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adobe pdf icon Analogic Announces Financial Results for the Third Quarter Ended April 30, 2012 and Declares Quarterly Cash Dividend

PEABODY, Mass., June 6, 2012 (GLOBE NEWSWIRE) — Analogic Corporation (Nasdaq:ALOG), enabling the world’s medical imaging and aviation security technology, today announced results for its third quarter ended April 30, 2012.

Highlights during the third quarter (comparisons are against Q3 of fiscal 2011) included:

  • Revenue of $121.3 million, up 3%

  • GAAP operating margin up 3 points to 8%

  • Non-GAAP operating margin up 3 points to 11%

  • GAAP diluted EPS of $0.59, up 69%

  • Non-GAAP diluted EPS of $0.76, up 41%

  • Positive operating cash flow of $21.1 million

Revenue for the third quarter of fiscal 2012 was $121.3 million, an increase of 3% compared with revenue of $117.2 million in the third quarter of fiscal 2011. GAAP net income for the third quarter of fiscal 2012 was $7.3 million, or $0.59 per diluted share, compared with net income of $4.3 million, or $0.35 per diluted share, in the third quarter of fiscal 2011.

Non-GAAP net income for the third quarter was $9.4 million, or $0.76 per diluted share, compared with $6.7 million, or $0.54 per diluted share, from the third quarter of fiscal 2011. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

For the first nine months of fiscal 2012, revenues totaled $365.6 million, up 8% from the same period in the prior year. Year-to-date GAAP net income was $31.0 million, or $2.45 per diluted share, up 154% and 153% respectively, from the same period of fiscal 2011. Year-to-date non-GAAP net income was $28.7 million, or $2.27 per diluted share, both up 49% from the same period of fiscal 2011.     

Jim Green, president and CEO, commented, “New product introductions and our ongoing focus on cost control drove continued double-digit non-GAAP operating margins and non-GAAP EPS growth of 41% in our third fiscal quarter. Revenue growth in our higher margin Security and Ultrasound product lines more than offset Medical Imaging, which was challenged by changes in customer ordering patterns and by European economic head winds. We remain confident in our ability to achieve our previously stated financial goals for fiscal 2012.”

Jim Green added, “We were also pleased to see Forbes magazine name Analogic one of America’s Most Trustworthy Companies. This is an honor for our Company and we are very proud of this achievement.”

Segment Revenue

Revenue from our Medical Imaging segment was $72.8 million for the third quarter of fiscal 2012, down 2% from revenue of $74.6 million in the same period of fiscal 2011. Year-to-date, Medical Imaging revenue was $220.7 million, up 4% from the prior year. Medical Imaging revenue was down slightly during the quarter due in part to changes in ordering patterns in CT (computed tomography), offset by continued growth in our MRI (magnetic resonance imaging) and digital mammography sales.

Our Ultrasound segment revenue was $33.9 million for the third quarter of fiscal 2012, up 5% from revenue of $32.4 million in the same period of fiscal 2011. Year-to-date, Ultrasound revenue was $109.6 million, up 16% from the prior year. The increase in Ultrasound revenue for the quarter was driven by a double-digit increase in sales in North America, offset by lower sales in Europe and an unfavorable foreign currency impact.

Security Technology segment revenue was $14.6 million for the third quarter of fiscal 2012, up 43% from revenue of $10.2 million in the same period of fiscal 2011. Year-to-date, Security revenue was $35.3 million, up 11% from the prior year. Product revenue grew 39% during the third quarter driven by increased demand for checked-baggage screening systems in North America.                                                                                                                                      

Quarterly Cash Dividend

Analogic’s Board of Directors, on June 4, 2012, declared a $0.10 cash dividend for each common share for its third fiscal quarter ended April 30, 2012. The cash dividend will be paid on July 2, 2012, to shareholders of record on June 20, 2012.

Use of Non-GAAP Financial Measures

This document includes non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measure to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. An explanation and a reconciliation of our non-GAAP measures are provided at the end of this press release.

