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adobe pdf icon Analogic Corporation Announces Financial Results for the First Quarter Ended October 31, 2009

PEABODY, Mass., Dec. 9, 2009 (GLOBE NEWSWIRE) — Analogic Corporation (Nasdaq:ALOG), a leading designer and manufacturer of high-precision medical and security imaging equipment, today announced results for its first quarter ended October 31, 2009.

Highlights during the first quarter included:



 --  First quarter revenue of $95.4 million and breakeven EPS

 --  Positive cash flow from operations of $2.3 million

 --  Medical Technology business revenues increased $2.6 million from
     the prior quarter with the Computed Tomography (CT) and Magnetic
     Resonance Imaging (MRI) revenues up $6.5 million as healthcare
     markets begin to show some improvement

 --  Security Technology business revenues decreased $5.9 million
     versus Q4 2009 due to fewer shipments of eXaminer(R) 3DX systems,
     reflecting a delay in orders from the Transportation Security
     Administration (TSA)

 --  eXaminer(R) XLB, ultra-high-throughput baggage scanner, received
     formal certification from the TSA and first order for delivery in
     fiscal Q3 2010

 --  Signed a major development contract with Smiths Detection for the
     development of high precision CT detection subsystems for use in
     a next-generation explosives detection system to be manufactured
     and marketed by Smiths

Revenues for the first fiscal quarter ended October 31, 2009, were $95.4 million, compared with fourth quarter revenues of $98.3 million and the prior fiscal year’s first quarter revenues of $101.6 million. Income from operations for the first quarter was breakeven compared with a loss of ($2.6) million in the fourth quarter of fiscal 2009 which included $3.1 million of restructuring charges, and a loss of ($1.6) million in the prior year’s first quarter. Reported net income for the first quarter of fiscal 2010 was $26,000, or $0.00 per diluted share, compared with a loss of ($0.3) million, or ($0.02) per diluted share, in the fourth quarter of fiscal 2009 and income of $0.3 million, or $0.02 per diluted share, for the prior year’s first quarter.

On an adjusted, non-GAAP basis, income from operations for the first quarter of fiscal 2010 was $1.9 million compared with $1.4 million in the fourth quarter and $1.7 million in the prior year’s first quarter. Adjusted non-GAAP net income for the first quarter was $1.3 million, or $0.10 per diluted share, compared with $1.4 million, or $0.11 per diluted share, in the fourth quarter of fiscal 2009 and $2.6 million, or $0.19 per diluted share, for the prior year’s first quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

Jim Green, president and CEO, commented, “We are encouraged in our Medical Technology business as we have returned to profitability and are starting to see indications that the medical imaging markets are beginning to improve, as reflected by the increased order volume of our CT and MRI sub-systems during the quarter. While we are experiencing near-term lumpiness in our security business, we expect to return to normal run rates in the second half of our fiscal year and are committed to profitability in this business for the fiscal year. In addition, we are pleased to have announced our new relationship with Smiths Detection, a recognized leader in the aviation security field, as this represents a long-term growth opportunity for Analogic.”

Green concluded, “As we have stated previously, one of our key financial goals is to achieve double-digit operating margins by FY2012. We are committed to achieving significant improvement in our operating margins, even at our current revenue run rate, through organic measures that are within our control. We will continue to focus on driving efficiencies throughout our businesses. Specifically, we have assembled a world-class operations team that is driving down our cost position by consolidating manufacturing operations, improving planning and supply chain management processes, increasing the use of automation in our manufacturing operations, and pursuing design-driven product cost reductions. Our recently announced presence in China provides additional low cost manufacturing and supply chain opportunities. We are confident that focusing on these and other items will drive enhanced
profitability in each of the next three years on our pathway to double-digit operating margins by FY2012. We look forward to executing on these objectives and delivering value to shareholders.”

Segment Revenues

Revenues from our CT and MRI segment, previously referred to as Medical Imaging, were $57.7 million for the first quarter of fiscal 2010, up $6.5 million from the fourth quarter and down $1.5 million over the prior year’s first quarter. Revenues were up during the first quarter, as compared to the fourth quarter of fiscal 2009, as the major medical OEMs have begun to increase their demand for new CT and MRI sub-systems.

