<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 January 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 January 31, 1996 was
12,468,444
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ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX
Page
No.
Part I Financial Information
Consolidated Condensed Balance Sheets
January 31, 1996 and July 31, 1995 3
Consolidated Condensed Statements of Income
Three and Six Months Ended January 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows
Six Months Ended January 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 - 9
Part II Other Information 10 - 11
Index to Exhibits 12
Exhibit 11 - Calculation of Earnings per Share 13
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<PAGE>3
PART I FINANCIAL INFORMATION
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000 omitted)
January 31, July 31,*
1996 1995
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 15,787 $ 12,404
Marketable securities, at market 78,451 87,398
Accounts and notes receivable, net 41,145 45,212
Inventories 52,205 46,287
Prepaid expenses and other current assets 4,490 5,108
Total current assets 192,078 196,409
Property, plant and equipment, net 49,830 49,762
Investments in and advances to affiliated companies 7,005 6,574
Excess of cost over acquired net assets,
net of accumulated amortization 522 681
Other assets, including unamortized software
costs ($6,545 and $6,413) 7,425 6,772
$256,860 $260,198
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Mortgage and other notes payable $ 1,867 $ 365
Obligations under capital leases 416 393
Accounts payable, trade 10,494 12,467
Accrued employee compensation and benefits 8,318 9,008
Accrued expenses 5,478 6,545
Accrued income taxes 461 1,832
Total current liabilities 27,034 30,610
Long-term debt:
Mortgage and other notes payable 6,772 7,016
Obligations under capital leases 3,006 3,220
Deferred income taxes 4,698 4,683
Minority interest in subsidiaries 10,935 12,489
Excess of acquired net assets over cost, net
of accumulated amortization 1,021 1,287
Stockholders' equity:
Common stock, $.05 par 687 685
Capital in excess of par value 20,809 20,517
Retained earnings 194,302 191,938
Unrealized holding gains and losses 3,069 2,004
Cumulative translation adjustments 1,363 2,846
Treasury stock, at cost (14,509) (14,470)
Unearned compensation (2,327) (2,627)
203,394 200,893
$256,860 $260,198
* 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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<PAGE>4
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(000 omitted, except per share data)
Three Months Ended Six Months Ended
January 31, January 31,
Revenues: 1996 1995 1996 1995
Product and service, net $49,408 $47,671 $88,897 $92,686
Engineering and licensing 587 1,782 1,987 3,470
Other operating revenue 1,858 1,794 5,085 4,800
Interest and dividend income 1,293 1,290 3,656 2,512
Total revenues 53,146 52,537 99,625 103,468
Costs and expenses:
Cost of sales:
Product and service 30,386 27,399 55,314 52,539
Engineering and licensing 782 687 2,121 1,285
Other operating expenses 1,182 1,164 2,720 2,611
General and administrative 4,671 3,603 8,955 8,096
Selling 6,900 7,275 13,785 14,334
Research and product development 6,768 7,626 13,671 15,195
Interest expense 201 214 385 454
(Gain) loss on foreign exchange (435) (144) (496) 105
Amortization of excess of acquired
net assets over cost (133) (133) (266) (266)
Amortization of excess of cost
over acquired net assets 79 97 158 194
Total cost of sales and expenses 50,402 47,788 96,347 94,547
Income before income taxes 2,744 4,749 3,278 8,921
Provision for income taxes 620 1,027 337 1,882
Minority interest in net income (loss)
of consolidated subsidiaries 124 590 (418) 433
Net income $ 2,000 $ 3,132 $ 3,359 $ 6,606
Average common and common
equivalent shares outstanding 12,529 12,477 12,534 12,459
Earnings per common and common
equivalent share $0.16 $0.25 $0.27 $0.53
Dividends declared per share $0.04 none $0.08 none
The accompanying notes are an integral part of these financial statements.
