision machined components to customers worldwide. The vast majority of the segment’s product offerings are sold into the advanced industrial market and, to a lesser extent, the medical market. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Reportable Segment Financial Information

Revenue, gross profit, gross profit margin, operating income (loss) from continuing operations, and depreciation and amortization by reportable segments are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Revenue
Laser Products	$	41,330	$	45,806	$	128,475	$	131,494
Vision Technologies		30,992		32,680		93,319		89,838
Precision Motion		19,949		16,170		61,585		49,362
Total	$	92,271	$	94,656	$	283,379	$	270,694

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross Profit
Laser Products	$	18,851		$	20,269		$	57,176		$	54,437
Vision Technologies		12,152			12,945			36,823			35,672
Precision Motion		9,233			6,776			28,309			21,141
Unallocated Corporate and Shared Services		(326	)		(307	)		(1,047	)		(811	)
Total	$	39,910		$	39,683		$	121,261		$	110,439

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	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross Profit Margin
Laser Products		45.6	%		44.2	%		44.5	%		41.4	%
Vision Technologies		39.2	%		39.6	%		39.5	%		39.7	%
Precision Motion		46.3	%		41.9	%		46.0	%		42.8	%
Total		43.3	%		41.9	%		42.8	%		40.8	%

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Operating Income (Loss) from Continuing Operations
Laser Products	$	10,145		$	9,857		$	28,586		$	23,828
Vision Technologies		(388	)		(1,115	)		(1,056	)		(1,194	)
Precision Motion		4,417			2,796			14,357			9,525
Unallocated Corporate and Shared Services		(5,167	)		(4,716	)		(17,168	)		(14,789	)
Total	$	9,007		$	6,822		$	24,719		$	17,370

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Depreciation and Amortization
Laser Products	$	1,394	$	1,618	$	4,373	$	4,838
Vision Technologies		2,109		3,745		6,449		9,552
Precision Motion		680		444		1,842		1,451
Unallocated Corporate and Shared Services		520		537		1,424		1,654
Total	$	4,703	$	6,344	$	14,088	$	17,495

15. Subsequent Events

On November 3, 2015, the Company entered into an agreement to acquire Lincoln Laser Company, a Phoenix, Arizona-based provider of ultrafast precision polygon scanners and other optical scanning solutions for the medical, food processing, and advanced industrial markets. The initial purchase price is $11 million in cash, subject to customary working capital adjustments. The transaction is expected to close in November 2015. Lincoln Laser Company specializes in ultrafast scanning, leveraging their expertise in polygon motor design and electro-optic subsystems. The acquisition creates an expanded range of highly competitive beam delivery technologies that significantly enhances the Company’s value proposition with OEM customers in growth applications. The Lincoln Laser business will be integrated into the Company’s beam delivery business line, which is part of the Company’s Laser Products segment.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Consolidated Financial Statements and Notes included in Item 1 of this Quarterly Report on Form 10-Q. The MD&A contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include, but are not limited to, expected benefits of the business acquisitions; our belief that the Purchasing Managers Index (PMI) may provide an indication of the impact of general economic conditions on our sales into the advanced industrial end market; expectations regarding the 2015 and 2016 restructuring programs, including anticipated cash charges and anticipated savings; anticipated financial performance; expected liquidity and capitalization; drivers of revenue growth; management’s plans and objectives for future operations, expenditures and product development and investments in research and development; business prospects; potential of future product releases; anticipated sales performance; changes in accounting principles and changes in actual or assumed tax liabilities; and expectations regarding tax exposure. These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the following: the PMI may not provide an indication of the impact of general economic conditions on our sales into the advanced industrial end market in any particular period or at all; economic and political conditions and the effects of these conditions on our customers’ businesses and level of business activities; our significant dependence upon our customers’ capital expenditures, which are subject to cyclical market fluctuations; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovate and successfully commercialize our innovations; failure to introduce new products in a timely manner; customer order timing and other similar factors beyond our control; disruptions or breaches in security of our information technology systems; changes in interest rates, credit ratings or foreign currency exchange rates; risk associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; our failure to comply with local import and export regulations in the jurisdictions in which we operate; our exposure to the credit risk of some of our customers and in weakened markets; our reliance on third party distribution channels; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our failure to successfully integrate recent and future acquisitions into our business or grow acquired businesses; our ability to make divestitures that provide business benefits; our ability to attract and retain key personnel; our restructuring and realignment activities and disruptions to our operations as a result of consolidation of our operations; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components and other goods from our suppliers; production difficulties and product delivery delays or disruptions; our compliance, or our failure to comply, with various federal, state and foreign regulations; changes in governmental regulation of our business or products; effects of compliance with conflict minerals regulations; our compliance, or failure to comply, with environmental regulations; our failure to implement new information technology systems and software successfully; our failure to realize the full value of our intangible assets; our ability to utilize our net operating loss carryforwards and other tax attributes; changes in tax laws, and fluctuations in our effective tax rates; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; volatility in the market price for our common shares; our ability to access cash and other assets of our subsidiaries; the influence of certain significant shareholders over our business; provisions of our articles of incorporation may delay or prevent a change in control; our significant existing indebtedness may limit our ability to engage in certain activities; and our failure to maintain appropriate internal controls in the future. Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect the Company’s operating results and financial condition are discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 under the heading “Risk Factors.” In this Quarterly Report on Form 10-Q, the words “anticipates,” “believes,” “expects,” “intends,” “future,” “could,” “estimates,” “plans,” “would,” “should,” “potential,” “continues,” and similar words or expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Management and the Company disclaim any obligation to publicly update or revise any such statement to reflect any change in its expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.

Accounting Period

The interim financial statements of GSI Group Inc. and its subsidiaries (collectively referred to as the “Company”, “we”, “us”, “our”) are prepared on a quarterly basis for quarterly periods ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31.

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Business Overview

We design, develop, manufacture and sell precision photonics and motion control components and subsystems to Original Equipment Manufacturers (“OEM”) in the medical and advanced industrial markets. We are a leader in highly engineered enabling technologies, including CO2 laser sources, laser scanning and beam delivery products, optical data collection and machine vision technologies, medical visualization and informatics solutions, and precision motion control products. We specialize in collaborating with OEM customers to adapt our component and subsystem technologies to deliver highly differentiated performance in their applications.

Reportable Segments

We operate in three reportable segments: Laser Products, Vision Technologies (formerly known as Medical Technologies), and Precision Motion. The reportable segments and their principal activities are summarized below.

Laser Products

Our Laser Products segment designs, manufactures and markets photonics-based solutions, including CO2 laser sources, and laser scanning and beam delivery products, to customers worldwide. The segment serves highly demanding photonics-based applications such as industrial material processing, and medical and life science imaging and laser procedures. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Vision Technologies

Our Vision Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, thermal printers, and light and color measurement instrumentation, to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Precision Motion

Our Precision Motion segment designs, manufactures and markets optical encoders, precision motor and motion control technology, air bearing spindles and precision machined components to customers worldwide. The vast majority of the segment’s product offerings are sold into the advanced industrial market and, to a lesser extent, the medical market. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

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End Markets

We primarily operate in two end markets: the advanced industrial market and the medical market.

Advanced Industrial Market

For the nine months ended October 2, 2015, the advanced industrial market accounted for approximately 60% of the Company’s revenue.  Revenue from our advanced industrial market products are affected by a number of factors, including changing technology requirements and preferences of our customers, the financial condition of our advanced industrial customers, and general economic conditions. We believe that the Purchasing Managers Index (PMI) on manufacturing activities specific to different regions around the world may provide an indication of the impact of general economic conditions on our sales into the advanced industrial market.

Medical Market

For the nine months ended October 2, 2015, the medical market accounted for approximately 40% of the Company’s revenue.  Our revenue from sales to the medical market is generally affected by hospital and other health care provider capital spending, changes in regulatory requirements and laws, aggregation of purchasing by healthcare networks, and demographics.

Strategy

Our strategy is to drive sustainable, profitable growth through short-term and long-term initiatives, including:

· improving our business mix to increase medical sales as a percentage of total revenue by:

- introducing new products aimed at attractive medical applications such as minimally invasive and robotic surgery, ophthalmology, patient monitoring, drug delivery, diagnostic testing and life science research;

- cross selling our entire product offerings to the leading medical manufacturers; and

- pursuing complementary medical technology acquisitions;

· increasing our penetration of high growth advanced industrial applications such as laser materials processing, robotics, automation, metrology, and via hole drilling by working closely with OEM customers to launch application specific products that closely match the requirements of each application;

· broadening our portfolio of precision motion control products and capabilities through increased new product development investment in motion control product lines, expanded sales and marketing channels to reach target customers, and acquisitions of additional motion control product technologies used by existing customers;

· broadening our product and service offerings through the acquisition of innovative and complementary technologies and solutions in medical and advanced industrial applications;

· upgrading our existing operations to expand profit margins and improve customer satisfaction by implementing lean manufacturing principles and strategic sourcing across our major production sites; and

· attracting, retaining, and developing talented and motivated employees.

Significant Events and Updates

Acquisition of Applimotion

On February 19, 2015, we acquired 100% of the outstanding stock of Applimotion Inc. (“Applimotion”), a Loomis, California based provider of advanced precision motor and motion control technology to OEM customers in the medical and advanced industrial markets, for a total purchase price of $14.0 million, net of working capital adjustments. This total purchase price includes $13.0 million in cash paid for the acquisition and $1.0 million in estimated fair value of future contingent considerations payable upon the achievement of certain revenue targets for the fiscal years 2015 to 2017. The undiscounted range of contingent considerations is zero to $4.0 million. Applimotion specializes in motor applications that require highly precise and dynamic motion control. The acquisition enhances our strategic position in precision motion control by enabling us to offer a broader range of motion control technologies and integrated solutions. Applimotion is included in our Precision Motion reportable segment.

JK Lasers Divestiture

On April 15, 2015, we completed the sale of our JK Lasers business for $29.6 million in cash, net of the final working capital adjustments and transaction costs, and recognized a $19.6 million pre-tax gain on sale during the nine months ended October 2, 2015.

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During the nine months ended October 2, 2015, we incurred $1.1 millionof consulting fees related to the JK Lasers business divestiture, which are included in restructuring, acquisition and divestiture related costs in the consolidated statement of operations.The JK Lasers business divestiture does not qualify for discontinued operations accounting treatment.

2015 Restructuring

During the first quarter of 2015, the Company implemented a program to eliminate redundant costs, as a result of acquisition and divestiture activities, to better align our operations to our strategic growth plans, to further integrate our business lines, and as a consequence of our productivity initiatives. We incurred severance costs related to the 2015 restructuring amounting to $1.1 million during the nine months ended October 2, 2015. We principally intend to reallocate resources and reinvest savings from the 2015 restructuring into higher growth businesses and lower cost regions.

2016 Restructuring

During the third quarter of 2015, the Company initiated a program targeting annualized savings of $4.5 million to $5.5 million after the program is fully executed. The 2016 restructuring program includes consolidating our manufacturing operations to optimize our facility footprint and to better utilize resources, and reducing redundant costs due to productivity cost savings and business volume reductions. We expect to incur cash charges of $3.5 million to $4.5 million related to this program, which we anticipate completing during the second quarter of 2016. We incurred severance costs related to the 2016 restructuring amounting to $0.7 million in the three and nine months ended October 2, 2015.

Results of Operations for the Three and Nine Months Ended October 2, 2015 Compared with the Three and Nine Months Ended September 26, 2014

The following table sets forth our unaudited results of operations as a percentage of revenue for the periods indicated:

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenue		56.7			58.1			57.2			59.2
Gross profit		43.3			41.9			42.8			40.8
Operating expenses:
Research and development and engineering		8.3			8.2			8.4			7.8
Selling, general and administrative		21.7			22.7			22.2			23.1
Amortization of purchased intangible assets		2.0			3.0			2.0			2.8
Restructuring, acquisition and divestiture related costs		1.5			0.8			1.5			0.7
Total operating expenses		33.5			34.7			34.1			34.4
Operating income from continuing operations		9.8			7.2			8.7			6.4
Interest income (expense), net		(1.4	)		(1.5	)		(1.4	)		(1.4	)
Foreign exchange transaction gains (losses), net		0.4			1.1			(0.8	)		0.4
Other income (expense), net		1.0			0.7			7.6			0.7
Income from continuing operations before income taxes		9.8			7.5			14.1			6.1
Income tax provision		2.7			2.1			3.7			1.9
Income from continuing operations		7.1			5.4			10.4			4.2
Loss from discontinued operations, net of tax		—			(0.3	)		—			(1.8	)
Loss on disposal of discontinued operations, net of tax		—			(0.3	)		—			(0.1	)
Consolidated net income		7.1			4.8			10.4			2.3
Less: Net income attributable to noncontrolling interest		—			—			—			—
Net income attributable to GSI Group Inc.		7.1	%		4.8	%		10.4	%		2.3	%

Overview of Financial Results

Total revenue decreased by 2.5% for the three months ended October 2, 2015 and increased by 4.7% for the nine months ended October 2, 2015, compared to the prior year. Our acquisitions and divestitures accounted for a 2.3% net decrease in revenue during the three months ended October 2, 2015 and a 3.9% net increase during the nine months ended October 2, 2015. In addition, foreign

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currency exchange rates adversely impacted our revenue by 3.8% and 4.5% during the three and nine months ended October 2, 2015, respectively. Excluding the impact of acquisitions, divestitures and changes in foreign exchange rates, total revenue for the three and nine months ended October 2, 2015 increased 3.6% and 5.3%, respectively, compared to the prior year. Our organic revenue growth is summarized as follows:

	Three Months Ended October 2, 2015 Percentage Change			Nine Months Ended October 2, 2015 Percentage Change
Reported growth (decline)		(2.5	)%		4.7	%
Less: Change attributable to acquisitions and divestitures		(2.3	)%		3.9	%
Plus: Change due to foreign currency		3.8	%		4.5	%
Organic growth		3.6	%		5.3	%

The organic growth in our revenue for the three months ended October 2, 2015 versus the prior year was primarily attributable to growth in our Laser Products segment, offset by a decrease in revenue of our Vision Technologies segment. The organic growth in our revenue for the nine months ended October 2, 2015 versus the prior year was attributable to growth in our Laser Products and Precision Motion segments, offset by a decrease in revenue of our Vision Technologies segment.

Operating income from continuing operations increased $2.2 million, or 32.0%, from $6.8 million for the three months ended September 26, 2014 to $9.0 million for the three months ended October 2, 2015. This increase was primarily attributable to a decrease in operating expenses. Operating income from continuing operations increased $7.3 million, or 42.3%, from $17.4 million for the nine months ended September 26, 2014 to $24.7 million for the nine months ended October 2, 2015. This increase was primarily due to an increase in gross profit and a decrease in amortization of purchased intangible assets, partially offset by an increase in restructuring expenses related to the 2015 and 2016 restructuring programs and JK Lasers divestiture related costs as well as Research, Development and Engineering (“R&D”) expenses.

Diluted earnings per share (“Diluted EPS”) from continuing operations of $0.19 for the three months ended October 2, 2015 increased $0.04 from the prior year. This increase was primarily attributable to higher operating income from continuing operations, partially offset by a decrease in foreign currency gains. Diluted EPS from continuing operations of $0.84 for the nine months ended October 2, 2015 increased by $0.51 from the prior year due to higher operating income from continuing operations, higher other income resulting from the gain recognized from the JK Lasers divestiture and lower effective tax rate, partially offset by foreign currency losses in the current year versus foreign currency gains in the prior year.

Revenue

The following table sets forth external revenue by reportable segment for the periods noted (dollars in thousands):

	Three Months Ended
	October 2, 2015		September 26, 2014		Increase (Decrease)			Percentage Change
Laser Products	$	41,330	$	45,806	$	(4,476	)		-9.8	%
Vision Technologies		30,992		32,680		(1,688	)		-5.2	%
Precision Motion		19,949		16,170		3,779			23.4	%
Total	$	92,271	$	94,656	$	(2,385	)		-2.5	%

	Nine Months Ended
	October 2, 2015		September 26, 2014		Increase (Decrease)			Percentage Change
Laser Products	$	128,475	$	131,494	$	(3,019	)		-2.3	%
Vision Technologies		93,319		89,838		3,481			3.9	%
Precision Motion		61,585		49,362		12,223			24.8	%
Total	$	283,379	$	270,694	$	12,685			4.7	%

Laser Products

Laser Products segment revenue for the three months ended October 2, 2015 decreased by $4.5 million, or 9.8%, versus the prior year primarily as a result of the JK Lasers divestiture which accounted for $5.9 million of the decrease, partially offset by an increase in revenue of our beam delivery and CO2 lasers products due to an increase in demand in the advanced industrial market.

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Laser Products segment revenue for the nine months ended October 2, 2015 decreased by $3.0 million, or 2.3%, versus the prior year primarily as a result of the JK Lasers divestiture which accounted for $10.6 million of the decrease, partially offset by an increase in revenue of our beam delivery and CO2 lasers products due to an increase in demand in the advanced industrial market.

Vision Technologies

Vision Technologies segment revenue for the three months ended October 2, 2015 decreased by $1.7 million, or 5.2%, versus the prior year. The decrease was primarily driven by a decline in our revenue as a result of softness in medical equipment spending impacting our customers’ demand for our products, partially offset by increased demand in our light and color measurement products.

Vision Technologies segment revenue for the nine months ended October 2, 2015 increased by $3.5 million, or 3.9%, versus the prior year. The increase was primarily due to revenue from our optical data collection business being included in the reported revenue in the prior year only following the acquisition in March 2014 and increases in revenue from our thermal printers and light and color measurement products, partially offset by a decline in our visualization solutions revenue as a result of softness in medical equipment spending.

Precision Motion

Precision Motion segment revenue for the three months ended October 2, 2015 increased by $3.8 million, or 23.4%, versus the prior year. The increase was principally driven by the Applimotion acquisition and higher revenue from our optical encoder products as a result of increased customer volumes, partially offset by a decline in revenue of our air bearing spindles products due to lower demand from the printed circuit board industry.

Precision Motion segment revenue for the nine months ended October 2, 2015 increased by $12.2 million, or 24.8%, versus the prior year. The increase was principally driven by the Applimotion acquisition and higher revenue from our optical encoder products as a result of increased customer volumes, partially offset by a decline in revenue of our air bearing spindles products due to lower demand from the printed circuit board industry.

Gross Profit and Gross Profit Margin

The following table sets forth the gross profit and gross profit margin for each of our reportable segments for the periods noted (dollars in thousands):

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross profit:
Laser Products	$	18,851		$	20,269		$	57,176		$	54,437
Vision Technologies		12,152			12,945			36,823			35,672
Precision Motion		9,233			6,776			28,309			21,141
Unallocated Corporate and Shared Services		(326	)		(307	)		(1,047	)		(811	)
Total	$	39,910		$	39,683		$	121,261		$	110,439
Gross profit margin:
Laser Products		45.6	%		44.2	%		44.5	%		41.4	%
Vision Technologies		39.2	%		39.6	%		39.5	%		39.7	%
Precision Motion		46.3	%		41.9	%		46.0	%		42.8	%
Total		43.3	%		41.9	%		42.8	%		40.8	%

Gross profit and gross profit margin can be influenced by a number of factors, including product mix, pricing, volume, manufacturing efficiencies and utilization, costs for raw materials and outsourced manufacturing, headcount, inventory obsolescence and warranty expenses.

Laser Products

Laser Products segment gross profit for the three months ended October 2, 2015 decreased $1.4 million, or 7.0%, versus the prior year due to a decline in revenue as a result of the JK Lasers divestiture which accounted for $1.9 million of the decrease, partially offset by revenue growth in our current product lines and an increase in gross profit margin. Laser Products segment gross

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profit margin was 45.6% for the three months ended October 2, 2015, versus a gross profit margin of 44.2% for the prior year due to the JK Lasers divestiture which accounted for a 1.9 percentage point increase in gross profit margin.

Laser Products segment gross profit for the nine months ended October 2, 2015 increased $2.7 million, or 5.0%, versus the prior year due to an increase in gross profit margin. Laser Products segment gross profit margin was 44.5% for the nine months ended October 2, 2015, versus a gross profit margin of 41.4% for the prior year due to the JK Lasers divestiture which accounted for a 1.1 percentage point of the 3.1 percentage point increase in gross profit margin. The remaining increase in gross profit margin was driven by increases in volume in our current product lines, product mix, and continuous improvement productivity initiatives.

Vision Technologies

Vision Technologies segment gross profit for the three months ended October 2, 2015 decreased $0.8 million, or 6.1%, versus the prior year due to a decline in revenue. Vision Technologies segment gross profit margin was 39.2% for the three months ended October 2, 2015, versus a gross profit margin of 39.6% for the prior year. The 0.4 percentage point decrease in gross profit margin was primarily attributable to lower volumes, partially offset by lower intangible asset amortization expense. Included in gross profit for the three months ended October 2, 2015 was the amortization of developed technologies of $0.5 million. Gross profit for the three months ended September 26, 2014 included amortization of developed technologies of $0.9 million.

Vision Technologies segment gross profit for the nine months ended October 2, 2015 increased $1.2 million, or 3.2%, versus the prior year. The increase was primarily attributable to a decline inintangible asset amortization expense. Vision Technologies segment gross profit margin was 39.5% for the nine months ended October 2, 2015, versus a gross profit margin of 39.7% for the prior year. The 0.2 percentage point decrease in gross profit margin was primarily attributable to product mix, offset by lower intangible asset amortization expense. Included in gross profit for the nine months ended October 2, 2015 was the amortization of developed technologies of $1.6 million. Gross profit for the nine months ended September 26, 2014 included amortization of developed technologies and amortization of inventory fair value step-ups of $2.8 million.

Precision Motion

Precision Motion segment gross profit for the three months ended October 2, 2015 increased $2.5 million, or 36.3%, versus the prior year. The increase was primarily attributable to an increase in revenue and gross profit margin. Precision Motion segment gross profit margin was 46.3% for the three months ended October 2, 2015, versus a gross profit margin of 41.9% for the prior year. The 4.4 percentage point increase in gross profit margin was primarily attributable to an increase in volumes, product mix and continuous improvement productivity initiatives.

Precision Motion segment gross profit for the nine months ended October 2, 2015 increased $7.2 million, or 33.9%, versus the prior year. The increase was primarily attributable to the increase in revenue and gross profit margin. Precision Motion segment gross profit margin was 46.0% for the nine months ended October 2, 2015, versus a gross profit margin of 42.8% for the prior year. The 3.2 percentage point increase in gross profit margin was primarily attributable to an increase in volumes, product mix and continuous improvement productivity initiatives.

Operating Expenses

The following table sets forth operating expenses for the periods noted (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Research and development and engineering	$	7,693	$	7,735	$	23,748	$	21,117
Selling, general and administrative		19,979		21,512		62,969		62,540
Amortization of purchased intangible assets		1,852		2,843		5,593		7,463
Restructuring, acquisition and divestiture related costs		1,379		771		4,232		1,949
Total	$	30,903	$	32,861	$	96,542	$	93,069

Research and Development and Engineering Expenses

R&D expenses are primarily comprised of employee compensation related expenses and cost of materials for R&D projects. R&D expenses were $7.7 million, or 8.3% of revenue, during the three months ended October 2, 2015, compared with $7.7 million, or 8.2% of revenue, during the prior year. R&D expenses slightly decreased in terms of total dollars, primarily due to the JK Lasers divestiture, partially offset by a current year acquisition.

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R&D expenses were $23.7 million, or 8.4% ofrevenue, during the nine months ended October 2, 2015, compared with $21.1 million, or 7.8% of revenue, during the prior year. R&D expenses increased primarily due to higher investments across the majority of our product lines and acquisitions, partially offset by the JK Lasers divestiture.

Selling, General and Administrative Expenses

Selling, General and Administrative (“SG&A”) expenses include costs for sales and marketing, sales administration, finance, human resources, legal, information systems, and executive management functions. SG&A expenses were $20.0 million, or 21.7% of revenue, during the three months ended October 2, 2015, compared with $21.5 million, or 22.7% of revenue, during the prior year. SG&A expenses decreased primarily due to the JK Lasers divestiture, partially offset by a current year acquisition.

SG&A expenses were $63.0 million, or 22.2% of revenue, during the nine months ended October 2, 2015, compared with $62.5 million, or 23.1% of revenue, during the prior year. SG&A expenses increased in terms of total dollars primarily due to acquisitions, partially offset by the JK Lasers divestiture.

Amortization of Purchased Intangible Assets

Amortization of purchased intangible assets, excluding the amortization of developed technologies included in cost of revenue, was $1.9 million, or 2.0% of revenue, during the three months ended October 2, 2015, compared with $2.8 million, or 3.0% of revenue, during the prior year. The decrease, in terms of total dollars, was related to the decrease in amortization of acquired intangible assets from acquisitions.

Amortization of purchased intangible assets, excluding the amortization of developed technologies included in cost of revenue, was $5.6 million, or 2.0% of revenue, during the nine months ended October 2, 2015, compared with $7.5 million, or 2.8% of revenue, during the prior year. The decrease, in terms of total dollars, was related to the decrease in amortization of acquired intangible assets from acquisitions.

Restructuring, Acquisition and Divestiture Related Costs

We recorded restructuring, acquisition and divestiture related costs of $1.4 million during the three months ended October 2, 2015, versus $0.8 million during the prior year. The increase in restructuring, acquisition and divestiture related costs versus the prior year was mainly due to an increase in restructuring charges related to our 2016 restructuring program and an increase in acquisition related charges.

During the nine months ended October 2, 2015, we recorded $4.2 million in restructuring, acquisition and divestiture related costs, versus $1.9 million during the prior year. The increase in restructuring, acquisition and divestiture related costs versus the prior year was mainly due to an increase in restructuring charges related to our 2015 and 2016 restructuring programs and costs related to the JK Lasers divestiture.

Operating Income from Continuing Operations by Segment

The following table sets forth operating income from continuing operations by segment for the periods noted (in thousands):

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Operating Income (Loss) from Continuing Operations:
Laser Products	$	10,145		$	9,857		$	28,586		$	23,828
Vision Technologies		(388	)		(1,115	)		(1,056	)		(1,194	)
Precision Motion		4,417			2,796			14,357			9,525
Unallocated Corporate and Shared Services		(5,167	)		(4,716	)		(17,168	)		(14,789	)
Total	$	9,007		$	6,822		$	24,719		$	17,370

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Laser Products

Laser Products operating income from continuing operations for the three months ended October 2, 2015 increased by $0.3 million, or 2.9%, versus the prior year. The increase in operating income from continuing operations was primarily due to lower operating expenses as a result of the JK Lasers divestiture.

Laser Products operating income from continuing operations for the nine months ended October 2, 2015 increased by $4.8 million, or 20.0%, versus the prior year. The increase in operating income from continuing operations was primarily due to higher gross profit from our beam delivery and CO2 lasers products and lower operating expenses as a result of the JK Lasers divestiture.

Vision Technologies

Vision Technologies operating loss from continuing operations for the three months ended October 2, 2015 decreased by $0.7 million, or 65.2%, versus the prior year. The decrease in operating loss from continuing operations was primarily attributable to a decrease in amortization of purchased intangibles, partially offset by lower gross profit.

Vision Technologies operating loss from continuing operations for the nine months ended October 2, 2015 decreased by $0.1 million, or 11.6%, versus the prior year. The decrease in operating loss from continuing operations was primarily attributable to an increase in gross profit, a decrease in acquisition related charges and amortization of purchased intangibles, partially offset by higher R&D and SG&A expenses as a result of a prior year acquisition. Acquisition related charges for the nine months ended October 2, 2015 decreased by $1.6 million from the prior year mainly due to the reversal of incentive compensation related to an acquisition.

Precision Motion

Precision Motion operating income from continuing operations for the three months ended October 2, 2015 increased by $1.6 million, or 58.0%, versus the prior year. The increase was primarily due to the increase in gross profit, partially offset by higher operating expenses due to the Applimotion acquisition.

Precision Motion operating income from continuing operations for the nine months ended October 2, 2015 increased by $4.8 million, or 50.7%, versus the prior year. The increase was primarily due to the increase in gross profit, partially offset by higher operating expenses due to the Applimotion acquisition.

Unallocated Corporate and Shared Services

Unallocated Corporate and Shared Services costs primarily represent costs of corporate and shared services functions that are not allocated to the operating segments, including certain restructuring and most acquisition related costs. These costs for the three months ended October 2, 2015 increased by $0.5 million, or 9.6%, versus the prior year primarily due to an increase in restructuring and acquisition related costs of $0.5 million. These costs for the nine months ended October 2, 2015 increased by $2.4 million, or 16.1%, versus the prior year primarily due to an increase in restructuring and acquisition related costs of $0.9 million and an increase in professional services costs.

Other Income and Expense Items

The following table sets forth other income and expense items for the periods noted (dollars in thousands):

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Interest income (expense), net	$	(1,248	)	$	(1,453	)	$	(4,020	)	$	(3,665	)
Foreign exchange transaction gains (losses), net		383			1,030			(2,253	)		950
Other income (expense), net		878			733			21,641			1,733

Interest Income (Expense), Net

Net interest expense was $1.2 million for the three months ended October 2, 2015, versus $1.5 million in the prior year. The $0.2 million decrease in net interest expense from the prior year was primarily due to a decrease in average debt levels. The weighted average interest rate on our Senior Credit Facilities was 3.15% and 3.23% during the three months ended October 2, 2015 and September 26, 2014, respectively.

27

Net interest expense was $4.0 million for the nine months ended October 2, 2015, versus $3.7 million in the prior year. The $0.4 million increase in net interest expense from the prior year was primarily due to an increase in average debt levels and interest paid on capital leases. The weighted average interest rate on our Senior Credit Facilities was 3.30% and 3.22% during the nine months ended October 2, 2015 and September 26, 2014, respectively.

Foreign Exchange Transaction Gains (Losses), Net

Foreign exchange transaction gains (losses), net, were $0.4 million net gains for the three months ended October 2, 2015, versus $1.0 million net gains for the prior year due to changes in the U.S. Dollar exchange rates against the Euro, British Pound and Japanese Yen.

Foreign exchange transaction gains (losses), net, were $2.3 million net losses for the nine months ended October 2, 2015, versus $1.0 million net gains for the prior year due to changes in the U.S. Dollar exchange rates against the Euro, British Pound and Japanese Yen and a $1.2 million foreign currency loss related to the cash proceeds in U.S. dollars from the JK Lasers divestiture being held for a period of time by our UK subsidiary.

Other Income (Expense), Net

Other income was $0.9 million for the three months ended October 2, 2015, versus $0.7 million in the prior year due to higher earnings from our equity-method investment in Laser Quantum. Other income was $21.6 million for the nine months ended October 2, 2015, versus $1.7 million in the prior year due to a gain recognized as a result of the JK Lasers divestiture and higher earnings from our equity-method investment in Laser Quantum.  

Income Taxes

The effective tax rate for the three months ended October 2, 2015 was 27.2%, versus 28.2% for the prior year. The effective tax rates for the three months ended October 2, 2015 and September 26, 2014 differ from the Canadian statutory rate of 27.0%, primarily due to the U.S. IRS audit settlement, mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a full valuation allowance, and the impact of discrete items for the period.

The effective tax rate for the nine months ended October 2, 2015 was 26.3%, versus 30.6% for the prior year. The effective tax rates for the nine months ended October 2, 2015 and September 26, 2014 differ from the Canadian statutory rate of 27.0%, primarily due to the gain from JK Lasers divestiture, the audit settlement with the U.S. Internal Revenue Service, mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a full valuation allowance, and the impact of discrete items for the period. During the nine months ended October 2, 2015 and September 26, 2014, respectively, the Company recognized $0.2 million and $1.1 million of net tax benefits associated with uncertain tax positions upon expiration of statute of limitations.

Discontinued Operations

Loss from discontinued operations, net of tax, was zero and less than $0.1 million, respectively, during the three and nine months ended October 2, 2015, compared to loss from discontinued operations, net of tax, of $0.3 million and $4.8 million, respectively, for the three and nine months ended September 26, 2014. The decline in loss from discontinued operations, net of tax, was due to losses related to the Scientific Lasers business, which was sold in July 2014.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements are funding operations, capital expenditures, investments in businesses, and repayment of our debt and related interest expense. Our primary sources of liquidity are cash flows from operations and borrowings under our revolving credit facility. We believe our future operating cash flows will be sufficient to meet our future operating and capital expenditure cash needs for the foreseeable future, including at least the next 12 months. The availability of borrowings under our revolving credit facility provides an additional potential source of liquidity should it be required. In addition, we may seek to raise additional capital, which could be in the form of bonds, convertible debt or equity to fund business development activities or other future investing cash requirements, subject to approval by the lenders in the Amended and Restated Credit Agreement.

