UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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 period ended January 31, 2004 | ||
| 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 | ||
Commission file number 0-6715
Analogic Corporation
| Massachusetts | 04-2454372 | |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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8 Centennial Drive, Peabody, Massachusetts (Address of principal executive offices) |
01960 (Zip Code) |
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(978) 977-3000
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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
The number of shares of Common Stock outstanding at February 27, 2004 was 13,599,572.
ANALOGIC CORPORATION
TABLE OF CONTENTS
1
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ANALOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| January 31, | July 31, | |||||||||
| 2004 | 2003 | |||||||||
| ASSETS | ||||||||||
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Current assets:
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Cash and cash equivalents
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$ | 130,132 | $ | 136,806 | ||||||
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Marketable securities, at market
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34,220 | 41,155 | ||||||||
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Accounts and notes receivable, net of allowance
for doubtful accounts of $2,711 at January 31, 2004 and
$4,189 at July 31, 2003
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56,474 | 53,875 | ||||||||
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Inventories
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70,871 | 69,548 | ||||||||
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Costs related to deferred revenue
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12,780 | 14,796 | ||||||||
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Refundable and deferred income taxes
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10,230 | 13,058 | ||||||||
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Other current assets
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8,245 | 6,069 | ||||||||
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Total current assets
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322,952 | 335,307 | ||||||||
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Property, plant and equipment, net
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92,207 | 83,926 | ||||||||
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Investments in and advances to affiliated
companies
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12,029 | 14,050 | ||||||||
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Capitalized software, net
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7,315 | 6,339 | ||||||||
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Goodwill
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2,306 | 2,306 | ||||||||
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Intangible assets, net
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12,012 | 11,708 | ||||||||
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Costs related to deferred revenue
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206 | 206 | ||||||||
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Other assets
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1,881 | 2,533 | ||||||||
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Total Assets
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$ | 450,908 | $ | 456,375 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
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Current liabilities:
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Mortgage and other notes payable
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$ | 1,017 | $ | 1,277 | ||||||
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Obligations under capital leases
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162 | 180 | ||||||||
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Accounts payable, trade
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17,426 | 21,162 | ||||||||
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Accrued liabilities
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19,581 | 24,412 | ||||||||
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Deferred revenue
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23,733 | 30,084 | ||||||||
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Advance payments and other
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8,382 | 5,798 | ||||||||
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Accrued income taxes
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6,006 | 5,867 | ||||||||
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Total current liabilities
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76,307 | 88,780 | ||||||||
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Long-term liabilities:
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Mortgage and other notes payable
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3,718 | 3,837 | ||||||||
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Obligations under capital leases
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249 | 327 | ||||||||
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Deferred revenue
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1,522 | 1,743 | ||||||||
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Deferred income taxes
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4,248 | 5,175 | ||||||||
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Total long-term liabilities
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9,737 | 11,082 | ||||||||
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Commitments and guarantees (Note 13)
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Stockholders’ equity:
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Common stock, $.05 par value
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710 | 710 | ||||||||
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Capital in excess of par value
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48,456 | 47,229 | ||||||||
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Retained earnings
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323,656 | 320,328 | ||||||||
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Accumulated other comprehensive income
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3,302 | 709 | ||||||||
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Treasury stock, at cost
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(6,380 | ) | (6,777 | ) | ||||||
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Unearned compensation
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(4,880 | ) | (5,686 | ) | ||||||
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Total stockholders’ equity
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364,864 | 356,513 | ||||||||
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Total Liabilities and Stockholders’ Equity
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$ | 450,908 | $ | 456,375 | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
ANALOGIC CORPORATION
| Three Months Ended | Six Months Ended | |||||||||||||||||
| January 31, | January 31, | |||||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||||
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Net revenue:
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Product
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$ | 90,017 | $ | 149,980 | $ | 153,929 | $ | 273,208 | ||||||||||
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Engineering
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3,500 | 5,475 | 12,121 | 11,855 | ||||||||||||||
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Other
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1,745 | 1,690 | 4,181 | 4,366 | ||||||||||||||
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Total net revenue
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95,262 | 157,145 | 170,231 | 289,429 | ||||||||||||||
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Cost of sales:
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Product
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51,642 | 88,051 | 90,950 | 155,684 | ||||||||||||||
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Engineering
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2,132 | 3,507 | 4,936 | 8,403 | ||||||||||||||
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Other
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1,140 | 1,125 | 2,349 | 2,366 | ||||||||||||||
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Total cost of sales
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54,914 | 92,683 | 98,235 | 166,453 | ||||||||||||||
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Gross margin
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40,348 | 64,462 | 71,996 | 122,976 | ||||||||||||||
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Operating expenses:
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Research and product development
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14,482 | 14,571 | 29,785 | 25,948 | ||||||||||||||
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Selling and marketing
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9,955 | 8,456 | 18,038 | 16,390 | ||||||||||||||
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General and administrative
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10,081 | 8,595 | 18,554 | 16,428 | ||||||||||||||
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Total operating expenses
