<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-6715
ANALOGIC CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2454372
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8 Centennial Drive, Peabody, Massachusetts 01960
(Address of principal executive offices) (Zip Code)
(508) 977-3000
(Registrant's 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 X No
The number of shares of Common Stock outstanding at October 31, 1996 was
12,500,729
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ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX
Page
No.
Part I Financial Information
Consolidated Condensed Balance Sheets
October 31, 1996 and July 31, 1996 3
Consolidated Condensed Statements of Income
Three Months Ended October 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows
Three Months Ended October 31, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
Part II Other Information 9 - 10
Index to Exhibits 11
Exhibit 11 - Calculation of Earnings per Share 12
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PART I FINANCIAL INFORMATION
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000 omitted)
October 31, July 31,*
1996 1996
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 19,923 $ 18,040
Marketable securities, at market 84,086 82,509
Accounts and notes receivable, net 46,354 46,815
Inventories 52,068 50,232
Prepaid expenses and other current assets 4,748 4,416
Total current assets 207,179 202,012
Property, plant and equipment, net 47,442 47,756
Investments in and advances to affiliated
companies 7,864 8,129
Excess of cost over acquired net assets,
net of accumulated amortization 309 375
Other assets, including unamortized software
costs ($5,663 and $6,073) 6,318 6,890
$269,112 $265,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Mortgage and other notes payable $ 350 $ 3,644
Obligations under capital leases 455 442
Accounts payable, trade 13,654 11,438
Accrued employee compensation and benefits 8,628 9,822
Accrued expenses 7,532 6,153
Accrued income taxes 3,277 1,998
Accrued dividends payable 625
Total current liabilities 34,521 33,497
Long-term debt:
Mortgage and other notes payable 6,479 6,677
Obligations under capital leases 2,660 2,778
Deferred income taxes 4,843 4,832
Minority interest in subsidiaries 4,339 4,268
Excess of acquired net assets over cost, net
of accumulated amortization 1,149 1,310
Stockholders' equity:
Common stock, $.05 par 689 688
Capital in excess of par value 21,446 21,413
Retained earnings 206,070 202,761
Unrealized holding gains and losses 2,206 2,092
Cumulative translation adjustments 1,182 1,539
Treasury stock, at cost (14,527) (14,550)
Unearned compensation (1,945) (2,143)
215,121 211,800
$269,112 $265,162
* See note 2 of notes to consolidated condensed financial statements for
further information.
The accompanying notes are an integral part of these financial statements.
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ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(000 omitted, except per share data)
Three Months Ended
October 31,
Revenues: 1996 1995
Product and service, net $52,383 $39,489
Engineering and licensing 2,363 1,400
Other operating revenue 3,404 3,228
Interest and dividend income 1,324 2,362
Total revenues 59,474 46,479
Costs and expenses:
Cost of sales:
Product and service 30,929 24,927
Engineering and licensing 1,899 1,339
Other operating expenses 1,628 1,538
General and administrative 4,282 4,283
Selling 6,096 6,885
Research and product development 8,433 6,902
Interest expense 216 185
Gain on foreign exchange (150) (61)
Amortization of excess of acquired
net assets over cost (161) (133)
Amortization of excess of cost
over acquired net assets 66 79
Total cost of sales and expenses 53,238 45,944
Income from operations 6,236 535
Equity in net loss of unconsolidated affiliate (265)
Income before income taxes 5,971 535
Provision (benefit) for income taxes 1,966 (283)
Minority interest in net income (loss)
of consolidated subsidiaries 71 (541)
Net income $ 3,934 $ 1,359
Average common and common
equivalent shares outstanding 12,654 12,540
Earnings per common and common
equivalent share $0.31 $0.11
Dividends declared per share $0.05 $0.04
The accompanying notes are an integral part of these financial statements.
