e10vq
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
January 31, 2006
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission File Number 0-6715
Analogic Corporation
(Exact name of registrant as
specified in its charter)
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Massachusetts
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04-2454372
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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8 Centennial Drive,
Peabody, Massachusetts
(Address of principal
executive offices)
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01960
(Zip Code)
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(978) 977-3000
(Registrants telephone
number, including area code)
(Former name, former address and
former fiscal year, if changed since last report.)
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 for 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 þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large
accelerated filer in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated
filer o Accelerated
filer þ Non-accelerated
filer o
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act.) Yes o No þ
The number of shares of Common Stock outstanding at
February 28, 2006 was 13,839,615.
ANALOGIC
CORPORATION
TABLE
OF CONTENTS
2
Part I.
FINANCIAL INFORMATION
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|
ITEM 1.
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Financial
Statements
|
ANALOGIC
CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
|
|
|
|
|
|
|
|
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January 31,
|
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July 31,
|
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|
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2006
|
|
|
2005
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
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|
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Cash and cash equivalents
|
|
$
|
238,455
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|
|
$
|
208,116
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Marketable securities, at fair
value
|
|
|
6,834
|
|
|
|
12,338
|
|
Accounts and notes receivable, net
of allowance for doubtful accounts of $1,152 at January 31,
2006, and $1,973 at July 31, 2005
|
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|
57,876
|
|
|
|
50,978
|
|
Inventories
|
|
|
70,227
|
|
|
|
63,604
|
|
Costs related to deferred revenue
|
|
|
1,059
|
|
|
|
1,300
|
|
Refundable and deferred income
taxes
|
|
|
12,864
|
|
|
|
11,657
|
|
Other current assets
|
|
|
6,866
|
|
|
|
6,729
|
|
Current assets of discontinued
operations (Note 2)
|
|
|
|
|
|
|
41,939
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
394,181
|
|
|
|
396,661
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
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|
79,572
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|
|
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79,442
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Investments in and advances to
affiliated companies
|
|
|
722
|
|
|
|
983
|
|
Capitalized software, net
|
|
|
8,219
|
|
|
|
8,463
|
|
Intangible assets, net
|
|
|
2,895
|
|
|
|
3,688
|
|
Other assets
|
|
|
5,043
|
|
|
|
5,579
|
|
Deferred income taxes
|
|
|
2,854
|
|
|
|
1,889
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
493,486
|
|
|
$
|
496,705
|
|
|
|
|
|
|
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LIABILITIES AND
STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
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|
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Accounts payable, trade
|
|
$
|
20,209
|
|
|
$
|
20,833
|
|
Accrued liabilities
|
|
|
20,116
|
|
|
|
19,802
|
|
Deferred revenue
|
|
|
6,734
|
|
|
|
6,114
|
|
Advance payments
|
|
|
1,315
|
|
|
|
8,273
|
|
Accrued income taxes
|
|
|
13,436
|
|
|
|
11,167
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|
Current liabilities of
discontinued operations (Note 2)
|
|
|
|
|
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30,445
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|
|
|
|
|
|
|
|
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Total current liabilities
|
|
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61,810
|
|
|
|
96,634
|
|
|
|
|
|
|
|
|
|
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Long-term liabilities:
|
|
|
|
|
|
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|
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Deferred income taxes
|
|
|
1,060
|
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
1,060
|
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
Commitments and guarantees
(Note 14)
|
|
|
|
|
|
|
|
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Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $.05 par value
|
|
|
692
|
|
|
|
691
|
|
Capital in excess of par value
|
|
|
52,965
|
|
|
|
47,081
|
|
Retained earnings
|
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|
373,495
|
|
|
|
348,499
|
|
Accumulated other comprehensive
income
|
|
|
3,464
|
|
|
|
2,886
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
430,616
|
|
|
|
399,157
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders Equity
|
|
$
|
493,486
|
|
|
$
|
496,705
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
3
ANALOGIC
CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
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Three Months Ended
|
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|
Six Months Ended
|
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|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
91,964
|
|
|
$
|
70,995
|
|
|
$
|
171,685
|
|
|
$
|
138,120
|
|
Engineering
|
|
|
6,119
|
|
|
|
3,169
|
|
|
|
9,931
|
|
|
|
8,409
|
|
Other
|
|
|
1,928
|
|
|
|
1,946
|
|
|
|
4,805
|
|
|
|
4,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenue
|
|
|
100,011
|
|
|
|
76,110
|
|
|
|
186,421
|
|
|
|
151,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
53,674
|
|
|
|
43,216
|
|
|
|
102,676
|
|
|
|
85,064
|
|
Engineering
|
|
|
4,109
|
|
|
|
3,480
|
|
|
|
9,842
|
|
|
|
7,542
|
|
Other
|
|
|
1,192
|
|
|
|
1,280
|
|
|
|
2,578
|
|
|
|
2,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales
|
|
|
58,975
|
|
|
|
47,976
|
|
|
|
115,096
|
|
|
|
95,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
41,036
|
|
|
|
28,134
|
|
|
|
71,325
|
|
|
|
55,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development
|
|
|
14,149
|
|
|
|
13,219
|
|
|
|
27,176
|
|
|
|
24,893
|
|
Selling and marketing
|
|
|
7,274
|
|
|
|
7,803
|
|
|
|
14,628
|
|
|
|
14,522
|
|
General and administrative
|
|
|
9,637
|
|
|
|
9,305
|
|
|
|
18,301
|
|
|
|
18,520
|
|
Restructuring and asset impairment
charges
|
|
|
503
|
|
|
|
947
|
|
|
|
1,528
|
|
|
|
947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
31,563
|
|
|
|
31,274
|
|
|
|
61,633
|
|
|
|
58,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
9,473
|
|
|
|
(3,140
|
)
|
|
|
9,692
|
|
|
|
(2,966
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
(2,469
|
)
|
|
|
(1,021
|
)
|
|
|
(4,502
|
)
|
|
|
(1,885
|
)
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Equity (gain) loss in
unconsolidated affiliates
|
|
|
(115
|
)
|
|
|
350
|
|
|
|
455
|
|
|
|
223
|
|
Other
|
|
|
(199
|
)
|
|
|
4
|
|
|
|
(42
|
)
|
|
|
(604
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (income) expense
|
|
|
(2,783
|
)
|
|
|
(667
|
)
|
|
|
(4,089
|
)
|
|
|
(2,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before income taxes and cumulative effect of change
in accounting principle
|
|
|
12,256
|
|
|
|
(2,473
|
)
|
|
|
13,781
|
|
|
|
(702
|
)
|
Provision (benefit) for income taxes
|
|
|
3,159
|
|
|
|
(427
|
)
|
|
|
3,621
|
|
|
|
(134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before discontinued operations and cumulative effect
of change in accounting principle
|
|
|
9,097
|
|
|
|
(2,046
|
)
|
|
|
10,160
|
|
|
|
(568
|
)
|
Income (loss) from discontinued
operations (net of income tax provision (benefit) of $133 and
($141) for the three and six months ended January 31, 2005,
and $126 for the six months ended January 31, 2006)
|
|
|
|
|
|
|
(1,664
|
)
|
|
|
159
|
|
|
|
(2,977
|
)
|
Gain on disposal of discontinued
operations (net of income tax of $9,104)
|
|
|
20,640
|
|
|
|
|
|
|
|
20,640
|
|
|
|
|
|
Cumulative effect of change in
accounting principle (net of income tax of $61)
|
|
|
|
|
|
|
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
29,737
|
|
|
$
|
(3,710
|
)
|
|
$
|
31,079
|
|
|
$
|
(3,545
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
|
0.67
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.75
|
|
|
$
|
(0.04
|
)
|
Income (loss) from discontinued
operations, net of tax
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
0.01
|
|
|
|
(0.22
|
)
|
Gain on disposal of discontinued
operations, net of tax
|
|
|
1.51
|
|
|
|
|
|
|
|
1.51
|
|
|
|
|
|
Cumulative effect of change in
accounting principle, net of tax
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2.18
|
|
|
$
|
(0.27
|
)
|
|
$
|
2.28
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
|
0.66
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.74
|
|
|
$
|
(0.04
|
)
|
Income (loss) from discontinued
operations, net of tax
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
0.01
|
|
|
|
(0.22
|
)
|
Gain on disposal of discontinued
operations, net of tax
|
|
|
1.50
|
|
|
|
|
|
|
|
1.50
|
|
|
|
|
|
Cumulative effect of change in
accounting principle, net of tax
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2.16
|
|
|
$
|
(0.27
|
)
|
|
$
|
2.26
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,625
|
|
|
|
13,545
|
|
|
|
13,628
|
|
|
|
13,534
|
|
Diluted
|
|
|
13,799
|
|
|
|
13,545
|
|
|
|
13,766
|
|
|
|
13,534
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
4
ANALOGIC
CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
31,079
|
|
|
$
|
(3,545
|
)
|
Less:
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued
operations
|
|
|
159
|
|
|
|
(2,977
|
)
|
Gain on disposal of discontinued
operations
|
|
|
20,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations and cumulative effect of change in accounting
principle
|
|
|
10,280
|
|
|
|
(568
|
)
|
Adjustments to reconcile net income
to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
2,651
|
|
|
|
(505
|
)
|
Depreciation and amortization
|
|
|
8,056
|
|
|
|
8,150
|
|
Cumulative effect of change on
accounting principle
|
|
|
(120
|
)
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
50
|
|
|
|
129
|
|
Gain on sale of property, plant,
and equipment
|
|
|
(20
|
)
|
|
|
(5
|
)
|
Equity loss in unconsolidated
affiliates
|
|
|
455
|
|
|
|
224
|
|
Equity loss in unconsolidated
affiliate classified as research and product development expense
|
|
|
|
|
|
|
759
|
|
Restructuring and asset impairment
charges
|
|
|
2,707
|
|
|
|
947
|
|
Share-based compensation expense
|
|
|
1,703
|
|
|
|
1,049
|
|
Excess tax benefit from share-based
compensation
|
|
|
(100
|
)
|
|
|
|
|
Net changes in operating assets and
liabilities (Note 11)
|
|
|
(32,222
|
)
|
|
|
(1,139
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH (USED FOR) PROVIDED BY
CONTINUING OPERATIONS
|
|
|
(6,560
|
)
|
|
|
9,041
|
|
NET CASH PROVIDED BY DISCONTINUED
OPERATIONS
|
|
|
1,898
|
|
|
|
4,406
|
|
|
|
|
|
|
|
|
|
|
NET CASH (USED FOR) PROVIDED BY
OPERATING ACTIVITIES
|
|
|
(4,662
|
)
|
|
|
13,447
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Investments in and advances to
affiliated companies
|
|
|
(687
|
)
|
|
|
(1,113
|
)
|
Additions to property, plant and
equipment
|
|
|
(6,199
|
)
|
|
|
(5,085
|
)
|
Proceeds from the sale of Camtronics
|
|
|
38,906
|
|
|
|
|
|
Capitalized software
|
|
|
(439
|
)
|
|
|
(2,437
|
)
|
Proceeds from the sale of property,
plant and equipment
|
|
|
135
|
|
|
|
25
|
|
Maturities of marketable securities
|
|
|
5,400
|
|
|
|
10,335
|
|
|
|
|
|
|
|
|
|
|
NET CASH (USED FOR) PROVIDED BY
CONTINUING OPERATIONS
|
|
|
37,116
|
|
|
|
1,725
|
|
NET CASH PROVIDED BY (USED FOR)
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
(1,353
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY INVESTING
ACTIVITIES
|
|
|
37,116
|
|
|
|
372
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Issuance of stock pursuant to
exercise of stock options and employee stock purchase plan
|
|
|
4,188
|
|
|
|
172
|
|
Excess tax benefit from share-based
compensation
|
|
|
100
|
|
|
|
|
|
Purchase of common stock
|
|
|
(3,883
|
)
|
|
|
|
|
Dividends paid to shareholders
|
|
|
(2,487
|
)
|
|
|
(2,190
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH USED FOR CONTINUING
OPERATIONS
|
|
|
(2,082
|
)
|
|
|
(2,018
|
)
|
NET CASH USED FOR DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
(743
|
)
|
|
|
|
|
|
|
|
|
|
NET CASH USED FOR FINANCING
ACTIVITIES
|
|
|
(2,082
|
)
|
|
|
(2,761
|
)
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON
CASH OF CONTINUING OPERATIONS
|
|
|
(33
|
)
|
|
|
(641
|
)
|
EFFECT OF EXCHANGE RATE CHANGES ON
CASH OF DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
(567
|
)
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH
EQUIVALENTS
|
|
|
30,339
|
|
|
|
10,491
|
|
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
|
|
|
208,116
|
|
|
|
149,549
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF
PERIOD
|
|
$
|
238,455
|
|
|
$
|
160,040
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Income taxes, net
|
|
$
|
10,028
|
|
|
$
|
3,309
|
|
Interest
|
|
|
4
|
|
|
|
21
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
5
(Dollars in thousands, except share and per share
data)
|
|
1.
|
Basis of
presentation:
|
The unaudited consolidated financial statements of Analogic
Corporation (the Company) presented herein have been
prepared pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on
Form 10-Q
and do not include all of the information and note disclosures
required by accounting principles generally accepted in the
United States of America for complete financial statements. In
the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting solely of normal recurring adjustments) necessary
for a fair statement of the results for all interim periods
presented. The results of operations for the three and six
months ended January 31, 2006, are not necessarily
indicative of the results to be expected for the fiscal year
ending July 31, 2006, or any other interim period. These
statements should be read in conjunction with the consolidated
financial statements and notes thereto for the fiscal year ended
July 31, 2005, included in the Companys Annual Report
on
Form 10-K
as filed with the Securities and Exchange Commission on
October 14, 2005. The consolidated balance sheet as of
July 31, 2005 contains data derived from audited financial
statements.
