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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
     
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the period ended April 30, 2005
 
or
 
o
   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
incorporation or organization)		   (I.R.S. Employer
Identification No.)
 
8 Centennial Drive
Peabody, Massachusetts
(Address of principal executive offices)		   01960
(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 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 May 31, 2005 was 13,725,022.
 
 

ANALOGIC CORPORATION
TABLE OF CONTENTS
           
    Page No.
     
       
       
   Unaudited Condensed Consolidated Balance Sheets as of April 30, 2005 and July 31, 2004     3  
   Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2005 and 2004     4  
   Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2005 and 2004     5  
   Notes to Unaudited Condensed Consolidated Financial Statements     6-17  
    18-32  
    32  
    32-34  
 
Part II. Other Information
        
    34  
    34  
    35  
    36  
 Ex-10.1 Secondary Sale of Common Share of Cedara Software Corp.
 Ex-31.1 Section 302 Certification of CEO
 Ex-31.2 Section 302 Certification of CFO
 Ex-32.1 Section 906 Certification of CEO
 Ex-32.2 Section 906 Certification of CFO

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Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ANALOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
                     
    April 30,   July 31,
    2005   2004
         
ASSETS
Current assets:
                
 
Cash and cash equivalents
   $ 215,449     $ 149,549  
 
Marketable securities, at fair value
     15,589       27,088  
 
Accounts and notes receivable, net of allowance for doubtful accounts of $2,569 at April 30, 2005 and $2,493 at July 31, 2004
     51,859       55,498  
 
Inventories
     69,068       65,952  
 
Costs related to deferred revenue
     13,905       12,723  
 
Refundable and deferred income taxes
     15,904       10,861  
 
Other current assets
     7,577       6,450  
             
   
Total current assets
     389,351       328,121  
             
Property, plant and equipment, net
     90,220       91,077  
Investments in and advances to affiliated companies
     1,448       10,967  
Capitalized software, net
     12,233       9,502  
Goodwill
     746       1,565  
Intangible assets, net
     5,568       9,223  
Costs related to deferred revenue
     219       219  
Other assets
     4,972       1,397  
             
   
Total Assets
   $ 504,757     $ 452,071  
             
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
                
 
Notes payable
   $ 42     $ 785  
 
Obligations under capital leases
     137       177  
 
Accounts payable, trade
     22,460       21,707  
 
Accrued liabilities
     22,034       21,380  
 
Deferred revenue
     28,985       26,281  
 
Advance payments
     15,831       6,125  
 
Accrued income taxes
     17,069       5,791  
             
   
Total current liabilities
     106,558       82,246  
             
Long-term liabilities:
                
 
Obligations under capital leases
     70       155  
 
Deferred revenue
     1,296       1,459  
 
Deferred income taxes
     1,487       810  
             
   
Total long-term liabilities
     2,853       2,424  
             
Commitments and guarantees (Note 14)
                
Stockholders’ equity:
                
 
Common stock, $.05 par value
     715       713  
 
Capital in excess of par value
     49,527       47,257  
 
Retained earnings
     345,312       324,025  
 
Accumulated other comprehensive income
     6,019       2,141  
 
Unearned compensation
     (6,227 )     (6,735 )
             
   
Total stockholders’ equity
     395,346       367,401  
             
   
Total Liabilities and Stockholders’ Equity
   $ 504,757     $ 452,071  
             
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ANALOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
                                     
    Three Months Ended   Nine Months Ended
    April 30,   April 30,
         
    2005   2004   2005   2004
                 
Net revenue:
                                
 
Product
   $ 87,230     $ 82,573     $ 242,517     $ 232,146  
 
Engineering
     5,221       4,733       13,630       15,329  
 
Other
     1,715       1,666       6,426       5,847  
                         
Total net revenue
     94,166       88,972       262,573       253,322  
                         
Cost of sales:
                                
 
Product
     53,111       50,046       147,744       138,554  
 
Engineering
     3,817       3,503       11,359       8,439  
 
Other
     1,256       1,156       3,974       3,505  
                         
Total cost of sales
     58,184       54,705       163,077       150,498  
                         
Gross margin
     35,982       34,267       99,496       102,824  
                         
Operating expenses:
                                
 
Research and product development
     15,219       14,084       44,428       43,869  
 
Selling and marketing
     9,365       9,552       28,093       27,371  
 
General and administrative
     11,034       10,333       31,689       28,887  
 
Asset impairment charges
     5,587       —       6,534       —  
                         
Total operating expenses
     41,205       33,969       110,744       100,127  
                         
Income (loss) from operations
     (5,223 )     298       (11,248 )     2,697  
                         
Other (income) expense:
                                
 
Interest income
     (1,484 )     (743 )     (3,369 )     (2,829 )
 
Interest expense
     5       61       26       253  
 
Equity gain in unconsolidated affiliates
     (966 )     (847 )     (727 )     (848 )
 
Gain on sale of marketable securities
     (43,829 )     —       (43,829 )     —  
 
Other
     313       322       (267 )     317  
                         
Total other (income) expense
     (45,961 )     (1,207 )     (48,166 )     (3,107 )
                         
