CAUTIONARY NOTE CONCERNING FACTORS THAT MAY INFLUENCE FUTURE RESULTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements which, to the extent they are not statements of historical or present fact, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are intended to provide management's current expectations or plans for the future operating and financial performance of the Company, based on assumptions currently believed to be reasonable. Forward-looking statements can be identified by the use of words such as "believe," "expect," "intend," "foresee," "may," "plan," "anticipate" and other words of similar meaning in connection with a discussion of future operating or financial performance. These include, among others, statements relating to:

· expected financial condition, future earnings, levels of growth, or other measures of financial performance, or the future size of market segments or geographic markets;

· economic conditions;

· planned cost reductions;

· future cash flows and uses of cash and debt reduction strategies;

· prospective product development and business growth opportunities, as well as competitor product developments;

· demand for the Company's products and services;

· methods of and costs associated with potential geographic expansion;

· regulatory and market developments and the impact of such developments on future operating results;

· potential impacts from credit market risk;

· future effective income tax rates;

· the outcome of contingencies;

· the availability and cost of raw materials; and

· pension plan assumptions and future contributions.

All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Some of these risks and uncertainties are set forth in Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2008 and in the Company's subsequent filings with the Securities and Exchange Commission. The Company cannot assure that its results of operations, financial condition, or cash flows will not be adversely affected by one or more of these factors. The Company does not undertake to update any forward-looking statement made in this report or that may from time to time be made by or on behalf of the Company, except as required by law.

OVERVIEW

The Company's revenue for the quarter and nine months ended January 31, 2009 was negatively impacted by current global economic conditions and the adverse effect on credit markets and demand for capital equipment purchases. To mitigate these challenging conditions, the Company has proactively taken actions to control its operating costs through reductions in workforce and other measures. The Company plans to continue to focus on controlling costs and prudently manage all aspects of its business throughout the economic downturn. The Company anticipates that its long-term growth prospects will be fueled by its portfolio of new products and market expansion; however the challenges of current market conditions are creating difficulties in forecasting the Company's near-term performance. The Company does not anticipate significant improvement in market conditions during the fourth quarter of fiscal 2009.

Revenue for the third quarter of fiscal 2009 was $120.1 million, a decline of $31.9 million, or 21.0 percent, as compared with the third quarter of fiscal 2008. The net change in value of foreign currencies against the United States dollar lowered revenue by approximately $11.6 million, as compared with the same revenue base at prior year rates. The remaining decline in revenue for the quarter ended January 31, 2009 was primarily attributable to lower sales of equipment, software and aftermarket materials. The decline in revenue in the third quarter of fiscal 2009 is believed to be attributable to both delays in making capital equipment purchases caused by customers' concerns over the current global economic conditions and customers' difficulty in obtaining financing for these purchases. Partially offsetting the decline in core business revenue was $11.9 million of incremental revenue for the quarter

ended January 31, 2009 from recently completed acquisitions. The Company continues to launch new products and released the Solara ionV to the sign making and specialty graphics markets and the E2G Blocking System to the ophthalmic markets. Revenue from key new products was $5.5 million for the quarter ended January 31, 2009, which represented a decrease of $3.6 million from the comparable period of fiscal 2008.

The Company reported essentially breakeven operating profit for the quarter ended January 31, 2009, which represented a decrease of $6.3 million, and was attributable primarily to the gross profit impact of lower revenue volume. Operating income from the recently acquired companies contributed positively to operating profit. In addition, the Company has been completing actions to lower its cost structure, which included global workforce reductions and facility rationalization plans. Facility rationalization plans during the third quarter of fiscal 2009 resulted in a non-cash benefit of $0.9 million to Selling, general and administrative expenses as a result of management's decision to utilize a leased facility that was vacant, eliminating the need for a previously established restructuring accrual. Fiscal 2009 global workforce reduction actions are expected to result in cost savings of approximately $8.4 million in fiscal 2009, net of severance costs of $2.5 million, and approximately $16.8 million in cost savings on an annual basis thereafter. Of the total severance costs, $1.3 million was incurred during the third quarter of fiscal 2009.

As of January 31, 2009, the Company's available for sale investment in a United States balanced mutual fund carried an unrealized loss of $2.3 million. This investment was impaired as the carrying value of the security exceeded the fair value. The Company reviewed this impairment as of January 31, 2009 to determine whether the impairment should be classified as temporary or other-than-temporary. The Company believes it has the ability to hold this investment for a sufficient period of time to recover the unrealized loss, as the Company expects the balanced fund to recover in value at a rate consistent with the overall investment market conditions in the United States. However, the duration of this recovery period will likely span several years. Based on this information, although the Company has the ability to hold this security until it has recovered in value, the Company recorded a $2.3 million non-cash charge for an other-than-temporary impairment within Other income (expense), net on the Condensed Consolidated Statement of Operations for the quarter and nine months ended January 31, 2009.