Certain financial statement items have been reclassified to
conform to the current period presentation.
|
|
2.
|
Discontinued
operations:
|
On November 1, 2005, the Company sold its wholly owned
subsidiary Camtronics Medical Systems, Ltd.
(Camtronics) for $40,000 in cash, and realized net
cash of $38,906 after transactional costs. In the second quarter
ended January 31, 2006, the Company recorded a net gain on
the sale of Camtronics of $20,640, net of a tax provision of
$9,104, or $1.50 per diluted share. In determining the
gain, the Company also provided indemnification and tax
liabilities of $1,102.
Prior to the sale, Camtronics had been reported as a separate
segment. The Company sold its Camtronics operating segment to
better focus on its other core lines of business. This business
has been reported as a discontinued operation in accordance with
SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, and all periods
presented have been restated accordingly to reflect these
operations as discontinued.
Revenues and net income (loss) for Camtronics for the three and
six months ended January 31, 2006 and 2005 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
January 31,
|
|
|
Six Months Ended
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Total net sales
|
|
$
|
|
|
|
$
|
8,206
|
|
|
$
|
11,495
|
|
|
$
|
17,167
|
|
Net income (loss)
|
|
|
|
|
|
|
(1,664
|
)
|
|
|
159
|
|
|
|
(2,977
|
)
|
6
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following represents a detailed listing of the current
assets and current liabilities of discontinued operations:
|
|
|
|
|
|
|
July 31,
|
|
|
|
2005
|
|
|
Current assets of discontinued
operations:
|
|
|
|
|
Accounts receivable, net
|
|
$
|
5,635
|
|
Inventories
|
|
|
6,422
|
|
Costs related to deferred revenue
|
|
|
11,771
|
|
Deferred income taxes
|
|
|
3,271
|
|
Other current assets
|
|
|
651
|
|
Property, plant and equipment, net
|
|
|
8,112
|
|
Capitalized software, net
|
|
|
4,048
|
|
Goodwill
|
|
|
746
|
|
Intangible assets, net
|
|
|
1,283
|
|
|
|
|
|
|
|
|
$
|
41,939
|
|
|
|
|
|
|
Current liabilities of
discontinued operations:
|
|
|
|
|
Obligations under capital leases
|
|
$
|
162
|
|
Account payable, trade
|
|
|
1,699
|
|
Accrued liabilities
|
|
|
2,684
|
|
Deferred revenue
|
|
|
22,667
|
|
Advance payments
|
|
|
1,950
|
|
Deferred income taxes
|
|
|
850
|
|
Accumulated other comprehensive
income
|
|
|
433
|
|
|
|
|
|
|
|
|
$
|
30,445
|
|
|
|
|
|
|
Effective August 1, 2005, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 123(R) (SFAS No. 123(R)),
Share-Based Payment, which establishes
accounting for equity instruments exchanged for employee
services. Under the provisions of SFAS No. 123(R),
share-based compensation cost is measured at the grant date,
based on the fair value of the award, and is recognized as an
expense over the employees requisite service period
(generally the vesting period of the equity grant). Prior to
August 1, 2005, the Company accounted for share-based
compensation to employees in accordance with Accounting
Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related
interpretations. The Company also followed the disclosure
requirements of Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation
(SFAS No. 123). The Company elected to
adopt the modified prospective transition method as provided by
SFAS No. 123(R) and, accordingly, financial statement
amounts for the prior periods presented in this
Form 10-Q
have not been restated to reflect the fair value method of
expensing share-based compensation.
7
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table presents share-based compensation expenses
for continuing operations included in the Companys
unaudited consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31, 2006
|
|
|
January 31, 2006
|
|
|
Cost of product sales
|
|
$
|
36
|
|
|
$
|
116
|
|
Research and product development
|
|
|
258
|
|
|
|
538
|
|
Selling and marketing
|
|
|
47
|
|
|
|
114
|
|
General and administrative
|
|
|
408
|
|
|
|
935
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
before tax
|
|
|
749
|
|
|
|
1,703
|
|
Provision for income tax
|
|
|
191
|
|
|
|
357
|
|
|
|
|
|
|
|
|
|
|
Net share-based compensation
expense
|
|
$
|
558
|
|
|
$
|
1,346
|
|
|
|
|
|
|
|
|
|
|
The Company estimates the fair value of stock options using the
Black-Scholes valuation model. Key input assumptions used to
estimate the fair value of stock options include the exercise
price of the award, the expected option term, the expected
volatility of the Companys stock over the options
expected term, the risk-free interest rate over the
options expected term, and the Companys expected
annual dividend yield. The Company believes that the valuation
technique and the approach utilized to develop the underlying
assumptions are appropriate in calculating the fair values of
the Companys stock options granted in the three and six
months ended January 31, 2006. Estimates of fair value are
not intended to predict actual future events or the value
ultimately realized by persons who receive equity awards.
The fair value of each option grant was estimated on the grant
date using the Black-Scholes option-pricing model with the
following assumptions:
|
|
|
|
|
|
|
Three and Six Months Ended
|
|
|
|
January 31,
|
|
|
|
2006
|
|
|
Expected option term(1)
|
|
|
5.25 years
|
|
Expected volatility factor(2)
|
|
|
30
|
%
|
Risk-free interest rate(3)
|
|
|
3.94
|
%
|
Expected annual dividend yield
|
|
|
.7
|
%
|
|
|
|
(1) |
|
The option life was determined using the simplified method for
estimating expected option life, which qualify as
plain-vanilla options. |
|
(2) |
|
The stock volatility for each grant is determined based on the
review of the experience of the weighted average of historical
weekly price changes of the Companys common stock over the
most recent five years, which approximates the expected option
life of the grant of 5.25 years, |
|
(3) |
|
The risk-free interest rate for periods equal to the expected
term of the share option is based on the U.S. Treasury
yield curve in effect at the time of grant. |
The Company did not recognize compensation expense for employee
stock option grants for the three and six months ended
January 31, 2005, when the exercise price of the
Companys employee stock options equaled the market price
of the underlying stock on the date of grant.
The Company has recognized compensation expense for its
restricted stock grants. Upon adoption of SFAS 123(R),
using the modified prospective method, the Company recognized a
benefit of $181 ($120 after tax) as a cumulative effect of a
change in accounting principle resulting from the requirement to
estimate forfeitures of the Companys restricted stock
grants at the date of grant instead of recognizing them as
incurred. The estimated forfeiture rate was applied to the
previously recorded compensation expense of the
8
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Companys unvested restricted stock in determining the
cumulative effect of a change in accounting principle. The
cumulative benefit, net of tax, increased both basic and diluted
earnings per share by $0.01.
The Company had previously adopted the provisions of
SFAS No. 123, as amended by SFAS No. 148,
Accounting for Stock-Based
Compensation Transition and Disclosure
through disclosure only. The following table illustrates the
effects on net income and earnings per share for the three and
six months ended January 31, 2005 as if the Company had
applied the fair value recognition provisions of SFAS 123
to share-based employee awards:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2005
|
|
|
2005
|
|
|
Net loss from continuing
operations, as reported:
|
|
$
|
(2,046
|
)
|
|
$
|
(568
|
)
|
Add: Employee compensation expense
for restricted stock included in reported net income
|
|
|
475
|
|
|
|
923
|
|
Less: Total employee compensation
expenses for options determined under the fair value method
|
|
|
(1,190
|
)
|
|
|
(2,312
|
)
|
|
|
|
|
|
|
|
|
|
Pro forma loss from continuing
operations:
|
|
$
|
(2,761
|
)
|
|
$
|
(1,957
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing
operations:
|
|
|
|
|
|
|
|
|
Basic as reported
|
|
$
|
(0.15
|
)
|
|
$
|
(0.04
|
)
|
pro
forma
|
|
|
(0.20
|
)
|
|
|
(0.14
|
)
|
Diluted as
reported
|
|
$
|
(0.15
|
)
|
|
$
|
(0.04
|
)
|
pro
forma
|
|
|
(0.20
|
)
|
|
|
(0.14
|
)
|
The fair value of each option grant was estimated on the grant
date using the Black-Scholes option pricing model with the
following assumptions:
|
|
|
|
|
|
|
Three and Six Months Ended
|
|
|
|
January 31,
|
|
|
|
2005
|
|
|
Expected term
|
|
|
5 years
|
|
Volatility
|
|
|
40
|
%
|
Risk-free interest rate
|
|
|
3.23
|
%
|
Dividend yield
|
|
|
.8
|
%
|
Stock
Incentive Plans
At January 31, 2006, the Company had two key employee stock
option plans (one of which has lapsed as to the granting of
options), two key employee stock bonus plans, two non-employee
director stock option plans (one of which has lapsed as to the
granting of options), and one employee stock purchase plan.
Options granted under the two key employee stock option plans
generally become exercisable in installments commencing no
earlier than two years from the date of grant and ending no
later than six years from the date of grant. Unexercised options
expire up to seven years from date of grant. Options issued
under the plans are non-qualified options or incentive stock
options and are issued at prices of not less than 100% of the
fair market value of the common stock at the date of grant.
Options granted under the two non-employee director stock option
plans become exercisable in equal installments over three years
commencing one year from the date of grant and remain
exercisable for ten years from the date of grant. Options issued
under the plans are non-qualified options and are issued at
prices of 100% of the fair market value of the common stock at
the date of grant.
9
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Under the Companys key employee stock bonus plans,
restricted common stock may be granted to key employees under
terms and conditions as determined by the Board of Directors.
Generally, participants under the stock bonus plans may not
dispose or otherwise transfer stock granted for three years from
date of grant. Stock granted under these plans generally vest in
four equal installments beginning in the third year from the
date of grant.
Under the employee stock purchase plan, eligible participants
are granted options to purchase the Companys common stock
twice a year at the lower of 85% of market value at the
beginning or end of each period. Calculation of the number of
options granted, and subsequent purchase of these shares, is
based upon voluntary payroll deductions during each six-month
period. The number of options granted to each employee under
this plan, when combined with options issued under other plans,
is limited to a maximum outstanding value of $25 during each
calendar year.
The fair value of each option granted under the employee stock
purchase plan was estimated on the expected grant date using the
Black-Scholes option pricing model with the following
assumptions:
|
|
|
|
|
|
|
Three and Six Months Ended
|
|
|
|
January 31,
|
|
|
|
2006
|
|
|
Expected term
|
|
|
.5 years
|
|
Volatility
|
|
|
25
|
%
|
Risk-free interest rate
|
|
|
3.94
|
%
|
Dividend yield
|
|
|
.7
|
%
|
At January 31, 2006, 1,020,315 shares were reserved
for grant under the above stock option, bonus and purchase plans.
The following table sets forth the stock option and restricted
stock transactions from July 31, 2005 to January 31,
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
Options Outstanding
|
|
|
Grants Outstanding
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Number of
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Price
|
|
|
Term (Years)
|
|
|
Shares
|
|
|
Fair Value
|
|
|
Outstanding at July 31,
2005
|
|
|
678,324
|
|
|
$
|
41.71
|
|
|
|
4.31
|
|
|
|
188,345
|
|
|
$
|
43.36
|
|
Granted
|
|
|
13,600
|
|
|
|
48.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(20,201
|
)
|
|
|
37.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,833
|
)
|
|
|
51.27
|
|
Cancelled
|
|
|
(3,000
|
)
|
|
|
46.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at October 31,
2005
|
|
|
668,723
|
|
|
|
41.96
|
|
|
|
4.17
|
|
|
|
185,512
|
|
|
|
43.48
|
|
Granted
|
|
|
7,500
|
|
|
|
46.85
|
|
|
|
|
|
|
|
3,243
|
|
|
|
52.98
|
|
Exercised
|
|
|
(83,701
|
)
|
|
|
37.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,875
|
)
|
|
|
40.42
|
|
Cancelled
|
|
|
(42,575
|
)
|
|
|
40.79
|
|
|
|
|
|
|
|
(3,750
|
)
|
|
|
41.64
|
|
Outstanding January 31,
2006
|
|
|
549,947
|
|
|
|
42.75
|
|
|
|
4.24
|
|
|
|
170,130
|
|
|
|
43.80
|
|
During the three and six months ended January 31, 2006, the
total intrinsic value of options exercised (i.e. the difference
between the market price and the price paid by the employee to
exercise the options) was $1,648 and $1,974, respectively, and
the total amount of cash received from the exercise of these
options was $3,162 and $3,932, respectively. The total fair
value of restricted stock grants that vested during the three
and six months period ended January 31, 2006 was $822 and
$967, respectively.