Forward-Looking Statements

Any statements about future expectations, plans, and prospects for the Company, including statements containing the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including risks relating to product development and commercialization, limited demand for the Company’s products, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, and other factors discussed in our most recent quarterly report filed with the Securities and Exchange Commission. In addition, the
forward-looking statements included in this presentation represent the Company’s views as of the date of this document. While the Company anticipates that subsequent events and developments will cause the Company’s views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s views as of any later date.

Conference Call

Analogic will conduct an investor conference call on Wednesday, June 6, at 5:00 p.m. (ET) to discuss the third quarter results. To participate in the conference call, dial 1-866-823-6992, or 1-334-323-7225 for international callers, approximately ten minutes before the conference is scheduled to begin. Inform the operator that you wish to join the Analogic conference, passcode 42748. You will then be asked for your name, organization, and telephone number, and be connected to the conference. The earnings release and, just prior to the call, presentation materials related to the quarterly financial information will be posted on the Company’s website at http://investor.analogic.com/.

The call will also be available via webcast in listen-only mode. To listen to the webcast, visit investor.analogic.com approximately five to ten minutes before the conference is scheduled to begin. A telephone digital replay will be available approximately two hours after the call is completed through midnight (ET) July 6, 2012. To access the digital replay, dial 1-877-919-4059 or 1-334-323-7226 for international callers. The passcode is 66806231.

A replay of the conference call webcast will be archived on the Company’s website at www.analogic.com approximately three hours after the call is completed and will be available through midnight (ET) July 6, 2012.

For more information on the conference call, visit www.analogic.com, call 978-326-4058, or email investorrelations@analogic.com

About Analogic

Analogic (Nasdaq:ALOG) provides leading-edge healthcare and security technology solutions to advance the practice of medicine and save lives. We are recognized around the world for advanced imaging systems and technology that enable computed tomography (CT), ultrasound, digital mammography, and magnetic resonance imaging (MRI), as well as automated threat detection for aviation security. Our CT, MRI, digital mammography, and ultrasound transducer products are sold to original equipment manufacturers (OEMs), providing state-of-the-art capability and enabling them to enter new markets and expand their existing market presence. Our market-leading BK Medical branded ultrasound systems, used in procedure-driven markets such as urology, surgery, and anesthesia, are sold to clinical end users through our direct sales force. For over 40 years we’ve enabled customers to thrive, improving the
health and enhancing the safety of people around the world. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com.

Analogic is a registered trademark of Analogic Corporation.

The globe logo is a trademark of Analogic Corporation.

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

 

 

 

 

 

 

 

 

 

(In thousands, except per share data)

Three months Ended Nine Months Ended

 

April 30, 2012 April 30, 2011 April 30, 2012 April 30, 2011

Net revenue:

 

 

 

 

Product

 $115,094

 $113,791

 $351,290

 $321,795

Engineering

 6,176

 3,380

 14,270

 16,451

Total net revenue

 121,270

 117,171

 365,560

 338,246

Cost of sales:

 

 

 

 

Product

 71,613

 69,714

 218,549

 199,366

Engineering

 4,905

 3,297

 12,388

 14,892

Total cost of sales

 76,518

 73,011

 230,937

 214,258

 

 

 

 

 

Gross profit

 44,752

 44,160

 134,623

 123,988

Operating expenses:

 

 

 

 

Research and product development

 13,106

 17,291

 42,313

 45,964

Selling and marketing

 10,925

 10,280

 31,995

 30,604

General and administrative

 10,848

 10,892

 37,067

 29,959

Restructuring

 – 

 – 

 – 

 3,428

Total operating expenses

 34,879

 38,463

 111,375

 109,955

Income from operations

 9,873

 5,697

 23,248

 14,033

Other income (expense):

 

 

 

 

Interest income, net

 98

 137

 367

 543

Gain on sale of other investments

 – 

 – 

 2,500

 – 

Other, net

 325

 (293)

 822

 (669)

Total other income (expense), net

 423

 (156)

 3,689

 (126)

Income from continuing operations before income taxes

 10,296

 5,541

 26,937

 13,907

Provision for (benefit from) income taxes

 2,966

 1,223

 (4,034)