The Company's long-term debt increased to $75.0 million as of January 31, 2009 from $42.0 million as of April 30, 2008. This increase was primarily associated with the funding requirements for the fiscal 2009 acquisitions and related transaction costs. Given the current economic conditions and the effect on the Company's results of operations, the Company amended its existing credit facility in March 2009 to, among other things, ease certain financial covenants, lower the committed available funds, and shorten the maturity date by one year. The credit facility amendment is expected to result in higher interest rates over the remainder of the credit facility. As a result of this amendment, the Company expects to expense approximately $0.3 million of previously capitalized deferred financing fees in the fourth quarter of fiscal 2009. The Company expects to incur $1.3 million to $1.7 million in fees and related costs to execute this amendment, which will be expensed over the remaining life of the facility to Interest expense.

The Company has continued to experience delays in orders from its customers and overall weaker demand as a result of the global recession and constrained credit and financial markets. Though the fourth quarter is typically the Company's highest revenue quarter and the Company anticipates realizing benefits from its cost reduction initiatives, current indicators lead the Company to believe that revenue in the fourth quarter may not show substantial improvement over the third quarter of fiscal 2009. The Company will continue to focus on controlling its costs during this protracted economic downturn to optimize results when markets improve.

RESULTS OF OPERATIONS

Revenue

                                                     For the Fiscal Quarters Ended                  For the Nine Months Ended
                                                              January 31,                                  January 31,
                                                                                 Percent                                    Percent
In thousands                                           2009           2008        Change           2009          2008        Change
Equipment and software                          $    38,224      $  50,333         (24.1 %)   $ 128,125     $ 148,703         (13.8 %)
Aftermarket supplies                                 64,289         83,304         (22.8 %)     248,989       262,319          (5.1 %)
Service                                              17,584         18,329          (4.1 %)      55,599        55,327           0.5 %
Total revenue                                   $   120,097      $ 151,966         (21.0 %)   $ 432,713     $ 466,349          (7.2 %)

The declines in consolidated revenue for both periods are considered to be as a result of adverse economic conditions and adverse credit markets, which is believed to have restricted many customers from securing equipment financing. In addition, unfavorable foreign currency translation rates, as compared with the same prior year periods have also contributed to the decline in revenue. As a result of the United States dollar strengthening against several other currencies in which the Company transacts business, foreign currency translation negatively impacted revenue for the quarter and nine months ended January 31, 2009 by approximately $11.6 million and $2.0 million, respectively, as compared with the quarter and nine months ended January 31, 2008. For the quarter and nine months ended January 31, 2009, revenue included the contribution of $11.9 million and $14.4 million, respectively, from the acquisitions of Virtek Vision International, Inc. ("Virtek") and Gamma Computer Tech Company, Ltd. ("Gamma"), which were completed in the second quarter of fiscal 2009. Revenue from key new products for the quarter ended January 31, 2009 contributed $5.5 million, representing a decrease of 39.3 percent for the same quarter of the prior year, and for the nine months ended January 31, 2009, contributed $27.8 million, an increase of 4.1 percent from the same prior year period.

The table below presents revenue by operating segment:

                                                            For the Fiscal Quarters           For the Nine Months
                                                               Ended January 31,               Ended January 31,
In thousands                                                      2009            2008           2009           2008
Sign Making and Specialty Graphics                        $     64,702       $  83,995     $  251,261     $  260,630
Apparel and Flexible Materials                                  43,009          52,146        137,890        153,065
Ophthalmic Lens Processing                                      12,386          15,825         43,562         52,654
Total revenue                                             $    120,097       $ 151,966     $  432,713     $  466,349

The Company believes that the overall lower volume is attributable to the current economic conditions rather than a loss of market share in its respective markets. On a segment basis, the Sign Making and Specialty Graphics segment's revenue decline was negatively impacted by $9.2 million and $1.8 million of unfavorable foreign currency translation for the quarter and nine months ended January 31, 2009, respectively. Economic conditions and adverse credit markets were believed to have led to the revenue decline for the quarter ended January 31, 2009 as compared with the quarter ended January 31, 2008. Demand in Europe did not appear to be significantly impacted by the economy until late in the third quarter of fiscal 2009. Additionally, this segment's launch of the Solara ion during the first quarter of fiscal 2009 helped to mitigate the impact of the economic conditions. The Apparel and Flexible Materials segment revenue suffered particularly within Asian markets, as customers appeared to be delaying equipment purchases until the economy stabilizes. Partially offsetting the lower revenue volume was incremental revenue from the recent acquisitions of Virtek and Gamma of $11.9 million for the third quarter of fiscal 2009 and $14.4 million for the nine months ended January 31, 2009. The revenue decline in the Ophthalmic Lens Processing segment reflected the declining global economic conditions and adverse credit markets, as customers are believed to have been experiencing difficulties in securing financing for their equipment purchases.