10
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes information about stock options
outstanding at January 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
Vested Options
|
|
|
|
|
|
|
Weighted Average
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
Number of
|
|
|
of Remaining
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
Shares
|
|
|
Contract Life
|
|
|
Exercise
|
|
|
Number
|
|
|
Exercise
|
|
Range of Exercise
Prices
|
|
Outstanding
|
|
|
(Years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
|
$29.31 - $40.95
|
|
|
148,237
|
|
|
|
2.93
|
|
|
$
|
37.65
|
|
|
|
98,737
|
|
|
$
|
36.57
|
|
40.98 - 42.04
|
|
|
152,050
|
|
|
|
5.52
|
|
|
|
41.38
|
|
|
|
16,676
|
|
|
|
41.48
|
|
42.48 - 47.00
|
|
|
144,660
|
|
|
|
3.61
|
|
|
|
43.79
|
|
|
|
94,443
|
|
|
|
43.58
|
|
48.54 - 52.20
|
|
|
105,000
|
|
|
|
5.11
|
|
|
|
50.48
|
|
|
|
20,295
|
|
|
|
51.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29.31 - 52.20
|
|
|
549,947
|
|
|
|
4.24
|
|
|
|
42.75
|
|
|
|
230,151
|
|
|
|
41.09
|
|
The total grant date fair value of stock options that vested
during the three months ended January 31, 2006 was
approximately $3,317 with a weighted average remaining
contractual term of 3.15 years.
The following table summarizes the status of the Companys
non-vested options since July 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
Non-Vested Options
|
|
|
|
|
|
|
Weighted
|
|
|
|
Number of
|
|
|
Average Fair
|
|
|
|
Shares
|
|
|
Value
|
|
|
Non-vested at July 31, 2005
|
|
|
425,409
|
|
|
$
|
16.97
|
|
Granted
|
|
|
13,600
|
|
|
|
15.53
|
|
Vested
|
|
|
(65,983
|
)
|
|
|
16.88
|
|
Forfeited
|
|
|
(2,750
|
)
|
|
|
17.63
|
|
|
|
|
|
|
|
|
|
|
Non-vested at October 31, 2005
|
|
|
370,276
|
|
|
|
16.91
|
|
Granted
|
|
|
7,500
|
|
|
|
14.87
|
|
Vested
|
|
|
(30,205
|
)
|
|
|
18.86
|
|
Forfeited
|
|
|
(27,775
|
)
|
|
|
16.32
|
|
|
|
|
|
|
|
|
|
|
Non-vested January 31, 2006
|
|
|
319,796
|
|
|
|
16.76
|
|
|
|
|
|
|
|
|
|
|
As of January 31, 2006, there was $8,891 of total
unrecognized compensation cost related to non-vested share-based
compensation arrangements granted under the Companys stock
option and restricted stock bonus plans. That cost is expected
to be recognized over a weighted-average period of
4.6 years. The Company amortizes stock-based compensation
on the straight-line method. The Company has adopted the
long-form method for the caìlculation of the
Windfall Pool as prescribed by paragraph 81 of
SFAS 123(R).
The actual tax benefit realized for the tax deductions from
option exercise of the share-based payment arrangements totaled
$307 and $377 for the three and six months ended
January 31, 2006.
|
|
4.
|
Restructuring
and asset impairment charges:
|
The Company recorded restructuring and asset impairment charges
as an operating expense in the Companys Unaudited
Consolidated Statements of Operations as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Medical Imaging Products:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shenzhen Anke High-Tech Co. Ltd
(SAHCO)
|
|
$
|
275
|
|
|
$
|
|
|
|
$
|
275
|
|
|
$
|
|
|
PhotoDetection Systems, Inc.
|
|
|
|
|
|
|
947
|
|
|
|
216
|
|
|
|
947
|
|
Corporate and other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SKY Computers, Inc.
|
|
|
228
|
|
|
|
|
|
|
|
1,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
503
|
|
|
$
|
947
|
|
|
$
|
1,528
|
|
|
$
|
947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Shenzhen
Anke High-Tech Co. Ltd. (SAHCO)
The Company has a 44.6% equity interest in SAHCO located in the
Peoples Republic of China. The Company reviewed this
investment for
other-than-temporary
impairment in accordance with Financial Accounting Standard
No. 115, Accounting for Certain Investments in
Debt and Equity Security and determined that at
January 31, 2006, its investment in SAHCO was impaired
based on its current fair value. At January 31, 2006, the
Company recorded an asset impairment charge related to this
investment of $275 which represented the Companys book
value.
PhotoDetection
Systems Inc.
On May 21, 2003, the Company acquired 1,251,313 shares
of Series B Convertible Participating Preferred Stock for
an equity interest of approximately 11% in PhotoDetection
Systems Inc. (PDS) of Acton, Massachusetts. PDS, a
privately held company, has developed proprietary detection
systems for high-performance Positron Tomography, a rapidly
growing medical diagnostic imaging modality. Since the second
quarter of fiscal year 2005, the Company had been accounting for
this investment under the cost method of accounting in
accordance with
EITF 02-14,
Whether an Investor Should Apply the Equity Method of
Accounting to Investments Other Then Common Stock. The
Company reviewed this investment for
other-than-temporary
impairment in accordance with Financial Accounting Standard
No. 115, Accounting for Certain Investments in
Debt and Equity Security and determined that at
October 31, 2005, its investments in PDS was impaired based
on its current fair value, and therefore, recorded an asset
impairment charge of $216 in the quarter ended October 31,
2005. At October 31, 2005, the Companys investment in
PDS was recorded, net of impairment charges, at $0 value.
During the second quarter of fiscal 2006, the Company invested
$471 in PDS. The Company reviewed this investment for
other-than-temporary
impairment and determined that at January 31, 2006, its
investment in PDS was not impaired based on its current fair
value. At January 31, 2006, the Companys investment
in PDS was recorded at a value of $471.
SKY
Computers, Inc.
In September 2005, the Company announced a plan to restructure
the business operations of its wholly-owned subsidiary, SKY
Computers, Inc (Sky). The decision to restructure
SKY was based on continued lower than expected sales. SKYs
manufacturing and service capability will be maintained in order
to service its commitments to its existing customers. The
restructuring plan involves (1) the termination of
approximately 36 employees most of whom have been engaged in
product development, sales, and administrative activities;
(2) the write-down of certain capital assets; and
(3) the write-down of certain inventory. The severance and
the write-down of capital assets charges have been recorded
within the operating expenses in the Unaudited Consolidated
Statements of Operations under the caption Restructuring
and asset impairment charges while the write-down of
inventory is recorded in the Unaudited Consolidated Statements
of Operations within product cost of sales. In accordance with
SFAS No. 146, Accounting for Costs Associated
with Exit Disposal Activities, the Company recorded an
additional severance charge of $228 for the three months ended
January 31, 2006.
12
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A summary of the changes in restructuring charges is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
Capital Assets
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
|
Severance
|
|
|
Abandoned
|
|
|
Sub-total
|
|
|
Impairment
|
|
|
Total
|
|
|
Balance at July 31, 2005
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Restructuring charge
|
|
|
499
|
|
|
|
310
|
|
|
|
809
|
|
|
|
1,179
|
|
|
|
1,988
|
|
Cash payments
|
|
|
(15
|
)
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2005
|
|
|
484
|
|
|
|
310
|
|
|
|
794
|
|
|
|
1,179
|
|
|
|
1,973
|
|
Restructuring charge
|
|
|
228
|
|
|
|
|
|
|
|
228
|
|
|
|
|
|
|
|
228
|
|
Cash payments
|
|
|
(444
|
)
|
|
|
|
|
|
|
(444
|
)
|
|
|
|
|
|
|
(444
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2006
|
|
$
|
268
|
|
|
$
|
310
|
|
|
$
|
578
|
|
|
$
|
1,179
|
|
|
$
|
1,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company estimates that an additional $176 of
personnel-related charges will be incurred and recorded as
period costs, during the remainder of fiscal year 2006, which
represents the future service period. The cash expenditures
subsequent to January 31, 2006 will approximate $444 in
personnel-related charges.
These restructuring and asset impairment charges are related to
segment information entitled Corporate and other.
|
|
5.
|
Balance
sheet information:
|
Additional information for certain balance sheet accounts is as
follows for the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
July 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
42,355
|
|
|
$
|
37,461
|
|
Work-in-process
|
|
|
15,892
|
|
|
|
15,275
|
|
Finished goods
|
|
|
11,980
|
|
|
|
10,868
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
70,227
|
|
|
$
|
63,604
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities:
|
|
|
|
|
|
|
|
|
Accrued employee compensation and
benefits
|
|
$
|
9,858
|
|
|
$
|
9,817
|
|
Accrued warranty
|
|
|
4,462
|
|
|
|
4,057
|
|
Other
|
|
|
5,796
|
|
|
|
5,928
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,116
|
|
|
$
|
19,802
|
|
|
|
|
|
|
|
|
|
|
Advance payments:
|
|
|
|
|
|
|
|
|
Long-lead time components(A)
|
|
$
|
|
|
|
$
|
6,170
|
|
Ramp-up
funds
|
|
|
473
|
|
|
|
475
|
|
Customer deposits
|
|
|
842
|
|
|
|
1,628
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,315
|
|
|
$
|
8,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Long-lead time components represent advance payments received
from L-3 Communications based on certain orders received for the
Companys EXACT systems. |
13
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
6.
|
Investments
in and advances to affiliated companies:
|
Summarized results of operations of the Companys partially
owned equity affiliates, SAHCO for the three and six months
ended January 31, 2006 and 2005, and Cedara Software
Corporation for the six months ended January 31, 2005 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Net revenue
|
|
$
|
4,706
|
|
|
$
|
24,510
|
|
|
$
|
8,536
|
|
|
$
|
37,922
|
|
Gross margin
|
|
|
1,895
|
|
|
|
15,304
|
|
|
|
3,427
|
|
|
|
24,268
|
|
Income (loss) from operations
|
|
|
105
|
|
|
|
4,061
|
|
|
|
(804
|
)
|
|
|
4,998
|
|
Net income (loss)
|
|
|
334
|
|
|
|
3,556
|
|
|
|
(880
|
)
|
|
|
4,672
|
|
Intangible assets at January 31, 2006 and July 31,
2005, which will continue to be amortized, consisted of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31, 2006
|
|
|
July 31, 2005
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
Cost
|
|
|
Amortization
|
|
|
Net
|
|
|
Cost
|
|
|
Accumulated
|
|
|
Net
|
|
|
Intellectual Property
|
|
$
|
8,264
|
|
|
$
|
5,369
|
|
|
$
|
2,895
|
|
|
$
|
8,264
|
|
|
$
|
4,576
|
|
|
$
|
3,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense related to acquire intangible assets was
$406 and $402 for the three months ended January 31, 2006
and 2005, respectively; and $811 and $804 for the six months
ended January 31, 2006 and 2005 respectively. Amortization
lives of intangibles range from two to five years.
The estimated future amortization expense related to intangible
assets in the current fiscal year, and each of the three
succeeding fiscal years, is expected to be as follows:
|
|
|
|
|
2006 (Remaining six months)
|
|
$
|
832
|
|
2007
|
|
|
1,643
|
|
2008
|
|
|
399
|
|
2009
|
|
|
21
|
|
|
|
|
|
|
|
|
$
|
2,895
|
|
|
|
|
|
|
Basic earnings per share are computed using the weighted average
number of common shares outstanding during the period. Diluted
earnings per share are computed using the sum of the weighted
average number of common shares outstanding during the period
and, if dilutive, the weighted average number of potential
shares of common stock, including unvested restricted stock and
the assumed exercise of stock options using the treasury stock
method.
14
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the computation of basic and
diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Income (loss) from continuing
operations
|
|
$
|
9,097
|
|
|
$
|
(2,046
|
)
|
|
$
|
10,160
|
|
|
$
|
(568
|
)
|
Income (loss) from discontinued
operations, net of tax
|
|
|
|
|
|
|
(1,664
|
)
|
|
|
159
|
|
|
|
(2,977
|
)
|
Gain on disposal of discontinued
operations, net of tax
|
|
|
20,640
|
|
|
|
|
|
|
|
20,640
|
|
|
|
|
|
Cumulative effect of change in
accounting principle, net of tax
|
|
|
|
|
|
|
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
29,737
|
|
|
$
|
(3,710
|
)
|
|
$
|
31,079
|
|
|
$
|
(3,545
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding-basic
|
|
|
13,625
|
|
|
|
13,545
|
|
|
|
13,628
|
|
|
|
13,534
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock
|
|
|
174
|
|
|
|
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding-diluted
|
|
|
13,799
|
|
|
|
13,545
|
|
|
|
13,766
|
|
|
|
13,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share,
net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
|
0.67
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.75
|
|
|
$
|
(0.04
|
)
|
Income (loss) from discontinued
operations
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
0.01
|
|
|
|
(0.22
|
)
|
Gain on disposal of discontinued
operations
|
|
|
1.51
|
|
|
|
|
|
|
|
1.51
|
|
|
|
|
|
Cumulative effect of change in
accounting principle
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2.18
|
|
|
$
|
(0.27
|
)
|
|
$
|
2.28
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share,
net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
|
0.66
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.74
|
|
|
$
|
(0.04
|
)
|
Income (loss) from discontinued
operations
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
0.01
|
|
|
|
(0.22
|
)
|
Gain on disposal of discontinued
operations
|
|
|
1.50
|
|
|
|
|
|
|
|
1.50
|
|
|
|
|
|
Cumulative effect of change in
accounting principle
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2.16
|
|
|
$
|
(0.27
|
)
|
|
$
|
2.26
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive shares related to
outstanding stock options
|
|
|
296
|
|
|
|
213
|
|
|
|
299
|
|
|
|
683
|
|
The Company declared a dividend of $.08 per common share on
September 20, 2005, payable on October 18, 2005 to
shareholders of record on October 4, 2005; and a dividend
of $.10 per common share on December 6, 2005, payable
on January 3, 2006 to shareholders of record on
December 20, 2005.
15
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
10.
|
Comprehensive
income:
|
Components of comprehensive income include net income and
certain transactions that have generally been reported in the
consolidated Statement of Stockholders Equity. The
following table presents the calculation of total comprehensive
income and its components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Income (loss) from continuing
operations
|
|
$
|
9,097
|
|
|
$
|
(2,046
|
)
|
|
$
|
10,160
|
|
|
$
|
(568
|
)
|
Income (loss) from discontinued
operations, net of tax
|
|
|
|
|
|
|
(1,664
|
)
|
|
|
159
|
|
|
|
(2,977
|
)
|
Gain on disposal of discontinued
operations, net of tax
|
|
|
20,640
|
|
|
|
|
|
|
|
20,640
|
|
|
|
|
|
Cumulative effect of change in
accounting principle, net of tax
|
|
|
|
|
|
|
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
29,737
|
|
|
|
(3,710
|
)
|
|
$
|
31,079
|
|
|
$
|
(3,545
|
)
|
Other comprehensive income (loss),
net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses from marketable
securities, net of tax benefit of $19 and $50, for the three
months ended January 31, 2006 and 2005, and tax benefit of
$41 and $102 for the six months ended January 31, 2006 and
2005, respectively
|
|
|
(28
|
)
|
|
|
(75
|
)
|
|
|
(63
|
)
|
|
|
(156
|
)
|
Unrealized gain from securities
classified as investment net of taxes of $16,201
|
|
|
|
|
|
|
24,743
|
|
|
|
|
|
|
|
24,743
|
|
Foreign currency translation
adjustment, net of tax provision of $171 and tax benefit of $18
for the three months ended January 31, 2006 and 2005, and
tax provision of $353 and $174 for the six months ended
January 31, 2006 and 2005, respectively
|
|
|
852
|
|
|
|
703
|
|
|
|
641
|
|
|
|
3,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
$
|
30,561
|
|
|
$
|
21,661
|
|
|
$
|
31,657
|
|
|
$
|
24,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
11.
|
Supplemental
disclosure of cash flow information:
|
Changes in operating assets and liabilities, net of the impact
of acquisitions, from continuing operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Accounts and notes receivable
|
|
$
|
(7,317
|
)
|
|
$
|
4,753
|
|
Refundable income taxes
|
|
|
(4,918
|
)
|
|
|
|
|
Accounts receivable from affiliates
|
|
|
725
|
|
|
|
(482
|
)
|
Inventories
|
|
|
(7,398
|
)
|
|
|
(2,640
|
)
|
Costs related to deferred revenue
|
|
|
241
|
|
|
|
103
|
|
Other current assets
|
|
|
(261
|
)
|
|
|
(870
|
)
|
Other assets
|
|
|
6
|
|
|
|
(3,153
|
)
|
Accounts payable, trade
|
|
|
(734
|
)
|
|
|
(30
|
)
|
Accrued liabilities
|
|
|
160
|
|
|
|
(1,934
|
)
|
Advance payments and deferred
revenue
|
|
|
(6,367
|
)
|
|
|
5,359
|
|
Accrued income taxes
|
|
|
(6,359
|
)
|
|
|
(2,245
|
)
|
|
|
|
|
|
|
|
|
|
Net changes in operating assets
and liabilities
|
|
$
|
(32,222
|
)
|
|
$
|
(1,139
|
)
|
|
|
|
|
|
|
|
|
|
The effective tax rate on continuing operations for the six
months ended January 31, 2006 and 2005 was 26.3% and 19.1%,
respectively. The tax rate on the gain on sale of Camtronics was
30.6%. The effective tax rate for discontinued operations for
the six months ended January 31, 2006 and
January 31, 2005, was 44.2% and a benefit of 4.5%,
respectively. The higher effective tax rate on continuing
operations in fiscal 2006 is largely the result of reduced
benefit of research credits, the Extraterritorial Income
Exclusion, and the Qualified Production Activities Deduction
against significantly higher income and non deductible incentive
stock options expenses.
The Company operates primarily within two major markets within
the electronics industry: Medical Technology Products and
Security Technology Products. Medical Technology Products
consist of two reporting segments: Medical Imaging Products
which consist primarily of electronic systems and subsystems for
medical imaging equipment and patient monitoring; and B-K
Medical ApS (B-K Medical) for ultrasound systems and
probes in the urology, surgery and radiology markets. Security
Technology Products consist of advanced weapon and threat
detection systems and subsystems.
The Companys Corporate and Other represents the
Companys hotel business, net interest income, and other
Company operations, primarily analog to digital
(A/D) converters and supporting modules, and embedded
multi-processing equipment, which do not meet the materiality
requirements for separate disclosure. The accounting policies of
the segments are the same as those described in the summary of
Significant Accounting Policies included in Note 1 of Notes
to Consolidated Financial Statements in the Companys
Annual Report on
Form 10-K
for the fiscal year ended July 31, 2005.
On November 1, 2005, the Company sold its Camtronics
operating segment to better focus on its other core lines of
business. See Note 2 of Notes to Unaudited Consolidated
Financial Statements. Previously, Camtronics had been reported
as a separate segment.
17
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The table below presents information about the Companys
reportable segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical technology products from
external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical imaging products
|
|
$
|
49,256
|
|
|
$
|
41,149
|
|
|
$
|
95,571
|
|
|
$
|
84,365
|
|
B-K Medical
|
|
|
20,481
|
|
|
|
21,474
|
|
|
|
35,366
|
|
|
|
37,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,737
|
|
|
|
62,623
|
|
|
|
130,937
|
|
|
|
122,180
|
|
Security technology products from
external customers
|
|
|
24,988
|
|
|
|
7,638
|
|
|
|
44,854
|
|
|
|
17,790
|
|
Corporate and other
|
|
|
5,286
|
|
|
|
5,849
|
|
|
|
10,630
|
|
|
|
11,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
100,011
|
|
|
$
|
76,110
|
|
|
$
|
186,421
|
|
|
$
|
151,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before income taxes and cumulative effects of change
in accounting principle:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical technology products:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical imaging products
|
|
$
|
17
|
|
|
$
|
(6,749
|
)
|
|
$
|
(2,589
|
)
|
|
$
|
(7,894
|
)
|
B-K Medical
|
|
|
2,086
|
|
|
|
2,726
|
|
|
|
1,325
|
|
|
|
3,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,103
|
|
|
|
(4,023
|
)
|
|
|
(1,264
|
)
|
|
|
(4,015
|
)
|
Security technology products
|
|
|
7,654
|
|
|
|
759
|
|
|
|
12,462
|
|
|
|
2,010
|
|
Corporate and other
|
|
|
2,499
|
|
|
|
791
|
|
|
|
2,583
|
|
|
|
1,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,256
|
|
|
$
|
(2,473
|
)
|
|
$
|
13,781
|
|
|
$
|
(702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
July 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Identifiable assets:
|
|
|
|
|
|
|
|
|
Medical imaging products
|
|
$
|
116,259
|
|
|
$
|
106,947
|
|
B-K Medical
|
|
|
69,970
|
|
|
|
71,143
|
|
Security technology products
|
|
|
23,833
|
|
|
|
15,497
|
|
Corporate and other(A)
|
|
|
283,424
|
|
|
|
261,179
|
|
|
|
|
|
|
|
|
|
|
Total assets from continuing
operations
|
|
|
493,486
|
|
|
|
454,766
|
|
Assets of discontinued operations
|
|
|
|
|
|
|
41,939
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
493,486
|
|
|
$
|
496,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Includes cash equivalents and marketable securities of $219,339
at January 31, 2006, and $195,321 and at July 31, 2005. |
|
|
14.
|
Commitments
and guarantees:
|
The Company has agreements whereby it indemnifies its officers
and directors for certain events or occurrences while the
officer or director is, or was serving, at the Companys
request in such capacity. The term of the indemnification period
is for the officers or directors lifetime. The
potential amount of future
18
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
payments the Company could be required to make under these
indemnification agreements is unlimited. Also, to the extent
permitted by Massachusetts law, the Companys Articles of
Organization require the Company to indemnify directors of the
Company and the Companys By-Laws require the Company to
indemnify the present or former directors and officers of the
Company, and also permit indemnification of other employees and
agents of the Company for whom the Board of Directors from time
to time authorizes indemnification. In no instance, however,
will indemnification be granted to a director otherwise entitled
thereto who is determined to have (a) committed a breach of
loyalty to the Company or its stockholders, (b) committed
acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of the law, or
(c) derived any improper personal benefit in connection
with a particular transaction. Because no claim for
indemnification has been made by any person covered by said
agreements,
and/or the
relevant provisions of the Companys Articles of
Organization or By-laws, the Company believes that its estimated
exposure for these indemnification obligations is currently
minimal. Accordingly, the Company has no liabilities recorded
for these indemnity agreements and requirements as of
January 31, 2006.
In November 2002, the Financial Accounting Standard Board
(FASB) issued FIN No. 45,
Guarantors Accounting and Disclosure Requirements
for Guarantees. Including Indirect Guarantees of Indebtedness of
Other, an interpretation of FASB Statements No. 5, 57, and
107 and rescission of FASB Interpretation No. 34
(FIN 45). FIN 45 requires a guarantor
to recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken by issuing the
guarantee. The following is a summary of agreements that the
Company determined are within the scope of FIN 45.
The Companys standard original equipment manufacturing and
supply agreements entered into in the ordinary course of
business typically contain an indemnification provision pursuant
to which the Company indemnifies, holds harmless, and agrees to
reimburse the indemnified party for losses suffered or incurred
by the indemnified party in connection with any United States
patent, or any copyright or other intellectual property
infringement claim by any third party with respect to the
Companys products. Such provisions generally survive
termination or expiration of the agreements. The potential
amount of future payments the Company could be required to make
under these indemnification provisions is, in some instances,
unlimited. The Company has never incurred costs to defend
lawsuits or settle claims related to these indemnification
obligations. As a result, the Company believes that its
estimated exposure on these agreements is currently minimal.
Accordingly, the Company has no liabilities recorded for these
agreements as of January 31, 2006.
Generally, the Company warrants that its products will perform
in all material respects in accordance with its standard
published specifications in effect at the time of delivery of
the products to the customer for a period ranging from 12 to
24 months from the date of delivery. The Company provides
for the estimated cost of product and service warranties based
on specific warranty claims, claim history and engineering
estimates, where applicable.
The following table presents the Companys product warranty
liability for the reporting periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Balance at the beginning of the
period
|
|
$
|
4,186
|
|
|
$
|
4,254
|
|
|
$
|
4,057
|
|
|
$
|
4,053
|
|
Accrual for warranties issued
during the period
|
|
|
828
|
|
|
|
505
|
|
|
|
1,472
|
|
|
|
1,210
|
|
Accrual related to pre-existing
warranties (including changes in estimate)
|
|
|
608
|
|
|
|
603
|
|
|
|
1,403
|
|
|
|
1,220
|
|
Settlements made in cash or in
kind during the period
|
|
|
(1,160
|
)
|
|
|
(1,031
|
)
|
|
|
(2,470
|
)
|
|
|
(2,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the period
|
|
$
|
4,462
|
|
|
$
|
4,331
|
|
|
$
|
4,462
|
|
|
$
|
4,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
ANALOGIC
CORPORATION
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Shareholders
Dividends:
On March 9, 2006 the Company announced that its Board of
Directors, on March 7, 2006, declared a dividend of
$.10 per common share payable on April 4, 2006 to
shareholders of record on March 21, 2006.
PhotoDetection
Systems, Inc.
On May 21, 2003, the Company acquired 1,251,313 shares
of Series B Convertible Participating Preferred Stock for
an equity interest of approximately 11% in PhotoDetection
Systems, Inc. (PDS) of Acton, Massachusetts. PDS, a
privately held company, has developed proprietary detection
systems for high-performance Positron Emission Tomography
(PET), a rapidly growing medical diagnostic imaging
modality. In addition, the Company also received a convertible
promissory note in the principle amount of $1,367 and an
exclusive license of PDS technology for non-PET products. The
convertible promissory note is convertible by the Company into
1,025,559 shares of Series B Convertible Participating
Preferred Stock. During fiscal 2005, upon PDS achievement
of a technology milestone, the exclusive license of PDS
technology reverted back to PDS and the Company received a
warrant for the purchase of 2,250,563 shares of
Series B Convertible Participating Preferred Stock.
During February 2006, the Company elected to convert the
outstanding principal represented by the convertible promissory
note and to exercise the warrant received into shares of PDS
Series B Convertible Participating Preferred Stock,
increasing the Company equity interest to 40.5% in PDS.
20
|
|
Item 2.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
All dollar amounts in this Item 2 are in thousands except
per share data.
The following discussion provides an analysis of the
Companys financial condition and results of operations and
should be read in conjunction with the Unaudited Consolidated
Financial Statements and Notes thereto included elsewhere in
this Quarterly Report on
Form 10-Q.
The discussion below contains forward-looking statements within
the meaning of the Securities Exchange Act of 1934. All
statements, other than statements of historical fact, the
Company makes in this document or in any document incorporated
by reference are forward-looking. Such forward-looking
statements involve known and unknown risks, uncertainties, and
other factors, which may cause the actual results, performance,
or achievements of the Company to differ from the projected
results. See separate section entitled Risk Factors.
Summary
The following is a summary of the areas that management believes
are important in understanding the results of the periods
indicated. This summary is not a substitute for the detail
provided in the following pages or for the unaudited
consolidated financial statements and notes that appear
elsewhere in this document.
On November 1, 2005, the Company sold its wholly owned
subsidiary Camtronics Medical Systems, Ltd.
(Camtronics) for $40,000 in cash, and realized net
cash of $38,906 after transactional costs. In the second quarter
ended January 31, 2006, the Company recorded a net gain on
the sale of Camtronics of $20,640, net of a tax provision of
$9,104, or $1.50 per diluted share. The net after tax gain
of $20,640 is $4,749 higher than the expected net after tax gain
of $15,891 that the Company had previously reported in the
Current Report on
Form 10-K/A
which it filed on January 13, 2006. The increase resulted
from a determination that the tax basis of Camtronics net
assets was greater than the book basis and that the deferred tax
assets had not been properly reflected in the original estimated
gain calculations. The Company sold its Camtronics operating
segment to better focus on its other core lines of business.
Revenue for Camtronics for the three months ended
January 31, 2006 and 2005, were $0 and $8,206,
respectively. Revenue for the six months ended January 31,
2006 and 2005, were $11,495 and $17,167, respectively. The
results of discontinued operations for the three months ended
January 31, 2006 and 2005 were $0 and a loss of $1,664,
respectively, versus a net income of $159 and a net loss of
$2,977 for the six months ended January 31, 2006 and 2005,
respectively.
On September 28, 2005, the Company decided to restructure
the business operations of its wholly-owned subsidiary, Sky
Computers Inc. (Sky). The decision to restructure
Sky was based on continued lower than expected sales. During the
three months ended October 31, 2005, the Company recorded
restructuring costs of $499 for severance, $310 for capital
assets impairment and $1,179 write-down of inventory. During the
three months ended January 31, 2006, an additional $228 for
severance was recorded as additional restructuring costs.
Net sales from continuing operations for the three and six
months ended January 31, 2006 were $23,901 or 31% higher
and $35,181 or 23% higher than the same period last year,
respectively. The sales increase, for both the three and the six
month periods, was primarily due to the increased shipments of
EXACT systems over the same period last year, continued higher
demand for the Companys 64 slice data acquisition systems,
and increased shipments of selenium-based X-ray digital
flat-panel detectors, partially offset by lower volume for
sub-systems used in MRI scanners. Total margin percentage
increased for both the quarter and first six months of fiscal
2006 versus the same periods last year primarily due to higher
unit volume of the EXACT systems and flat-panel detectors.
Higher operating expenses, excluding restructuring and asset
impairment charges, were primarily due to increased personnel
and related costs to support product development, which
continues to be focused on developing new generations of medical
imaging systems, including Computed Tomography (CT)
systems and an extended family of multi-slice CT data
acquisition systems, a number of security systems projects, and
expenses under SFAS 123(R) associated with share-based
payments. These were partially offset by lower legal and
accounting expenses associated with the Companys review of
revenue recognition procedures followed by Camtronics in the
prior periods. Diluted earnings per share from continuing
operations, excluding the gain of $1.50 per share from the
sale of Camtronics, were $0.66 and $0.74 for the three and six
months ended January 31, 2006, respectively, as compared to
losses per diluted
21
shares of $0.15 and $0.04 for the same period last year. The
Companys cash, cash equivalent and marketable securities
increased $24,835 from July 31, 2005 primarily due to
proceeds from the sale of Camtronics partially offset by an
increase in working capital requirements.
Critical
Accounting Policies, Judgments, and Estimates
The SEC considers critical accounting policies to be the ones
that are most important to the portrayal of a companys
financial condition and operating results, and require
management to make its most difficult and subjective judgments,
often as a result of the need to make estimates on matters that
are inherently uncertain. In the case of the Companys
critical accounting policies, these judgments are based on its
historical experience, terms of existing contracts, the
Companys observance of trends in the industry, information
provided by its customers and information available from other
outside sources, as appropriate. The Companys critical
accounting policies, judgments, and estimates include:
Revenue
Recognition and Accounts Receivable
The Company recognizes the majority of its revenue in accordance
with SEC Staff Accounting Bulletin No. 104,
Revenue Recognition in Financial Statements.
Revenue related to product sales is recognized upon shipment
provided that title and risk of loss have passed to the
customer, there is persuasive evidence of an arrangement, the
sales price is fixed or determinable, collection of the related
receivable is reasonably assured and customer acceptance
criteria, if any, have been successfully demonstrated. For
product sales with acceptance criteria that are not successfully
demonstrated prior to shipment, revenue is recognized upon
customer acceptance, provided all other revenue recognition
criteria have been met. The Companys sales contracts
generally provide for the customer to accept title and risk of
loss when the product leaves the Companys facilities. When
shipping terms or local laws do not allow for passage of title
and risk of loss at the shipping point, the Company defers
recognizing revenue until title and risk of loss transfer to the
customer. The Company classifies shipping and handling costs in
cost of sales.
The Companys transactions sometimes involve multiple
elements (i.e., systems and services). Revenue under multiple
element arrangements is recognized in accordance with Emerging
Issues Task Force (EITF) Issue No.
00-21,
Accounting for Revenue Arrangements with Multiple
Deliverables. Under this method, if an element is
determined to be a separate unit of accounting, the revenue for
the element is based on fair value and determined by verifiable
objective evidence, and recognized at the time of delivery. If
the arrangement has an undelivered element, the Company ensures
that they have objective and reliable evidence of the fair value
of the undelivered element. Fair value is determined based upon
the price charged when the element is sold separately.
Maintenance or service revenues are recognized ratably over the
life of the contracts.
For business units that sell software licenses or products in
which the software is considered more than incidental, the
Company recognizes revenue in accordance with the American
Institute of Certified Public Accountants
(AICPA)s Statement of Position 97-2,
Software Revenue Recognition
(SOP 97-2).
The application of
SOP 97-2
requires judgment, including whether a software arrangement
includes multiple elements, and if so, whether vendor-specific
objective evidence (VSOE) of fair value exists for
those elements. License revenue is recognized upon delivery,
provided that persuasive evidence of an arrangement exists, no
significant obligations with regard to installation or
implementation remain, fees are fixed or determinable,
collectibility is probable, and customer acceptance, when
applicable, is obtained. We allocate revenue first to the fair
value of the undelivered elements and allocate the residual
revenue to the delivered elements. Hardware and software
maintenance is marketed under annual and multi-year arrangements
and revenue is recognized ratably over the contracted
maintenance term.
The Company provides engineering services to some of its
customers on a contractual basis and recognizes revenue using
the percentage of completion method. The Company estimates the
percentage of completion on contracts with a fixed fee
arrangement on a monthly basis utilizing costs incurred to date
as a percentage of total estimated costs to complete the
project. If the Company does not have a sufficient basis to
22
measure progress towards completion, revenue is recognized upon
completion of the contract. When total cost estimates exceed
revenues, the Company accrues for the estimated losses
immediately.
Deferred revenue is comprised of 1) maintenance and other
service revenues for which payment has been received and for
which services have not yet been performed and 2) revenues
related to delivered components of a multiple-element
arrangement for which VSOE of fair value has not been determined
for components not yet delivered or accepted by the customer.
Deferred costs represent costs related to these revenues; for
example, costs of goods sold and services provided and sales
commission expenses.
Revenue related to the hotel operations is recognized as
services are performed.
The Company grants credit to domestic and foreign original
equipment manufacturers, distributors, and end users, and
performs ongoing credit evaluations of its customers
financial condition. The Company continuously monitors
collections and payments from its customers and maintains a
provision for estimated credit losses based upon historical
experience and any specific customer collection issues that have
been identified.
Inventories
The Company values inventory at the lower of cost or market
using the
first-in,
first-out method. Management assesses the recoverability of
inventory based on types and levels of inventory held, product
life cycles, and changes in technology. A variety of
methodologies are used to determine the amount of inventory
reserves necessary for excess and obsolete inventory. The
write-downs are based upon the age of the inventory, lower of
cost or market, along with significant management judgments
concerning future demands for the inventory. If actual demand
for the Companys products is less than its estimates, or
the Company experiences a higher incidence of inventory
obsolescence because of rapidly changing technology and customer
requirements, additional write-downs for existing inventories
may be recorded in future periods.
Concentration
of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and
cash equivalents, marketable securities, and accounts
receivable. The Company maintains a bond investment portfolio of
various types and maturities with high credit quality issuers.
Cash and cash equivalents not required for working capital
purposes are placed in short term investments with original
maturities for six months or less. The Company grants credit to
domestic and foreign original equipment manufacturers,
distributors, and end users, and performs ongoing credit
evaluations on its customers financial condition. The
Company continuously monitors collections and payments from its
customers and maintains a provision for estimated credit losses
based upon historical experience and any specific customer
collection issues that have been identified. While such credit
losses have historically been within expectations and provisions
established, there is no guarantee that the Company will
continue to experience the same credit loss rates as in the
past. Since the accounts receivable are concentrated among
relatively few customers, a significant change in the liquidity
or financial position of any one of these customers could have a
material adverse impact on the collectibility of accounts
receivable and future operating results.
Warranty
Reserve
The Company provides for the estimated cost of product
warranties at the time products are shipped. Although the
Company engages in extensive product quality programs and
processes, its warranty obligations are affected by product
failure rates and service delivery costs incurred to correct
product failures. Should actual product failure rates or service
delivery costs differ from the Companys estimates (which
are based on specific warranty claims, historical data, and
engineering estimates, where applicable), revisions to the
estimated warranty liability would be required. Such revisions
could adversely affect the Companys operating results.
Generally, the Company warrants that its products will perform
in all material respects in accordance with its standard
published specifications in effect at the time of delivery of
the products to the customer for a period ranging from 12 to
24 months from the date of delivery.
23
Investments
in and Advances to Affiliated Companies
The Company has investments in affiliated companies related to
areas of the Companys strategic focus. Investment in
companies over which the Company has the ability to exercise
significant influence are accounted for under the equity method.
