Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the GSI Group Second Quarter 2013 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) I will now turn the call over to Robert Buckley, Chief Financial Officer of GSI Group. You may begin your conference.

Thank you very much. Good afternoon and welcome to GSI Group second quarter 2013 earnings conference call. With me on the call is John Roush, Chief Executive Officer of GSI Group. If you’ve not received a copy of our earnings press release, you may get one from the Investor Relations section of our website at www.gsig.com. Please note this call is being webcast live and will be archived on our website. Before we begin, we need to remind everyone of the Safe Harbor for forward-looking statements that we’ve outlined in our earnings press release issued earlier this afternoon and also those in our SEC filings. We may make some comments today both in our prepared remarks and our responses to questions that may include forward-looking statements. These involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of today. We disclaim any obligation to update forward-looking statements in the future even if our estimates change. So you should not rely on any of today’s forward-looking statements as representing our views as of any date after today. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent that we use non-GAAP financial measures during this call that are not reconciled the GAAP measures in the earnings press release. We will be providing reconciliations promptly on the Investor Relations section of our website. I’m now pleased to introduce Chief Executive Officer of GSI Group, John Roush.

Thank you, Robert, and greetings, everybody. Welcome to the call. We do appreciate your continued interest in GSI. So today, we’re pleased to announce our results for the second quarter and on the whole financial performance is very much in line with our expectation. For the most part, we have solid execution and very good cash generation across the company, despite the sluggish economic recovery we continue to see across most of our end markets. Revenue was $85.3 million and our adjusted EBITDA was $12 million. Both of those figures were in the upper portion of the guidance ranges that we have previously communicated. GAAP earnings per share from continuing operations was $0.02, which was impacted by a purchase accounting, as well as restructuring expenses related to our ongoing efforts to streamline and focus the company. Non-GAAP EPS, which is a new metric we intend to report going forward was $0.14. Robert will cover EPS results in much more detail in his section. One of the highlights of the performance was our cash generation. We’re very pleased that we’re able to generate over $13 million in operating cash flow and we ended the quarter with just $43 million of net debt. We expect to continue to reduce our net debt through the balance of this year. So during Q2, market conditions were about what we expected, we’re still a bit of a mixed picture. Our reported revenue was up 21% year-over-year due to the inclusion of NDS in our results that on an organic basis, sales declined 1.7%. We were, however, able to generate growth in several areas, including the scanning market and in spindles, where we experienced some degree of recovery in the PCB drilling market. Our scientific laser revenue grew slightly on a year-over-year basis, but this was…

Thank you, John. During the second quarter of 2013, GSI generated revenue of $85.3 million, an increase of 21% from $70.4 million in the second quarter of 2012. The NDS acquisition accounted for roughly 23.7% revenue increase year-over-year, while changes in foreign exchange rates adversely impacted revenue causing a roughly 1% decline in revenue. Excluding the impact of the NDS acquisition and changes in foreign exchange rates, the company’s revenue decreased by 1.7% compared to the second quarter 2012. Turning to our segments, sales in our laser product segment for the second quarter of 2013 decreased 0.7% to $46 million, compared to $46.3 million one year ago. Excluding the impact of foreign exchange laser product segment revenue was flat year-over-year. Sales of our scanning solutions product increased by more than 65% year-over-year due to strong demand for our Lightening II digital scanning subsystem. This was offset by a sales decline in our fiber laser products. As John mentioned earlier, due to the competitive dynamics and [blades] and moving to a lower cost architecture we have chosen to be more selective in our pursuit to the fiber laser business, will be evaluated in several different options to include the profitability, this business will go minimizing losses by the end of the year. Sales of our precision technology segment for the second quarter of 2013 include 63.3% to $39.3 million from $24.1 million in 2012. The NDS acquisition added approximately 17 million of sales for this quarter. Changes in foreign currency rates adversely impacted our sales by 1.2% compared to the prior year. Excluding NDS and the impact of foreign exchange rate fluctuations, revenue declined 4.7%. The decline was largely attributed to decline in sales volumes and our optical encoder product line, which was impacted by an upgrade program for customers and…

(Operator Instructions) Your first question is from Lee Jagoda of CJS Securities. Your line is open. Lee Jagoda – CJS Securities, Inc.: Hi, good afternoon.

