<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, 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)
(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, 1997 was
12,543,083<PAGE>
<PAGE>2
ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX
Page
No.
Part I Financial Information
Consolidated Condensed Balance Sheets
January 31, 1997 and July 31, 1996 3
Consolidated Condensed Statements of Income
Three and Six Months Ended January 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows
Six Months Ended January 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 - 9
Part II Other Information 10 - 11
Index to Exhibits 12
Exhibit 11 - Calculation of Earnings per Share 13
<PAGE>
<PAGE>3
PART I FINANCIAL INFORMATION
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000 omitted)
January 31, July 31,*
1997 1996
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 21,664 $ 18,040
Marketable securities, at market 83,579 82,509
Accounts and notes receivable, net 42,211 46,815
Inventories 51,860 50,232
Prepaid expenses and other current assets 4,444 4,416
Total current assets 203,758 202,012
Property, plant and equipment, net 47,705 47,756
Investments in and advances to affiliated companies 7,526 8,129
Excess of cost over acquired net assets,
net of accumulated amortization 243 375
Other assets, including unamortized software
costs ($5,144 and $6,073) 5,807 6,890
$265,039 $265,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Mortgage and other notes payable $ 342 $ 3,644
Obligations under capital leases 468 442
Accounts payable, trade 10,307 11,438
Accrued employee compensation and benefits 8,669 9,822
Accrued expenses 6,452 6,153
Accrued income taxes 1,279 1,998
Accrued dividends payable 627
Total current liabilities 28,144 33,497
Long-term debt:
Mortgage and other notes payable 6,431 6,677
Obligations under capital leases 2,537 2,778
Deferred income taxes 4,856 4,832
Minority interest in subsidiaries 4,368 4,268
Excess of acquired net assets over cost, net
of accumulated amortization 988 1,310
Stockholders' equity:
Common stock, $.05 par 690 688
Capital in excess of par value 22,167 21,413
Retained earnings 210,021 202,761
Unrealized holding gains and losses 1,234 2,092
Cumulative translation adjustments 175 1,539
Treasury stock, at cost (14,419) (14,550)
Unearned compensation (2,153) (2,143)
217,715 211,800
$265,039 $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.
<PAGE>
<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,
1997 1996 1997 1996
Revenues:
Product and service, net $54,262 $49,408 $106,646 $88,897
Engineering and licensing 3,843 587 6,205 1,987
Other operating revenue 2,241 1,858 5,645 5,085
Interest and dividend income 1,385 1,293 2,708 3,656
Total revenues 61,731 53,146 121,204 99,625
Costs and expenses:
Cost of sales:
Product and service 30,950 30,386 61,879 55,314
Engineering and licensing 2,586 782 4,485 2,121
Other operating expenses 1,369 1,182 2,997 2,720
General and administrative 4,475 4,671 8,757 8,955
Selling 6,461 6,900 12,558 13,785
Research and product development 9,173 6,768 17,606 13,671
Interest expense 132 201 347 385
Gain on foreign exchange (187) (435) (338) (496)
Amortization of excess of acquired
net assets over cost (161) (133) (322) (266)
Amortization of excess of cost
over acquired net assets 66 79 132 158
Total cost of sales and expenses 54,864 50,402 108,101 96,347
Income from operations 6,867 2,744 13,103 3,278
Equity in net loss of unconsolidated
affiliate 338 603
Income before income taxes
and minority interest 6,529 2,744 12,500 3,278
Provision for income taxes 1,921 620 3,887 337
Minority interest in net income (loss)
of consolidated subsidiaries 29 124 100 (418)
Net income $ 4,579 $ 2,000 $ 8,513 $ 3,359
Average common and common
equivalent shares outstanding 12,687 12,529 12,671 12,534
Earnings per common and common
equivalent share $0.36 $0.16 $0.67 $0.27
Dividends declared per share $0.05 $0.04 $0.10 $0.08
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>5
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(000 omitted)
Six Months Ended
January 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1997 1996
Net income $ 8,513 $ 3,359
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,037 3,018
Amortization of capitalized software 1,558 871
Amortization of excess of cost over
net acquired assets 132 158
Amortization of excess of acquired net
assets over cost (322) (266)
Minority interest in net gain (loss) of
consolidated subsidiaries 100 (418)
Compensation from stock grants 301 369
Gain on sale of equipment (45) (4)
Equity in loss of an unconsolidated affiliate 603
Changes in operating assets and liabilities
Decrease (increase) in assets:
Accounts and notes receivable 4,604 4,067
Inventories (1,628) (5,918)
Prepaid expenses and other current assets (29) 352
Other assets 154 (521)
Increase (decrease) in liabilities:
Accounts payable, trade (1,131) (1,973)
Accrued expenses and other current
liabilities ( 854) (2,833)
Accrued and deferred income taxes ( 694) (1,090)
TOTAL ADJUSTMENTS 5,786 (4,188)
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 14,299 (829)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (2,988) (3,086)
Capitalized software ( 629) (1,003)
Purchases of marketable securities (8,005) (12,750)
Maturities of marketable securities 6,077 22,770
Proceeds from sale of property, plant
and equipment 47 4
Investments in and advances to affiliated
companies (500)
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (5,498) 5,435
<PAGE>
<PAGE>6
ANALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(UNAUDITED)
(000 omitted)
Six Months Ended
January 31,
CASH FLOWS FROM FINANCING ACTIVITIES: 1997 1996
Repayment of overdraft facility (3,225)
Payments on debt and capital lease obligations (538) 1,067
Purchase of common stock for treasury (111)
Purchase of common stock of majority
owned subsidiary (138)
Issuance of common stock pursuant to stock options
and employee stock purchase plan 575 436
Dividends paid (625) (994)
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (3,813) 260
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,364) (1,483)
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,624 3,383
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,040 12,404
CASH AND CASH EQUIVALENTS, END OF PERIOD $21,664 $15,787
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>7
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, 1997 and July 31, 1996, the results of its operations
for the three and six months ended January 31, 1997 and 1996 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, 1997 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 January 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:
January 31, July 31,
1997 1996
Raw materials $19,797,000 $19,363,000
Work-in-process 19,418,000 17,830,000
Finished goods 12,645,000 13,039,000
$51,860,000 $50,232,000
4. Mortgage and other notes payable decreased $3,302,000 as a result of
the Company's Danish subsidiary reducing its uncollateralized bank
overdraft facility.