The Company generates approximately three-quarters of its revenue annually from sales to non-U.S. markets. Current global economic conditions were particularly adverse within the Company's Asian markets. As a result, the Company reported revenue for the current fiscal quarter within greater China of $4.5 million, a decrease of $4.0 million from the same quarter of the prior year, and for the nine months ended January 31, 2009, reported revenue of $15.6 million, a decrease of $9.3 million as compared with the same period in the prior year. Although the Company continues to believe that this geographic region represents significant long-term growth opportunities, this growth will be dependent on an improvement in the current economic conditions in China. The Company cannot predict when and if these markets will recover; however, it believes that it is well positioned to grow with these markets as they improve.

The following table provides the Company's backlog as of January 31, 2009 and April 30, 2008. Backlog as of January 31, 2009 included $4.1 million from Virtek, which is reflected in the Apparel and Flexible Materials segment:

                                         January 31,       April 30,
In thousands                                    2009            2008
Backlog:
  Sign Making and Specialty Graphics   $       2,222     $     3,462
  Apparel and Flexible Materials              21,717          33,770
  Ophthalmic Lens Processing                   2,100           1,440
Total backlog                          $      26,039     $    38,672

Overall the Company's backlog as of January 31, 2009 decreased from April 30, 2008. This decrease reflected a general decline in the current global business environment caused by adverse macro economic conditions and the related uncertainty as to when these conditions will improve. As a result of these conditions, the Company is unable to determine when its backlog will return to more typical levels.

Gross Profit / Margin

                                                   For the Fiscal Quarters Ended                  For the Nine Months Ended
                                                            January 31,                                  January 31,
                                                                               Percent                                    Percent
In thousands                                         2009           2008        Change           2009          2008        Change
Gross profit                                  $    35,519    $    43,453         (18.3 %)   $ 121,157     $ 135,310         (10.5 %)
Gross profit margin                                  29.6 %         28.6 %                       28.0 %        29.0 %

Gross profit decreased in the fiscal quarter and nine months ended January 31, 2009 by $7.9 million and $14.2 million, respectively, as compared with the same periods of the prior year. The impact of unfavorable foreign currency translation from international operations reduced gross profit by $3.4 million and $1.5 million, respectively, as compared with the quarter and nine months ended January 31, 2008.

The lower gross profit for the third quarter of fiscal 2009 was primarily from lower volume that negatively impacted gross profit by approximately $11.6 million. Incremental gross profit from the acquisitions and cost savings measures, including workforce reductions and manufacturing shut-downs partially offset these declines. Purchase accounting adjustments that required inventory acquired to be recorded at fair value upon acquisition reduced gross margins from normalized levels by $1.0 million for the quarter ended January 31, 2009. Severance costs from the workforce reduction actions negatively impacted gross profit by $0.4 million for the quarter ended January 31, 2009.

For the nine months ended January 31, 2009, lower volume negatively impacted gross profit by $16.0 million and an unfavorable product mix reflecting lower software sales negatively impacted gross profit by $2.8 million. Incremental gross profit from the recent acquisitions and cost savings initiatives that included workforce reductions partially offset the lower gross profit as compared with the prior year. Severance costs included in cost of sales were approximately $0.7 million for the nine months ended January 31, 2009.

The Company's gross profit margin improved 1.0 percentage point and declined 1.0 percentage point for the quarter and nine months ended January 31, 2009, respectively, as compared with the same periods of the prior year. The higher gross profit margin for the fiscal quarter ended January 31, 2009 was primarily attributable to a favorable product mix including revenue from licensing certain patents, higher gross profit contribution from acquired businesses and the impact of the Company's cost control measures, which were partially offset by the severance charges. The lower gross profit margin for the nine months ended January 31, 2009 was attributable to the impact of lower sales volume on the Company's fixed manufacturing costs, higher contribution of revenue from the Company's Spandex business unit, which is an international distribution business and realizes lower gross margins than the Company's manufacturing businesses, lower contribution from software revenue and the negative impact of severance expenses.

The Company continues to focus on cost reduction strategies within its manufacturing operations, including lean manufacturing and quality initiatives. Additionally, the Company's targeted workforce reductions and cost controls

Selling, General and Administrative Expenses

                                                     For the Fiscal Quarters Ended               For the Nine Months Ended
                                                              January 31,                               January 31,
                                                                               Percent                                    Percent
In thousands                                          2009           2008      Change         2009          2008          Change
Selling, general and administrative expenses    $   30,193       $ 30,691       (1.6 %)   $ 96,295  (1)   $ 99,022 (1)     (2.8 %)

(1) Gains of $0.6 million on sales of operating assets are included in SG&A for the nine months ended January 31, 2009 and gains of $1.0 million on sales of operating assets are included in SG&A for the nine months ended January 31, 2008.