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34,518 | 31,622 | 66,377 | 58,766 | ||||||||||||||
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Income from operations
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5,830 | 32,840 | 5,619 | 64,210 | ||||||||||||||
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Other (income) expense:
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Interest income
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(962 | ) | (1,221 | ) | (2,086 | ) | (2,509 | ) | ||||||||||
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Interest expense
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119 | 82 | 192 | 151 | ||||||||||||||
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Equity in unconsolidated affiliates
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(158 | ) | 855 | (1 | ) | 2,093 | ||||||||||||
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Other
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101 | (1,301 | ) | (5 | ) | (1,644 | ) | |||||||||||
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Total other (income) expense
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(900 | ) | (1,585 | ) | (1,900 | ) | (1,909 | ) | ||||||||||
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Income before income taxes
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6,730 | 34,425 | 7,519 | 66,119 | ||||||||||||||
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Provision for income taxes
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1,872 | 13,111 | 2,030 | 25,155 | ||||||||||||||
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Net income
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$ | 4,858 | $ | 21,314 | $ | 5,489 | $ | 40,964 | ||||||||||
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Net income per common share:
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Basic
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$ | 0.36 | $ | 1.61 | $ | 0.41 | $ | 3.10 | ||||||||||
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Diluted
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0.36 | 1.59 | 0.41 | 3.07 | ||||||||||||||
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Weighted average shares outstanding:
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Basic
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13,412 | 13,215 | 13,397 | 13,194 | ||||||||||||||
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Diluted
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13,464 | 13,412 | 13,505 | 13,332 | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
ANALOGIC CORPORATION
| Six Months Ended | |||||||||||
| January 31, | |||||||||||
| 2004 | 2003 | ||||||||||
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OPERATING ACTIVITIES:
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Net income
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$ | 5,489 | $ | 40,964 | |||||||
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Adjustments to reconcile net income to net cash
provided (used) by operating activities:
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Deferred income taxes
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1,184 | 2,639 | |||||||||
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Depreciation and amortization
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10,508 | 9,332 | |||||||||
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Allowance for doubtful accounts
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2 | 988 | |||||||||
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Loss (gain) on sale of property, plant, and
equipment
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(46 | ) | 8 | ||||||||
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Equity loss in unconsolidated affiliates
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(1 | ) | 2,093 | ||||||||
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Equity (gain) loss in unconsolidated affiliate
classified as research and product development expense
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2,040 | — | |||||||||
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Non-cash compensation expense from stock grants
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806 | 577 | |||||||||
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Net changes in operating assets and liabilities
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(13,695 | ) | (30,748 | ) | |||||||
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NET CASH PROVIDED BY OPERATING ACTIVITIES:
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6,287 | 25,853 | |||||||||
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INVESTING ACTIVITIES:
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Investments in and advances to affiliated
companies
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(19 | ) | — | ||||||||
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Return of investment from affiliated company
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— | 516 | |||||||||
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Acquisition of businesses, net of cash acquired
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(141 | ) | (2,851 | ) | |||||||
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Acquisition of assets
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(1,750 | ) | (10,149 | ) | |||||||
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Additions to property, plant and equipment
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(14,483 | ) | (9,191 | ) | |||||||
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Capitalized software
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(1,653 | ) | (1,071 | ) | |||||||
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Proceeds from sale of property, plant and
equipment
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156 | 94 | |||||||||
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Maturities of marketable securities
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6,485 | 10,225 | |||||||||
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NET CASH USED FOR INVESTING ACTIVITIES
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(11,405 | ) | (12,427 | ) | |||||||
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FINANCING ACTIVITIES:
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Payments on debt and capital lease obligations
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(1,159 | ) | (234 | ) | |||||||
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Issuances of stock pursuant to exercise of stock
options and employee stock purchase plan
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1,445 | 2,451 | |||||||||
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Dividends paid to shareholders
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(2,161 | ) | (2,126 | ) | |||||||
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NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES
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(1,875 | ) | 91 | ||||||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
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319 | (1,555 | ) | ||||||||
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
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(6,674 | ) | 11,962 | ||||||||
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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136,806 | 123,168 | |||||||||
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CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 130,132 | $ | 135,130 | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation:
The unaudited condensed 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 generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the results for all periods presented. The results of the operations for the three and six months ended January 31, 2004, are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 2004, or any other interim period.
These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended July 31, 2003, included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on October 29, 2003.
The financial statements have not been audited by independent certified public accountants. The condensed consolidated balance sheet as of July 31, 2003, contains data derived from audited financial statements.
Certain financial statement items in the prior fiscal year have been reclassified to conform to the current year’s financial presentation format. The Company reclassified $2,183 of intangibles and $1,290 of goodwill related to the Company’s 17.6% ownership of Cedara Software Corporation (“Cedara”) to investment in and advances to affiliated companies in the Condensed Consolidated Balance Sheets as of July 31, 2003.
The Company also reclassified amortization of intangible assets of $252 and $504 related to Cedara from general and administrative expense to equity in unconsolidated affiliates in the Condensed Consolidated Statements of Operations for the three and six months period ended January 31, 2004, respectively.
2. Stock-based compensation:
As permitted by Statement of Financial Accounting Standards No. 148 (“SFAS 148”), “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB statement No. 123,” and Statement of Financial Accounting Standards No. 123 (“SFAS 123”) “Accounting for Stock-Based Compensation,” the Company continues to apply the accounting provisions of the Accounting Principle Board (“APB”) No. 25, and related interpretations, with regard to the measurement of compensation cost for options granted under the Company’s equity compensation plans.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
If the Company had adopted the fair value method described in SFAS 123, the results of operations would have been reported as follows: