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, 1997
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)
(978) 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, 1997 was
12,593,461
ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX
Page
No.
Part I Financial Information
Consolidated Condensed Balance Sheets
October 31, 1997 and July 31, 1997 3
Consolidated Condensed Statements of Income
Three Months Ended October 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows
Three Months Ended October 31, 1997 and 1996 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
PART I FINANCIAL INFORMATION
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000 omitted)
<TABLE>
<CAPTION>
October 31, July 31,*
1997 1997
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 22,568 $ 24,954
Marketable securities, at market 94,483 89,496
Accounts and notes receivable, net 48,578 52,638
Inventories 52,108 47,800
Prepaid expenses and other current assets 7,317 6,714
Total current assets 225,054 221,602
Property, plant and equipment, net 49,028 48,247
Investments in and advances to affiliated
companies 5,982 7,095
Excess of cost over acquired net assets,
net of accumulated amortization 149 171
Other assets, including unamortized software
costs (1998, $4,218; 1997, $4,437) 4,781 5,244
$284,994 $282,359
</TABLE>
PART I FINANCIAL INFORMATION
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000 omitted)
<TABLE>
<CAPTION>
October 31, July, 31*
1997 1997
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Mortgage and other notes payable $ 345 $ 344
Obligations under capital leases 512 497
Accounts payable, trade 14,027 13,185
Accrued employee compensation and benefits 8,714 11,654
Accrued expenses 5,868 6,343
Accrued income taxes 3,668 3,449
Accrued dividends payable 630
Total current liabilities 33,764 35,472
Long-term debt:
Mortgage and other notes payable 6,133 6,333
Obligations under capital leases 2,148 2,281
Deferred income taxes 3,871 3,854
Minority interest in subsidiary 5,547 5,538
Excess of acquired net assets over cost, net
of accumulated amortization 503 665
Stockholders' equity:
Common stock, $.05 par 692 692
Capital in excess of par value 22,766 22,916
Retained earnings 224,347 220,343
Unrealized holding gains and losses 1,624 1,713
Cumulative translation adjustments (865) (1,617)
Treasury stock, at cost (14,109) (14,121)
Unearned compensation (1,427) (1,710)
Stockholders' Equity 233,028 228,216
$284,994 $282,359
* See note 2 of notes to consolidated condensed financial statements for
further information.
The accompanying notes are an integral part of these financial statements.
</TABLE>
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(000 omitted, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
Revenues: 1997 1996
<S> <C> <C>
Product and service, net $54,523 $52,383
Engineering and licensing 4,163 2,363
Other operating revenue 3,735 3,404
Interest and dividend income 1,508 1,324
Total revenues 63,929 59,474
Costs and expenses:
Cost of sales:
Product and service 31,901 30,929
Engineering and licensing 4,364 1,899
Other operating expenses 1,725 1,628
General and administrative 4,906 4,282
Selling 5,995 6,096
Research and product development 7,748 8,433
Interest expense 108 216
Gain on foreign exchange (68) (150)
Amortization of excess of acquired
net assets over cost (161) (161)
Amortization of excess of cost
over acquired net assets 21 66
Total cost of sales and expenses 56,539 53,238
Income from operations 7,390 6,236
Gain on sale of marketable securities 997
Equity in net loss of unconsolidated affiliates (974) (265)
Impairment on investment (400)
Income before income taxes and minority
interest 7,013 5,971
Provision for income taxes 2,370 1,966
Minority interest in net income of
consolidated subsidiary 9 71
Net income $ 4,634 $ 3,934
Average common and common
equivalent shares outstanding 12,776 12,654
Earnings per common and common
equivalent share $0.36 $0.31
Dividends declared per share $0.05 $0.05
The accompanying notes are an integral part of these financial statements.