Investments in companies over which the Company does not have
the ability to exercise significant influence are accounted for
under the cost method. In assessing the recoverability of these
investments, the Company must make certain assumptions and
judgments based upon changes in the Companys overall
business strategy, the financial condition of the affiliated
companies, market conditions, and the industry and economic
environment in which the entities operate. Adverse changes in
market conditions or poor operating results of affiliated
companies could result in losses or an inability to recover the
carrying value of the investments, thereby requiring an
impairment charge in the future.
Intangible
Assets and Other Long-Lived Assets
Intangible assets consist of: intellectual property, licenses,
and capitalized software. Other long-lived assets consist
primarily of property, plant, and equipment. These assets are
reviewed for impairment annually in the first quarter of each
fiscal year or whenever events or changes in circumstances
indicate that the carrying value of assets may not be
recoverable. Recoverability of these assets is measured by
comparison of their carrying value to future undiscounted cash
flows the assets are expected to generate over their remaining
economic life. If such assets are considered to be impaired, the
impairment to be recognized in earnings equals the amount by
which the carrying value of the assets exceeds their fair market
value determined by either a quoted market price, if any, or a
value determined by utilizing a discounted cash flow technique.
Evaluation of impairment of long-lived assets requires estimates
of future operating results that are used in the preparation of
the expected future undiscounted cash flows. Actual future
operating results and the remaining economic lives of long-lived
assets could differ from the estimates used in assessing the
recoverability of these assets. These differences could result
in impairment charges, which could have a material adverse
impact on the Companys results of operations.
Income
Taxes
The Company is required to estimate its income taxes in each of
the jurisdictions within which it operates. This process
involves assessing temporary differences resulting from
different treatment of items for tax and accounting purposes.
These differences result in deferred tax assets and liabilities,
which are included within the balance sheet. The Company must
then assess the likelihood that the deferred tax assets will be
recovered from future taxable income and, to the extent that
recovery is not more than likely, a valuation allowance must be
established. To the extent a valuation allowance is established,
the Company must include an expense within the tax provision in
the statement of operations. In the event that actual results
differ from these estimates, the provision for income taxes and
results of operations could be materially impacted. The Company
establishes liabilities for possible assessments by taxing
authorities resulting from known tax exposures including, but
not limited to certain tax credits, and various federal, state
and foreign tax matters. The Company does not provide for US
Federal income taxes on undistributed earnings of consolidated
foreign subsidiaries; as such earnings are intended to be
indefinitely reinvested in those operations. Determination of
the potential deferred income tax liability on these
undistributed earnings is not practicable because such
liability, if any, is dependent on circumstances existing if and
when remittance occurs. The American Jobs Act of 2004 creates a
temporary incentive for U.S. corporations to repatriate
accumulated income earned abroad by providing an 85% dividends
received deduction for certain dividends received from
controlled foreign corporations. The deduction is subject to a
number of limitations. Based on the Companys analysis,
this provision will not provide a benefit to the Company.
Results
of Operations
Six
Months Ended January 31, 2006 vs. Six Months Ended
January 31, 2005
Product revenue for the six months ended January 31, 2006
was $171,685 compared to $138,120 for the same period last year,
an increase of $33,565 or 24%. The increase in product revenue
was primarily due to
24
increased sales of Security Technology Products of $28,088,
related primarily to 62 additional EXACT systems shipped in the
current period versus last year, and increased sales of Medical
Technology Products of $6,203, primarily due to continued higher
demand for the Companys 64 slice data acquisition systems,
and increased shipments of digital flat-panel detectors,
partially offset by lower sales of sub-systems used in MRI
scanners.
Engineering revenue for the six months ended January 31,
2006 was $9,931 compared to $8,409 for the same period last
year, an increase of $1,522 or 18%. The increase was primarily
due to additional funding for certain customer funded projects
of medical technology products, partially offset by lower
revenue for security products recognized on project funding
received from the Transportation Security Administration
(TSA).
Other revenue of $4,805 and $4,711 represents revenue for the
Companys hotel operation for the six months ended
January 31, 2006 and 2005, respectively.
Product gross margin was $69,009, or 40% of product revenue, for
the six months ended January 31, 2006 compared to $53,056,
or 38% of product revenue, for the same period last year. The
increase in gross margin percentage was primarily due to higher
sales of Security Technology Products, which have a higher
margin than most of the Companys other products, partially
offset by the effect of the write-down of certain inventory of
$1,179 related to the restructuring of Sky Computers business
operations.
The engineering gross margin was $89 for the six months ended
January 31, 2006 as compared to gross margin of $867 for
the same period last year. The decrease in margin was primarily
the result of the cost of a TSA contract exceeding the funded
amount of the contract by approximately $2,000, partially offset
by approximately $1,900 of additional funds received on a
completed project with no related costs. Additionally, as
compared to the prior year, the Company incurred additional
costs in excess of the value of certain funded projects on
medical imaging technology products.
Research and product development expenses were $27,176, or 15%
of total revenue, and $24,893, or 16% of total revenue, for the
six months ended January 31, 2006 and 2005,
respectively. The increase of $2,283 was primarily due to
increased personnel and related costs to support product
development, which continues to be focused on developing new
generations of medical imaging equipment, including CT systems
and an extended family of multi-slice CT data acquisition
systems and a number of projects for security systems, as well
as expenses under SFAS 123(R) associated with share-based
payments.
Selling and marketing expenses were $14,628 or 8% of total
revenue and $14,522 or 10% of total revenue, for the six months
ended January 31, 2006 and 2005, respectively. The decrease
in selling and marketing expenses as a percentage of total
revenue was primarily the results of higher revenue over the
same period last year.
General and administrative expenses were $18,301 or 10% of total
revenue, and $18,520 or 12% of total revenue for the six months
ended January 31, 2006 and 2005, respectively. The decrease
of $219 was primarily attributable to legal expenses incurred
during the comparable period last fiscal year for the L-3
litigation, costs related to the Camtronics subsidiary review of
certain transactions for revenue recognition and a real estate
tax abatement rebate received during the six months ended
January 31, 2006. These reductions were partially offset by
expenses associated with share-based payments in connection with
the adoption of SFAS 123(R) and other general expenses.
Restructuring and asset impairment charges were $1,528 and $947
for the six months ended January 31, 2006 and 2005,
respectively. For the six months ended January 31, 2006,
the Company recorded $1,037 for severance costs and certain
write-downs of capital assets for the restructuring of Sky
Computers, and impairment charges of $275 related to SAHCO and
$216 related to PDS based on the net realizable value of the
Companys investments. For the six months ended
January 31, 2005, the Company recorded asset impairment
charges of $947 related to the change in accounting method for
the Companys investment in PDS from equity to cost method
of accounting, and the requirement to evaluate the net
realizable value of its investment.
25
Interest income was $4,502 and $1,885 for the six months ended
January 31, 2006 and 2005, respectively. The increase was
due to higher effective interest rates and higher invested cash
balances.
The Company recorded an equity loss in unconsolidated affiliates
of $455 related to SAHCO for the six months ended
January 31, 2006, and an equity loss for the six months
ended January 31, 2005 of $223 of which $201 related to an
equity loss in Cedara Software Corporation, and $22 related to
an equity loss in SAHCO.
Other income was $42 and $604 for the six months ended
January 31, 2006 and 2005, respectively. The change in
other income consisted of lower foreign currency exchange gain
incurred by the Companys Canadian and Danish subsidiaries,
partially offset by a recovery for bad debt of $198 written off
in prior years.
The effective tax rate on continuing operations for the six
months ended January 31, 2006 and 2005 was 26.3% and 19.1%,
respectively. The tax rate on the gain on sale of Camtronics was
30.6%. The effective tax rate for discontinued operations for
the six months ended January 31, 2006 and
January 31, 2005, was 44.2% and a benefit of 4.5%,
respectively. The higher effective tax rate on continuing
operations for the six months ended January 31, 2006, is
largely the result of reduced benefit of research credits, the
Extraterritorial Income Exclusion, and the Qualified Production
Activities Deduction against significantly higher income and non
deductible incentive stock options expenses.
Net income from continuing operations for the six months ended
January 31, 2006 was $10,160, compared to a net loss of
$568 for the same period last year. Basic earnings per share
from continuing operations for the six months ended
January 31, 2006 were $0.75, as compared to a loss per
share of $0.04 for the same period last year. Diluted earnings
per share from continuing operations for the six months ended
January 31, 2006 were $0.74 as compared to a loss per share
of $0.04 for the same period last year. The increase in net
income was primarily related to higher sales of security
products and medical technology products, and higher interest
income.
Three
Months Ended January 31, 2006 vs. Three Months Ended
January 31, 2005
Product revenue for the three months ended January 31, 2006
was $91,964 compared to $70,995 for the same period last year,
an increase of $20,969 or 30%. The increase in product revenue
was primarily due to increased sales of Security Technology
Products of $16,905, related to an additional 37 EXACT systems
shipped in the current period versus last year, and increased
sales of Medical Technology Products of $4,609, primarily due to
increased demand for the Companys 64 slice data
acquisition systems, increase shipments of digital flat-panel
detectors, partially offset by lower sales of sub-systems used
in MRI scanners.
Engineering revenue for the three months ended January 31,
2006 was $6,119 compared to $3,169 for the same period last
year, an increase of $2,950 or 93%. The increase was due to
additional funding for certain customer funded projects for
computed tomography systems, including $1,900 of additional
funds received on a completed project.
Other revenue of $1,928 and $1,946 represents revenue for the
hotel operations for the three months ended January 31,
2006 and 2005, respectively.
Product gross margin was $38,290 for the three months ended
January 31, 2006 compared to $27,779 for the same period
last year. Product gross margin as a percentage of product
revenue was 42% and 39% for the three months ended
January 31, 2006 and 2005, respectively. The increase was
primarily due to higher sales of security technology products,
which have a higher margin than most of the Companys other
products.
The engineering gross margin was $2,010 for the three months
ended January 31, 2006 as compared to a negative
gross margin of $311 for the same period last year. The positive
margin for the three months ended January 31, 2006 was
primarily due to $1,900 of additional funding received on a
completed project with no related costs.
Research and product development expenses were $14,149 for the
three months ended January 31, 2006 or 14% of total revenue
compared to $13,219 or 17% of total revenue for the same period
last year. The
26
increase of $930 was primarily due to increased personnel and
related costs to support product development, which continues to
be focused on developing new generations of medical imaging
equipment, including CT systems and an extended family of
multi-slice CT data acquisition systems, and projects for
security systems, and expenses associated with share-based
payments in connection with the adoption of SFAS 123(R).
Selling and marketing expenses were $7,274 for the three months
ended January, 31, 2006, or 7% of total revenue, as
compared to $7,803, or 10% of total revenue, for the same period
last year. The decrease of $529 related primarily to the
restructuring of Sky Computers and a favorable exchange rate
conversion for the B-K subsidiary.
General and administrative expenses were $9,637 for the three
months ended January 31, 2006 or 10% of total revenue,
compared to $9,305 or 12% of total revenue for the same period
last year. General and administrative expenses were $332 higher
than last year, primarily from increased insurance costs and
profit sharing contributions. These increases were partially
offset by lower legal expenses incurred last year for the L-3
litigation and the Camtronics subsidiary review of certain
transactions related to revenue recognition.
Restructuring and asset impairment charges were $503 for the
three months ended January 31, 2006, related to SAHCO
impairment charges of $275 based on the net realizable value of
the Companys investments, and $228 for additional
severance costs for the restructuring of Sky Computers. Prior
year impairment charges of $947 related to the change in
accounting method for the Companys investment is PDS from
equity to cost method of accounting, and the requirements to
evaluate the net realizable value of its investment.
Interest income was $2,469 for the three months ended
January 31, 2006 compared with $1,021 for the same period
last year. The increase was primarily due to higher effective
interest rates and higher invested cash balances.
The Company recorded an equity gain in unconsolidated affiliates
of $115 related to SAHCO for the three months ended
January 31, 2006 versus an equity loss of $350 on the same
investment for the same period last year.
Other income was $199 for the three months ended
January 31, 2006 compared to other expenses of $4 for the
same period last year. Other income for the three months ended
January 31, 2006 is related primarily to a recovery for bad
debt written off in prior years.
The effective tax rate on continuing operations for the second
quarters of fiscal 2006 and fiscal 2005 was 25.8% and 17.3%
respectively. The tax rate on the gain on sale of Camtronics was
30.6%. The higher effective tax rate on continuing operations
for the second quarter of 2006, is largely the result of reduced
benefit of research credits, the Extraterritorial Income
Exclusion, and the Qualified Production Activities Deduction
against significantly higher income and non deductible incentive
stock options expenses.
Net income from continuing operations was $9,097 for the three
months ended January 31, 2006 compared to a loss of $2,046
for the same period last year. Basic earnings per share from
continuing operation were $0.67 as compared to an earnings loss
per share of $0.15 for the second quarter ended January 31,
2006 and 2005, respectively. Diluted earnings per share from
continuing operations were $0.66, versus a loss per share of
$0.15 for the second quarter ended January 31, 2006 and
2005, respectively. The increase in net income was primarily
related to higher sales of security products and medical
technology products, and higher interest income.