Hi, Lee. Lee Jagoda – CJS Securities, Inc.: So Robert, can you just walk us through your assumptions behind the guidance for net debt of less than $20 million at year end, both in terms of the operating and non-operating cash. And more specially, does it include expected real estate sales?

It does not include expected real estate sales. So the only thing I would take into account is our operating cash flows on a conservative basis and then the IRS refund.

Some of which is in hand and some of which is not yet in hand. Lee Jagoda – CJS Securities, Inc.: And how does that tax refund compare to sort of the, I guess, 15 to 17 range that you had perviously spoke about. And the reason I’m asking that is, as you’ve got the component that you expect to receive and then you got the carry back and carry-forward component?

That’s correct. So there is way to think about it is, there is roughly $13 million to $13.5 million worth of cash refunds, and then another $4 million to $5 million worth of carry back and carry-forwards, and given the profitability performance of the company that we look to take advantage of that and probably next year 2014. Lee Jagoda – CJS Securities, Inc.: Okay, great. And then just shifting gears a little bit, can you talk about the revenue and the losses incurred in fiber in Q2. And maybe provide a little more detail with regards to what it means to be more selective in pursuit of the fiber laser?

Well, I would just say that you are going to see probably the revenue, you aren’t going be drilling a whole lot there. With the cost structure that we have, we’re just not just taking orders. We are losing something on the orders a $1 million a quarter. And our goal is to kind of cut that run rate down to – maybe we don’t get to break-even, but we get close to break-even exiting the year. And that’s going to involve controlling costs carefully in a few different options, but just not taking sales at the rate that we thought we could. I mean, we can win some of the orders, but it is not just worth doing so. We’ll still end up the year with as I said, it’s somewhere in the $9 million to $10 million range in fiber. Lee Jagoda – CJS Securities, Inc.: And I guess, by keeping fiber lasers you got to feel that there is some benefit beyond just achieving break-even. How you think about the upside opportunity, again, like you say at this given cost structure?

Well. I mean, we are thinking through a few different options there, so we haven’t made a decision on what exactly we’re going to do. There is still an opportunity to possibly get, a lower cost architecture in the market, which would then open up the growth opportunity. But it’s just sort of the matter of how long that takes and what the ultimate cost is to get to that and sort of a time cost relationship. And we’re sort of – what we’re telling you is, we’ve been rethinking that. Lee Jagoda – CJS Securities, Inc.: Okay. I’ll hop back in queue. Thank you very much.

Thanks, Lee.

(Operator instructions) The next question is from Joe Bess of ROTH Capital Partners. Your line is open.

Hi, Joe. Joe Bess – ROTH Capital Partners: Good afternoon, gentlemen. Just a piggyback on the last question. What sort of acquired this technology to lower cost architecture in the market? What would that need to be – what would you need to do for that happen?

Well, I mean, there are several different approaches, but we have developed what we view as a novel approach to how to construct the inner workings of a fiber laser, the diodes and the how the light is generated, and how that’s coupled into the fiber, and how the fibers itself is configured. The whole different set of changes to the technology that when you sort of cascade all that, you take a lot of cost out of the system. What we found is that it works, but it’s not manufacturable. Thus far, so the question is, can we get through those manufacturing issues in what timeframe and can we bring partners into help with some of that? Joe Bess – ROTH Capital Partners: Okay. And then the tax credits, when do you expect to receive the remainder of the tax credits?

You mean, the carry back and carry-forward NOLs? Joe Bess – ROTH Capital Partners: You received $9 million so far $9.8 I believe. And then when are you expecting to get the remainder of the carry back, carry-forwards?

So, the card $12 million to $13.5 million of cash refunds we’ve received around $10 million thus far. I hope to complete the collection of that before the end of the quarter. Joe Bess – ROTH Capital Partners: Gotcha, great.

The carry back and carry-forwards, I’ll be able to take advantage of those in 2014 once we completed a couple of items. Joe Bess – ROTH Capital Partners: Okay, gotcha. And then thinking about acquisitions a little bit more, you talked about (inaudible). Are you guys seeing opportunities for acquisitions outside of the medical market in considering kind of the little lower slower trajectory that you’re seeing for the medical growth opportunity, are there things outside of medical that make sense at this point?

Yeah, I mean, Joe, I think that’s a fair point. If you just look at the last couple of quarters, you might say, I’m not sure medical is the most ideal space. But I think when you look a little further out, we definitely believe the demographic factors, the long-term growth you support focusing on medical and we’re doing that. But we do see other opportunities that kind of relate into some of our more traditional areas what we play and we’re pursuing those two, so it’s probably a mix. It’s probably 60% of our pipeline focus is medical and 40% is in some of the other traditional markets that we have in precision tech and laser. But what I’ll tell you, it’s not so easily separable, some other things we’ve looked at come with a significant medical exposure, but then some traditional exposure, so it’s not necessarily one or the other. Joe Bess – ROTH Capital Partners: Okay, great. And then can you talk a little more about some of the new products that you have coming out in the back half of the year. And what you think that these might be able to do in terms of incremental growth in 2014?

Yeah well, we highlighted some of those, I mean, one of the most important new products we have coming out is a radiology product that’s coming out in NDS that, I think sort of a multimillion dollar opportunity for us. We also highlighted a new program we have in optical encoders that were shipping, sort of startup quantities now not full rate production quantity, but that’s a multimillion dollar incremental opportunity for us next year. In the scanning area, there is a whole slue of, they are not necessarily new product, they are sort of more the model is we have a new product out there. We have the standard, but with each customer you adapt that so the application requirements of that particular customer and there is a lot of work going on with that that could lead to a lot of growth. So you can point to millions of dollars of opportunity that we have next year, but we all know it’s not quite that simple. Like that you also have some of your revenue base that is some setting, where we’ve been selling into an application for a long time and it’s winding down. So we can’t just take this year and add on your MPIs and say, we’re done. There is always some part as an OEM supplier some of what you designed into is fading down. But we definitely see opportunities. Joe Bess – ROTH Capital Partners: Okay, great. And then last question, think about NDS and the integration process (inaudible) there is still – there is remaining some aspects you can do on the sales side, can you talk a little bit more about those and when you think of those might be achieved?

Yeah, I would say for the most part they are not 2013 opportunities. I mean what you’re talking about is, when we line up our medical OEM customer base in NDS in the printers business and some of our others products that sell into medical, which would include scanning and will include our optical encoders and will include our color measurement instrumentation. You can line all of that up and say, they all sell into a set of medical customers. And it doesn’t line up perfectly, so in some cases, we’ll have real strength in NDS, but we don’t have much penetration with printers or what have you. And so that’s where we are in the midst of doing this thing, where do we have a real strong relationship in one product and we can pull the other products into that conversation or do it by vice versa. Those aren’t the kind of things that turn into a production order in months, it’s quarters away, because you really face getting the technology in front of the customer, samples, their technical team has to work with that and then ultimately if they do pursue you for a program and then could be quiet a while until see meaningful revenue. But that’s just the revenue acquisition cycle that you have in an OEM business and in a medical business. All right. So, the revenue has a long kind of stickiness to it once you’re in there, but you’re not going to get in three or four months. Joe Bess – ROTH Capital Partners: Great. Thank you, guys.

Thank you.

There are no further questions at this time. I’ll turn the call back over to the presenters.

Thank you, operator. So in conclusion, I would like to say that Q2 results were in line with our expectations. The company is executing well and making good progress on our strategic goals. The complexion of GSI and the caliber of our team are greatly improved. The financial results were solid and I would say with respect to the balance sheet the progress was very good. We are getting more predictable as a company and now with the use of a non-GAAP earnings per share metric, I believe the true economics behind our earnings performances will be somewhat easier for investors to understand. The economic landscape still has some uncertainty for us that we generally see an improving picture. We will deliver organic revenue growth in the second half, while continuing to improve the balance sheet and position ourselves for additional milestones in terms of our growth strategy, our transformation of the company is that we think of that in terms of acquisitions. As Robert said if the acquisitions do not materialize, we will take a serious look at share repurchase. But right now, we’re optimistic about the pipeline and the opportunities for the company. So on behalf of the whole GSI team, I would like to thank you for your continued interest in the company and the call is now adjourned. Thank you very much.

This concludes today’s conference call. You may now disconnect.