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<PAGE>5
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(000 omitted)
Six Months Ended
January 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
Net income $ 3,359 $ 6,606
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,018 3,173
Amortization of capitalized software 871 1,159
Amortization of excess of cost over
acquired net assets 158 194
Amortization of excess of acquired net
assets over cost (266) (266)
Minority interest in net income (loss) of
consolidated subsidiaries (418) 433
Compensation from stock grants 369 360
Gain sale of equipment (4) (15)
Changes in operating assets and liabilities
Decrease (increase) in assets:
Accounts and notes receivable 4,067 (2,884)
Inventories (5,918) (2,298)
Prepaid expenses and other current assets 352 123
Other assets (521) (4)
Increase (decrease) in liabilities:
Accounts payable, trade (1,973) 2,487
Accrued expenses and other current
liabilities (2,833) (122)
Accrued and deferred income taxes (1,090) 1,422
TOTAL ADJUSTMENTS (4,188) 3,782
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (829) 10,388
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,086) (4,751)
Capitalized software (1,003) (1,513)
Purchases of marketable securities (12,750) (16,485)
Maturities of marketable securities 22,770 9,475
Proceeds from sale of property, plant and equipment 4 15
Investments in and advances to affiliated companies (500)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 5,435 (13,259)
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ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
(UNAUDITED)
(000 omitted)
Six Months Ended
January 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt and capital lease obligations 1,067 (2,042)
Purchase of common stock for treasury (111) (112)
Purchase of common stock of majority owned
subsidiary (138) (243)
Issuance of common stock pursuant to stock options
and employee stock purchase plan 436 136
Dividends paid to shareholders (994)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 260 (2,261)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,483) 400
NET DECREASE IN CASH AND CASH EQUIVALENTS 3,383 (4,732)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,404 23,571
CASH AND CASH EQUIVALENTS, END OF PERIOD $15,787 $18,839
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 January 31, 1996 and
July 31, 1995, the results of its operations for the three and six
months ended January 31, 1996 and 1995 and statements of cash flows for
the six months then ended. The results of the operations for the three
and six months ended January 31, 1996 are not necessarily indicative of
the results to be expected for the fiscal year ending July 31, 1996.
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, 1995.
2. Financial statements, with the exception of the July 31, 1995 balance
sheet, are unaudited and have not been examined by independent certified
public accountants. The consolidated balance sheet as of July 31, 1995
contains data derived from audited financial statements.
3. The inventories as of January 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:
January 31, July 31,
1996 1995
Raw materials $21,540,000 $18,883,000
Work-in-process 18,340,000 16,037,000
Finished goods 12,325,000 11,367,000
$52,205,000 $46,287,000
4. Total interest expense, amounted to $475,000 of which $90,000 was
capitalized during the six months ended January 31, 1996. Interest paid
amounted to $430,000 and $480,000 during the six months ended January
31, 1996 and 1995, respectively.
5. Income taxes paid during the six months ended January 31, 1996 and 1995
amounted to $1,501,000 and $1,562,000, respectively.
6. The Company declared a dividend of $.04 per common share on October 5,
1995, payable on November 3, 1995 to shareholders of record on October
20, 1995. On December 19, 1995, the Company declared a $.04 dividend
per common share, payable on January 17, 1996 to shareholders of record
on January 3, 1996.
7. Certain financial statement items have been reclassified to conform to
the current periods' format.
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<PAGE>8
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 7.1 to 1 at January
31, 1996 compared to 6.4 to 1 at July 31, 1995. Cash, cash equivalents and
marketable securities, along with accounts and notes receivable, constitute
approximately 70% of current assets at January 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 0.26 to 1 at January 31, 1996 and 0.30 to
1 at July 31, 1995.
Capital expenditures totaled approximately $3,086,000 during the six months
ended January 31, 1996.