Significant factors affecting the management of our ongoing cash requirements are the adequacy of available bank lines of credit and our ability to attract long term capital with satisfactory terms. The sources of our liquidity are subject to all of the risks of our business and could be adversely affected by, among other factors, a decrease in demand for our products, our ability to integrate current and future acquisitions, deterioration in certain financial ratios, and market changes in general. See “Risks Relating to Our

28

Common Shares and Our Capital Structure” included in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the earnings and the distribution of funds from our subsidiaries. Local laws and regulations and/or the terms of our indebtedness restrict certain of our subsidiaries from paying dividends and transferring assets to us. We cannot assure you that applicable laws and regulations and/or the terms of our indebtedness will permit our subsidiaries to provide us with sufficient dividends, distributions or loans when necessary.

In October 2013, the Company’s Board of Directors authorized a share repurchase plan under which the Company may repurchase outstanding shares of the Company’s common stock up to an aggregate amount of $10.0 million. The shares may be repurchased from time to time, at the Company’s discretion, based on ongoing assessment of the capital needs of the business, the market price of the Company’s common stock, and general market conditions. Shares may also be repurchased through an accelerated stock purchase agreement, on the open market or in privately negotiated transactions in accordance with applicable federal securities laws. Repurchases may be made under certain SEC regulations, which would permit common stock to be purchased when the Company would otherwise be prohibited from doing so under insider trading laws. The share repurchase plan does not obligate the Company to acquire any particular amount of common stock. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time. The Company expects to fund share repurchases through cash on hand and future cash flows from operations. As of December 31, 2014, the Company had cumulatively repurchased 50 thousand shares of its common stock for an aggregate amount of $0.5 million. During the third quarter of 2015, the Company repurchased 77 thousand shares in the open market for an aggregate purchase price of $1.0 million at an average price of $13.03 per share.

As of October 2, 2015, $31.8 million of our $80.1 million cash and cash equivalents was held by our subsidiaries outside of Canada and the United States. Generally, our intent is to use cash held in these foreign subsidiaries to fund our local operations or acquisitions by those local subsidiaries. However, in certain instances, we have identified excess cash for which we may repatriate and we have established deferred tax liabilities for the expected tax cost. Additionally, we may use intercompany loans to address short-term cash flow needs for various subsidiaries.

Amended and Restated Credit Agreement

Our amended and restated senior secured credit agreement (the “Amended and Restated Credit Agreement”) consists of a $50.0 million, 5-year term loan facility and a $175.0 million, 5-year revolving credit facility (collectively, the “Senior Credit Facilities”) that mature in December 2017. As of October 2, 2015, we had outstanding term loans of $29.4 million and revolving loans of $80.0 million under the Senior Credit Facilities.

The Amended and Restated Credit Agreement contains various covenants that we believe are usual and customary for this type of agreement, including a maximum allowed leverage ratio, and a minimum required fixed charge coverage ratio (as defined in the Amended and Restated Credit Agreement). The following table summarizes these financial covenant requirements and our compliance as of October 2, 2015:

	Requirement		Actual
Maximum consolidated leverage ratio		3.00		1.80
Minimum consolidated fixed charge coverage ratio		1.50		3.95

Cash Flows for the Nine Months Ended October 2, 2015 and September 26, 2014

The following table summarizes our cash flows from continuing operations, cash and cash equivalent balances and unused and available funds under our revolving credit facility for the periods indicated (dollars in thousands):

	Nine Months Ended
	October 2, 2015			September 26, 2014
Net cash provided by operating activities of continuing operations	$	25,476		$	34,415
Net cash provided by (used in) investing activities of continuing operations	$	12,534		$	(91,964	)
Net cash provided by (used in) financing activities of continuing operations	$	(8,444	)	$	47,591

29

	October 2, 2015		December 31, 2014
Cash and cash equivalents	$	80,089	$	51,146
Unused and available funds under revolving credit facility	$	95,000	$	95,000

Operating Cash Flows

Cash provided by operating activities of continuing operations was $25.5 million for the nine months ended October 2, 2015, versus $34.4 million for the prior year. Income from continuing operations for the nine months ended October 2, 2015 increased from the prior year while changes in operating assets and liabilities decreased cash provided by operating activities of continuing operations by $6.5 million. Cash provided by operating activities of continuing operations was positively impacted by an increase in our days payables outstanding from 46 days at December 31, 2014 to 48 days at October 2, 2015. Cash provided by operating activities of continuing operations was negatively impacted by an increase in our days sales outstanding from 51 days at December 31, 2014 to 55 days at October 2, 2015 and an increase in inventories excluding inventories sold as part of the JK Lasers divestiture and inventories from the Applimotion acquisition. In addition, cash provided by operating activities of continuing operations was impacted by the timing of sales in the three months ended October 2, 2015, compared to the three months ended December 31, 2014.

Cash provided by operating activities of continuing operations for the nine months ended September 26, 2014 was primarily related to income from continuing operations and an improvement in our working capital. Cash provided by operating activities of continuing operations was impacted by a decrease in our days sales outstanding from 56 days at December 31, 2013 to 54 days at September 26, 2014, an increase in our days payables outstanding from 48 days at December 31, 2013 to 52 days at September 26, 2014, and a decrease in inventories excluding inventories from the JADAK acquisition.

As a result of the sale of our Scientific Lasers business in July 2014, cash used in operating activities of discontinued operations was less than $0.1 million for the nine months ended October 2, 2015.

Investing Cash Flows

Cash provided by investing activities of our continuing operations was $12.5 million during the nine months ended October 2, 2015, compared to cash used of $92.0 million during the prior year. Cash provided by investing activities for the nine months ended October 2, 2015 was primarily due to cash proceeds received from the sale of the JK Lasers business in April 2015, partially offset by cash consideration paid for the Applimotion acquisition in February 2015 and $4.1 million in capital expenditures.  Cash outflows from investing activities of continuing operations during the nine months ended September 26, 2014 were primarily related to cash consideration paid for the JADAK acquisition in March 2014 and $3.8 million in capital expenditures, partially offset by proceeds of $5.4 million related to the recovery of an escrow claim for the NDS acquisition.

As a result of the sale of our Scientific Lasers business in July 2014, there were no cash flows from investing activities of discontinued operations for the nine months ended October 2, 2015.

Financing Cash Flows

Cash used in financing activities of continuing operations was $8.4 million during the nine months ended October 2, 2015, consisting of $5.6 million of contractual term loan payments, $13.0 million of optional repayments of borrowings under our revolving credit facility and the repurchase of $1.0 million of the Company’s common stock, partially offset by $13.0 million of borrowings under our revolving credit facility to fund the Applimotion acquisition. The Company also made payroll tax payments on stock-based awards of $1.4 million and capital lease payments of $0.4 million.

Cash provided by financing activities of continuing operations was $47.6 million during the nine months ended September 26, 2014, consisting of $77.0 million of borrowings under our revolving credit facility to fund the JADAK acquisition, partially offset by $5.6 million of contractual term loan payments, $21.0 million of optional repayments of borrowings under our revolving credit facility and $0.7 million fees paid in connection with the fourth amendment to the Amended and Restated Credit Agreement entered into in February 2014. The Company also made payroll tax payments on stock-based awards of $1.6 million and capital lease payments of $0.9 million.

30

Off-Balance Sheet Arrangements, Contractual Obligations

Contractual Obligations

Our contractual obligations primarily consist of the principal and interest associated with our debt, operating and capital leases, purchase commitments and pension obligations. Such contractual obligations are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Excluding the drawdown on our Senior Credit Facilities to fund the Applimotion acquisition, through October 2, 2015, we have not entered into any material new or modified contractual obligations since the end of the fiscal year ended December 31, 2014.

Off-Balance Sheet Arrangements

The Company has an equity method investment in Laser Quantum Ltd. Group (“Laser Quantum”), a privately held company located in the United Kingdom. The Company has an ownership interest of approximately 41% in the Laser Quantum business. We continue to recognize our share of the earnings of this entity under the equity method.

Through October 2, 2015, we have not entered into any other off-balance sheet arrangements or material transactions with any unconsolidated entities or other persons.

Critical Accounting Policies and Estimates

The critical accounting policies that we believe impact significant judgments and estimates used in the preparation of our consolidated financial statements presented in this report are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated Financial Statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. There have been no material changes to our critical accounting policies through October 2, 2015 from those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Recent Accounting Pronouncements

See Note 1 to Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our primary market risk exposures are foreign currency exchange rate fluctuation and interest rate sensitivity. During the nine months ended October 2, 2015, there have been no material changes to the information included under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of October 2, 2015, the end of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of October 2, 2015.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter ended October 2, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

31

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company does not believe that the outcome of these claims will have a material adverse effect upon its financial condition or results of operations but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect upon its financial condition or results of operations.

Item 1A. Risk Factors

The Company’s risk factors are described in Part I, Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. There have been no material changes in the risks affecting the Company since the filing of such Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth certain information with respect to repurchases of the Company’s common stock during the three months ended October 2, 2015.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)(2)		Approximate Dollar Value that May Yet Be Purchased Under the Plans or Programs(1)
July 4 - July 31, 2015		—	$	—		—	$	9,474,000
August 1 - August 28, 2015		63,300	$	13.10		63,300	$	8,644,884
August 29 - October 2, 2015		13,200	$	12.70		13,200	$	8,477,236
Total		76,500	$	13.03		76,500

(1) In October 2013, the Company's Board of Directors authorized a share repurchase plan for the repurchase of up to an aggregate of $10.0 million of the Company's common stock, which was announced in the quarterly report for the period ended September 27, 2013 filed on November 5, 2013. The shares may be repurchased from time to time, at the Company's discretion, based on ongoing assessment of the capital needs of the business, the market price of the Company's common stock, and general market conditions. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time.

(2) The Company has repurchased 126,500 shares of its common stock pursuant to the share repurchase program since its adoption.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

32

Item 6. Exhibits

List of Exhibits

See the Company’s SEC filings on Edgar at: http://www.sec.gov/ for all Exhibits.

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
3.1	Certificate and Articles of Continuance of the Registrant, dated March 22, 1999.	S-3	333-202597	3.1	03/09/15
3.2	Articles of Amendment of the Registrant, dated May 26, 2005.	S-3	333-202597	3.2	03/09/15
3.3	By-Laws of the Registrant, as amended	10-Q	000-25705	3.2	04/13/10
3.4	Articles of Reorganization of the Registrant, dated July 23, 2010.	8-K	000-25705	3.1	07/23/10
3.5	Articles of Amendment of the Registrant, dated December 29, 2010.	8-K	000-25705	3.1	12/29/10
31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*
31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**
101.INS	XBRL Instance Document.					*
101.SCH	XBRL Schema Document					*
101.CAL	XBRL Calculation Linkbase Document.					*
101.DEF	XBRL Definition Linkbase Document.					*
101.LAB	XBRL Labels Linkbase Document.					*
101.PRE	XBRL Presentation Linkbase Document.					*

* Filed herewith

** Furnished herewith

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at October 2, 2015 and December 31, 2014, (ii) Consolidated Statements of Operations for the three and nine months ended October 2, 2015 and September 26, 2014, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended October 2, 2015 and September 26, 2014, (iv) Consolidated Statements of Cash Flows for the nine months ended October 2, 2015 and September 26, 2014, and (v) Notes to Consolidated Financial Statements.

33

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 thereunto duly authorized.

GSI Group Inc. (Registrant)

Name	Title	Date
/s/ John A. Roush	Director, Chief Executive Officer	November 4, 2015
John A. Roush
/s/ Robert J. Buckley	Chief Financial Officer	November 4, 2015
Robert J. Buckley

34

EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
3.1	Certificate and Articles of Continuance of the Registrant, dated March 22, 1999.	S-3	333-202597	3.1	03/09/15
3.2	Articles of Amendment of the Registrant, dated May 26, 2005.	S-3	333-202597	3.2	03/02/15
3.3	By-Laws of the Registrant, as amended	10-Q	000-25705	3.2	04/13/10
3.4	Articles of Reorganization of the Registrant, dated July 23, 2010.	8-K	000-25705	3.1	07/23/10
3.5	Articles of Amendment of the Registrant, dated December 29, 2010.	8-K	000-25705	3.1	12/29/10
31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*
31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**
101.INS	XBRL Instance Document.					*
101.SCH	XBRL Schema Document					*
101.CAL	XBRL Calculation Linkbase Document.					*
101.DEF	XBRL Definition Linkbase Document.					*
101.LAB	XBRL Labels Linkbase Document.					*
101.PRE	XBRL Presentation Linkbase Document.					*

* Filed herewith

** Furnished herewith

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at October 2, 2015 and December 31, 2014, (ii) Consolidated Statements of Operations for the three and nine months ended October 2, 2015 and September 26, 2014, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended October 2, 2015 and September 26, 2014, (iv) Consolidated Statements of Cash Flows for the nine months ended October 2, 2015 and September 26, 2014, and (v) Notes to Consolidated Financial Statements.

35

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, John A. Roush, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GSI Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2015

/s/ John A. Roush

John A. Roush

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Robert J. Buckley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of GSI Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2015

/s/ Robert J. Buckley

Robert J. Buckley

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of GSI Group Inc. (the “Company”) on Form 10-Q for the period ended October 2, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John A. Roush, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John A. Roush

John A. Roush

Chief Executive Officer

November 4, 2015

This Certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, or incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission by implication or by any reference in any such filings to the Report.

A signed original of this written statement required by Section 906 has been provided to GSI Group Inc. and will be retained by GSI Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of GSI Group Inc. (the “Company”) on Form 10-Q for the period ended October 2, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Buckley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert J. Buckley

Robert J. Buckley

Chief Financial Officer

November 4, 2015

This Certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, or incorporated by reference into any of the Company’s filings with the Securities and Exchange Commission by implication or by any reference in any such filings to the Report.

A signed original of this written statement required by Section 906 has been provided to GSI Group Inc. and will be retained by GSI Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Discontinued Operations and Divestitures - Additional Information (Details) - USD ($)		1 Months Ended	9 Months Ended
	Apr. 15, 2015	Jul. 31, 2014	Oct. 02, 2015	Jun. 30, 2015	Dec. 31, 2014
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Proceeds from sale of business, net of transaction costs			$ 29,570,000
Assets of discontinued operations			0		$ 631,000
Liabilities of discontinued operations			0		$ 324,000
Ownership in joint venture, Excel Laser Technology Private Limited
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Minority interest ownership percentage				50.00%
Ownership in joint venture, Excel Laser Technology Private Limited | Maximum
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Pre-tax gain (loss) on sale of business			(100,000)
JK Lasers Business
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Proceeds from sale of business, net of transaction costs	$ 29,600,000
Pre-tax gain (loss) on sale of business			$ 19,600,000
Scientific Lasers Business
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Proceeds from sale of business, net of transaction costs		$ 6,500,000
Sale proceeds held in escrow		$ 1,500,000
Sale proceeds held in escrow, Period			2016-01

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014	Sep. 26, 2014	Dec. 31, 2013
Other Liabilities Disclosure [Abstract]
Accrued compensation and benefits	$ 8,602	$ 7,741
Accrued warranty	3,529	3,044	$ 3,223	$ 3,315
Accrued professional services	1,332	1,827
Other	8,431	6,789
Total	$ 21,894	$ 19,401

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Summary of Changes in Goodwill (Details) $ in Thousands	9 Months Ended
	Oct. 02, 2015 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Balance at beginning of the period	$ 90,746
Goodwill acquired from the Applimotion acquisition	7,612
Balance at end of the period	$ 98,358

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Accrued Warranty (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014
Product Warranties Disclosures [Abstract]
Balance at beginning of the period	$ 3,044	$ 3,315
Provision charged to cost of revenue	1,878	1,361
Acquisition related warranty accrual	94	90
Use of provision	(1,084)	(1,529)
Divestiture of JK Lasers	(392)
Foreign currency exchange rate changes	(11)	(14)
Balance at end of period	$ 3,529	$ 3,223

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Fair Value Measurements - Additional Information (Details)	7 Months Ended	9 Months Ended
	Oct. 02, 2015 USD ($)	Oct. 02, 2015 Installment
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Business combination, date of agreement		Feb. 19, 2015
Number of contingent consideration installments		2
Applimotion Inc.
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Change in fair value of contingent consideration since the acquisition date | $	$ 0
Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Date for achieving revenue target		Dec. 31, 2015
Contingent consideration payment year		2017
Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Date for achieving revenue target		Dec. 31, 2017
Contingent consideration payment year		2018

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Restructuring, Acquisition and Divestiture Related Costs (Tables)

9 Months Ended

Oct. 02, 2015

Restructuring And Related Activities [Abstract]

Schedule Of Restructuring And Related Cost

The following table summarizes restructuring, acquisition and divestiture related costs in the accompanying consolidated statements of operations (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015			September 26, 2014
2011 restructuring	$	300	$	233	$	953		$	139
2013 restructuring		—		—		—			(66	)
2015 restructuring		—		—		1,484			—
2016 restructuring		751		—		751			—
Total restructuring charges		1,051		233		3,188			73
Acquisition charges		282		26		546			774
Acquisition related incentive compensation		—		512		(612	)		1,102
Divestiture related charges		46		—		1,110			—
Total acquisition and divestiture related charges		328		538		1,044			1,876
Total restructuring, acquisition and divestiture related costs	$	1,379	$	771	$	4,232		$	1,949

Summary of Accrual Activities by Components Related to Company's Restructuring Plans

The following table summarizes the accrual activities, by component, related to the Company’s restructuring plans recorded in the accompanying consolidated balance sheets (in thousands):

	Total			Severance			Facility			Depreciation			Other
Balance at December 31, 2014	$	231		$	102		$	105		$	—		$	24
Restructuring charges		3,188			2,021			139			832			196
Cash payments		(1,742	)		(1,438	)		(222	)		—			(82	)
Non-cash write-offs and other adjustments		(827	)		5			—			(832	)		—
Balance at October 2, 2015	$	850		$	690		$	22		$	—		$	138

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Debt (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Less: unamortized debt issuance costs		$ (200)
Total current portion of long-term debt	$ 7,374	7,345
Less: unamortized debt issuance costs		(2,500)
Total long-term debt	100,084	105,030
Total Senior Credit Facilities	107,458	112,375
Term Loans
Debt Instrument [Line Items]
Current portion of long-term debt, Gross	7,500	7,500
Less: unamortized debt issuance costs	(126)	(155)
Total current portion of long-term debt	7,500
Long-term debt, Gross	21,875	27,500
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt, Gross	80,000	80,000
Term Loans and Revolving Credit Facility
Debt Instrument [Line Items]
Less: unamortized debt issuance costs	$ (1,791)	$ (2,470)

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Discontinued Operations and Divestitures (Tables)

9 Months Ended

Oct. 02, 2015

Discontinued Operations And Disposal Groups [Abstract]

Components of Assets and Liabilities and Operating Results of Discontinued Operations

The major components of the assets and liabilities of discontinued operations as of December 31, 2014, respectively, were as follows (in thousands):

	December 31,
	2014
Accounts receivable, net	$	95
Inventories		161
Prepaid and other current assets		8
Other assets		367
Assets of discontinued operations	$	631
Accounts payable	$	16
Accrued expenses and other current liabilities		74
Other liabilities		234
Liabilities of discontinued operations	$	324

The following table presents the operating results which are reported as discontinued operations in the Company’s consolidated statements of operations (in thousands):

	ThreeMonths Ended					Nine Months Ended
	October 2,		September 26,			October 2,			September 26,
	2015		2014			2015			2014
Revenue from discontinued operations	$	—	$	225		$	—		$	10,512
Operating loss from discontinued operations, before income tax	$	—	$	(1,256	)	$	(13	)	$	(6,243	)
Operating loss from discontinued operations, net of tax	$	—	$	(273	)	$	(13	)	$	(4,817	)
Loss on disposal of discontinued operations, net of tax	$	—	$	(321	)	$	—		$	(321	)

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Intangible Assets (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Schedule of Intangible Assets Disclosure [Line Items]
Amortizable intangible assets, gross carrying amount	$ 160,846	$ 155,127
Amortizable intangible assets, accumulated amortization	(109,633)	(100,912)
Amortizable intangible assets, net carrying amount	51,213	54,215
Non-amortizable intangible assets	13,027	13,027
Gross carrying amount	173,873	168,154
Net carrying amount	64,240	67,242
Patents and Acquired Technologies
Schedule of Intangible Assets Disclosure [Line Items]
Amortizable intangible assets, gross carrying amount	80,695	78,253
Amortizable intangible assets, accumulated amortization	(65,236)	(62,010)
Amortizable intangible assets, net carrying amount	15,459	16,243
Customer Relationships
Schedule of Intangible Assets Disclosure [Line Items]
Amortizable intangible assets, gross carrying amount	65,030	63,029
Amortizable intangible assets, accumulated amortization	(35,581)	(31,531)
Amortizable intangible assets, net carrying amount	29,449	31,498
Customer Backlog
Schedule of Intangible Assets Disclosure [Line Items]
Amortizable intangible assets, gross carrying amount	2,447	1,810
Amortizable intangible assets, accumulated amortization	(2,265)	(1,641)
Amortizable intangible assets, net carrying amount	182	169
Non-compete Covenant
Schedule of Intangible Assets Disclosure [Line Items]
Amortizable intangible assets, gross carrying amount	2,514	1,830
Amortizable intangible assets, accumulated amortization	(747)	(366)
Amortizable intangible assets, net carrying amount	1,767	1,464
Trademarks and Trade Names
Schedule of Intangible Assets Disclosure [Line Items]
Amortizable intangible assets, gross carrying amount	10,160	10,205
Amortizable intangible assets, accumulated amortization	(5,804)	(5,364)
Amortizable intangible assets, net carrying amount	$ 4,356	$ 4,841

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Accumulated Other Comprehensive Income (Loss) (Details) $ in Thousands	9 Months Ended
	Oct. 02, 2015 USD ($)
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ (16,456)
Other comprehensive income (loss)	(2,223)
Amounts reclassified from other comprehensive income (loss)	988	[1]
Ending Balance	(17,691)
Foreign currency translation adjustments
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(5,615)
Other comprehensive income (loss)	(2,506)
Amounts reclassified from other comprehensive income (loss)	334	[1]
Ending Balance	(7,787)
Pension liability
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(10,841)
Other comprehensive income (loss)	283
Amounts reclassified from other comprehensive income (loss)	654	[1]
Ending Balance	$ (9,904)

[1] The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses and loss from discontinued operations, net of tax in the consolidated statements of operations.

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Summary of Fair Values of Assets Acquired and Liabilities Assumed Purchase Price Allocation (Details) - USD ($) $ in Thousands	Feb. 19, 2015	Oct. 02, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Goodwill		$ 98,358	$ 90,746
Applimotion Inc.
Business Acquisition [Line Items]
Cash	$ 317
Accounts receivable	1,821
Inventory	2,041
Prepaid expenses and other current assets	89
Property and equipment	308
Intangible assets	6,071
Goodwill	7,612
Total assets acquired	18,259
Accounts payable	964
Other liabilities	717
Deferred tax liabilities	2,248
Total liabilities assumed	3,929
Total assets acquired and liabilities assumed	14,330
Less: cash acquired	317
Total purchase price, net of cash acquired	14,013
Less: contingent consideration	965
Net cash used for acquisition of business	$ 13,048

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Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
2015 (remainder of year)	$ 3,026
2016	10,806
2017	9,863
2018	7,754
2019	5,495
Thereafter	14,269
Amortizable intangible assets, net carrying amount	51,213	$ 54,215
Cost of Revenue
Finite-Lived Intangible Assets [Line Items]
2015 (remainder of year)	1,175
2016	3,550
2017	3,229
2018	1,754
2019	1,487
Thereafter	4,264
Amortizable intangible assets, net carrying amount	15,459
Operating Expenses
Finite-Lived Intangible Assets [Line Items]
2015 (remainder of year)	1,851
2016	7,256
2017	6,634
2018	6,000
2019	4,008
Thereafter	10,005
Amortizable intangible assets, net carrying amount	$ 35,754

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Revenue, Gross Profit and Gross Profit Margin by Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Segment Reporting Information [Line Items]
Revenue	$ 92,271	$ 94,656	$ 283,379	$ 270,694
Gross Profit	$ 39,910	$ 39,683	$ 121,261	$ 110,439
Gross profit margin percentage	43.30%	41.90%	42.80%	40.80%
Laser Products
Segment Reporting Information [Line Items]
Revenue	$ 41,330	$ 45,806	$ 128,475	$ 131,494
Gross Profit	$ 18,851	$ 20,269	$ 57,176	$ 54,437
Gross profit margin percentage	45.60%	44.20%	44.50%	41.40%
Vision Technologies
Segment Reporting Information [Line Items]
Revenue	$ 30,992	$ 32,680	$ 93,319	$ 89,838
Gross Profit	$ 12,152	$ 12,945	$ 36,823	$ 35,672
Gross profit margin percentage	39.20%	39.60%	39.50%	39.70%
Precision Motion
Segment Reporting Information [Line Items]
Revenue	$ 19,949	$ 16,170	$ 61,585	$ 49,362
Gross Profit	$ 9,233	$ 6,776	$ 28,309	$ 21,141
Gross profit margin percentage	46.30%	41.90%	46.00%	42.80%
Unallocated Corporate and Shared Services
Segment Reporting Information [Line Items]
Gross Profit	$ (326)	$ (307)	$ (1,047)	$ (811)

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Share Based Compensation Expense Recorded In Income from Continuing Operations in Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 961	$ 1,246	$ 3,173	$ 3,984
Selling, general and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation expense	849	886	3,165	3,156
Research and development and engineering
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation expense	42	49	122	144
Cost of Revenue
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 70	43	207	112
Restructuring, acquisition and divestiture related costs
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation expense		$ 268	$ (321)	$ 572

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Goodwill and Intangible Assets - Additional Information (Details)	3 Months Ended
	Jul. 03, 2015 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Impairment Charge, Goodwill	$ 0

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Business Combinations

9 Months Ended

Oct. 02, 2015

Business Combinations [Abstract]

Business Combinations

2. Business Combinations

On February 19, 2015, the Company acquired 100% of the outstanding stock of Applimotion Inc. (“Applimotion”), a Loomis, California based provider of advanced precision motor and motion control technology to OEM customers in the medical and advanced industrial markets, for a total purchase price of $14.0 million, net of working capital adjustments. The purchase price includes $13.0 million cash paid for the acquisition and $1.0 million estimated fair value of future contingent considerations payable upon the achievement of certain revenue targets for fiscal years 2015 to 2017. The undiscounted range of possible contingent considerations is zero to $4.0 million. The Company expects that the addition of Applimotion will enable the Company to offer a broader range of motion control technologies and integrated solutions to customers. The Company recognized Applimotion acquisition costs of zero and $0.2 million during the three and nine months ended October 2, 2015, respectively. Acquisition-related costs are included in restructuring, acquisition and divestiture related costs in the consolidated statements of operations.

The acquisition of Applimotion has been accounted for as a business combination. The allocation of the purchase price is based upon the estimated fair value of assets acquired and liabilities assumed as of the acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of Applimotion and the Company. The process for estimating the fair values of identifiable intangible assets and the contingent consideration liability requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

The total purchase price was allocated as follows (in thousands):

	PurchasePrice
	Allocation
Cash	$	317
Accounts receivable		1,821
Inventory		2,041
Prepaid expenses and other current assets		89
Property and equipment		308
Intangible assets		6,071
Goodwill		7,612
Total assets acquired		18,259
Accounts payable		964
Other liabilities		717
Deferred tax liabilities		2,248
Total liabilities assumed		3,929
Total assets acquired and liabilities assumed		14,330
Less: cash acquired		317
Total purchase price, net of cash acquired		14,013
Less: contingent consideration		965
Net cash used for acquisition of business	$	13,048

The fair value of intangible assets is comprised of the following (dollar amounts in thousands):

			Weighted Average
	Estimated Fair		Amortization
	Value		Period
Developed technology	$	2,684	10 years
Customer relationships		2,066	10 years
Non-compete covenant		684	4 years
Backlog		637	1 year
Total	$	6,071

The purchase price allocation resulted in $7.6 million of goodwill and $6.1 million of identifiable intangible assets, none of which is expected to be deductible for tax purposes. Intangible assets are being amortized over their weighted average useful lives primarily based upon the pattern in which anticipated economic benefits from such assets are expected to be realized. The goodwill recorded represents the anticipated incremental value of future cash flow potential attributable to: (i) Applimotion’s ability to grow their business with existing and new customers, (ii) the potential to realize cost improvements due to scale and more efficient operations, (iii) the opportunity to serve customers with integrated assemblies that feature products from both Applimotion and the Company and, (iv) the potential to sell the Company’s products into Applimotion’s customer base.

The results of the Applimotion acquisition were included in the Company’s results of operations beginning on February 19, 2015. The pro forma financial information reflecting the operating results of Applimotion, as if it had been acquired on January 1, 2014, is not presented herein as it would not differ materially from the operating results of the Company as reported for 2014. Applimotion is included in the Company’s Precision Motion reportable segment.

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Income Taxes - Additional Information (Details)	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Income Taxes [Line Items]
Effective tax rate on income from operations	27.20%	28.20%	26.30%	30.60%
CANADA
Income Taxes [Line Items]
Statutory tax rate	27.00%	27.00%	27.00%	27.00%

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Computation of Basic and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Numerators:
Income from continuing operations	$ 6,568	$ 5,119	$ 29,525	$ 11,381
Loss from discontinued operations		(594)	(13)	(5,138)
Less: Income attributable to noncontrolling interest				(10)
Loss from discontinued operations attributable to GSI Group Inc.		(594)	(13)	(5,148)
Net income attributable to GSI Group Inc.	$ 6,568	$ 4,525	$ 29,512	$ 6,233
Denominators:
Weighted average common shares outstanding—basic	34,599	34,389	34,578	34,333
Dilutive potential common shares	456	404	449	392
Weighted average common shares outstanding— diluted	35,055	34,793	35,027	34,725
Antidilutive common shares excluded from above				29
Basic Earnings (Loss) per Common Share:
From continuing operations	$ 0.19	$ 0.15	$ 0.85	$ 0.33
From discontinued operations		(0.02)	0.00	(0.15)
Basic earnings per share attributable to GSI Group Inc.	0.19	0.13	0.85	0.18
Diluted Earnings (Loss) per Common Share:
From continuing operations	0.19	0.15	0.84	0.33
From discontinued operations		(0.02)	0.00	(0.15)
Diluted earnings per share attributable to GSI Group Inc.	$ 0.19	$ 0.13	$ 0.84	$ 0.18

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Oct. 02, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Changes in Goodwill

The following table summarizes changes in goodwill during the nine months ended October 2, 2015 (in thousands):

Balance at beginning of the period	$	90,746
Goodwill acquired from the Applimotion acquisition		7,612
Balance at end of the period	$	98,358

Goodwill by Reportable Segment

Goodwill by reportable segment as of October 2, 2015 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	33,903		$	249,587
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	16,857		$	98,358

Goodwill by reportable segment as of December 31, 2014 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	26,291		$	241,975
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	9,245		$	90,746

Intangible Assets

Intangible assets as of October 2, 2015 and December 31, 2014, respectively, are summarized as follows (in thousands):

	October 2, 2015							December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		GrossCarrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and acquired technologies	$	80,695	$	(65,236	)	$	15,459	$	78,253	$	(62,010	)	$	16,243
Customer relationships		65,030		(35,581	)		29,449		63,029		(31,531	)		31,498
Customer backlog		2,447		(2,265	)		182		1,810		(1,641	)		169
Non-compete covenant		2,514		(747	)		1,767		1,830		(366	)		1,464
Trademarks and trade names		10,160		(5,804	)		4,356		10,205		(5,364	)		4,841
Amortizable intangible assets		160,846		(109,633	)		51,213		155,127		(100,912	)		54,215
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	173,873	$	(109,633	)	$	64,240	$	168,154	$	(100,912	)	$	67,242

Amortization Expense of Intangible Assets

Amortization expense reported in the consolidated statements of operations is summarized as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Amortization expense – cost of revenue	$	1,175	$	1,614	$	3,468	$	4,529
Amortization expense – operating expenses		1,852		2,843		5,593		7,463
Total amortization expense	$	3,027	$	4,457	$	9,061	$	11,992