</TABLE>
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1997 1996
<S> <C> <C>
CASH FLOWS FORM OPERATING ACTIVITIES:
Net income $ 4,634 $ 3,934
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,265 1,507
Amortization of capitalized software 606 757
Amortization of excess of cost over
acquired net assets 21 66
Amortization of excess of acquired net
assets over cost (161) (161)
Minority interest in net gain of
consolidated subsidiaries 9 71
Compensation from stock grants 156 165
Gain on sale of equipment (1) (6)
Gain of sale of marketable securities (997)
Excess of equity in losses (income) of
unconsolidated affiliates 974 265
Impairment on investment 400
Changes in operating assets and liabilities
Decrease (increase) in assets:
Accounts and notes receivable 4,060 461
Inventories (4,308) (1,836)
Prepaid expenses and other current assets (603) (333)
Other assets (18) 68
Increase (decrease) in liabilities:
Accounts payable, trade 842 2,216
Accrued expenses and other current liabilities (3,415) 185
Accrued and deferred income taxes 236 1,291
Accrued dividends payable 630 625
TOTAL ADJUSTMENTS 696 5,341
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,330 9,275
</TABLE>
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,046) (1,194)
Capitalized software (386) (253)
Purchases of marketable securities (10,631) (2,463)
Maturities of marketable securities 5,555 1,000
Proceeds from sale of property, plant and equipment 1 7
Proceeds from sales of marketable securities 997
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (7,510) (2,903)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of overdraft facility (3,295)
Payments on debt and capital lease obligations (317) (302)
Issuance (cancellation) of common stock pursuant
to stock options and employee stock purchase plan (11) 90
Dividends declared to shareholders (630) (625)
NET CASH USED BY FINANCING ACTIVITIES (958) (4,132)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 752 (357)
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS (2,386) 1,883
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,954 18,040
CASH AND CASH EQUIVALENTS, END OF PERIOD $22,568 $19,923
The accompanying notes are an integral part of these financial statements.
</TABLE>
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, 1997 and
July 31, 1997, the results of its operations for the three months ended
October 31, 1997 and 1996 and statements of cash flows for the three
months then ended. The results of the operations for the three months
ended October 31, 1997 are not necessarily indicative of the results to
be expected for the fiscal year ending July 31, 1998.
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, 1997.
2. Financial statements, with the exception of the July 31, 1997 balance
sheet, are unaudited and have not been examined by independent certified
public accountants. The consolidated balance sheet as of July 31, 1997
contains data derived from audited financial statements.
3. The inventories as of October 31, 1997 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:
<TABLE>
<CAPTION>
October 31, July 31,
1997 1997
<S> <C> <C>
Raw materials $20,824,000 $19,166,000
Work-in-process 19,963,000 18,381,000
Finished goods 11,321,000 10,253,000
$52,108,000 $47,800,000
</TABLE>
4. Total interest expense, amounted to $146,000 of which $38,000 was
capitalized during the three months ended October 31, 1997. Interest
paid amounted to $108,000 and $216,000 during the three months ended
October 31, 1997 and 1996, respectively.
5. Income taxes paid during the three months ended October 31, 1997 and
1996 amounted to $1,425,000 and $702,000, respectively.
6. The Company declared a dividend of $.05 per common share on October 9,
1997, payable on November 6, 1997 to shareholders of record on October
23, 1997.
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 6.7 to 1 at October
31, 1997 compared to 6.2 to 1 at July 31, 1997. Cash, cash equivalents and
marketable securities, along with accounts and notes receivable, constitute
approximately 74% of current assets at October 31, 1997. 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 0.22 to 1 at October 31, 1997 compared to
0.24 to 1 at July 31, 1997.
Capital expenditures totaled approximately $3,046,000 during the three months
ended October 31, 1997.
RESULTS OF OPERATIONS
Three Months Fiscal 1998 (10/31/97) vs. Three Months Fiscal 1997 (10/31/96)
Product, service, engineering and licensing revenues for the three months
ended October 31, 1997 were $58,686,000 as compared to $54,746,000 for the
same period last year. The increase of $3,940,000 was due to an increase in
sales of Medical Technology Products of $2,490,000 (primarily due to sales of
the new Computed Tomography (CT) Scanner and Ultrasound systems for the
Company's Danish subsidiary, B&K), Signal Processing Technology Products of
$1,151,000 (primarily from the digital imaging DASM-Rx product family for
picture archiving and communications systems) and Industrial Technology
Products of $299,000. Other operating revenue of $3,735,000 and $3,404,000
represents revenue from the Hotel operation for the three months ending
October 31, 1997 and 1996, respectively.