 2,912

Income from continuing operations

 7,330

 4,318

 30,971

 10,995

Income from discontinued operations, net of tax

 – 

 – 

 – 

 289

Gain on disposal of discontinued operations, net of tax

 – 

 – 

 – 

 924

Net income

 $7,330

 $4,318

 $30,971

 $12,208

 

 

 

 

 

Basic net income per share:

 

 

 

 

Income from continuing operations

 $0.60

 $0.35

 $2.48

 $0.88

Income from discontinued operations, net of tax

 – 

 – 

 – 

 0.02

Gain on disposal of discontinued operations, net of tax

 – 

 – 

 – 

 0.07

Basic net income per share

 $0.60

 $0.35

 $2.48

 $0.97

 

 

 

 

 

Diluted net income per share:

 

 

 

 

Income from continuing operations

 $0.59

 $0.35

 $2.45

 $0.88

Income from discontinued operations, net of tax

 – 

 – 

 – 

 0.02

Gain on disposal of discontinued operations, net of tax

 – 

 – 

 – 

 0.07

Diluted net income per share

 $0.59

 $0.35

 $2.45

 $0.97

 

 

 

 

 

Dividends declared per share

 $0.10

 $0.10

 $0.30

 $0.30

Weighted-average shares outstanding:

 

 

 

 

Basic

 12,227

 12,381

 12,470

 12,526

Diluted

 12,433

 12,487

 12,636

 12,600

 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 

 

 

 

 

 

(In thousands)

 

 

 

 

April 30, 2012

 

July 31, 2011

Assets:

 

 

 

Cash and cash equivalents

 $189,545

 

 $169,656

Accounts receivable, net

 78,367

 

 88,558

Inventories

 113,618

 

 105,483

Other current assets

 15,326

 

 19,516

Total current assets

 396,856

 

 383,213

Property, plant, and equipment, net

 93,661

 

 83,157

Other assets

 52,325

 

 55,182

Total Assets

 $542,842

 

 $521,552

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

Accounts payable

 $42,523

 

 $37,478

Accrued liabilities

 35,057

 

 41,438

Advanced payments and deferred revenue

 12,945

 

 9,249

Accrued income taxes

 3,184

 

 661

Total current liabilities

 93,709

 

 88,826

Long-term liabilities

 7,226

 

 9,254

Stockholders’ equity

 441,907

 

 423,472

Total Liabilities and Stockholders’ Equity

 $542,842

 

 $521,552

UNAUDITED SUPPLEMENTAL INFORMATION – RECONCILIATION OF GAAP TO NON-GAAP MEASURES 

We provide non-GAAP gross profit, operating expenses, income from operations, income from continuing operations, diluted earnings per share from continuing operations, net income and diluted net income per share as supplemental measures to reported results regarding our operational performance. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. The adjustments to these financial measures, and the basis for such adjustments, are outlined below:

Share-Based Compensation Expense

We incur expense related to share-based compensation included in the GAAP presentation of cost of sales, research and development, selling and marketing, and general and administrative expense. Although share-based compensation is an expense and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within our control, such as the market price and volatility of our shares, risk-free interest rates, and the expected term and forfeiture rates of the awards. Additionally, a portion of our equity compensation is performance-based, which drives volatility in expense as estimated performance-based metrics are updated for actual and forecasted results. We believe that exclusion of these expenses allows comparisons of operating results that are consistent between periods and allows
comparisons of our operating results to those of other companies that disclose non-GAAP financial measures that exclude share-based compensation.

BK Distributor Matter Inquiry-Related Costs

As previously disclosed in the Company’s annual report on Form 10-K for the fiscal year ended July 31, 2011, the Company has identified transactions involving our Danish subsidiary, BK Medical, and certain of its foreign distributors, with respect to which the Company has raised questions concerning compliance with law and the Company’s business policies. The Company has concluded that the identified transactions have been properly accounted for in our GAAP financial statements in all material respects. During the nine months ended April 30, 2012 we incurred $1.2 million of inquiry-related costs and have excluded this amount from our non-GAAP results.