Estimated Amortization Expense

Estimated amortization expense for each of the five succeeding years and thereafter as of October 2, 2015 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2015 (remainder of year)	$	1,175	$	1,851	$	3,026
2016		3,550		7,256		10,806
2017		3,229		6,634		9,863
2018		1,754		6,000		7,754
2019		1,487		4,008		5,495
Thereafter		4,264		10,005		14,269
Total	$	15,459	$	35,754	$	51,213

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 02, 2015

Fair Value Disclosures [Abstract]

Fair Values of Financial Assets and Liabilities

The following table summarizes the fair values of our financial assets and liabilities as of October 2, 2015 (in thousands):

			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	521	$	521	$	—	$	—
Liabilities
Contingent consideration	$	965	$	—	$	—	$	965

The following table summarizes the fair values of our financial assets as of December 31, 2014 (in thousands):

			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	2,255	$	2,255	$	—	$	—

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Summary of Other Long Term Liabilities (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Other Liabilities Noncurrent [Abstract]
Capital lease obligations	$ 9,100	$ 9,507
Accrued pension liabilities	4,805	6,037
Other	3,572	3,275
Total	$ 17,477	$ 18,819

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Earnings Per Common Share - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended	9 Months Ended	13 Months Ended
	Oct. 02, 2015	Oct. 02, 2015	Dec. 31, 2014	Oct. 31, 2013
Computation Of Earnings Per Share Line Items
Repurchase of common stock	$ 1,000,000	$ 997,000	$ 500,000
Shares repurchased, average cost per share	$ 13.03
Capital Stock
Computation Of Earnings Per Share Line Items
Shares repurchased	77		50
Maximum
Computation Of Earnings Per Share Line Items
Outstanding common stock repurchase program authorized amount				$ 10,000,000

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Supplementary Balance Sheet Information (Tables)

9 Months Ended

Oct. 02, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Inventories

Inventories

	October 2, 2015		December 31, 2014
Raw materials	$	39,005	$	38,934
Work-in-process		10,624		9,899
Finished goods		9,673		11,945
Demo and consigned inventory		1,966		2,165
Total inventories	$	61,268	$	62,943

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

	October 2, 2015		December 31, 2014
Accrued compensation and benefits	$	8,602	$	7,741
Accrued warranty		3,529		3,044
Accrued professional services		1,332		1,827
Other		8,431		6,789
Total	$	21,894	$	19,401

Accrued Warranty

Accrued Warranty

	Nine Months Ended
	October 2, 2015			September 26, 2014
Balance at beginning of the period	$	3,044		$	3,315
Provision charged to cost of revenue		1,878			1,361
Acquisition related warranty accrual		94			90
Use of provision		(1,084	)		(1,529	)
Divestiture of JK Lasers		(392	)		—
Foreign currency exchange rate changes		(11	)		(14	)
Balance at end of period	$	3,529		$	3,223

Summary of Other Long Term Liabilities

Other Long Term Liabilities

	October 2, 2015		December 31, 2014
Capital lease obligations	$	9,100	$	9,507
Accrued pension liabilities		4,805		6,037
Other		3,572		3,275
Total	$	17,477	$	18,819

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Debt (Tables)

9 Months Ended

Oct. 02, 2015

Debt Disclosure [Abstract]

Debt

Debt consisted of the following (in thousands):

	October 2, 2015			December 31, 2014
Senior Credit Facilities – term loan	$	7,500		$	7,500
Less: unamortized debt issuance costs		(126	)		(155	)
Total current portion of long-term debt	$	7,374		$	7,345
Senior Credit Facilities – term loan	$	21,875		$	27,500
Senior Credit Facilities – revolving credit facility		80,000			80,000
Less: unamortized debt issuance costs		(1,791	)		(2,470	)
Total long-term debt	$	100,084		$	105,030
Total Senior Credit Facilities	$	107,458		$	112,375

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Basis of Presentation

9 Months Ended

Oct. 02, 2015

Accounting Policies [Abstract]

Basis of Presentation

1. Basis of Presentation

GSI Group Inc. and its subsidiaries (collectively referred to as the “Company”, “we”, “us”, “our”) design, develop, manufacture and sell precision photonic and motion control components and subsystems to Original Equipment Manufacturers (“OEMs”) in the medical and advanced industrial markets. The Company is a leader in highly engineered enabling technologies, including CO2 laser sources, laser scanning and beam delivery products, optical data collection and machine vision technologies, medical visualization and informatics solutions, and precision motion control products. The Company specializes in collaborating with OEM customers to adapt its component and subsystem technologies to deliver highly differentiated performance in their applications.

The accompanying unaudited interim consolidated financial statements have been prepared in U.S. dollars and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim financial statements. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements and notes included in this report should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, these interim consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the interim periods presented. The results for interim periods are not necessarily indicative of results to be expected for the full year or for any future periods.

During the second quarter ended July 3, 2015, the Company deconsolidated its 50% owned joint venture, Excel Laser Technology Private Limited (the “India JV”), as a result of an agreement executed in June 2015 to sell 100% of the Company’s interest in the India JV. The accounts of the India JV were previously included in discontinued operations in the consolidated financial statements.

The Company owns 41% of Laser Quantum Ltd. (“Laser Quantum”), a privately held company located in the United Kingdom. The Company records the results of this entity under the equity method as it does not have a controlling interest in the entity.

The Company’s unaudited interim financial statements are prepared on a quarterly basis ending on the Friday closest to the end of the calendar quarter, with the exception of the fourth quarter which always ends on December 31.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates based on historical experience, current conditions and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which they are deemed to be necessary. Actual results could differ significantly from those estimates.

Recent Accounting Pronouncements

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 provides guidance on determining when disposals can be presented as discontinued operations. ASU 2014-08 requires that only disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results should be presented as discontinued operations. A strategic shift may include a disposal of a major line of business, a major equity method investment or a major part of an entity. Additionally, ASU 2014-08 requires expanded disclosures regarding discontinued operations. ASU 2014-08 is effective prospectively for reporting periods beginning after December 15, 2014. The Company adopted this pronouncement in January 2015.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires debt issuance related costs to be presented in the balance sheet as a direct reduction to the carrying amount of the associated debt liability, consistent with the presentation of a debt discount. The Company adopted the provisions of ASU 2015-03 retrospectively as of the fiscal quarter ended October 2, 2015. Prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2014, $0.2 million of debt issuance costs were reclassified from prepaid expenses and other current assets to current portion of long-term debt and $2.5 million was reclassified from other long-term assets to long-term debt in the consolidated balance sheet. Other than these reclassifications, the adoption of ASU 2015-03 did not have an impact on the Company’s consolidated financial statements.

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 will be effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption permitted. Upon adoption, an entity may apply the new guidance either retrospectively or prospectively to all arrangements entered into or materially modified after the effective date. The Company is currently evaluating the impact of ASU 2015-05 on the Company’s consolidated financial statements.

Business Combinations

In September 2015, the FASB issued ASU 2015-16, “Business Combinations,” which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment had been recognized at the acquisition date. ASU 2015-16 will be effective prospectively for reporting periods beginning after December 15, 2015. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition,” and requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2016. Early adoption is not permitted. Upon adoption, an entity may apply the new guidance either retrospectively to each prior reporting period presented or retrospectively only to customer contracts not yet completed as of the date of adoption with the cumulative effect of initially applying the standard recognized in beginning retained earnings at the date of the initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers – Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 by one year, with the option of early adoption as of the original effective date. The amendment in ASU 2015-14 will result in ASU 2014-09 being effective for annual and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements.

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)," which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. ASU 2014-15 will be effective for annual reporting periods ending after December 15, 2016. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have any impact on the Company’s consolidated financial statements.

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Share-Based Compensation (Tables)

9 Months Ended

Oct. 02, 2015

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Share Based Compensation Expense Recorded In Income from Continuing Operations in Statements of Operations

The table below summarizes share-based compensation expense recorded in income from continuing operations in the consolidated statements of operations (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015			September 26, 2014
Selling, general and administrative	$	849	$	886	$	3,165		$	3,156
Research and development and engineering		42		49		122			144
Cost of revenue		70		43		207			112
Restructuring, acquisition and divestiture related costs		—		268		(321	)		572
Total share-based compensation expense	$	961	$	1,246	$	3,173		$	3,984

2010 Incentive Award Plan

Share Based Compensation Arrangement By Share Based Payment Award [Line Items]

Restricted Stock Issued and Outstanding

The table below summarizes activities relating to restricted stock units issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the nine months ended October 2, 2015:

	Restricted Stock Units (In thousands)			Weighted Average Grant Date Fair Value
Unvested at December 31, 2014		749		$	10.80
Granted		305		$	13.34
Vested		(311	)	$	11.01
Forfeited		(42	)	$	11.03
Unvested at October 2, 2015		701		$	11.80
Expected to vest as of October 2, 2015		685

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Components of Assets and Liabilities (Details) - USD ($)	Oct. 02, 2015	Dec. 31, 2014
Discontinued Operations And Disposal Groups [Abstract]
Accounts receivable, net		$ 95,000
Inventories		161,000
Prepaid and other current assets		8,000
Other assets		367,000
Assets of discontinued operations	$ 0	631,000
Accounts payable		16,000
Accrued expenses and other current liabilities		74,000
Other liabilities		234,000
Liabilities of discontinued operations	$ 0	$ 324,000

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Inventories (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 39,005	$ 38,934
Work-in-process	10,624	9,899
Finished goods	9,673	11,945
Demo and consigned inventory	1,966	2,165
Total inventories	$ 61,268	$ 62,943

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CONSOLIDATED BALANCE SHEETS - USD ($)	Oct. 02, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 80,089,000	$ 51,146,000
Accounts receivable, net of allowance of $311 and $282, respectively	56,050,000	51,494,000
Inventories	61,268,000	62,943,000
Income taxes receivable	5,662,000	5,906,000
Deferred tax assets	3,820,000	5,971,000
Prepaid expenses and other current assets	5,361,000	5,081,000
Assets of discontinued operations	0	631,000
Total current assets	212,250,000	183,172,000
Property, plant and equipment, net	37,596,000	40,088,000
Deferred tax assets	1,293,000	2,912,000
Other assets	12,163,000	12,134,000
Intangible assets, net	64,240,000	67,242,000
Goodwill	98,358,000	90,746,000
Total assets	425,900,000	396,294,000
Current Liabilities
Current portion of long-term debt	7,374,000	7,345,000
Accounts payable	27,507,000	25,592,000
Income taxes payable	3,009,000	1,189,000
Deferred tax liabilities	202,000	208,000
Accrued expenses and other current liabilities	21,894,000	19,401,000
Liabilities of discontinued operations	0	324,000
Total current liabilities	59,986,000	54,059,000
Long-term debt	100,084,000	105,030,000
Deferred tax liabilities	2,509,000	35,000
Income taxes payable	5,861,000	7,097,000
Other liabilities	17,477,000	18,819,000
Total liabilities	$ 185,917,000	$ 185,040,000
Commitments and Contingencies (Note 13)
Stockholders’ Equity:
Common shares, no par value; Authorized shares: unlimited; Issued and outstanding: 34,341 and 34,219, respectively	$ 423,856,000	$ 423,856,000
Additional paid-in capital	29,471,000	28,590,000
Accumulated deficit	(195,653,000)	(225,165,000)
Accumulated other comprehensive loss	(17,691,000)	(16,456,000)
Total GSI Group Inc. stockholders’ equity	239,983,000	210,825,000
Noncontrolling interest		429,000
Total stockholders’ equity	239,983,000	211,254,000
Total liabilities and stockholders’ equity	$ 425,900,000	$ 396,294,000

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Fair Values of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Assets
Cash equivalents	$ 521	$ 2,255
Liabilities
Contingent consideration	965
Fair Value, Inputs, Level 1
Assets
Cash equivalents	521	$ 2,255
Fair Value, Inputs, Level 3
Liabilities
Contingent consideration	$ 965

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Statement Of Income And Comprehensive Income [Abstract]
Foreign currency translation adjustments - Tax effect on component of comprehensive income	$ 0.2	$ 0.4	$ 0.2	$ 0.2

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Restricted Stock Units Issued and Outstanding (Details) - 2010 Incentive Award Plan - Restricted Stock Units (RSUs) shares in Thousands	9 Months Ended
	Oct. 02, 2015 $ / shares shares
Restricted Stock Units
Unvested, Beginning Balance	749
Granted	305
Vested	(311)
Forfeited	(42)
Unvested, Ending Balance	701
Expected to vest at end of period	685
Weighted Average Grant Date Fair Value
Unvested, Beginning Balance | $ / shares	$ 10.80
Granted | $ / shares	13.34
Vested | $ / shares	11.01
Forfeited | $ / shares	11.03
Unvested, Ending Balance | $ / shares	$ 11.80

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Basis of Presentation - Additional information (Details) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Jun. 30, 2015	Oct. 02, 2015	Jul. 03, 2015	Dec. 31, 2014
Basis Of Presentation [Line Items]
Equity method investment ownership percentage on Laser Quantum		41.00%
Reclassification of debt issuance costs from other assets				$ 0.2
Reclassification from other assets to long term debt				$ 2.5
Ownership in joint venture, Excel Laser Technology Private Limited
Basis Of Presentation [Line Items]
Minority interest ownership percentage			50.00%
Percentage of Company's interests sold	100.00%

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Summary of Accrual Activities by Components Related to Company's Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Restructuring Cost And Reserve [Line Items]
Accrued expense beginning balance			$ 231
Restructuring charges	$ 1,051	$ 233	3,188	$ 73
Cash payments			(1,742)
Non-cash write-offs and other adjustments			(827)
Accrued expense ending balance	850		850
Severance
Restructuring Cost And Reserve [Line Items]
Accrued expense beginning balance			102
Restructuring charges			2,021
Cash payments			(1,438)
Non-cash write-offs and other adjustments			5
Accrued expense ending balance	690		690
Facility
Restructuring Cost And Reserve [Line Items]
Accrued expense beginning balance			105
Restructuring charges			139
Cash payments			(222)
Accrued expense ending balance	22		22
Depreciation
Restructuring Cost And Reserve [Line Items]
Restructuring charges			832
Non-cash write-offs and other adjustments			(832)
Other Restructuring Charges
Restructuring Cost And Reserve [Line Items]
Accrued expense beginning balance			24
Restructuring charges			196
Cash payments			(82)
Accrued expense ending balance	$ 138		$ 138

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Subsequent Events

9 Months Ended

Oct. 02, 2015

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

On November 3, 2015, the Company entered into an agreement to acquire Lincoln Laser Company, a Phoenix, Arizona-based provider of ultrafast precision polygon scanners and other optical scanning solutions for the medical, food processing, and advanced industrial markets. The initial purchase price is $11 million in cash, subject to customary working capital adjustments. The transaction is expected to close in November 2015. Lincoln Laser Company specializes in ultrafast scanning, leveraging their expertise in polygon motor design and electro-optic subsystems. The acquisition creates an expanded range of highly competitive beam delivery technologies that significantly enhances the Company’s value proposition with OEM customers in growth applications. The Lincoln Laser business will be integrated into the Company’s beam delivery business line, which is part of the Company’s Laser Products segment.

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Business Combinations - Additional Information (Details) - USD ($)		3 Months Ended		9 Months Ended
	Feb. 19, 2015	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014	Dec. 31, 2014
Business Acquisition [Line Items]
Recognized acquisition costs		$ 282,000	$ 26,000	$ 546,000	$ 774,000
Goodwill		98,358,000		98,358,000		$ 90,746,000
Applimotion Inc.
Business Acquisition [Line Items]
Membership interests acquired	100.00%
Total purchase price	$ 14,013,000
Net cash used for acquisition of business	13,048,000
Future contingent consideration	965,000
Undiscounted range of outcomes, minimum	0
Undiscounted range of outcomes, maximum	4,000,000
Recognized acquisition costs		$ 0		$ 200,000
Goodwill	7,612,000
Intangible assets	6,071,000
Goodwill and intangible assets expected to be deductible for tax purposes	$ 0

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Business Combinations (Tables) - Applimotion Inc.