RESULTS OF OPERATIONS
Six Months Fiscal 1996 (01/31/96) vs. Six Months Fiscal 1995 (01/31/95)
Product, service, engineering and licensing revenues for the six months ended
January 31, 1996 were $90,884,000 as compared to $96,156,000 for the same
period last year. The decrease of $5,272,000 was principally due to a
decrease in sales of Medical Technology Products of $6,699,000 offset by an
increase in sales of Industrial Technology Products of $563,000 and Signal
Processing Technology Products of $864,000. Other operating revenue of
$5,085,000 and $4,800,000 represents revenue from the Hotel operation for the
six months ending January 31, 1996 and 1995, respectively.
The percentage of total cost of sales to total net sales for the six months
of fiscal 1996 and fiscal 1995 were 63% and 56%, respectively. The increase
was primarily due to higher direct material costs, less favorable product
mix, lower selling prices caused by competitive pressure in certain
ultrasound medical technology markets and additional manufacturing costs
associated with the introduction of the Company's unique, lightweight, low-
power CT Scanner. Operating costs associated with the Hotel during the six
months of fiscal 1996 and 1995 were $2,720,000 and $2,611,000, respectively.
General and administrative and selling expenses increased by $310,000, a net
result of lower selling expenses primarily in the areas of advertising and
staff expenses, offset by higher general and administrative expenses relating
to staffing and facilities. Research and product development expenses
decreased $1,524,000 primarily due to a reduction in the engineering effort
applicable to the development of the mobile CT Scanner.
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<PAGE>9
ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Six Months Fiscal 1996 (01/31/96) vs. Six Months Fiscal 1995 (01/31/95)
(continued)
A gain on foreign exchange of $496,000 was realized during the first six
months of fiscal 1996 versus a loss of $105,000 for the same period last
year.
Computer software costs of $1,003,000 and $1,513,000 were capitalized in the
six months of fiscal 1996 and 1995, respectively. Amortization of
capitalized software amounted to $871,000 and $1,159,000 in the first six
months of fiscal 1996 and 1995, respectively.
Minority interest in the net loss of the Company's consolidated subsidiary,
Camtronics, for the six months ended January 31, 1996 amounted to $88,000
compared to minority interest in the net income of Camtronics of $454,000 for
the six months ended January 31, 1995.
Minority interest in the net loss of the Company's consolidated subsidiary,
B&K, for the six months ended January 31, 1996 and 1995 amounted to $330,000
and $21,000, respectively.
The effective tax rate for the six months of fiscal 1996 was 10% vs. 21% for
the six months of fiscal 1995. The decrease 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 six months ended January 31, 1996 was $3,359,000 or $.27
per share as compared with $6,606,000 or $.53 per share for the same period
last year. As noted above, the decrease was caused primarily by a less
favorable product mix, competitive pricing pressures in certain medical
markets, an increase in manufacturing costs associated with the introduction
of more sophisticated complete systems to the medical and industrial markets
and lower sales volume in the medical technology product sector.
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ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Second Quarter Fiscal 1996 (01/31/96) vs. Second Quarter Fiscal 1995
(01/31/95)
Product, service, engineering and licensing revenues for the three months
ended January 31, 1996 were $49,995,000 as compared to $49,453,000 for the
same period last year. The increase of $542,000 was principally due to an
increase in sales of Medical Technology Products of $215,000, Signal
Processing Technology Products of $139,000 and Industrial Technology Products
of $188,000. Other operating revenue of $1,858,000 and $1,794,000 represents
revenue from the Hotel operation for the three months ending January 31, 1996
and 1995, respectively.
The percentage of total cost of sales to total net sales for the three months
of fiscal 1996 and fiscal 1995 were 62% and 57%, respectively. The increase
was primarily due to higher direct material costs, less favorable product
mix, lower selling prices caused by competitive pressures in certain
ultrasound medical technology markets and additional manufacturing costs
associated with the introduction of the Company's unique, lightweight,
low-power CT Scanner. Operating costs associated with the Hotel during the
three months of fiscal 1996 and 1995 were $1,182,000 and $1,164,000,
respectively.