Liquidity
and Capital Resources
Cash and cash equivalents and marketable securities totaled
$245,289 and $220,454 at January 31, 2006 and July 31,
2005, respectively. The Companys balance sheet reflects a
current ratio of 6.4 to 1 at January 31, 2006 compared to
4.1 to 1 at July 31, 2005. Liquidity is sustained
principally through funds provided from operations, with
short-term deposits and marketable securities available to
provide additional sources of cash. The Companys debt to
equity ratio was .15 to 1 at January 31, 2006 and .24 to 1
at July 31, 2005. The Company believes that its balances of
cash and cash equivalents, marketable securities and cash flows
27
expected to be generated by future operating activities will be
sufficient to meet its cash requirements over at least the next
twelve months.
The Company faces limited exposure to financial market risks,
including adverse movements in foreign currency exchange rates
and changes in interest rates. These exposures may change over
time as business practices evolve and could have a material
adverse impact on the Companys financial results. The
Companys primary exposure is related to fluctuations
between the US dollar and local currencies for the
Companys subsidiaries in Canada and Europe.
The carrying amounts reflected in the Unaudited Consolidated
Balance Sheets of cash and cash equivalents, trade receivables,
and trade payables approximate fair value at January 31,
2006, due to the short maturities of these instruments.
The Company maintains a bond investment portfolio of various
issuers, types, and maturities. This portfolio is classified on
the balance sheet as either cash and cash equivalents or
marketable securities, depending on the length of time to
maturity from original purchase. Cash equivalents include all
highly liquid investments primarily invested in US treasury and
US government agency securities with maturities of six months or
less from the time of purchase. Investments having maturities
from the time of purchase in excess of six months are stated at
amortized cost, which approximates fair value, and are
classified as available for sale. A rise in interest rates could
have an adverse impact on the fair value of the Companys
investment portfolio. The Company does not currently hedge these
interest rate exposures.
Net cash used for operating activities was $4,662 for the six
months ended January 31, 2006, including $6,560 used for
continuing operations and $1,898 provided by discontinued
operations. The cash used for operating activities of continuing
operations of $6,560 for the six months ended January 31,
2006, was primarily due to an increase in operating assets and
liabilities, partially offset by net income, depreciation and
amortization, and non-cash impact of asset impairment charges.
The increase in operating assets and liabilities was primarily
due to receivable and inventories increasing due to higher
revenue, and lower advance payments received primarily related
to orders for the EXACT systems.
Net cash provided by investing activities was $37,116 for the
six months ended January 31, 2006, including $38,906
provided by proceeds of the sale of Camtronics. Net cash used
for investing activities from continuing operations was
primarily due to capital expenditures of $6,199, and investment
in and advances to affiliated companies, PDS, of $687, partially
offset by $5,400 of proceeds from maturities of marketable
securities.
Net cash used for financing activities for the six months ended
January 31, 2006 was $2,082, primarily due to $3,883
used to repurchase the Companys shares of common stock,
and $2,487 used for dividends paid to stockholders, partially
offset by $4,188 of cash received from the issuance of stock
pursuant to the Companys employee stock option and stock
purchase plans.
The Company currently has approximately $23,500 in revolving
credit facilities with various banks available for direct
borrowings. As of January 31, 2006, there were no direct
borrowings.
Commitments,
Contractual Obligations and Off-Balance Sheet
Arrangements
The Companys off-balance sheet arrangements, at
January 31, 2006, and the effect such obligations are
expected to have on liquidity and cash flows in future periods
are as follows:
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
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|
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Less
|
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|
|
|
|
|
|
|
More
|
|
|
|
|
|
|
Than
|
|
|
|
|
|
|
|
|
Than
|
|
|
|
Total
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
5 Years
|
|
|
Operating leases
|
|
$
|
6,138
|
|
|
$
|
1,468
|
|
|
$
|
2,018
|
|
|
$
|
1,377
|
|
|
$
|
1,275
|
|
Purchasing obligations
|
|
|
34,447
|
|
|
|
30,129
|
|
|
|
4,318
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,585
|
|
|
$
|
31,597
|
|
|
$
|
6,336
|
|
|
$
|
1,377
|
|
|
$
|
1,275
|
|
|
|
|
|
|
|
|
|
|
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28
New
Accounting Pronouncements
In June 2005, Financial Accounting Standards Board
(FASB) issued FAS No. 154,
Accounting Changes and Error Corrections.
This statement replaces APB Opinion No. 20,
Accounting Changes, and FAS No. 3,
Reporting Accounting Changes in Interim Financial
Statements. The statement applies to all voluntary
changes in accounting for and reporting of changes in accounting
principles. FAS No. 154 requires retrospective
application to prior periods financial statements of a
voluntary change in accounting principles unless it is not
practical to do so. APB No. 20 previously required that
most voluntary changes in accounting principles be recognized by
including in net income of the period of the change the
cumulative effect of changing to the new accounting principle.
FAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after
December 15, 2005. Earlier application is permitted for
accounting changes and errors made occurring in fiscal years
beginning after May 31, 2005. The adoption of
FAS No. 154 is not expected to have a material impact
on the Companys financial position or results of
operations.
In November 2005, the FASB issued FASB Staff Position (FSP)
No. FAS 115-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments. This FSP nullifies certain requirements
of Issue 03-1 and supersedes EITF Topic No. D-44,
Recognition of Other-Than-Temporary Impairment upon the
Planned Sale of a Security Whose Cost Exceeds Fair
Value. The FSP establishes the steps required in
determining when an investment is considered impaired, whether
that impairment is other than temporary, and the measurement of
an impairment loss. Under this FSP, impairment shall be assessed
at the individual security level and the assessment of whether
an investment is impaired shall be performed in each reporting
period. When impairment has been determined to be other than
temporary, an impairment loss will be recognized on an
impairment loss equal to the difference between the
investments cost and its fair value. The provisions of
FSP 115-1 shall be effective for reporting periods
beginning after December 15, 2005. The adoption of
FSP 115-1 is not expected to have a material impact on the
Companys financial position or results of operations.
Forward-Looking
Statements
This Quarterly Report on
Form 10-Q
contains statements, which, to the extent that they are not
recitation of historical facts, constitute forward-looking
statements pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that all forward-looking statements, including,
without limitation, statements about product development, market
and industry trends, strategic initiatives, regulatory
approvals, sales, profits, expenses, price trends, research and
development expenses and trends, and capital expenditures
involve risk and uncertainties, and actual events and results
may differ significantly from those indicated in any
forward-looking statement as a result of a number of important
factors, including those discussed below and elsewhere herein.
Risk
Factors
You should carefully consider the risks described below before
making an investment decision with respect to Analogic Common
Stock. Additional risks not presently known to us, or that we
currently deem immaterial, may also impair our business. Any of
these could have a material and negative effect on our business,
financial condition, or results of operations.
29
Because
a significant portion of our revenue currently comes from a
small number of customers, any decrease in revenue from these
customers could harm our operating results.
We depend on a small number of customers for a large portion of
our business, and changes in our customers orders may have
a significant impact on our operating results. If a major
customer significantly reduces the amount of business it does
with us, there would be an adverse impact on our operating
results. The following table sets forth the percentages of our
net product and engineering revenue from our five largest
customers for the six months ended January 31, 2006 as well
as each of the last three fiscal years and the percentage of our
product and engineering sales to our ten largest customers
during these periods:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
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|
January 31,
|
|
|
Year Ended
July 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
L-3 Communications
|
|
|
22
|
%
|
|
|
16
|
%
|
|
|
9
|
%
|
|
|
47
|
%
|
Toshiba
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
14
|
%
|
|
|
7
|
%
|
Siemens
|
|
|
8
|
%
|
|
|
9
|
%
|
|
|
10
|
%
|
|
|
5
|
%
|
General Electric
|
|
|
8
|
%
|
|
|
10
|
%
|
|
|
9
|
%
|
|
|
7
|
%
|
Philips
|
|
|
5
|
%
|
|
|
7
|
%
|
|
|
8
|
%
|
|
|
4
|
%
|
Ten largest customers as a group
|
|
|
71
|
%
|
|
|
66
|
%
|
|
|
68
|
%
|
|
|
81
|
%
|
Although we are seeking to broaden our customer base, we will
continue to depend on sales to a relatively small number of
major customers. Because it often takes significant time to
replace lost business, it is likely that our operating results
would be adversely affected if one or more of our major
customers were to cancel, delay, or reduce significant orders in
the future. Our customer agreements typically permit the
customer to discontinue future purchases after timely notice.
In addition, we generate significant accounts receivable in
connection with the products we sell and the services we provide
to our major customers. Although our major customers are large
corporations, if one or more of our customers were to become
insolvent or otherwise be unable to pay for our products and
services, our operating results and financial condition could be
adversely affected.
Competition
from existing or new companies in the medical and security
imaging technology industry could cause us to experience
downward pressure on prices, fewer customer orders, reduced
margins, the inability to take advantage of new business
opportunities, and the loss of market share.
We operate in a highly competitive industry. We are subject to
competition based upon product design, performance, pricing,
quality, and services and we believe our innovative engineering
and product reliability have been important factors in our
growth. While we try to maintain competitive pricing on those
products which are directly comparable to products manufactured
by others, in many instances our products will conform to more
exacting specifications and carry a higher price than analogous
products manufactured by others.
Our competitors include divisions of some larger, more
diversified organizations as well as several specialized
companies. Some of them have greater resources and larger staffs
than we have. Many of our OEM customers and potential OEM
customers have the capacity to design and manufacture internally
the products we manufacture for them. We face competition from
research and product development groups and the manufacturing
operations of our current and potential customers, who
continually evaluate the benefits of internal research and
product development and manufacturing versus outsourcing.
We
depend on our suppliers, some of which are the sole source for
our components, and our production would be substantially
curtailed if these suppliers are not able to meet our demands
and alternative sources are not available.
We order raw materials and components to complete our
customers orders, and some of these raw materials and
components are ordered from sole-source suppliers. Although we
work with our customers and suppliers to minimize the impact of
shortages in raw materials and components, we sometimes
experience
30
short-term adverse effects due to price fluctuations and delayed
shipments. In the past, there have been industry-wide shortages
of electronics components. If a significant shortage of raw
materials or components were to occur, we might have to delay
shipments or pay premium pricing, which could adversely affect
our operating results. In some cases, supply shortages of
particular components will substantially curtail production of
products using these components. We are not always able to pass
on price increases to our customers. Accordingly, some raw
material and component price increases could adversely affect
our operating results. We also depend on a small number of
suppliers, some of which are affiliated with customers or
competitors and others of which may be small, poorly financed
companies, for many of the other raw materials and components
that we use in our business. If we are unable to continue to
purchase these raw materials and components from our suppliers,
our operating results could be adversely affected. Because many
of our costs are fixed, our margins depend on our volume of
output at our facilities and a reduction in volume could
adversely affect our margins.
If we
are left with excess inventory, our operating results will be
adversely affected.
Because of long lead times and specialized product designs, we
typically purchase components and manufacture products in
anticipation of customer orders based on customer forecasts. For
a variety of reasons, such as decreased end-user demand for our
products, our customers might not purchase all the products we
have manufactured or for which we have purchased components. In
either event, we would attempt to recoup our materials and
manufacturing costs by means such as returning components to our
vendors, disposing of excess inventory through other channels or
requiring our OEM customers to purchase or otherwise compensate
us for such excess inventory. Some of our significant customer
agreements do not give us the ability to require our OEM
customers to do this. To the extent we are unsuccessful in
recouping our material and manufacturing costs, not only would
our net sales be adversely affected, but also our operating
results would be disproportionately adversely affected.
Moreover, carrying excess inventory would reduce the working
capital we have available to continue to operate and grow our
business.
Uncertainties
and adverse trends affecting our industry or any of our major
customers may adversely affect our operating
results.
Our business operates primarily within two major markets within
the electronics industry, Medical Technology Products and
Security Technology Products, which are subject to rapid
technological change and pricing and margin pressure. These
markets have historically been cyclical and subject to
significant downturns characterized by diminished product
demand, rapid declines in average selling prices and production
over-capacity. In addition, changes in government policy
relating to reimbursement for the purchase and use of medical
and security related capital equipment could also affect our
sales. Our customers markets are also subject to economic
cycles and are likely to experience recessionary periods in the
future. The economic conditions affecting our industry in
general, or any of our major customers in particular, might
adversely affect our operating results. Our other businesses are
subject to the same or greater technological and cyclical
pressures.
Our
customers delay or inability to obtain any necessary
United States or foreign regulatory clearances or approvals for
their products could have a material adverse effect on our
business.