Income before income taxes
     40,738       1,505       36,918       5,804  
Provision for income taxes
     12,618       365       12,343       1,354  
                         
Net income
   $ 28,120     $ 1,140     $ 24,575     $ 4,450  
                         
Net income per common share:
                                
   
Basic
   $ 2.07     $ 0.08     $ 1.81     $ 0.33  
   
Diluted
     2.07       0.08       1.81       0.33  
Weighted average shares outstanding:
                                
   
Basic
     13,573       13,492       13,546       13,428  
   
Diluted
     13,614       13,508       13,588       13,506  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ANALOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
                       
    Nine Months Ended
    April 30,
     
    2005   2004
         
OPERATING ACTIVITIES:
                
Net income
   $ 24,575     $ 4,450  
 
Adjustments to reconcile net income to net cash provided by operating activities:
                
     
Deferred income taxes
     (1,864 )     745  
     
Depreciation and amortization
     15,374       15,554  
     
Allowance for doubtful accounts
     294       2  
     
Asset impairment charges
     6,534       —  
     
Gain on sale of property, plant, and equipment
     (13 )     (26 )
     
Equity gain in unconsolidated affiliates
     (727 )     (848 )
     
Equity loss in unconsolidated affiliate classified as research and product development expense
     759       2,564  
     
Gain on sale of Cedara investment
     (43,829 )     —  
     
Non-cash compensation expense from stock grants
     1,532       1,147  
     
Net changes in operating assets and liabilities (Note 11)
     19,657       621  
             
NET CASH PROVIDED BY OPERATING ACTIVITIES
     22,292       24,209  
             
INVESTING ACTIVITIES:
                
   
Investments in and advances to affiliated companies
     (2,260 )     (19 )
   
Acquisition of businesses, net of cash acquired
     —       (141 )
   
Acquisition of assets
     —       (1,750 )
   
Proceeds from the sale of Cedara investment
     50,752       —  
   
Additions to property, plant and equipment
     (8,598 )     (17,948 )
   
Capitalized software
     (4,202 )     (2,851 )
   
Proceeds from sale of property, plant and equipment
     90       171  
   
Maturities of marketable securities
     11,060       8,775  
             
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
     46,842       (13,763 )
             
FINANCING ACTIVITIES:
                
   
Payments on debt and capital lease obligations
     (743 )     (5,100 )
   
Issuances of stock pursuant to exercise of stock options and employee stock purchase plan
     1,159       3,111  
   
Dividends paid to shareholders
     (3,288 )     (3,250 )
             
NET CASH USED FOR FINANCING ACTIVITIES
     (2,872 )     (5,239 )
             
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
     (362 )     291  
             
NET INCREASE IN CASH AND CASH EQUIVALENTS
     65,900       5,498  
             
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     149,549       136,806  
             
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 215,449     $ 142,304  
             
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
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 (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America 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 statement of the results for all periods presented. The results of the operations for the three and nine months ended April 30, 2005, are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 2005, or any other interim period.
      These statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended July 31, 2004, included in the Company’s Annual Report on Form 10-K as filed with the SEC on February 1, 2005.
      The financial statements have not been audited by an independent registered certified public accounting firm. The condensed consolidated balance sheet as of July 31, 2004, 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.
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 applies the accounting provisions of the Accounting Principle Board (“APB”) No. 25 “Accounting for Stock Issued to Employees,” and related interpretations, with regard to the measurement of compensation cost for options granted under the Company’s equity compensation plans.
      If the Company had adopted the fair value method described in SFAS 123, using the Black-Scholes option-pricing model the Company would have reported the following results of operations:
                                   
    Three Months Ended   Nine Months Ended
    April 30,   April 30,
         
    2005   2004   2005   2004
                 
Net income, as reported
   $ 28,120     $ 1,140     $ 24,575     $ 4,450  
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects
     237       207       871       693  
Deduct: Stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects
     (861 )     (799 )     (2,962 )     (2,696 )
                         
Pro forma net income
   $ 27,496     $ 548     $ 22,484     $ 2,447  
                         
Earnings per share:
                                
 
Basic — as reported
   $ 2.07     $ 0.08     $ 1.81     $ 0.33  
 
Basic — pro forma
     2.03       0.04       1.66       0.18  
 
Diluted — as reported
     2.07       0.08       1.81       0.33  
 
Diluted — pro forma
     2.02       0.04       1.65       0.18  

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ANALOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — (Continued)
3. Balance sheet information:
      Additional information for certain balance sheet accounts is as follows for the periods indicated:
                   
    April 30,   July 31,
    2005   2004
         
Inventories:
                
 
Raw materials
   $ 40,375     $ 36,246  
 
Work-in-process
     15,022       12,400  
 
Finished goods
     13,671       17,306  
             
    $ 69,068     $ 65,952  
             
Accrued liabilities:
                
 
Accrued employee compensation and benefits
   $ 12,573     $ 11,247  
 
Accrued warranty
     5,110       5,039  
 
Other
     4,351       5,094  
             
    $ 22,034     $ 21,380