Acquisition Related Expenses

We incur amortization of intangibles and other expenses related to acquisitions we have made in recent years. The intangible assets are valued at the time of acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed after the acquisition. During the three and nine months ended April 30, 2011, our results included accounting items related to an acquisition of an OEM ultrasound transducer and probe product line. The acquisition accounting items included a bargain purchase gain (i.e. the acquired assets exceeded the amount to be paid for the acquisition) of $1.0 million recorded in general and administrative expenses within operating income. During the nine months ended April 30, 2012 our results included an adjustment to contingent consideration for the acquisition of an OEM ultrasound transducer and probe product line of less
than $0.1 million. We believe the exclusion of this gain and acquisition related expenses allow comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses.

Restructuring

During the nine months ended April 30, 2011 we initiated a plan to reduce our work force by 104 employees worldwide as we continue to streamline our operations and consolidate our Denmark and Canton, Mass. manufacturing operations into our existing U.S. facilities. The total cost of $3.4 million, including severance and personnel related costs, was recorded as an operating expense during the nine months ended April 30, 2011and has been excluded from our non-GAAP results.

Gain on sale of other investments

On July 25, 2011, we entered into an agreement to sell our 25% interest in our China-based affiliate for $2.5 million. The book value of our interest in the China-based affiliate was written down to $0 in fiscal 2006, and we, upon final approval of the transaction by the Chinese government, recorded a gain of $2.5 million in the nine months ended April 30, 2012. This gain has been excluded from our non-GAAP results.

Taxes

For purposes of calculating non-GAAP net income and non-GAAP diluted earnings per share, we adjust the provision (benefit from) for income taxes to tax effect the non-GAAP adjustments described above as they have a significant impact on our income tax provision (benefit). In addition, from time-to-time, we recognize certain non-recurring tax adjustments. During the second quarter of fiscal year 2012, we received a refund of $12.0 million as the result of the completion of an Internal Revenue Service (“IRS”) audit of federal income tax returns for the fiscal years ended July 31, 2003, 2005, and 2008. The refund was largely the result of Federal research and experimentation credits that carryover from the fiscal years 1991 through 2000 into the audited returns. We recorded a tax benefit for this refund, including the related interest, in the unaudited Consolidated Statement of Operations
of $10.0 million in the nine months ended April 30, 2012. The tax benefit from the refund and interest were partially offset by related contingent professional fees of $2.7 million recorded in general and administrative expenses within income from operations in the unaudited Consolidated Statement of Operations in the nine months ended April 30, 2012. As these adjustments do not reflect the underlying performance of the business they have been excluded from non-GAAP net income.

We exclude the above-described expenses, their related tax impact and other non-recurring tax benefits in evaluating short-term and long-term operating trends in our operations, and allocating resources to various initiatives and operational requirements. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making.

These non-GAAP financial measures have not been prepared in accordance with GAAP, and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Further, these non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

The following table reconciles the non-GAAP financial measures to their most directly comparable GAAP financial measures.

 

NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION

 

 

 

 

 

(In thousands, except per share data)

Three Months Ended Nine Months Ended

 

April 30, 2012 April 30, 2011 April 30, 2012 April 30, 2011

 

 

 

 

 

GAAP Gross Profit

 $44,752

 $44,160

 $134,623

 $123,988

Share-based compensation expense

 142

 148

 461

 432

Acquisition related expenses

 303

 325

 909

 1,267

Non-GAAP Gross Profit

 $45,197

 $44,633

 $135,993

 $125,687

Percentage of Total Net Revenue

37.3%

38.1%

37.2%

37.2%

 

 

 

 

 

GAAP Operating Expenses

 $34,879

 $38,463

 $111,375

 $109,955

Share-based compensation expense

 (2,173)

 (2,595)

 (7,255)

 (6,865)

BK Medical distributor matter inquiry related costs

 – 

 – 

 (1,204)

 – 

Tax refund related charges

 – 

 – 

 (2,714)

 – 

Restructuring

 – 

 – 

 – 

 (3,428)

Acquisition related gains and expenses

 (463)

 (462)

 (1,432)

 (345)

Non-GAAP Operating Expenses

 $32,243

 $35,406

 $98,770

 $99,317

Percentage of Total Net Revenue

26.6%

30.2%

27.0%

29.4%

 

 

 

 

 