Our products are used by a number of our customers in the
production of medical devices that are subject to a high level
of regulatory oversight. A delay or inability to obtain any
necessary United States or foreign regulatory clearances or
approvals for products could have a material adverse effect on
our business. The process of obtaining clearances and approvals
can be costly and time-consuming. There is a further risk that
any approvals or clearances, once obtained, might be withdrawn
or modified. Medical devices cannot be marketed in the United
States without clearance or clearance from the FDA. Medical
devices sold in the United States must also be manufactured in
compliance with FDA rules and regulations, which regulate the
design, manufacture, packing, storage, and installation of
medical devices. Moreover, medical devices are required to
comply with FDA regulations relating to investigational research
and labeling. States may also
31
regulate the manufacture, sale, and use of medical devices.
Medical devices are also subject to approval and regulation by
foreign regulatory and safety agencies.
Our
business strategy involves the pursuit of acquisitions or
business combinations, which may be difficult to integrate,
disrupt our business, dilute stockholder value or divert
management attention.
As part of our business strategy, we may consummate acquisitions
or business combinations. Acquisitions are typically accompanied
by a number of risks, including the difficulty of integrating
the operations and personnel of the acquired companies, the
potential disruption of our ongoing business and distraction of
management, expenses related to the acquisition and potential
unknown liabilities associated with acquired businesses. If we
do not successfully complete acquisitions that we pursue in the
future, we may incur substantial expenses and devote significant
management time and resources in seeking to complete proposed
acquisitions that will not generate benefits for us. In
addition, substantial portions of our available cash might be
utilized as consideration for these acquisitions.
Our
annual and quarterly operating results are subject to
fluctuations, which could affect the market price of our common
stock.
Our annual and quarterly results may vary significantly
depending on various factors, many of which are beyond our
control, and may not meet the expectations of securities
analysts or investors. If this occurs, the price of our common
stock would likely decline. These factors include:
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|
|
variations in the timing and volume of customer orders relative
to our manufacturing capacity;
|
|
|
|
introduction and market acceptance of our customers new
products;
|
|
|
|
changes in demand for our customers existing products;
|
|
|
|
the timing of our expenditures in anticipation of future orders;
|
|
|
|
effectiveness in managing our manufacturing processes;
|
|
|
|
changes in competitive and economic conditions generally or in
our customers markets;
|
|
|
|
changes in the cost or availability of components or skilled
labor;
|
|
|
|
foreign currency exposure; and
|
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|
|
investor and analyst perceptions of events affecting the
Company, our competitors
and/or our
industry.
|
As is the case with many technology companies, we typically ship
a significant portion of our products in the last month of a
quarter. As a result, any delay in anticipated sales is likely
to result in the deferral of the associated revenue beyond the
end of a particular quarter, which would have a significant
effect on our operating results for that quarter. In addition,
most of our operating expenses do not vary directly with net
sales and are difficult to adjust in the short term. As a
result, if net sales for a particular quarter were below our
expectations, we could not proportionately reduce operating
expenses for that quarter, and, therefore, that revenue
shortfall would have a disproportionate adverse effect on our
operating results for that quarter.
Loss
of any of our key personnel could hurt our business because of
their industry experience and their technological
expertise.
We operate in a highly competitive industry and depend on the
services of our key senior executives and our technological
experts. The loss of the services of one or several of our key
employees or an inability to attract, train and retain qualified
and skilled employees, specifically engineering and operations
personnel, could result in the loss of customers or otherwise
inhibit our ability to operate and grow our business
successfully.
32
If we
are unable to maintain our technological expertise in research
and product development and manufacturing processes, we will not
be able to successfully compete.
We believe that our future success will depend upon our ability
to provide research and product development and manufacturing
services that meet the changing needs of our customers. This
requires that we successfully anticipate and respond to
technological changes in design and manufacturing processes in a
cost-effective and timely manner. As a result, we continually
evaluate the advantages and feasibility of new product design
and manufacturing processes. We cannot, however, be certain that
our development efforts will be successful.
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
All dollar amounts in this Item 3 are in thousands.
The Company faces limited exposure to financial market risks,
including adverse movements in foreign currency exchange rates
and changes in interest rates. These exposures may change over
time as business practices evolve and could have a material
adverse impact on the Companys financial results. The
Companys primary exposure is related to fluctuations
between the US dollar and local currencies for the
Companys subsidiaries in Canada and Europe.
The Company maintains a bond investment portfolio of various
issuers, types, and maturities with high credit quality issuers.
Cash and cash equivalents not required for working capital
purposes are primarily invested in US treasury and US government
agency securities, with original maturities of six months or
less. Investments having original maturities in excess of six
months are stated at fair value, and are classified as available
for sale. Total interest income for the three and six months
ended January 31, 2006 was $2,469 and $4,502, respectively.
An interest rate change of 10% would not have a material impact
on the fair value of the portfolio or on future earnings.
|
|
Item 4.
|
Controls
and Procedures
|
The Company maintains disclosure controls and procedures, as
defined in
Rules 13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934 (the Exchange
Act). The term disclosure controls and
procedures means controls and other procedures of a
company that are designed to ensure that information required to
be disclosed by the company in the reports that it files or
submits under the Exchange Act is recorded, processed,
summarized, and reported, within the time periods specified in
the SECs rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by
a company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the
companys management including its chief executive officer
and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure. It should be noted that
any system of controls and procedures, however well designed and
operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system are met and
management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
The Company had previously determined that as of
October 31, 2005, its disclosure controls and procedures
were not effective at a reasonable assurance level because of a
material weakness in the Companys internal control over
financial reporting. A companys internal control over
financial reporting is a process designed by, or under the
supervision of, the chief executive officer and chief financial
officer and effected by the companys board of directors,
management, and other personnel 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. A
material weakness in internal control over financial reporting
is a control deficiency, or combination of control deficiencies,
that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will
not be prevented or detected. As of October 31, 2005, the
Company had a material weakness in its internal control over
financial reporting in that it did not maintain effective
controls over software revenue and related deferred revenue.
Specifically, the Companys review and approval controls
over the completeness and accuracy of revenue and deferred
revenue under multiple-element software arrangements at its
Camtronics Medical
33
Systems, Ltd. subsidiary were ineffective to ensure revenues
were recorded in the correct period. Please refer to
Item 9A of the Companys Annual Report on
Form 10-K
for the fiscal year ended July 31, 2005 and Item 4 of
the Companys Quarterly Report on
Form 10-Q
for the fiscal quarter ended October 31, 2005 for a further
description of this material weakness in internal control over
financial reporting.
On November 1, 2005, the Company sold all of the
outstanding shares of capital stock of Camtronics Medical
Systems, Ltd. As a result, the Company no longer has a material
weakness in its internal control over financial reporting with
respect to software revenue and related deferred revenue at
Camtronics.
The Company has evaluated the effectiveness of its disclosure
controls and procedures as of January 31, 2006, the end of
the period covered by this Quarterly Report on
Form 10-Q.
The evaluation was carried out by management with the
participation of the chief executive officer and chief financial
officer. Based on this evaluation, the Companys chief
executive officer and chief financial officer have concluded
that the Companys disclosure controls and procedures were
effective at the reasonable assurance level.
There were no changes to the Companys internal control
over financial reporting, other than the change discussed above
relating to the sale of Camtronics, during the fiscal quarter
ended January 31, 2006 that materially affected, or are
reasonably likely to materially affect, the Companys
internal control over financial reporting.
PART II OTHER
INFORMATION
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
All dollar amounts in this Item 2 are in thousands, except
per share data.
The following table provides information about repurchases by
the Company of its common stock during the three months ended
January 31, 2006.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Approximate Dollar
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value of Shares that
|
|
|
|
|
|
|
Average
|
|
|
Purchased as Part of
|
|
|
May Yet be
|
|
|
|
Total Number of
|
|
|
Price Paid
|
|
|
Publicity Announced
|
|
|
Purchased Under
|
|
Period
|
|
Shares Purchased(1)
|
|
|
per Share
|
|
|
Program(2)
|
|
|
the Program
|
|
|
11/1/05-11/30/05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/1/05-12/31/05
|
|
|
60,000
|
|
|
$
|
48.45
|
|
|
|
60,000
|
|
|
|
|
|
1/1/06-1/31/06
|
|
|
20,000
|
|
|
|
48.77
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
80,000
|
|
|
|
48.53
|
|
|
|
80,000
|
|
|
$
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All repurchases by the Company of its common stock during the
three months ended January 31, 2006 were done pursuant to
the repurchase program that the Company publicly announced on
June 7, 2005 (The Program). |
|
(2) |
|
The Companys Board of Directors approved the repurchase of
$25,000 of the Companys common stock pursuant to the
Program. |
34
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
On January 27, 2006, the Company held its 2006 Annual
Meeting of Stockholders. At the meeting, the votes cast or
withheld on the matters presented to the Companys
stockholders were as follows:
(1) Election of three (3) Class II Directors for
a three (3) year term, to hold office until the 2009 Annual
Meeting of Stockholders and until their respectful successors
are elected and qualified.
|
|
|
|
|
|
|
|
|
|
|
Votes For
|
|
|
Votes Withheld
|
|
|
James J. Judge
|
|
|
12,442,461
|
|
|
|
239,861
|
|
Bruce W. Steinhauer
|
|
|
11,373,607
|
|
|
|
1,308,715
|
|
Gerald L. Wilson
|
|
|
11,374,383
|
|
|
|
1,307,939
|
|
The remaining terms of M. Ross Brown, Bernard M. Gordon, Michael
T. Modic, John A. Tarello, Edward F. Voboril, and John W.
Wood Jr. continued after the meeting.
(2) Shareholder proposal that the Companys
stockholders request the Companys Board of Directors to
take the necessary steps to provide that all directors have a
one-year term of office, including approval of amendments to the
Restated Articles of Organization and the By-Laws of the Company
to eliminate the staggered Board of Directors terms
and submission of such amendments for stockholder approval to
the extent required:
|
|
|
|
|
|
|
Votes For
|
|
Votes Against
|
|
Votes Abstain
|
|
No Vote
|
|
9,247,289
|
|
2,196,502
|
|
110,799
|
|
1,127,732
|
Please see the Companys Proxy Statement filed with the
Securities and Exchange Commission on January 4, 2006 in
connection with the 2006 Annual Meeting for a complete
description of the matters voted upon.
|
|
|
|
|
Exhibit
|
|
Description
|
|
|
2
|
.1
|
|
Stock Purchase Agreement dated as
of November 1, 2005, between Analogic Corporation and
Emageon Inc. (Incorporated by reference to the Companys
Current Report on
Form 8-K
dated November 1, 2005)
|
|
|
|
|
|
|
|
|
|
|
|
10
|
.1
|
|
Key Employee Stock Bonus Plan
dated March 14, 1983, as amended on January 27,
1988
|
|
|
|
|
|
|
|
|
|
|
|
31
|
.1
|
|
Certification of Chief Executive
Officer pursuant to
Rule 13a-14(a)/Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
|
|
31
|
.2
|
|
Certification of Chief Financial
Officer pursuant to
Rule 13a-14(a)/Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
|
|
32
|
.1
|
|
Certification of Chief Executive
Officer pursuant to
Rule 13a-14(b)/Rule 15d-14(b)
of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
|
|
32
|
.2
|
|
Certification of Chief Financial
Officer pursuant to
Rule 13a-14(b)/Rule 15d-14(b)
of the Securities Exchange Act of 1934, as amended
|
35
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.
ANALOGIC CORPORATION
Registrant
John W. Wood Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 13, 2006
/s/ John J. Millerick
John J. Millerick
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: March 13, 2006
36
EXHIBIT INDEX
|
|
|
|
|
Exhibit
|
|
Description
|
|
|
2
|
.1
|
|
Stock Purchase Agreement dated as
of November 1, 2005, between Analogic Corporation and
Emageon Inc. (Incorporated by reference to the Companys
Current Report on
Form 8-K
dated November 1, 2005)
|
|
|
|
|
|
|
|
|
|
|
|
10
|
.1
|
|
Key Employee Stock Bonus Plan
dated March 14, 1983, as amended on January 27, 1988
|
|
|
|
|
|
|
|
|
|
|
|
31
|
.1
|
|
Certification of Chief Executive
Officer pursuant to
Rule 13a-14(a)/Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
|
|
31
|
.2
|
|
Certification of Chief Financial
Officer pursuant to
Rule 13a-14(a)/Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
|
|
32
|
.1
|
|
Certification of Chief Executive
Officer pursuant to
Rule 13a-14(b)/Rule 15d-14(b)
of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
|
|
32
|
.2
|
|
Certification of Chief Financial
Officer pursuant to
Rule 13a-14(b)/Rule 15d-14(b)
of the Securities Exchange Act of 1934, as amended
|
37