Lumonics to Merge With General Scanning Inc.

In a proposed merger of equals, the boards of directors of General Scanning Inc. of Watertown, MA, and Lumonics Inc. of Kanata, ON, today announced the signing of a definitive agreement to combine the two companies, subject to shareholder and regulatory approvals. The merged company, GSI Lumonics Inc., would be the world's leading producer of laser-based advanced manufacturing systems.

The combined enterprise will be listed on both the TSE and Nasdaq and will report its financial results in U.S. dollars. On a pro forma basis, based on 12-month trailing revenues, the new company would have annual sales of approximately US$330 million and serve customers in more than 40 countries. By business segment, the combined company would generate approximately 18% of annual sales from semiconductor, 19% from electronics, 9% from automotive, 6% from aerospace, 15% from medical device markets, 4% from packaging and 29% from other sources, including parts and service.

Under terms of the proposed merger, each General Scanning Inc. shareholder will receive 1.347 shares of Lumonics Inc. for each share held. Lumonics Inc. shareholders will continue to hold their existing number of shares. As a result, current shareholders of each company will own approximately 50% of the combined company following the merger, which is expected to close during the first quarter of 1999 subject to regulatory and shareholder approval.

Charles D. Winston, president and CEO of General Scanning Inc., will become the CEO of GSI Lumonics Inc. Warren Scott Nix, president and CEO of Lumonics Inc., will serve as president and COO of GSI Lumonics Inc. "GSI Lumonics Inc. will have far greater potential for long-term growth with better market and product diversity than either company on its own," said Nix.

The board of directors of the combined companies will be made up of equal representation from members of both Lumonics Inc. and General Scanning Inc. current Boards. Robert J. Atkinson, Lumonics Inc. chairman, will be the chairman of the board of GSI Lumonics Inc. "Given the fact we have very little competitive overlap but operate in similar markets with complementary technologies, we anticipate significant cross-selling, manufacturing and product development opportunities," said Nix.

General Scanning Inc. is a developer and manufacturer of a broad line of laser systems for a wide range of applications in the semiconductor, electronics, aircraft and medical industries. The company also produces a line of laser subsystems and components, which are used in the company's own systems as well as sold to other manufacturers of laser systems. General Scanning also designs and manufactures under ISO 9001 certification a line of thermal printers for leading medical instrument companies.

Founded in 1970, Lumonics designs, develops, manufactures and markets laser-based advanced manufacturing systems for semiconductor, electronics, aerospace, automotive and packaging markets.