Digital Radiography revenues were $8.2 million for the first quarter of fiscal 2010, down $0.2 million from the fourth quarter and up $0.7 million over the prior year. Demand for the Company’s Selenium-based digital detector plates continues to grow as sales of digital mammography systems increase outside the U.S.

Our Specialized Ultrasound segment, previously referred to as BK Medical, generated revenues of $20.0 million for the first quarter of fiscal 2010, down $3.7 million from the fourth quarter and up $1.1 million from the prior year. The decrease in revenue during the first quarter primarily reflects seasonality in the business.

Security Technology revenues were $6.9 million for the first quarter of fiscal 2010, down $5.9 million from the fourth quarter and down $6.0 million from a year earlier primarily due to order delays from our OEM customer, L-3 Communications. We understand that these delays were driven by delays in TSA orders for checked baggage screening systems. The delay in order flow will impact segment revenues for the current fiscal year, but we are committed to profitability in this business. Separately, we were pleased to see that the eXaminer XLB received formal certification from the TSA and the first order was received for system delivery in the third fiscal quarter. In addition, a contract was signed with a new security OEM customer, Smiths Detection, to develop high precision CT detection subsystem components for a next-generation checked-baggage explosives detection system.

Use of Adjusted Non-GAAP Financial Measures

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

Adjusted 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 measures to evaluate our financial results. The adjusted 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 adjusted non-GAAP measures are provided at the end of this press release.

Conference Call

Analogic will conduct an investor conference call on December 9, 2009 at 5:00 p.m. (ET) to discuss the results for the fourth quarter. 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 presentation materials related to the quarterly financial information will be posted on the Company’s website at investor.analogic.com. The call will also be available via webcast in listen-only mode. To listen to the live 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) January 8, 2010. To access the digital replay, dial 1-877-919-4059, or 1-334-323-7226 for international callers. The passcode is 35516804. 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) January 8, 2010.

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

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.

About Analogic

Analogic Corporation is a growth oriented high-technology signal and image-processing company, providing products and services to original equipment manufacturers (OEMs) and end users in growing medical diagnostics and security markets worldwide. The Company is recognized worldwide for advancing the state of the art in automatic explosives detection, computed tomography (CT), digital radiography (DR), ultrasound, magnetic resonance imaging (MRI), and advanced signal processing. For more information, visit www.analogic.com.



                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

 (In thousands, except per share data)        Three months Ended
                                         ----------------------------
                                         Oct. 31,  July 31,  Oct. 31,
                                           2009      2009      2008
                                         --------  --------  --------
 Net revenue:
  Product                                 $89,454   $89,515   $94,947
  Engineering                               3,352     6,543     3,493
  Other                                     2,571     2,231     3,112
                                         --------  --------  --------
 Total net revenue                         95,377    98,289   101,552
                                         --------  --------  --------
 Cost of sales:
  Product                                  59,777    59,849    65,278
  Engineering                               3,167     6,767     3,190
  Other                                     1,571     1,636     1,789
                                         --------  --------  --------
 Total cost of sales                       64,515    68,252    70,257
                                         --------  --------  --------

 Gross margin                              30,862    30,037    31,295
                                         --------  --------  --------
 Operating expenses:
  Research and product development         11,455    10,779    12,567
  Selling and marketing                     9,308     8,923     9,684
  General and administrative               10,095     9,803    10,628
  Restructuring charges                        --     3,131        --
                                         --------  --------  --------
 Total operating expenses                  30,858    32,636    32,879
                                         --------  --------  --------
 Income (loss) from operations                  4    (2,599)   (1,584)
                                         --------  --------  --------
 Other income (expense):
  Interest income, net                        176       267     1,008
  Gain on sale of other investments            --       815        --
  Other, net                                 (143)   (1,152)      433
                                         --------  --------  --------
 Total other income (expense)                  33       (70)    1,441
                                         --------  --------  --------
 Income (loss) before income taxes             37    (2,669)     (143)
  Provision for (benefit from) income 
   taxes                                       11    (2,384)     (463)
                                         --------  --------  --------
 Net income (loss)                            $26     $(285)     $320
                                         ========  ========  ========
 Net income (loss) per share:
  Basic                                     $0.00    $(0.02)    $0.02
  Diluted                                   $0.00    $(0.02)    $0.02
 Dividends declared per share               $0.10     $0.10     $0.10
 Weighted-average shares outstanding:
  Basic                                    12,672    12,665    13,240
  Diluted                                  12,820    12,665    13,356