General and administrative and selling expenses increased $693,000 primarily
the result of staffing and facility related expenditures. Research and
product development expenses decreased $858,000 primarily due to a reduction
in the engineering effort applicable to the development of the mobile CT
Scanner.
A gain on foreign exchange of $435,000 was realized during the second quarter
of fiscal 1996 versus a gain of $144,000 for the same period last year.
Computer software costs of $477,000 and $764,000 were capitalized in the
second quarter of fiscal 1996 and 1995, respectively. Amortization of
capitalized software amounted to $422,000 and $578,000 in the second quarter
of fiscal 1996 and 1995, respectively.
Minority interest in the net loss of the Company's consolidated subsidiary,
Camtronics, for the three months ended January 31, 1996 amounted to $54,000
compared to minority interest in the net income of Camtronics of $166,000 for
the three months ended January 31, 1995.
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<PAGE>11
ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Second Quarter Fiscal 1996 (01/31/96) vs. Second Quarter Fiscal 1995
(01/31/95) (continued)
Minority interest in the net income of B&K for the three months ended January
31, 1996 and 1995 amounted to $178,000 and $424,000 respectively.
The effective tax rate for the three months of fiscal 1996 was 23% vs. 22%
for the three months of fiscal 1995.
Net income for the three months ended January 31, 1996 was $2,000,000 or $.16
per share as compared with $3,132,000 or $.25 per share for the three months
ended January 31, 1995. As discussed above, the decrease was caused
primarily by lower gross margins and higher general and administrative costs.
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<PAGE>12
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 January 31, 1996, the Company did not file any
reports on Form 8-K.
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<PAGE>13
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 March 13, 1996 /s/ Bernard M.Gordon
Bernard M. Gordon
Chairman of the Board
Chief Executive Officer
Date March 13, 1996 /s/ John A. Tarello
John A. Tarello
Senior Vice President
Chief Accounting Officer
<PAGE>
<PAGE>14
ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. Page No.
11 Calculation of Earnings per Share 13
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<PAGE>15
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 Six Months Ended
January 31, January 31,
1996 1995 1996 1995
PRIMARY:
Net Income $2,000,000 $3,132,000 $3,359,000 $6,606,000
Average shares outstanding 12,438,975 12,355,943 12,432,189 12,352,588
Add: Incremental shares to
reflect dilutive stock
options deemed common
stock equivalents.
(Computed by treasury
stock method.) 89,729 120,928 102,282 106,550
Common and common equivalent
shares outstanding 12,528,704 12,476,871 12,534,471 12,459,138
Earnings per share $.16 $.25 $.27 $.53
ASSUMING FULL DILUTION:
Net Income $2,000,000 $3,132,000 $3,359,000 $6,606,000
Average shares outstanding 12,438,975 12,355,943 12,432,189 12,352,588
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. 73,328 129,373 94,173 116,664
Average common shares
outstanding 12,512,303 12,485,316 12,526,362 12,469,252
Earnings per share $.16 $.25 $.27 $.53
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This 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> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 15787
<SECURITIES> 78451
<RECEIVABLES> 41145
<ALLOWANCES> 1265
<INVENTORY> 52205
<CURRENT-ASSETS> 192078
<PP&E> 133481
<DEPRECIATION> 83651
<TOTAL-ASSETS> 256860
<CURRENT-LIABILITIES> 27034
<BONDS> 0
0
0
<COMMON> 687
<OTHER-SE> 202707
<TOTAL-LIABILITY-AND-EQUITY> 256860
<SALES> 90884
<TOTAL-REVENUES> 99625
<CGS> 57435
<TOTAL-COSTS> 60155
<OTHER-EXPENSES> 35649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 385
<INCOME-PRETAX> 3278
<INCOME-TAX> 337
<INCOME-CONTINUING> 3359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3359
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