5. Total interest expense, amounted to $429,000 of which $82,000 was
capitalized during the six months ended January 31, 1997. Interest
paid amounted to $409,000 and $430,000 during the six months ended
January 31, 1997 and 1996, respectively.
6. Income taxes paid during the six months ended January 31, 1997 and
1996 amounted to $4,616,000 and $965,000, respectively.
7. 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. On January 24, 1997, the Company declared a $.05
dividend per common share, payable on February 21, 1997 to
shareholders of record on February 7, 1997.
<PAGE>
<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 7.2 to 1 at
January 31, 1997 compared to 6.0 to 1 at July 31, 1996. Cash, cash
equivalents and marketable securities, along with accounts and notes
receivable, constitute approximately 72% of current assets at January 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 January 31, 1997 and 0.25 to 1 at July 31, 1996.
Capital expenditures totaled approximately $2,988,000 during the six
months ended January 31, 1997.
RESULTS OF OPERATIONS
Six Months Fiscal 1997 (01/31/97) vs. Six Months Fiscal 1996 (01/31/96)
Product, service, engineering and licensing revenues for the six months
ended January 31, 1997 were $112,851,000 as compared to $90,884,000 for
the same period last year, an increase of 24%. The increase of
$21,967,000 was due to increased sales of Medical Technology Products of
$18,744,000, (primarily due to sales of the Company's new CT Scanner),
and Signal Processing Technology Products of $4,119,000 offset by
decreased sales of Industrial Technology Products of $896,000. Other
operating revenue of $5,645,000 and $5,085,000 represents revenue from
the Hotel operation for the six months ending January 31, 1997 and 1996,
respectively.
Interest and dividend income decreased from $3,656,000 to $2,708,000
primarily due to a distribution in the first six months of fiscal 1996
from a limited partnership in which the Company has invested. During the
first six months of fiscal 1997 there was no distribution received from
the limited partnership.
The percentage of total cost of sales to total net sales for the six
months of fiscal 1997 and 1996 were 59% and 63%, respectively. The
decrease was primarily due to a 24% 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 six
months of fiscal 1997 and 1996 were $2,997,000 and $2,720,000,
respectively.
General and administrative and selling expenses decreased by $1,425,000,
primarily due to a cost reduction program in the Company's Danish
subsidiary. Research and product development expenses increased
$3,935,000 primarily due to the expanding engineering effort applicable
to developing complex medical imaging systems and increased amortization
of capitalized computer software costs.
<PAGE>
<PAGE>9
ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Six Months Fiscal 1997 (01/31/97) vs. Six Months Fiscal 1996 (01/31/96)
(continued)
Computer software costs of $629,000 and $1,003,000 were capitalized in
the six months of fiscal 1997 and 1996, respectively. Amortization of
capitalized software amounted to $1,558,000 and $871,000 in the first six
months of fiscal 1997 and 1996, respectively.
A gain on foreign exchange of $338,000 was realized during the first six
months of fiscal 1997 versus a gain of $496,000 for the same period last
year.
Minority interest in the net income of the Company's consolidated
subsidiary, Camtronics, for the six months ended January 31, 1997
amounted to $100,000 compared to minority interest in the net loss of
Camtronics of $88,000 for the six months ended January 31, 1996.
Minority interest in the net loss of the Company's consolidated
subsidiary, B&K, for the six months ended January 31, 1996 amounted to
$330,000. 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 $603,000 during the first six months of fiscal 1997.
The effective tax rate for the six months of fiscal 1997 was 31% which
reflects the benefit of tax exempt interest and utilization of
alternative minimum tax credit carryforwards. The effective tax rate for
the six months ended January 31, 1996 of 10% reflects the benefit at the
statutory rate on the loss of the Company's subsidiary in Denmark.