                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

  (In thousands, except per share data)
                                                    Oct. 31,  July 31, 
                                                      2009      2009
                                                    --------  --------
 Assets:
  Cash, cash equivalents, and marketable securities $159,429  $160,293
  Accounts receivable, net                            67,906    64,874
  Inventories                                         80,602    79,011
  Other current assets                                19,947    20,113
                                                    --------  --------
   Total current assets                              327,884   324,291
  Property, plant, and equipment, net                 83,536    83,688
  Other assets                                        56,034    56,135
                                                    --------  --------
   Total Assets                                     $467,454  $464,114
                                                    ========  ========

 Liabilities and Stockholders' Equity:
  Accounts payable                                   $27,021   $22,064
  Accrued liabilities                                 28,598    30,868
  Advanced payments and deferred revenue               6,293     7,219
                                                    --------  --------
   Total current liabilities                          61,912    60,151
                                                    --------  --------
  Long-term liabilities                                6,338     6,444
                                                    --------  --------
  Stockholders' equity                               399,204   397,519
                                                    --------  --------
   Total Liabilities and Stockholders' Equity:      $467,454  $464,114
                                                    ========  ========

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

The Company provides adjusted non-GAAP gross margin, adjusted non-GAAP operating expenses, adjusted non-GAAP income from operations, adjusted non-GAAP income before income taxes, adjusted non-GAAP net income and adjusted non-GAAP diluted earnings per share as supplemental measures to GAAP regarding the Company’s 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 non-GAAP financial measures, and the basis for such adjustments, are outlined below:



     Share-based compensation expense. The Company incurs expense
     related to share-based compensation included in its GAAP
     presentation of cost of sales, research and development, selling
     and marketing, general and administrative expense. Although
     share-based compensation is an expense of the Company 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 the control of
     management, such as the market price and volatility of the
     Company's shares, risk-free interest rates, and the expected term
     and forfeiture rates of the awards. In accordance with SFAS No.
     123(R), share-based compensation expense is calculated as of the
     grant date of each share-based award, and generally cannot be
     changed or influenced by management after the grant date.
     Management believes that exclusion of these expenses allows
     comparisons of operating results that are consistent between
     periods and allows comparisons of the Company's operating results
     to those of other companies that disclose adjusted non-GAAP
     financial measures that exclude share-based compensation.
  

     Acquisition related expenses. The Company incurs amortization of
     intangibles and other expenses related to acquisitions it has
     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 or
     influenced by management after the acquisition. Management
     believes that exclusion of these expenses allows comparisons of
     operating results that are consistent over time for both our
     newly acquired and long-held businesses.


     Restructuring charges. The Company continuously strives to
     improve its operating efficiency. During the three months ended
     July 31, 2009, the Company reduced its work force by 85 employees
     or approximately 6% worldwide and vacated 50% of its office
     facility in Canton, MA on July 31, 2009 as a result of moving
     certain operations to our Peabody facility. The total cost of
     these activities was $3,131,000, which was recorded as an
     operating expense during the three months ended July 31, 2009.
     

     Gain on sale of other investments. During the three months ended
     July 31, 2009, the Company received $838,000 as the final escrow
     payment related to the sale of its interest in Bio-Imaging
     Research ("BIR") was recorded as other income in the three months
     ended July 31, 2009. 


     Taxes. For purposes of calculating adjusted non-GAAP net income
     and adjusted non-GAAP diluted earnings per share, management
     adjusts the provision (benefit) for income taxes to tax effect
     the non-GAAP adjustments described above as they have a
     significant impact on the Company's income tax provision
     (benefit).