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ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(000 omitted)
Three Months Ended
October 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
Net income $ 3,934 $ 1,359
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,507 1,540
Amortization of capitalized software 757 477
Amortization of excess of cost over
acquired net assets 66 79
Amortization of excess of acquired net
assets over cost (161) (133)
Minority interest in net gain (loss) of
consolidated subsidiaries 71 (541)
Compensation from stock grants 165 166
Gain sale of equipment (6) (4)
Excess of equity in losses of unconsolidated
affiliates over dividend received 265
Changes in operating assets and liabilities
Decrease (increase) in assets:
Accounts and notes receivable 461 (5,679)
Inventories (1,836) (4,437)
Prepaid expenses and other current assets (333) (194)
Other assets 68 (609)
Increase (decrease) in liabilities:
Accounts payable, trade 2,216 1,596
Accrued expenses and other current liabilities 185 (4,279)
Accrued and deferred income taxes 1,291 (280)
Accrued dividends payable 625 497
TOTAL ADJUSTMENTS 5,341 (443)
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,275 916
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,194) (1,044)
Capitalized software (253) (554)
Purchases of marketable securities (2,463) (9,750)
Maturities of marketable securities 1,000 12,160
Proceeds from sale of property, plant and equipment 7 4
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (2,903) 816
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of overdraft facility (3,295)
Payments on debt and capital lease obligations (302) (301)
Purchase of common stock for treasury
Purchase of common stock of majority owned subsidiary (116)
Issuance of common stock pursuant to stock options
and employee stock purchase plan 90 69
Dividends declared to shareholders (625) (497)
NET CASH USED BY FINANCING ACTIVITIES (4,132) (845)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (357) (623)
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,883 264
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,040 12,404
CASH AND CASH EQUIVALENTS, END OF PERIOD $19,923 $12,668
The accompanying notes are an integral part of these financial statements.
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ANALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting
solely of normal recurring adjustments) necessary to fairly present
Analogic Corporation's financial position as of October 31, 1996 and
July 31, 1996, the results of its operations for the three months ended
October 31, 1996 and 1995 and statements of cash flows for the three
months then ended. The results of the operations for the three months
ended October 31, 1996 are not necessarily indicative of the results to
be expected for the fiscal year ending July 31, 1997.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in its Annual Report on Form 10-K
for the fiscal year ended July 31, 1996.
2. Financial statements, with the exception of the July 31, 1996 balance
sheet, are unaudited and have not been examined by independent certified
public accountants. The consolidated balance sheet as of July 31, 1996
contains data derived from audited financial statements.
3. The inventories as of October 31, 1996 were not based on a physical or
perpetual inventory but were calculated on the basis of an estimated
percentage of material used during the period. The components of
inventory are estimated as follows:
October 31, July 31,
1996 1996
Raw materials $19,441,000 $19,363,000
Work-in-process 18,471,000 17,830,000
Finished goods 14,156,000 13,039,000
$52,068,000 $50,232,000
4. Total interest expense, amounted to $256,000 of which $40,000 was
capitalized during the three months ended October 31, 1996. Interest
paid amounted to $216,000 and $245,000 during the three months ended
October 31, 1996 and 1995, respectively.
5. Income taxes paid during the three months ended October 31, 1996 and
1995 amounted to $702,000 and $180,000, respectively.
6. The Company declared a dividend of $.05 per common share on October 9,
1996, payable on November 5, 1996 to shareholders of record on October
22, 1996.
7. Certain financial statement items have been reclassified to conform to
the current periods' format.
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ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's balance sheet reflects a current ratio of 6.0 to 1 at October
31, 1996 and July 31, 1996. Cash, cash equivalents and marketable
securities, along with accounts and notes receivable, constitute
approximately 73% of current assets at October 31, 1996. Liquidity is
sustained principally through funds provided from operations, with short-term
time deposits and marketable securities available to provide additional
sources of cash. The Company places its cash investments in high credit
quality financial instruments and, by policy, limits the amount of credit
exposure to any one financial institution. Management does not anticipate
any difficulties in financing operations at anticipated levels. The
Company's debt to equity ratio was 0.25 to 1 at October 31, 1996 and July 31,
1996.
Capital expenditures totaled approximately $1,194,000 during the three months
ended October 31, 1996.
RESULTS OF OPERATIONS
Three Months Fiscal 1997 (10/31/96) vs. Three Months Fiscal 1996 (10/31/95)
Product, service, engineering and licensing revenues for the three months
ended October 31, 1996 were $54,746,000 as compared to $40,889,000 for the
same period last year. The increase of $13,857,000 was due to an increase
in sales of Medical Technology Products of $12,533,000, Signal Processing
Technology Products of $1,198,000 and Industrial Technology Products of
$126,000. Other operating revenue of $3,404,000 and $3,228,000 represents
revenue from the Hotel operation for the three months ending October 31, 1996
and 1995, respectively. Interest and dividend income decreased primarily due
to a distribution in the first quarter of fiscal 1996, from a limited
partnership in which the Company has invested.
The percentage of total cost of sales to total net sales for the three months
of fiscal 1997 and fiscal 1996 were 60% and 64%, respectively. The decrease
was primarily due to a 34% increase in sales, diminished start up
manufacturing costs associated with the CT Scanner and a favorable product
mix. Operating costs associated with the Hotel during the three months of
fiscal 1997 and 1996 were $1,628,000 and $1,538,000, respectively.
General and administrative and selling expenses decreased $790,000 primarily
due to a cost reduction program in our subsidiary in Denmark. Research and
product development expenses increased $1,531,000 primarily due to the
expanding engineering effort applicable to developing complex medical imaging
systems and an increase in the amortization of capitalized computer software
costs.
Computer software costs of $366,000 and $554,000 were capitalized in the
first three months of fiscal 1997 and 1996, respectively. Amortization of
capitalized software amounted to $776,000 and $477,000 in the first three
months of fiscal 1997 and 1996, respectively.
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ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Fiscal 1997 (10/31/96) vs. Three Months Fiscal 1996 (10/31/95)
(continued)
Minority interest in the net income of the Company's consolidated subsidiary,
Camtronics, for the three months ended October 31, 1996 amounted to $71,000
compared to minority interest in the net loss of Camtronics of $33,000 for
the three months ended October 31, 1995.
Minority interest in the net loss of the Company's consolidated subsidiary,
B&K, for the first quarter of fiscal 1996 was $508,000. As of July 1, 1996
the Company purchased the remaining 41% minority interest in B&K.
The Company's share of losses of a newly formed privately held company
amounted to $265,000 during the first quarter of fiscal 1997.
The effective tax rate for the first three months of fiscal 1997 was 33%
which reflects the benefit of tax exempt interest and utilization of
alternative minimum tax credit carryforwards. The tax benefit in the quarter
ended October 31, 1995 was primarily a result of the benefit at the statutory
tax rate on the loss of the Company's subsidiary in Denmark offset, in part,
by the utilization of the alternative minimum tax benefit carry forwards
applicable to profits of the remainder of the Company.
Net income for the three months ended October 31, 1996 was $3,934,000 or $.31
per share as compared with $1,359,000 or $.11 per share for the same period
last year. As noted above the increase was caused primarily by higher sales
volume and gross margin.
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ANALOGIC CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. 11 - Calculation of earnings per share.
(b) During the quarter ended October 31, 1996, the Company did not file any
reports on Form 8-K.
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ANALOGIC CORPORATION AND SUBSIDIARIES
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
Date December 2, 1996 /s/ Bernard M. Gordon
Bernard M. Gordon
Chairman of the Board
Chief Executive Officer
Date December 2, 1996 /s/ John A. Tarello
John A. Tarello
Senior Vice President
Chief Accounting Officer
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<PAGE>11
ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. Page No.
11 Calculation of Earnings per Share 12
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<PAGE>12
EXHIBIT 11
ANALOGIC CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
Net earnings per share are computed using the average number of shares
actually outstanding plus the incremental shares computed on the assumption
that certain lower priced stock options had been exercised with the proceeds
utilized to purchase treasury stock.
Three Months Ended
October 31,
1996 1995
PRIMARY:
Net Income $3,934,000 $1,359,000
Average shares outstanding 12,498,908 12,425,400
Add: Incremental shares to
reflect dilutive stock
options deemed common
stock equivalents.
(Computed by treasury
stock method.) 155,020 114,835
Common and common equivalent
shares outstanding 12,653,928 12,540,235
Earnings per share $.31 $.11
ASSUMING FULL DILUTION:
Net Income $3,934,000 $1,359,000
Average shares outstanding 12,498,908 12,425,400
Add: Incremental shares due to
the effect of common stock
equivalents - this assumes
that proceeds from shares
sold under dilutive stock
options (using quarter end
market price to determine
proceeds where such price
was in excess of average
quarterly prices) were
used to purchase treasury
stock. 153,503 115,018
Average common shares
outstanding 12,652,411 12,540,418
Earnings per share $.31 $.11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Company's balance sheets and consolidated statements of income and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 19923
<SECURITIES> 84086
<RECEIVABLES> 47912
<ALLOWANCES> 1558
<INVENTORY> 52068
<CURRENT-ASSETS> 207179
<PP&E> 133679
<DEPRECIATION> 86237
<TOTAL-ASSETS> 269112
<CURRENT-LIABILITIES> 34521
<BONDS> 0
0
0
<COMMON> 689
<OTHER-SE> 214432
<TOTAL-LIABILITY-AND-EQUITY> 269112
<SALES> 54746
<TOTAL-REVENUES> 59474
<CGS> 32828
<TOTAL-COSTS> 34456
<OTHER-EXPENSES> 18566
<LOSS-PROVISION> 0
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<INCOME-TAX> 1966
<INCOME-CONTINUING> 3934
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<NET-INCOME> 3934
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