Net income for the six months ended January 31, 1997 was $8,513,000 or
$.67 per share as compared with $3,359,000 or $.27 per share for the same
period last year. As noted above the increase was caused primarily by
higher sales volume and gross margin.
<PAGE>
<PAGE>10
ANALOGIC CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Second Quarter Fiscal 1997 (01/31/97) vs. Second Quarter Fiscal 1996
(01/31/96)
Product, service, engineering and licensing revenues for the three months
ended January 31, 1997 were $58,105,000 as compared to $49,995,000 for the
same period last year, an increase of 16%. The increase of $8,110,000 was
due to increased sales of Medical Technology Products of $6,211,000,
(primarily due to sales of the Company's new CT Scanner), and Signal
Processing Technology Products of $2,921,000 offset by decreased sales in
Industrial Technology Products of $1,022,000. Other operating revenue of
$2,241,000 and $1,858,000 represents revenue from the Hotel operation for
the three months ending January 31, 1997 and 1996, respectively.
The percentage of total cost of sales to total net sales for the second
quarter of fiscal 1997 and fiscal 1996 were 58% and 62%, respectively. The
decrease was primarily due to a 16% 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 second quarter of
fiscal 1997 and 1996 were $1,369,000 and $1,182,000, respectively.
General and administrative and selling expenses decreased $635,000 primarily
due to a cost reduction program in the Company's Danish subsidiary.
Research and product development expenses increased $2,405,000 primarily due
to the expanding engineering effort applicable to developing complex medical
imaging systems and increased amortization of capitalized computer software
costs.
Computer software costs of $263,000 and $477,000 were capitalized in the
second quarter of fiscal 1997 and 1996, respectively. Amortization of
capitalized software amounted to $782,000 and $422,000 in the second quarter
of fiscal 1997 and 1996, respectively.
A gain on foreign exchange of $187,000 was realized during the second
quarter of fiscal 1997 vs. a gain of $435,000 for the same period last year.
Minority interest in the net income of the Company's consolidated
subsidiary, Camtronics, for the second quarter ended January 31, 1997
amounted to $29,000 compared to minority interest in the net loss of
Camtronics of $54,000 for the second quarter ended January 31, 1996.
Minority interest in the net income of the Company's consolidated
subsidiary, B&K, for the second quarter of fiscal 1996 was $178,000. 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 $338,000 during the second quarter of fiscal 1997.
The effective tax rate for the second quarter of fiscal 1997 was 29% vs. 23%
for the same period last year. The change in the rate was due to the
reduction in the utilization of the available tax credits.
Net income for the three months ended January 31, 1997 was $4,579,000 or
$.36 per share as compared with $2,000,000 or $.16 per share for the same
period last year. As noted above the increase was caused primarily by higher
sales volume and gross margin.<PAGE>
<PAGE>11
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, 1997, the Company did not file any
reports on Form 8-K.
<PAGE>
<PAGE>12
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 3, 1997 /s/ Bernard M. Gordon
Bernard M. Gordon
Chairman of the Board
Chief Executive Officer
Date March 3, 1997 /s/ John A. Tarello
John A. Tarello
Senior Vice President
Chief Accounting Officer
<PAGE>
<PAGE>13
ANALOGIC CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. Page No.
11 Calculation of Earnings per Share 13
<PAGE>
<PAGE>14
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,
1997 1996 1997 1996
PRIMARY:
Net Income $4,579,000 $2,000,000 $8,513,000 $3,359,000
Average shares
outstanding 12,511,396 12,438,975 12,505,152 12,432,189
Add: Incremental shares to
reflect dilutive stock
options deemed common
stock equivalents.
(Computed by treasury
stock method.) 175,825 89,729 165,423 102,282
Common and common equivalent
shares outstanding 12,687,221 12,528,704 12,670,575 12,534,471
Earnings per share $.36 $.16 $.67 $.27
ASSUMING FULL DILUTION:
Net Income $4,579,000 $2,000,000 $8,513,000 $3,359,000
Average shares outstanding 12,511,396 12,438,975 12,505,152 12,432,189
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. 194,900 73,328 174,202 94,173
Average common shares
outstanding 12,706,296 12,512,303 12,679,354 12,526,362
Earnings per share $.36 $.16 $.67 $.27
<PAGE>
<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> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 21664
<SECURITIES> 83579
<RECEIVABLES> 43896
<ALLOWANCES> 1685
<INVENTORY> 51860
<CURRENT-ASSETS> 203758
<PP&E> 134683
<DEPRECIATION> 86978
<TOTAL-ASSETS> 265039
<CURRENT-LIABILITIES> 28144
<BONDS> 0
0
0
<COMMON> 690
<OTHER-SE> 217025
<TOTAL-LIABILITY-AND-EQUITY> 265039
<SALES> 112851
<TOTAL-REVENUES> 121204
<CGS> 66364
<TOTAL-COSTS> 69361
<OTHER-EXPENSES> 38393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 12500
<INCOME-TAX> 3887
<INCOME-CONTINUING> 8513
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8513
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
</TABLE>