     Periodically, the Company recognizes certain non-recurring tax
     adjustments. In the three months ended July 31, 2009, the company
     recorded $244,000 for a tax refund and related interest. As these
     adjustments do not reflect the underlying performance of the
     business they have been excluded from adjusted Non-GAAP net
     income.

Management excludes the above-described expenses, their related tax impact and other non-recurring tax benefits in evaluating short-term and long-term operating trends in the Company’s operations, and allocating resources to various initiatives and operational requirements. The Company believes that these adjusted 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 adjusted 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 adjusted 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 adjusted non-GAAP financial measures to their most directly comparable GAAP financial measures.



              ADJUSTED NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
                               RECONCILIATION

  (In thousands, except per share data)       Three months Ended
                                         ----------------------------
                                         Oct. 31,  July 31,  Oct. 31,
                                           2009      2009      2008
                                         --------  --------  --------

 GAAP Gross Margin                        $30,862   $30,037   $31,295
  Share-based compensation expense             84        58        81
  Acquisition related expenses                282       282     1,148
                                         --------  --------  --------
 Adjusted Non-GAAP Gross Margin           $31,228   $30,377   $32,524
                                         ========  ========  ========
  Percentage of Total Net Revenue            32.7%     30.9%     32.0%

 GAAP Operating Expenses                  $30,858   $32,636   $32,879
  Share-based compensation expense         (1,071)     (124)   (1,581)
  Restructuring charges                        --    (3,131)       --
  Acquisition related expenses               (451)     (450)     (447)
                                         --------  --------  --------
 Adjusted Non-GAAP Operating Expenses     $29,336   $28,931   $30,851
                                         ========  ========  ========
  Percentage of Total Net Revenue            30.8%     29.4%     30.4%

 GAAP Income (Loss) From Operations            $4   $(2,599)  $(1,584)
  Share-based compensation expense          1,155       182     1,662
  Restructuring charges                        --     3,131        --
  Acquisition related expenses                733       732     1,595
                                         --------  --------  --------
 Adjusted Non-GAAP Income (Loss) From
  Operations                               $1,892    $1,446    $1,673
                                         ========  ========  ========
  Percentage of Total Net Revenue             2.0%      1.5%      1.6%

 GAAP Other Income (Expense)                  $33      $(70)   $1,441
  Gain on sale of other investments and
   other                                       --      (838)       --
                                         --------  --------  --------
 Adjusted Non-GAAP Other Income 
  (Expense)                                   $33     $(908)   $1,441
                                         ========  ========  ========
  Percentage of Total Net Revenue             0.0%    -0.9%       1.4%

 GAAP Income (Loss) Before Income Taxes       $37   $(2,669)    $(143)
  Share-based compensation expense          1,155       182     1,662
  Restructuring charges                        --     3,131        --
  Acquisition related expenses                733       732     1,595
  Gain on sale of other investments and 
   other                                       --      (838)       --
                                         --------  --------  --------
 Adjusted Non-GAAP Income Before Income
  Taxes                                    $1,925      $538    $3,114
                                         ========  ========  ========
  Percentage of Total Net Revenue             2.0%      0.5%      3.1%

 GAAP Net Income (Loss)                       $26     $(285)     $320
  Share-based compensation expense            780       142     1,194
  Restructuring charges                        --     1,962        --
  Acquisition related expenses                462       357     1,037
  Gain on sale of other investments and
   other                                       --      (528)       --
  Tax refunds and related interest             --      (244)       --
                                         --------  --------  --------
 Adjusted Non-GAAP Net Income              $1,268    $1,404    $2,551
                                         ========  ========  ========
  Percentage of Total Net Revenue             1.3%      1.4%      2.5%

 GAAP Diluted Net Income (Loss) Per 
  Share                                     $0.00    $(0.02)    $0.02
  Effect of non-GAAP adjustments            $0.10     $0.13     $0.17
                                         --------  --------  --------
 Adjusted Non-GAAP Diluted Net Income 
  Per Share                                 $0.10     $0.11     $0.19
                                         ========  ========  ========
CONTACT:  Analogic Corporation 
          Mark Namaroff, Director of Strategic Marketing 
           and Investor Relations
          (978) 326-4058
          Investorrelations@analogic.com

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