The percentage of total cost of sales to total net sales for the three months
of fiscal 1998 and fiscal 1997 were 62% and 60%, respectively. The increase
was primarily due to the engineering portion of cost of sales reflecting
higher than anticipated costs on engineering projects. Operating costs
associated with the Hotel during the three months of fiscal 1998 and 1997
were $1,725,000 and $1,628,000, respectively.
General and administrative and selling expenses increased $523,000 primarily
due to increases in the bad debt reserve. Research and product development
expenses decreased $685,000 primarily due to lower amortization of
capitalized computer software costs and improved efficiencies within the
Company.
Computer software costs of $386,000 and $366,000 were capitalized in the
first three months of fiscal 1998 and 1997, respectively. Amortization of
capitalized software amounted to $605,000 and $776,000 in the first three
months of fiscal 1998 and 1997, respectively.
ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Fiscal 1998 (10/31/97) vs. Three Months Fiscal 1997 (10/31/96)
(continued)
The Company's share of losses of a privately held company amounted to
$538,000 and $265,000 during the first quarter of fiscal 1998 and 1997,
respectively.
During the first quarter of fiscal 1998, the Company's investment in Analogic
Scientific was decreased by $575,000, reflecting the Company's share of
Analogic Scientific's equity.
During the first quarter of fiscal 1998, the Company sold 140,560 common
shares of a publicly traded company, resulting in a gain of $997,000.
During the first quarter of fiscal 1998, the Company recorded a reserve of
$400,000, reflecting a partial impairment of its 19% investment in a
privately held company.
Net income for the three months ended October 31, 1997 was $4,634,000 or $.36
per share as compared with $3,934,000 or $.31 per share for the same period
last year.
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, 1997, the Company did not file any
reports on Form 8-K.
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 8, 1997 /s/ Bernard M. Gordon
Bernard M. Gordon
Chairman of the Board
Chief Executive Officer
Date December 8, 1997 /s/ John A. Tarello
John A. Tarello
Senior Vice President
Chief Accounting Officer
ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. Page No.
11 Calculation of Earnings per Share 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.
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1997 1996
<S> <C> <C>
PRIMARY:
Net Income $4,634,000 $3,934,000
Average shares outstanding 12,598,468 12,498,908
Add: Incremental shares to
reflect dilutive stock
options deemed common
stock equivalents.
(Computed by treasury
stock method.) 177,244 155,020
Common and common equivalent
shares outstanding 12,775,712 12,653,928
Earnings per share $.36 $.31
ASSUMING FULL DILUTION:
Net Income $4,634,000 $3,934,000
Average shares outstanding 12,598,468 12,498,908
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. 174,124 153,503
Average common shares
outstanding 12,772,592 12,652,411
Earnings per share $.36 $.31
</TABLE>
<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
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<EXCHANGE-RATE> 1
<CASH> 22,568
<SECURITIES> 94,483
<RECEIVABLES> 50,575
<ALLOWANCES> 1,997
<INVENTORY> 52,108
<CURRENT-ASSETS> 225,054
<PP&E> 140,142
<DEPRECIATION> 91,114
<TOTAL-ASSETS> 284,994
<CURRENT-LIABILITIES> 33,764
<BONDS> 0
0
0
<COMMON> 692
<OTHER-SE> 232,336
<TOTAL-LIABILITY-AND-EQUITY> 284,994
<SALES> 58,686
<TOTAL-REVENUES> 63,929
<CGS> 36,265
<TOTAL-COSTS> 37,990
<OTHER-EXPENSES> 18,441
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108
<INCOME-PRETAX> 7,013
<INCOME-TAX> 2,370
<INCOME-CONTINUING> 4,634
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,634
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