9 Months Ended

Oct. 02, 2015

Summary of Fair Values of Assets Acquired and Liabilities Assumed Purchase Price Allocation

The total purchase price was allocated as follows (in thousands):

	PurchasePrice
	Allocation
Cash	$	317
Accounts receivable		1,821
Inventory		2,041
Prepaid expenses and other current assets		89
Property and equipment		308
Intangible assets		6,071
Goodwill		7,612
Total assets acquired		18,259
Accounts payable		964
Other liabilities		717
Deferred tax liabilities		2,248
Total liabilities assumed		3,929
Total assets acquired and liabilities assumed		14,330
Less: cash acquired		317
Total purchase price, net of cash acquired		14,013
Less: contingent consideration		965
Net cash used for acquisition of business	$	13,048

Fair Value of Intangible Assets

The fair value of intangible assets is comprised of the following (dollar amounts in thousands):

			Weighted Average
	Estimated Fair		Amortization
	Value		Period
Developed technology	$	2,684	10 years
Customer relationships		2,066	10 years
Non-compete covenant		684	4 years
Backlog		637	1 year
Total	$	6,071

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Operating Income (Loss) from Continuing Operations by Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Operating Income (Loss) from Continuing Operations
Operating Income (Loss) from Continuing Operations	$ 9,007	$ 6,822	$ 24,719	$ 17,370
Laser Products
Operating Income (Loss) from Continuing Operations
Operating Income (Loss) from Continuing Operations	10,145	9,857	28,586	23,828
Vision Technologies
Operating Income (Loss) from Continuing Operations
Operating Income (Loss) from Continuing Operations	(388)	(1,115)	(1,056)	(1,194)
Precision Motion
Operating Income (Loss) from Continuing Operations
Operating Income (Loss) from Continuing Operations	4,417	2,796	14,357	9,525
Unallocated Corporate and Shared Services
Operating Income (Loss) from Continuing Operations
Operating Income (Loss) from Continuing Operations	$ (5,167)	$ (4,716)	$ (17,168)	$ (14,789)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014
Cash flows from operating activities:
Consolidated net income	$ 29,512	$ 6,243
Less: Loss from discontinued operations, net of tax	13	5,138
Income from continuing operations	29,525	11,381
Adjustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations:
Depreciation and amortization	14,088	17,495
Provision for inventory excess and obsolescence	1,303	704
Share-based compensation	3,494	3,412
Deferred income taxes	3,782	(1,653)
Earnings from equity-method investment	(2,007)	(1,707)
Gain on disposal of business	(19,633)
Non-cash restructuring and acquisition related charges	511	944
Other	897	1,478
Changes in assets and liabilities which (used) provided cash, excluding effects from businesses purchased or classified as discontinued operations:
Accounts receivable	(6,996)	(835)
Inventories	(5,352)	116
Income taxes receivable, prepaid expenses and other current assets	1,244	911
Accounts payable, income taxes payable, accrued expenses and other current liabilities	6,602	1,706
Other non-current assets and liabilities	(1,982)	463
Cash provided by operating activities of continuing operations	25,476	34,415
Cash used in operating activities of discontinued operations	(13)	(761)
Cash provided by operating activities	25,463	33,654
Cash flows from investing activities:
Purchases of property, plant and equipment	(4,111)	(3,783)
Acquisition of businesses, net of cash acquired and escrow recovery	(13,048)	(88,238)
Proceeds from sale of business, net of transaction costs	29,570
Proceeds from the sale of property, plant and equipment	123	57
Cash provided by (used in) investing activities of continuing operations	12,534	(91,964)
Cash provided by investing activities of discontinued operations		4,344
Cash provided by (used in) investing activities	12,534	(87,620)
Cash flows from financing activities:
Borrowings under revolving credit facility	13,000	77,000
Repayments of long-term debt and revolving credit facility	(18,625)	(26,625)
Payments for debt issuance costs		(712)
Payments of withholding taxes from stock-based awards	(1,431)	(1,605)
Capital lease payments	(414)	(938)
Repurchase of common stock	(997)
Other financing activities	23	471
Cash provided by (used in) financing activities of continuing operations	(8,444)	47,591
Cash provided by financing activities of discontinued operations	0	0
Cash provided by (used in) financing activities	(8,444)	47,591
Effect of exchange rates on cash and cash equivalents	(610)	(1,056)
Increase (decrease) in cash and cash equivalents	28,943	(7,431)
Cash and cash equivalents, beginning of period	51,146	60,980
Cash and cash equivalents, end of period	80,089	53,549
Supplemental disclosure of cash flow information:
Cash paid for interest	2,939	2,644
Cash paid for income taxes	6,071	3,944
Income tax refunds received	$ 63	$ 150

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Accounts receivable, allowance	$ 311	$ 282
Common shares, no par value	$ 0	$ 0
Common shares, Issued	34,341	34,219
Common shares, outstanding	34,341	34,219

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Share-Based Compensation

9 Months Ended

Oct. 02, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

10. Share-Based Compensation

The table below summarizes activities relating to restricted stock units issued and outstanding under the Company’s Amended and Restated 2010 Incentive Plan during the nine months ended October 2, 2015:

	Restricted Stock Units (In thousands)			Weighted Average Grant Date Fair Value
Unvested at December 31, 2014		749		$	10.80
Granted		305		$	13.34
Vested		(311	)	$	11.01
Forfeited		(42	)	$	11.03
Unvested at October 2, 2015		701		$	11.80
Expected to vest as of October 2, 2015		685

The total fair value of restricted stock units that vested during the nine months ended October 2, 2015, based on the market price of the underlying stock on the date of vesting, was $3.9 million.

The table below summarizes share-based compensation expense recorded in income from continuing operations in the consolidated statements of operations (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015			September 26, 2014
Selling, general and administrative	$	849	$	886	$	3,165		$	3,156
Research and development and engineering		42		49		122			144
Cost of revenue		70		43		207			112
Restructuring, acquisition and divestiture related costs		—		268		(321	)		572
Total share-based compensation expense	$	961	$	1,246	$	3,173		$	3,984

The expense recorded during each of the nine-month periods ended October 2, 2015 and September 26, 2014, respectively, included $0.5 million related to deferred stock units granted to the members of the Company’s Board of Directors, pursuant to the Company’s Amended and Restated 2010 Incentive Plan. The expense associated with the respective deferred stock units was recognized in full on the date of grant, as the deferred stock units were fully vested and non-forfeitable upon grant.

In March 2014, the Company granted restricted stock units in an aggregate of 180,000 shares as employment inducement awards related to an acquisition. These restricted stock units are performance based awards and would vest after two years if certain financial targets and service conditions have been achieved. During the nine months ended October 2, 2015, these financial targets were no longer deemed probable and the cumulative expense was reversed.

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Document and Entity Information - shares	9 Months Ended
	Oct. 02, 2015	Oct. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 02, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Trading Symbol	GSIG
Entity Registrant Name	GSI GROUP INC
Entity Central Index Key	0001076930
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		34,387,509

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Income Taxes

9 Months Ended

Oct. 02, 2015

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The Company determines its estimated annual effective tax rate at the end of each interim period based on full-year forecasted pre-tax income and facts known at that time. The estimated annual effective tax rate is applied to the year-to-date pre-tax income at the end of each interim period. The tax effect of significant unusual items is reflected in the period in which they occur. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 27.0% in the determination of the estimated annual effective tax rate.

The Company’s effective tax rate on income from continuing operations of 27.2% and 26.3%, respectively, for the three and nine month periods ended October 2, 2015 differ from the Canadian statutory rate of 27.0% primarily due to the gain from JK Lasers divestiture, the audit settlement with the U.S. Internal Revenue Service (the “IRS”), mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a full valuation allowance, and the impact of discrete items for the periods. The Company’s effective tax rate on income from continuing operations of 28.2% and 30.6%, respectively, for the three and nine month periods ended September 26, 2014 differ from the Canadian statutory rate of 27.0% primarily due to the mix of income earned in jurisdictions with varying tax rates, losses in jurisdictions with a valuation allowance which are not benefitted in the income tax provision during the periods, and the impact of discrete items for the periods.

The Company maintains a valuation allowance on some of its deferred tax assets in certain jurisdictions. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.

In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of releasing the remaining valuation allowance currently in place on its deferred tax assets. A release would be reported as a reduction to income tax expense without any impact on cash flows in the quarter in which it is released.

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Income Statement [Abstract]
Revenue	$ 92,271	$ 94,656	$ 283,379	$ 270,694
Cost of revenue	52,361	54,973	162,118	160,255
Gross profit	39,910	39,683	121,261	110,439
Operating expenses:
Research and development and engineering	7,693	7,735	23,748	21,117
Selling, general and administrative	19,979	21,512	62,969	62,540
Amortization of purchased intangible assets	1,852	2,843	5,593	7,463
Restructuring, acquisition and divestiture related costs	1,379	771	4,232	1,949
Total operating expenses	30,903	32,861	96,542	93,069
Operating income from continuing operations	9,007	6,822	24,719	17,370
Interest income (expense), net	(1,248)	(1,453)	(4,020)	(3,665)
Foreign exchange transaction gains (losses), net	383	1,030	(2,253)	950
Other income (expense), net	878	733	21,641	1,733
Income from continuing operations before income taxes	9,020	7,132	40,087	16,388
Income tax provision	2,452	2,013	10,562	5,007
Income from continuing operations	6,568	5,119	29,525	11,381
Loss from discontinued operations, net of tax		(273)	(13)	(4,817)
Loss on disposal of discontinued operations, net of tax		(321)		(321)
Consolidated net income	6,568	4,525	29,512	6,243
Less: Net income attributable to noncontrolling interest				(10)
Net income attributable to GSI Group Inc.	$ 6,568	$ 4,525	$ 29,512	$ 6,233
Earnings per common share from continuing operations:
Basic	$ 0.19	$ 0.15	$ 0.85	$ 0.33
Diluted	0.19	0.15	0.84	0.33
Loss per common share from discontinued operations:
Basic		(0.02)	0.00	(0.15)
Diluted		(0.02)	0.00	(0.15)
Earnings per common share attributable to GSI Group Inc.:
Basic	0.19	0.13	0.85	0.18
Diluted	$ 0.19	$ 0.13	$ 0.84	$ 0.18
Weighted average common shares outstanding—basic	34,599	34,389	34,578	34,333
Weighted average common shares outstanding—diluted	35,055	34,793	35,027	34,725

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Earnings per Common Share

9 Months Ended

Oct. 02, 2015

Earnings Per Share [Abstract]

Earnings per Common Share

5. Earnings per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. For diluted earnings per common share, the denominator also includes the dilutive effect of outstanding restricted stock units determined using the treasury stock method. Dilutive effects of contingently issuable shares are included in the weighted average dilutive share calculation when the contingencies have been resolved. For periods in which net losses are generated, the dilutive potential common shares are excluded from the calculation of diluted earnings per share as the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share amounts):

	ThreeMonths Ended					Nine Months Ended
	October 2,		September 26,			October 2,			September 26,
	2015		2014			2015			2014
Numerators:
Income from continuing operations	$	6,568	$	5,119		$	29,525		$	11,381
Loss from discontinued operations		—		(594	)		(13	)		(5,138	)
Less: Income attributable to noncontrolling interest		—		—			—			(10	)
Loss from discontinued operations attributable to GSI Group Inc.		—		(594	)		(13	)		(5,148	)
Net income attributable to GSI Group Inc.	$	6,568	$	4,525		$	29,512		$	6,233
Denominators:
Weighted average common shares outstanding— basic		34,599		34,389			34,578			34,333
Dilutive potential common shares		456		404			449			392
Weighted average common shares outstanding— diluted		35,055		34,793			35,027			34,725
Antidilutive common shares excluded from above		—		—			—			29
Basic Earnings (Loss) per Common Share:
From continuing operations	$	0.19	$	0.15		$	0.85		$	0.33
From discontinued operations	$	—	$	(0.02	)	$	(0.00	)	$	(0.15	)
Basic earnings per share attributable to GSI Group Inc.	$	0.19	$	0.13		$	0.85		$	0.18
Diluted Earnings (Loss) per Common Share:
From continuing operations	$	0.19	$	0.15		$	0.84		$	0.33
From discontinued operations	$	—	$	(0.02	)	$	(0.00	)	$	(0.15	)
Diluted earnings per share attributable to GSI Group Inc.	$	0.19	$	0.13		$	0.84		$	0.18

Common Stock Repurchases

In October 2013, the Company’s Board of Directors authorized a share repurchase plan under which the Company may repurchase outstanding shares of the Company’s common stock up to an aggregate amount of $10.0 million. The shares may be repurchased from time to time, at the Company’s discretion, based on ongoing assessment of the capital needs of the business, the market price of the Company’s common stock, and general market conditions. Shares may also be repurchased through an accelerated stock purchase agreement, on the open market or in privately negotiated transactions in accordance with applicable federal securities laws. Repurchases may be made under certain SEC regulations, which would permit common stock to be purchased when the Company would otherwise be prohibited from doing so under insider trading laws. The share repurchase plan does not obligate the Company to acquire any particular amount of common stock. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time. As of December 31, 2014, the Company had cumulatively repurchased 50 thousand shares of its common stock for an aggregate amount of $0.5 million. During the third quarter of 2015, the Company repurchased 77 thousand shares in the open market for an aggregate purchase price of $1.0 million at an average price of $13.03 per share.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Oct. 02, 2015

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

4. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) was as follows (in thousands):

	Total accumulated
	other			Foreign currency
	comprehensive			translation			Pension
	income (loss)			adjustments			liability
Balance at December 31, 2014	$	(16,456	)	$	(5,615	)	$	(10,841	)
Other comprehensive income (loss)		(2,223	)		(2,506	)		283
Amounts reclassified from other comprehensive income (loss) (1)		988			334			654
Balance at October 2, 2015	$	(17,691	)	$	(7,787	)	$	(9,904	)

(1) The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses and loss from discontinued operations, net of tax in the consolidated statements of operations.

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Basis of Presentation (Policies)

9 Months Ended

Oct. 02, 2015

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates based on historical experience, current conditions and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed on an on-going basis and the effects of revisions are reflected in the period in which they are deemed to be necessary. Actual results could differ significantly from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 provides guidance on determining when disposals can be presented as discontinued operations. ASU 2014-08 requires that only disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results should be presented as discontinued operations. A strategic shift may include a disposal of a major line of business, a major equity method investment or a major part of an entity. Additionally, ASU 2014-08 requires expanded disclosures regarding discontinued operations. ASU 2014-08 is effective prospectively for reporting periods beginning after December 15, 2014. The Company adopted this pronouncement in January 2015.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires debt issuance related costs to be presented in the balance sheet as a direct reduction to the carrying amount of the associated debt liability, consistent with the presentation of a debt discount. The Company adopted the provisions of ASU 2015-03 retrospectively as of the fiscal quarter ended October 2, 2015. Prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2014, $0.2 million of debt issuance costs were reclassified from prepaid expenses and other current assets to current portion of long-term debt and $2.5 million was reclassified from other long-term assets to long-term debt in the consolidated balance sheet. Other than these reclassifications, the adoption of ASU 2015-03 did not have an impact on the Company’s consolidated financial statements.

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 will be effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption permitted. Upon adoption, an entity may apply the new guidance either retrospectively or prospectively to all arrangements entered into or materially modified after the effective date. The Company is currently evaluating the impact of ASU 2015-05 on the Company’s consolidated financial statements.

Business Combinations

In September 2015, the FASB issued ASU 2015-16, “Business Combinations,” which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment had been recognized at the acquisition date. ASU 2015-16 will be effective prospectively for reporting periods beginning after December 15, 2015. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements.

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition,” and requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2016. Early adoption is not permitted. Upon adoption, an entity may apply the new guidance either retrospectively to each prior reporting period presented or retrospectively only to customer contracts not yet completed as of the date of adoption with the cumulative effect of initially applying the standard recognized in beginning retained earnings at the date of the initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers – Deferral of the Effective Date”, which defers the effective date of ASU 2014-09 by one year, with the option of early adoption as of the original effective date. The amendment in ASU 2015-14 will result in ASU 2014-09 being effective for annual and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements.

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)," which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. ASU 2014-15 will be effective for annual reporting periods ending after December 15, 2016. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have any impact on the Company’s consolidated financial statements.