GAAP Income From Operations

 $9,873

 $5,697

 $23,248

 $14,033

Share-based compensation expense

 2,315

 2,743

 7,716

 7,297

BK Medical distributor matter inquiry related costs

 – 

 – 

 1,204

 – 

Tax refund related charges

 – 

 – 

 2,714

 – 

Restructuring

 – 

 – 

 – 

 3,428

Acquisition related gains and expenses

 766

 787

 2,341

 1,612

Non-GAAP Income From Operations

 $12,954

 $9,227

 $37,223

 $26,370

Percentage of Total Net Revenue

10.7%

7.9%

10.2%

7.8%

 

 

 

 

 

GAAP Other Income (Expense)

 $423

 $(156)

 $3,689

 $(126)

Gain on sale of other investments and other

 – 

 – 

 (2,500)

 – 

Non-GAAP Other Income (Expense)

 $423

 $(156)

 $1,189

 $(126)

Percentage of Total Net Revenue

0.3%

-0.1%

0.3%

0.0%

 

 

 

 

 

GAAP Income From Continuing Operations Before Income Taxes

 $10,296

 $5,541

 $26,937

 $13,907

Share-based compensation expense

 2,315

 2,743

 7,716

 7,297

BK Medical distributor matter inquiry related costs

 – 

 – 

 1,204

 – 

Tax refund related charges

 – 

 – 

 2,714

 – 

Restructuring

 – 

 – 

 – 

 3,428

Acquisition related gains and expenses

 766

 787

 2,341

 1,612

Gain on sale of other investments and other

 – 

 – 

 (2,500)

 – 

Non-GAAP Income From Continuing Operations Before Income Taxes

 $13,377

 $9,071

 $38,412

 $26,244

Percentage of Total Net Revenue

11.0%

7.7%

10.5%

7.8%

 

 

 

 

 

GAAP Income From Continuing Operations

 $7,330

 $4,318

 $30,971

 $10,995

Share-based compensation expense

 1,615

 1,901

 5,309

 4,940

BK Medical distributor matter inquiry related costs

 – 

 – 

 772

 – 

Tax refund and related charges

 – 

 – 

 (8,285)

 – 

Restructuring

 – 

 – 

 – 

 2,354

Acquisition related gains and expenses

 500

 488

 1,510

 628

Gain on sale of other investments and other

 – 

 – 

 (1,603)

 – 

Non-GAAP Income From Continuing Operations

 $9,445

 $6,707

 $28,674

 $18,917

Percentage of Total Net Revenue

7.8%

5.7%

7.8%

5.6%

 

 

 

 

 

GAAP Diluted Net Income Per Share From Continuing Operations

 $0.59

 $0.35

 $2.45

 $0.88

Effect of non-GAAP adjustments

 0.17

 0.19

 (0.18)

 0.62

Non-GAAP Diluted Net Income Per Share From Continuing Operations

 $0.76

 $0.54

 $2.27

 $1.50

 

 

 

 

 

GAAP Net Income

 $7,330

 $4,318

 $30,971

 $12,208

Share-based compensation expense

 1,615

 1,901

 5,309

 4,940

BK Medical distributor matter inquiry related costs

 – 

 – 

 772

 – 

Tax refund and related charges

 – 

 – 

 (8,285)

 – 

Restructuring

 – 

 – 

 – 

 2,354

Acquisition related gains and expenses

 500

 488

 1,510

 628

Gain on sale of other investments and other

 – 

 – 

 (1,603)

 – 

Gain on sale of discontinued operation

 – 

 – 

 – 

 (924)

Non-GAAP Net Income

 $9,445

 $6,707

 $28,674

 $19,206

Percentage of Total Net Revenue

7.8%

5.7%

7.8%

5.7%

 

 

 

 

 

GAAP Diluted Net Income Per Share

 $0.59

 $0.35

 $2.45

 $0.97

Effect of non-GAAP adjustments

 0.17

 0.19

 (0.18)

 0.55

Non-GAAP Diluted Net Income Per Share

 $0.76

 $0.54

 $2.27

 $1.52

CONTACT: Mark Namaroff

         Director of Investor Relations

         (978) 326-4058

         investorrelations@analogic.com