Selling, general and administrative ("SG&A") expenses decreased $0.5 million for the quarter ended January 31, 2009 as compared with the quarter ended January 31, 2008, primarily as the result of the favorable impact of foreign currency translation of approximately $2.6 million and the impact of cost savings measures that included a reduced workforce. Partially offsetting these benefits, SG&A included incremental expenses of $3.3 million from recent acquisitions. Also included in SG&A expenses for the fiscal quarter ended January 31, 2009 was an offsetting benefit of $0.9 million for the reversal of a previously established leased facility restructuring reserve. The Company did not record any incentive compensation expense for the quarter ended January 31, 2009 as compared with a benefit from the reversal of incentive compensation accrual of $1.4 million for the quarter ended January 31, 2008. The Company further reduced its workforce during the quarter ended January 31, 2009 and incurred incremental severance costs of approximately $0.8 million in SG&A as compared with the quarter ended January 31, 2008. The Company expects to realize continued cost savings for the remainder of fiscal 2009 and thereafter as a result of these actions. SG&A for the quarter ended January 31, 2009 included approximately $0.7 million in higher self-insurance expenses, primarily related to medical insurance costs, as compared with the quarter ended January 31, 2008. The Company anticipates that its self-insurance medical expenses for the remainder of fiscal 2009 will continue to be moderately higher than the previous year.

SG&A expenses decreased $2.7 million for the nine months ended January 31, 2009 and were favorably impacted by foreign currency translation of $0.8 million as compared with the same period of the prior year. The remaining decrease reflected cost savings from the fiscal 2009 workforce reduction and other related cost reduction actions that included the decision to utilize a previously vacated leased facility, which resulted in an expense reduction of $0.9 million for the reversal of a previously established restructuring reserve. The Company also incurred lower selling expenses in the nine months ended January 31, 2009 as compared with the prior year, which was primarily attributable to lower sales volume and controlled discretionary spending. SG&A expenses for the nine months ended January 31, 2009 included a $0.6 million gain on the sale of property within the Ophthalmic Lens Processing segment. Incremental SG&A from the recent acquisitions of $3.9 million, higher medical and other self-insurance costs of $1.4 million and higher defined benefit pension plan expenses of $0.8 million partially offset these lower costs for the nine months ended January 31, 2009 as compared with the prior year. The Company did not record incentive compensation expense for the nine months ended January 31, 2009, as performance objectives were not achieved. SG&A expenses included $0.9 million in incentive compensation expense for the nine months ended January 31, 2008 and $0.9 million in professional fees related to the Company's adoption of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 ("FIN 48"). SG&A expenses for the nine months ended January 31, 2008 included a gain of $1.0 million on the sale of assets within the Ophthalmic Lens Processing segment.

Research and Development

                                                     For the Fiscal Quarters Ended                 For the Nine Months Ended
                                                              January 31,                                 January 31,
                                                                                 Percent                                  Percent
In thousands                                          2009             2008       Change           2009         2008       Change
Research and development                        $    5,329       $    6,466        (17.6 %)   $  17,331     $ 19,483        (11.0 %)
Percentage of revenue                                  4.4 %            4.3 %                       4.0 %        4.2 %

Research and development expenses in both the third quarter and first nine months of fiscal 2009 were lower than the same periods of fiscal 2008, primarily related to significant investment in development activities associated with the Solara ion and the Advanced Lens Processing System in the prior fiscal year. These products were launched at the beginning of fiscal 2009. The Company anticipates that these costs will continue at the third quarter fiscal 2009 levels for the remainder of the fiscal year. Lower research and development costs in fiscal 2009 also reflected the benefit of recent workforce reductions.

Other Income (Expense), net

                                                   For the Fiscal Quarters Ended         For the Nine Months Ended
                                                            January 31,                         January 31,
In thousands                                            2009                2008              2009                2008

Other income (expense), net primarily includes interest income, bank fees and foreign currency transaction gains and losses. During the fiscal quarter and nine months ended January 31, 2009, the Company realized a $2.3 million non-cash charge related to the recording of an other-than-temporary impairment of an available for sale investment. Though the Company anticipates that this security will recover its value over time, the duration of the loss and the inability to predict when the United States stock markets will recover resulted in the Company determining that this investment was other-than-temporarily impaired as of January 31, 2009. This security also yielded lower dividend income in the nine months ended January 31, 2009 as compared with the nine months ended January 31, 2008.

Interest Expense

                                                      For the Fiscal Quarters Ended              For the Nine Months Ended
                                                               January 31,                              January 31,
                                                                               Percent                                  Percent
In thousands                                        2009             2008       Change           2009         2008       Change
. . .