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Restructuring, Acquisition and Divestiture Related Costs

9 Months Ended

Oct. 02, 2015

Restructuring And Related Activities [Abstract]

Restructuring, Acquisition and Divestiture Related costs

12. Restructuring, Acquisition and Divestiture Related Costs

The following table summarizes restructuring, acquisition and divestiture related costs in the accompanying consolidated statements of operations (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015			September 26, 2014
2011 restructuring	$	300	$	233	$	953		$	139
2013 restructuring		—		—		—			(66	)
2015 restructuring		—		—		1,484			—
2016 restructuring		751		—		751			—
Total restructuring charges		1,051		233		3,188			73
Acquisition charges		282		26		546			774
Acquisition related incentive compensation		—		512		(612	)		1,102
Divestiture related charges		46		—		1,110			—
Total acquisition and divestiture related charges		328		538		1,044			1,876
Total restructuring, acquisition and divestiture related costs	$	1,379	$	771	$	4,232		$	1,949

2011 Restructuring

In November 2011, the Company announced a strategic initiative (“2011 restructuring”), which aimed to consolidate operations to reduce the Company’s cost structure and improve operational efficiency. As part of this initiative, the Company eliminated facilities through the consolidation of certain manufacturing, sales and distribution facilities and the exit of Semiconductor and Laser Systems businesses. The Company substantially completed the 2011 restructuring program by the end of 2013. Restructuring costs for the three and nine months ended October 2, 2015 included facility costs related to the Company’s vacant Orlando, Florida facility, which the Company owns and was previously occupied by the Laser Systems business. These costs were recorded in the Unallocated Corporate and Shared Services Costs segment.

2015 Restructuring

During the first quarter of 2015, the Company implemented a program to eliminate redundant costs, as a result of acquisition and divestiture activities, to better align our operations to our strategic growth plans, to further integrate our business lines, and as a consequence of our productivity initiatives. During the nine months ended October 2, 2015, the Company incurred restructuring costs of $1.5 million related to the 2015 restructuring plan. Restructuring costs incurred during the nine months ended October 2, 2015 of $0.6 million, $0.5 million, $0.1 million and $0.3 million related to the Laser Products, Vision Technologies, Precision Motion and Unallocated Corporate and Shared Services Costs reportable segments, respectively.

2016 Restructuring

During the third quarter of 2015, the Company initiated a program targeting annualized savings of $4.5 million to $5.5 million after the program is fully executed. The 2016 restructuring program includes consolidating our manufacturing operations to optimize our facility footprint and better utilize resources, and reducing redundant costs due to productivity cost savings and business volume reductions. We expect to incur cash charges of $3.5 million to $4.5 million related to this program, which we anticipate completing during the second quarter of 2016. During the three and nine months ended October 2, 2015, the Company incurred restructuring costs of $0.8 million related to the 2016 restructuring plan. Restructuring costs incurred during the three and nine months ended October 2, 2015 of $0.4 million, $0.1 million and $0.3 million related to the Vision Technologies, Precision Motion and Unallocated Corporate and Shared Services Costs reportable segments, respectively.

Rollforward of Accrued Expenses Related to Restructuring

The following table summarizes the accrual activities, by component, related to the Company’s restructuring plans recorded in the accompanying consolidated balance sheets (in thousands):

	Total			Severance			Facility			Depreciation			Other
Balance at December 31, 2014	$	231		$	102		$	105		$	—		$	24
Restructuring charges		3,188			2,021			139			832			196
Cash payments		(1,742	)		(1,438	)		(222	)		—			(82	)
Non-cash write-offs and other adjustments		(827	)		5			—			(832	)		—
Balance at October 2, 2015	$	850		$	690		$	22		$	—		$	138

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Supplementary Balance Sheet Information

9 Months Ended

Oct. 02, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Supplementary Balance Sheet Information

8. Supplementary Balance Sheet Information

The following tables provide the details of selected balance sheet items as of the periods indicated (in thousands):

Inventories

	October 2, 2015		December 31, 2014
Raw materials	$	39,005	$	38,934
Work-in-process		10,624		9,899
Finished goods		9,673		11,945
Demo and consigned inventory		1,966		2,165
Total inventories	$	61,268	$	62,943

Accrued Expenses and Other Current Liabilities

	October 2, 2015		December 31, 2014
Accrued compensation and benefits	$	8,602	$	7,741
Accrued warranty		3,529		3,044
Accrued professional services		1,332		1,827
Other		8,431		6,789
Total	$	21,894	$	19,401

Accrued Warranty

	Nine Months Ended
	October 2, 2015			September 26, 2014
Balance at beginning of the period	$	3,044		$	3,315
Provision charged to cost of revenue		1,878			1,361
Acquisition related warranty accrual		94			90
Use of provision		(1,084	)		(1,529	)
Divestiture of JK Lasers		(392	)		—
Foreign currency exchange rate changes		(11	)		(14	)
Balance at end of period	$	3,529		$	3,223

Other Long Term Liabilities

	October 2, 2015		December 31, 2014
Capital lease obligations	$	9,100	$	9,507
Accrued pension liabilities		4,805		6,037
Other		3,572		3,275
Total	$	17,477	$	18,819

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Share-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense recognized		$ 961	$ 1,246	$ 3,173	$ 3,984
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units issued	180,000
Vesting period	2 years
Deferred Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense recognized				500	$ 500
2010 Incentive Award Plan | Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total fair value of restricted stock vested				$ 3,900

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Fair Value Measurements

9 Months Ended

Oct. 02, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. Fair Value Measurements

ASC 820, “Fair Value Measurements,” establishes a fair value hierarchy based on the following three levels of inputs:

· Level 1: Quoted prices for identical assets or liabilities in active markets which the Company can access.

· Level 2: Observable inputs other than those described in Level 1.

· Level 3: Unobservable inputs.

The Company’s cash equivalents are investments in money market accounts, which represent the only asset the Company measures at fair value on a recurring basis. The Company determines the fair value of our cash equivalents using a market approach based on quoted prices in active markets which is classified as Level 1. The contingent consideration is classified as Level 3 as the fair value is based on unobservable inputs. The fair values of cash, accounts receivable, income taxes receivable, accounts payable, income taxes payable, accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

The following table summarizes the fair values of our financial assets and liabilities as of October 2, 2015 (in thousands):

			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	521	$	521	$	—	$	—
Liabilities
Contingent consideration	$	965	$	—	$	—	$	965

The following table summarizes the fair values of our financial assets as of December 31, 2014 (in thousands):

			Quoted Prices in				Significant Other
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	2,255	$	2,255	$	—	$	—

Contingent consideration relates to the Company’s acquisition of Applimotion on February 19, 2015. The former shareholders of Applimotion are eligible to receive contingent consideration based on the achievement of certain revenue targets for fiscal years 2015 to 2017. If such targets are achieved, the contingent consideration will be payable in cash in two installments in 2017 and 2018, respectively. The estimated fair value of the contingent consideration was determined based on the Monte Carlo valuation method and has been recorded as part of the purchase price as of the acquisition date. Subsequent changes in the estimated fair value of this contingent liability will be recorded in the consolidated statement of operations as acquisition related costs until the liability is fully settled. There have been no changes to the fair value of the contingent consideration since the acquisition date. The estimated fair value of the contingent consideration is reported as a long-term liability in the consolidated balance sheet.

See Note 9 to Consolidated Financial Statements for a discussion of the estimated fair value of the Company’s outstanding debt.

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Goodwill and Intangible Assets

9 Months Ended

Oct. 02, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

Goodwill

Goodwill is recorded when the consideration for a business combination exceeds the fair value of net tangible and identifiable intangible assets acquired. The Company tests its goodwill balances annually for impairment as of the beginning of the second quarter or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The Company performed its annual goodwill impairment test as of the beginning of the second quarter of 2015 and noted no impairment of goodwill.

The following table summarizes changes in goodwill during the nine months ended October 2, 2015 (in thousands):

Balance at beginning of the period	$	90,746
Goodwill acquired from the Applimotion acquisition		7,612
Balance at end of the period	$	98,358

Goodwill acquired from the Applimotion acquisition is reflected in the Precision Motion segment. Goodwill by reportable segment as of October 2, 2015 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	33,903		$	249,587
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	16,857		$	98,358

Goodwill by reportable segment as of December 31, 2014 was as follows (in thousands):

	Reportable Segment
	Laser Products			Vision Technologies			Precision Motion			Total
Goodwill	$	132,954		$	82,730		$	26,291		$	241,975
Accumulated impairment of goodwill		(102,461	)		(31,722	)		(17,046	)		(151,229	)
Total	$	30,493		$	51,008		$	9,245		$	90,746

Intangible Assets

Intangible assets as of October 2, 2015 and December 31, 2014, respectively, are summarized as follows (in thousands):

	October 2, 2015							December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		GrossCarrying Amount		Accumulated Amortization			Net Carrying Amount
Amortizable intangible assets:
Patents and acquired technologies	$	80,695	$	(65,236	)	$	15,459	$	78,253	$	(62,010	)	$	16,243
Customer relationships		65,030		(35,581	)		29,449		63,029		(31,531	)		31,498
Customer backlog		2,447		(2,265	)		182		1,810		(1,641	)		169
Non-compete covenant		2,514		(747	)		1,767		1,830		(366	)		1,464
Trademarks and trade names		10,160		(5,804	)		4,356		10,205		(5,364	)		4,841
Amortizable intangible assets		160,846		(109,633	)		51,213		155,127		(100,912	)		54,215
Non-amortizable intangible assets:
Trade names		13,027		—			13,027		13,027		—			13,027
Totals	$	173,873	$	(109,633	)	$	64,240	$	168,154	$	(100,912	)	$	67,242

All definite-lived intangible assets are amortized either on a straight-line basis or an economic benefit basis over their remaining useful life. Amortization expense for customer relationships and definite-lived trademarks, trade names and other intangibles is included in operating expenses in the accompanying consolidated statements of operations. Amortization expense for patents and acquired technologies is included in cost of revenue in the accompanying consolidated statements of operations. Amortization expense reported in the consolidated statements of operations is summarized as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Amortization expense – cost of revenue	$	1,175	$	1,614	$	3,468	$	4,529
Amortization expense – operating expenses		1,852		2,843		5,593		7,463
Total amortization expense	$	3,027	$	4,457	$	9,061	$	11,992

Estimated amortization expense for each of the five succeeding years and thereafter as of October 2, 2015 was as follows (in thousands):

Year Ending December 31,	Cost of Revenue		Operating Expenses		Total
2015 (remainder of year)	$	1,175	$	1,851	$	3,026
2016		3,550		7,256		10,806
2017		3,229		6,634		9,863
2018		1,754		6,000		7,754
2019		1,487		4,008		5,495
Thereafter		4,264		10,005		14,269
Total	$	15,459	$	35,754	$	51,213

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Debt

9 Months Ended

Oct. 02, 2015

Debt Disclosure [Abstract]

Debt

9. Debt

Debt consisted of the following (in thousands):

	October 2, 2015			December 31, 2014
Senior Credit Facilities – term loan	$	7,500		$	7,500
Less: unamortized debt issuance costs		(126	)		(155	)
Total current portion of long-term debt	$	7,374		$	7,345
Senior Credit Facilities – term loan	$	21,875		$	27,500
Senior Credit Facilities – revolving credit facility		80,000			80,000
Less: unamortized debt issuance costs		(1,791	)		(2,470	)
Total long-term debt	$	100,084		$	105,030
Total Senior Credit Facilities	$	107,458		$	112,375

Senior Credit Facilities

The Company’s amended and restated senior secured credit agreement (the “Amended and Restated Credit Agreement”) provides for a $50.0 million, 5-year term loan facility due in quarterly installments of $1.9 million beginning in January 2013 and a $175.0 million, 5-year revolving credit facility (collectively, the “Senior Credit Facilities”) that matures in December 2017. Quarterly installments due in the next twelve months under the term loan amount to $7.5 million and are classified as a current liability in the consolidated balance sheet. The Company adopted the provisions of ASU 2015-03 during the fiscal quarter ended October 2, 2015. The adoption of ASU 2015-03 resulted in the reclassification of unamortized debt issuance costs related to the Senior Credit Facilities from other assets to debt in the consolidated balance sheet.

The Company is required to satisfy certain financial and non-financial covenants under the Amended and Restated Credit Agreement. The Company was in compliance with these covenants as of October 2, 2015.

Fair Value of Debt

As of October 2, 2015 and December 31, 2014, the outstanding balance of the Company’s debt approximated its fair value based on current rates available to the Company for debt of the same maturity.

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Restructuring, Acquisition and Divestiture Related Costs - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014	Jul. 01, 2015
Restructuring Cost And Reserve [Line Items]
Restructuring Costs	$ 1,051	$ 233	$ 3,188	$ 73
2011 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring plan			In November 2011, the Company announced a strategic initiative (“2011 restructuring”), which aimed to consolidate operations to reduce the Company’s cost structure and improve operational efficiency. As part of this initiative, the Company eliminated facilities through the consolidation of certain manufacturing, sales and distribution facilities and the exit of Semiconductor and Laser Systems businesses. The Company substantially completed the 2011 restructuring program by the end of 2013. Restructuring costs for the three and nine months ended October 2, 2015 included facility costs related to the Company’s vacant Orlando, Florida facility, which the Company owns and was previously occupied by the Laser Systems business. These costs were recorded in the Unallocated Corporate and Shared Services Costs segment.
2015 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring plan			During the first quarter of 2015, the Company implemented a program to eliminate redundant costs, as a result of acquisition and divestiture activities, to better align our operations to our strategic growth plans, to further integrate our business lines, and as a consequence of our productivity initiatives. During the nine months ended October 2, 2015, the Company incurred restructuring costs of $1.5 million related to the 2015 restructuring plan. Restructuring costs incurred during the nine months ended October 2, 2015 of $0.6 million, $0.5 million, $0.1 million and $0.3 million related to the Laser Products, Vision Technologies, Precision Motion and Unallocated Corporate and Shared Services Costs reportable segments, respectively.
Restructuring Costs			$ 1,484
2015 Restructuring | Vision Technologies
Restructuring Cost And Reserve [Line Items]
Restructuring Costs			500
2015 Restructuring | Precision Motion
Restructuring Cost And Reserve [Line Items]
Restructuring Costs			100
2015 Restructuring | Unallocated Corporate and Shared Services
Restructuring Cost And Reserve [Line Items]
Restructuring Costs			300
2015 Restructuring | Laser Products
Restructuring Cost And Reserve [Line Items]
Restructuring Costs			$ 600
2016 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring plan			During the third quarter of 2015, the Company initiated a program targeting annualized savings of $4.5 million to $5.5 million after the program is fully executed. The 2016 restructuring program includes consolidating our manufacturing operations to optimize our facility footprint and better utilize resources, and reducing redundant costs due to productivity cost savings and business volume reductions. We expect to incur cash charges of $3.5 million to $4.5 million related to this program, which we anticipate completing during the second quarter of 2016. During the three and nine months ended October 2, 2015, the Company incurred restructuring costs of $0.8 million related to the 2016 restructuring plan. Restructuring costs incurred during the three and nine months ended October 2, 2015 of $0.4 million, $0.1 million and $0.3 million related to the Vision Technologies, Precision Motion and Unallocated Corporate and Shared Services Costs reportable segments, respectively.
Restructuring Costs	751		$ 751
2016 Restructuring | Minimum
Restructuring Cost And Reserve [Line Items]
Targeting annualized savings	4,500		4,500
Expected cash payments					$ 3,500
2016 Restructuring | Maximum
Restructuring Cost And Reserve [Line Items]
Targeting annualized savings	5,500		5,500
Expected cash payments					$ 4,500
2016 Restructuring | Vision Technologies
Restructuring Cost And Reserve [Line Items]
Restructuring Costs	400		400
2016 Restructuring | Precision Motion
Restructuring Cost And Reserve [Line Items]
Restructuring Costs	100		100
2016 Restructuring | Unallocated Corporate and Shared Services
Restructuring Cost And Reserve [Line Items]
Restructuring Costs	$ 300		$ 300

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Segment Information - Additional Information (Details)	9 Months Ended
	Oct. 02, 2015 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Schedule of Restructuring, Acquisition and Divestiture Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Restructuring Cost And Reserve [Line Items]
Restructuring charges	$ 1,051	$ 233	$ 3,188	$ 73
Acquisition charges	282	26	546	774
Acquisition related incentive compensation		512	(612)	1,102
Divestiture related charges	46		1,110
Acquisition and divestiture related charges	328	538	1,044	1,876
Restructuring, acquisition and divestiture related costs	1,379	771	4,232	1,949
2011 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring charges	300	$ 233	953	139
2013 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring charges				$ (66)
2015 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring charges			1,484
2016 Restructuring
Restructuring Cost And Reserve [Line Items]
Restructuring charges	$ 751		$ 751

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Segment Information (Tables)

9 Months Ended

Oct. 02, 2015

Segment Reporting [Abstract]

Revenue, Gross Profit, Gross Profit Margin, Operating Income (Loss) from Continuing Operations, and Depreciation and Amortization by Reportable Segments

Revenue, gross profit, gross profit margin, operating income (loss) from continuing operations, and depreciation and amortization by reportable segments are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Revenue
Laser Products	$	41,330	$	45,806	$	128,475	$	131,494
Vision Technologies		30,992		32,680		93,319		89,838
Precision Motion		19,949		16,170		61,585		49,362
Total	$	92,271	$	94,656	$	283,379	$	270,694

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross Profit
Laser Products	$	18,851		$	20,269		$	57,176		$	54,437
Vision Technologies		12,152			12,945			36,823			35,672
Precision Motion		9,233			6,776			28,309			21,141
Unallocated Corporate and Shared Services		(326	)		(307	)		(1,047	)		(811	)
Total	$	39,910		$	39,683		$	121,261		$	110,439

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross Profit Margin
Laser Products		45.6	%		44.2	%		44.5	%		41.4	%
Vision Technologies		39.2	%		39.6	%		39.5	%		39.7	%
Precision Motion		46.3	%		41.9	%		46.0	%		42.8	%
Total		43.3	%		41.9	%		42.8	%		40.8	%

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Operating Income (Loss) from Continuing Operations
Laser Products	$	10,145		$	9,857		$	28,586		$	23,828
Vision Technologies		(388	)		(1,115	)		(1,056	)		(1,194	)
Precision Motion		4,417			2,796			14,357			9,525
Unallocated Corporate and Shared Services		(5,167	)		(4,716	)		(17,168	)		(14,789	)
Total	$	9,007		$	6,822		$	24,719		$	17,370

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Depreciation and Amortization
Laser Products	$	1,394	$	1,618	$	4,373	$	4,838
Vision Technologies		2,109		3,745		6,449		9,552
Precision Motion		680		444		1,842		1,451
Unallocated Corporate and Shared Services		520		537		1,424		1,654
Total	$	4,703	$	6,344	$	14,088	$	17,495

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Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense – cost of revenue	$ 1,175	$ 1,614	$ 3,468	$ 4,529
Amortization expense – operating expenses	1,852	2,843	5,593	7,463
Total amortization expense	$ 3,027	$ 4,457	$ 9,061	$ 11,992

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Segment Information

9 Months Ended

Oct. 02, 2015

Segment Reporting [Abstract]

Segment Information

14. Segment Information

The Company evaluates the performance of, and allocates resources to, its segments based on revenue, gross profit and operating profit. The Company’s reportable segments have been identified based on commonality of end markets, customers, applications and technologies amongst the Company’s individual product lines, which is consistent with the Company’s operating structure, associated management structure, and management compensation programs.

We operate in three reportable segments: Laser Products, Vision Technologies (formerly known as Medical Technologies), and Precision Motion. The reportable segments and their principal activities are summarized below.

Laser Products

The Laser Products segment designs, manufactures and markets photonics-based solutions, including CO2 laser sources, laser scanning and beam delivery products, to customers worldwide. The segment serves highly demanding photonics-based applications such as industrial material processing, and medical and life science imaging and laser procedures. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Vision Technologies

The Vision Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, thermal printers, and light and color measurement instrumentation, to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Precision Motion

The Precision Motion segment designs, manufactures and markets optical encoders, precision motor and motion control technology, air bearing spindles and precision machined components to customers worldwide. The vast majority of the segment’s product offerings are sold into the advanced industrial market and, to a lesser extent, the medical market. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Reportable Segment Financial Information

Revenue, gross profit, gross profit margin, operating income (loss) from continuing operations, and depreciation and amortization by reportable segments are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Revenue
Laser Products	$	41,330	$	45,806	$	128,475	$	131,494
Vision Technologies		30,992		32,680		93,319		89,838
Precision Motion		19,949		16,170		61,585		49,362
Total	$	92,271	$	94,656	$	283,379	$	270,694

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross Profit
Laser Products	$	18,851		$	20,269		$	57,176		$	54,437
Vision Technologies		12,152			12,945			36,823			35,672
Precision Motion		9,233			6,776			28,309			21,141
Unallocated Corporate and Shared Services		(326	)		(307	)		(1,047	)		(811	)
Total	$	39,910		$	39,683		$	121,261		$	110,439

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Gross Profit Margin
Laser Products		45.6	%		44.2	%		44.5	%		41.4	%
Vision Technologies		39.2	%		39.6	%		39.5	%		39.7	%
Precision Motion		46.3	%		41.9	%		46.0	%		42.8	%
Total		43.3	%		41.9	%		42.8	%		40.8	%

	Three Months Ended						Nine Months Ended
	October 2, 2015			September 26, 2014			October 2, 2015			September 26, 2014
Operating Income (Loss) from Continuing Operations
Laser Products	$	10,145		$	9,857		$	28,586		$	23,828
Vision Technologies		(388	)		(1,115	)		(1,056	)		(1,194	)
Precision Motion		4,417			2,796			14,357			9,525
Unallocated Corporate and Shared Services		(5,167	)		(4,716	)		(17,168	)		(14,789	)
Total	$	9,007		$	6,822		$	24,719		$	17,370

	Three Months Ended				Nine Months Ended
	October 2, 2015		September 26, 2014		October 2, 2015		September 26, 2014
Depreciation and Amortization
Laser Products	$	1,394	$	1,618	$	4,373	$	4,838
Vision Technologies		2,109		3,745		6,449		9,552
Precision Motion		680		444		1,842		1,451
Unallocated Corporate and Shared Services		520		537		1,424		1,654
Total	$	4,703	$	6,344	$	14,088	$	17,495

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Oct. 02, 2015

Equity [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) was as follows (in thousands):

	Total accumulated
	other			Foreign currency
	comprehensive			translation			Pension
	income (loss)			adjustments			liability
Balance at December 31, 2014	$	(16,456	)	$	(5,615	)	$	(10,841	)
Other comprehensive income (loss)		(2,223	)		(2,506	)		283
Amounts reclassified from other comprehensive income (loss) (1)		988			334			654
Balance at October 2, 2015	$	(17,691	)	$	(7,787	)	$	(9,904	)

(1) The amounts reclassified from other comprehensive income (loss) were included in selling, general and administrative expenses and loss from discontinued operations, net of tax in the consolidated statements of operations.

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Goodwill By Reportable Segment (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Dec. 31, 2014
Goodwill [Line Items]
Goodwill	$ 249,587	$ 241,975
Accumulated impairment of goodwill	(151,229)	(151,229)
Total	98,358	90,746
Laser Products
Goodwill [Line Items]
Goodwill	132,954	132,954
Accumulated impairment of goodwill	(102,461)	(102,461)
Total	30,493	30,493
Vision Technologies
Goodwill [Line Items]
Goodwill	82,730	82,730
Accumulated impairment of goodwill	(31,722)	(31,722)
Total	51,008	51,008
Precision Motion
Goodwill [Line Items]
Goodwill	33,903	26,291
Accumulated impairment of goodwill	(17,046)	(17,046)
Total	$ 16,857	$ 9,245

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Operating Results Historically Included Segment (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Discontinued Operations And Disposal Groups [Abstract]
Revenue from discontinued operations	$ 225		$ 10,512
Operating loss from discontinued operations, before income tax	(1,256)	$ (13)	(6,243)
Operating loss from discontinued operations, net of tax	(273)	$ (13)	(4,817)
Loss on disposal of discontinued operations, net of tax	$ (321)		$ (321)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Statement Of Income And Comprehensive Income [Abstract]
Consolidated net income		$ 6,568	$ 4,525	$ 29,512	$ 6,243
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax	[1]	(1,624)	(3,845)	(2,172)	(2,902)
Pension liability adjustments, net of tax	[2]	517	435	937	449
Total other comprehensive income (loss)		(1,107)	(3,410)	(1,235)	(2,453)
Total consolidated comprehensive income (loss)		5,461	1,115	28,277	3,790
Less: Comprehensive income attributable to noncontrolling interest					(10)
Comprehensive income (loss) attributable to GSI Group Inc.		$ 5,461	$ 1,115	$ 28,277	$ 3,780

[1] The tax effect on this component of comprehensive income was $0.2 million for the three and nine months ended October 2, 2015. The impact was $0.4 million and $0.2 million for the three and nine months ended September 26, 2014, respectively.

[2] The tax effect on this component of comprehensive income was not material for all periods presented. See Note 4 for the total amount of pension liability adjustments reclassified out of accumulated other comprehensive income (loss).

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Discontinued Operations and Divestitures

9 Months Ended

Oct. 02, 2015

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations and Divestitures

3. Discontinued Operations and Divestitures

In June 2015, the Company finalized an agreement to divest its 50% owned joint venture, the India JV, and recorded a pre-tax loss of less than $0.1 million in operating loss from discontinued operations, net of tax during the nine months ended October 2, 2015. All assets, liabilities, accumulated other comprehensive income and non-controlling interest of the India JV were derecognized as of the date of the agreement.  

On April 15, 2015, the Company completed the sale of certain assets and liabilities of its JK Lasers business, previously included in the Laser Products reportable segment, for approximately $29.6 million in cash, net of the final working capital adjustments and transaction costs. During the nine months ended October 2, 2015, the Company recognized a pre-tax gain on sale of $19.6 million in other income (expense), net on the consolidated statement of operations. The JK Lasers business divestiture does not qualify for discontinued operations accounting treatment.

In July 2014, the Company completed the sale of certain assets and liabilities of its Scientific Lasers business for approximately $6.5 million in cash, net of the final working capital adjustments.  In accordance with the purchase and sale agreement, $1.5 million of the sales proceeds is held in escrow until January 2016. The $1.5 million escrow is included in prepaid expenses and other current assets on the balance sheet as of October 2, 2015 and other long-term assets as of December 31, 2014.

Assets and liabilities of discontinued operations as of December 31, 2014 included the balances of the India JV. There were no assets and liabilities of discontinued operations as of October 2, 2015. The major components of the assets and liabilities of discontinued operations as of December 31, 2014, respectively, were as follows (in thousands):

	December 31,
	2014
Accounts receivable, net	$	95
Inventories		161
Prepaid and other current assets		8
Other assets		367
Assets of discontinued operations	$	631
Accounts payable	$	16
Accrued expenses and other current liabilities		74
Other liabilities		234
Liabilities of discontinued operations	$	324

The following table presents the operating results which are reported as discontinued operations in the Company’s consolidated statements of operations (in thousands):

	ThreeMonths Ended					Nine Months Ended
	October 2,		September 26,			October 2,			September 26,
	2015		2014			2015			2014
Revenue from discontinued operations	$	—	$	225		$	—		$	10,512
Operating loss from discontinued operations, before income tax	$	—	$	(1,256	)	$	(13	)	$	(6,243	)
Operating loss from discontinued operations, net of tax	$	—	$	(273	)	$	(13	)	$	(4,817	)
Loss on disposal of discontinued operations, net of tax	$	—	$	(321	)	$	—		$	(321	)

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Debt - Additional Information (Details) - USD ($)	9 Months Ended
	Oct. 02, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Current portion of long-term debt	$ 7,374,000	$ 7,345,000
Revolving credit facility maturity year	2017-12
Term Loans
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 50,000,000
Debt instrument maturity period	5 years
Quarterly installments payable on term loan	$ 1,900,000
Current portion of long-term debt	7,500,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 175,000,000
Debt instrument maturity period	5 years

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Depreciation and Amortization by Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Depreciation and Amortization
Depreciation and amortization	$ 4,703	$ 6,344	$ 14,088	$ 17,495
Laser Products
Depreciation and Amortization
Depreciation and amortization	1,394	1,618	4,373	4,838
Vision Technologies
Depreciation and Amortization
Depreciation and amortization	2,109	3,745	6,449	9,552
Precision Motion
Depreciation and Amortization
Depreciation and amortization	680	444	1,842	1,451
Unallocated Corporate and Shared Services
Depreciation and Amortization
Depreciation and amortization	$ 520	$ 537	$ 1,424	$ 1,654

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Earnings per Common Share (Tables)

9 Months Ended

Oct. 02, 2015

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share amounts):

	ThreeMonths Ended					Nine Months Ended
	October 2,		September 26,			October 2,			September 26,
	2015		2014			2015			2014
Numerators:
Income from continuing operations	$	6,568	$	5,119		$	29,525		$	11,381
Loss from discontinued operations		—		(594	)		(13	)		(5,138	)
Less: Income attributable to noncontrolling interest		—		—			—			(10	)
Loss from discontinued operations attributable to GSI Group Inc.		—		(594	)		(13	)		(5,148	)
Net income attributable to GSI Group Inc.	$	6,568	$	4,525		$	29,512		$	6,233
Denominators:
Weighted average common shares outstanding— basic		34,599		34,389			34,578			34,333
Dilutive potential common shares		456		404			449			392
Weighted average common shares outstanding— diluted		35,055		34,793			35,027			34,725
Antidilutive common shares excluded from above		—		—			—			29
Basic Earnings (Loss) per Common Share:
From continuing operations	$	0.19	$	0.15		$	0.85		$	0.33
From discontinued operations	$	—	$	(0.02	)	$	(0.00	)	$	(0.15	)
Basic earnings per share attributable to GSI Group Inc.	$	0.19	$	0.13		$	0.85		$	0.18
Diluted Earnings (Loss) per Common Share:
From continuing operations	$	0.19	$	0.15		$	0.84		$	0.33
From discontinued operations	$	—	$	(0.02	)	$	(0.00	)	$	(0.15	)
Diluted earnings per share attributable to GSI Group Inc.	$	0.19	$	0.13		$	0.84		$	0.18

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Fair Value of Intangible Assets (Details) - Applimotion Inc. $ in Thousands	Feb. 19, 2015 USD ($)
Acquired Finite Lived Intangible Assets [Line Items]
Intangible assets	$ 6,071
Developed Technology
Acquired Finite Lived Intangible Assets [Line Items]
Intangible assets	$ 2,684
Amortization Period of intangible assets	10 years
Customer Relationships
Acquired Finite Lived Intangible Assets [Line Items]
Intangible assets	$ 2,066
Amortization Period of intangible assets	10 years
Non-compete Covenant
Acquired Finite Lived Intangible Assets [Line Items]
Intangible assets	$ 684
Amortization Period of intangible assets	4 years
Backlog
Acquired Finite Lived Intangible Assets [Line Items]
Intangible assets	$ 637
Amortization Period of intangible assets	1 year

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Commitments and Contingencies

9 Months Ended

Oct. 02, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Leases

The Company leases certain equipment and facilities under operating and capital lease agreements. There have been no material changes to the Company’s leases through October 2, 2015 from those discussed in Note 15 to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.   

Purchase Commitments

There have been no material changes to the Company’s purchase commitments from those discussed in Note 15 to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Legal Proceedings

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company does not believe that the outcome of these claims will have a material adverse effect upon its financial condition or results of operations but there can be no assurance that any such claims, or any similar claims, would not have a material adverse effect upon its financial condition or results of operations.

Guarantees and Indemnifications

In the normal course of its operations, the Company executes agreements that provide for indemnification and guarantees to counterparties in transactions such as business dispositions, sale of assets, sale of products and operating leases. Additionally, the by-laws of the Company require it to indemnify certain current or former directors, officers, and employees of the Company against expenses incurred by them in connection with each proceeding in which he or she is involved as a result of serving or having served in certain capacities. Indemnification is not available with respect to a proceeding as to which it has been adjudicated that the person did not act in good faith in the reasonable belief that the action was in the best interests of the Company. Certain of our officers and directors are also a party to indemnification agreements with the Company. These indemnification agreements provide, among other things, that the director and officer shall be indemnified to the fullest extent permitted by applicable law against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such officer or director in connection with any proceeding by reason of his or her relationship with the Company. In addition, the indemnification agreements provide for the advancement of expenses incurred by such director or officer in connection with any proceeding covered by the indemnification agreement, subject to the conditions set forth therein and to the extent such advancement is not prohibited by law. The indemnification agreements also set out the procedures for determining entitlement to indemnification, the requirements relating to notice and defense of claims for which indemnification is sought, the procedures for enforcement of indemnification rights, the limitations on and exclusions from indemnification, and the minimum levels of directors’ and officers’ liability insurance to be maintained by the Company.