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adobe pdf icon Analogic Corporation Announces Revenues and Earnings for Its Fourth Quarter and Fiscal Year Ended July 31, 2008

Analogic Corporation Announces Revenues and Earnings for Its Fourth Quarter and Fiscal Year Ended July 31, 2008

Analogic Corporation Announces Revenues and Earnings for Its Fourth Quarter and Fiscal Year Ended July 31, 2008

PEABODY, Mass.–(BUSINESS WIRE)–Sept. 25, 2008–Analogic
Corporation (NASDAQ: ALOG), a leading designer and manufacturer of
high-precision health and security imaging equipment, today announced
revenues and earnings for its fourth quarter and fiscal year ended
July 31, 2008.

Financial highlights of the fiscal year and quarter include:

Fiscal Year

--Revenues of $413.5 million, up $72.7 million, or 21% over the prior
   fiscal year
--Income from Operations of $24.3 million, up 22.0 million or 946%
--Net Income of $23.5 million, up $8.1 million, or 53%
--Earnings Per Share:
  -- GAAP: $1.77 per diluted share
  -- Non-GAAP: $2.26 per diluted share

Fourth Quarter

--Revenues of $117.1 million, up $24.2 million, or 26%, over the prior
   year's fourth quarter
--Income from Operations of $2.5 million, down $0.4 million, primarily
   due to voluntary retirement and restructuring costs of $4.0 million
   and charges related to the acquisition of Copley Controls
   Corporation of $3.2 million
--Net Income of $3.3 million, down $5.0 million, further impacted by
   $2.1 million lower interest income and $2.0 million lower gain on
   sale of other investments from prior year's fourth quarter
--Earnings Per Share:
  -- GAAP: $0.25 per diluted share
  -- Non-GAAP: $0.55 per diluted share
--Medical Technology revenues grew 27%
--Security Technology revenues grew 27%

Revenues for the fiscal year ended July 31, 2008, were
$413,509,000, compared with the prior year’s revenues of $340,782,000,
an increase of $72,727,000, or 21%. Income from operations on a GAAP
basis was $24,311,000, up $21,986,000, or 946%, from a year earlier.
GAAP net income was $23,486,000, or $1.77 per diluted share, compared
with $15,380,000, or $1.10 per diluted share, for the same period a
year ago, an increase of $8,106,000, or 53%. GAAP net income for the
fiscal year ended July 31, 2008 includes a pre-tax charge of
$4,016,000 related to voluntary retirement and other restructuring
costs, a pre-tax charge of $4,182,000 primarily related to
amortization of Copley-acquisition-related intangible assets and
inventory fair value adjustments, and a gain of $2,000,000 from the
sale of 20% of the Company’s 45% equity interest (for a remaining
interest of 25%) in Shenzhen Anke High Tech Co. Ltd.

During the fiscal year ended July 31, 2007, the Company recorded
pre-tax charges of $9,705,000 related to asset impairments as well as
dividend income and a gain on the sale of the Company’s 17% ownership
in Bio-Imaging Research, Inc. totaling $4,036,000.

Income from operations on a non-GAAP basis for the fiscal year
ended July 31, 2008, was $36,913,000, up 118% from a year earlier.
Non-GAAP net income for the fiscal year ended July 31, 2008, was
$29,956,000, or $2.26 per diluted share, compared to non-GAAP net
income of $22,176,000, or $1.60 per diluted share, for last year.

Non-GAAP financial measures exclude the impact of certain items. A
description of these non-GAAP financial measures and a reconciliation
of all GAAP to non-GAAP financial measures are presented in the
financial tables at the end of this news release.

Revenues for the fourth quarter ended July 31, 2008, were
$117,140,000, compared with the prior year’s fourth-quarter revenues
of $92,933,000, an increase of $24,207,000, or 26%. Income from
operations on a GAAP basis was $2,448,000, down $404,000 from the
prior year’s fourth quarter. GAAP net income for the quarter ended
July 31, 2008, was $3,272,000, or $0.25 per diluted share, compared
with $8,322,000, or $0.60 per diluted share, for the prior year’s
fourth quarter.

Income from operations on a non-GAAP basis for the quarter ended
July 31, 2008, was $10,680,000, up 106% from the same quarter last
year. Non-GAAP net income was $7,245,000, or $0.55 per diluted share,
compared to $6,612,000, or $0.48 per diluted share, for the same
quarter last year. Both GAAP and Non-GAAP net income include
significant unfavorable effects of lower interest income and a higher
tax rate versus the prior year.

During the fourth quarter ended July 31, 2008, Analogic announced
the completion of a restructuring program to lower the Company’s cost
structure going forward. The program included a reduction in force
that resulted in a one-time charge of $597,000, and a voluntary
retirement program that resulted in a one-time charge of $3,419,000 in
the fourth quarter. The Company also announced that it is amortizing
Copley-acquisition-related intangible assets and inventory fair value
adjustments, which resulted in a $3,156,000 charge in the fourth
quarter.

Also during the fourth quarter the Company recognized a gain of
$2,000,000 before taxes from the sale to Chonqing Anke Medical
Equipment Co. of 20% of its existing 45% equity interest (for a
remaining interest of 25%) in Shenzhen Anke High Tech Co. Ltd.

During the fourth quarter of the year ended July 31, 2007, the
Company recognized a gain of $4,036,000 before taxes from the sale of
its 17% ownership interest in Bio-Imaging Research, Inc., and related
dividend income.

Jim Green, Analogic President and CEO, said “I am very pleased
with the Company’s achievements during FY2008. We were successful in
accelerating growth of our Medical and Security Technology businesses,
returning our Security Technology business to profitability, moving
Digital Radiography to breakeven in the fourth quarter, completing the
acquisition of Copley Controls, and making investments in technology,
our channel, and our employees.

With respect to the fourth quarter, we realized solid growth in
revenues. Medical technology revenues were $101,274,000, up 27% over
the prior year’s fourth quarter, in large part due to the addition of
Copley’s revenues for a full quarter, and solid growth in Digital
Radiography revenues. Ultrasound systems revenues were up as well,
driven partly by favorable exchange rates. Security Technology
revenues were up 27% from the prior fourth quarter.”

“This has been a quarter with several significant milestones,”
said Green. “The integration of Copley Controls is proceeding
according to plan. On a go-forward basis, we expect Copley to make a
strong contribution to our profitability. Digital Radiography broke
even in the fourth quarter for the first time. During the quarter, we
received two major contracts from an OEM to supply new CT Data
Acquisition Systems and a major OEM customer introduced a line of 3
Tesla MRI systems incorporating our new AN8135 solid-state RF
amplifier. As announced earlier, we completed a significant
restructuring in the quarter, which makes us a leaner and more
productive organization.

“We are a stronger, leaner business, and better prepared for the
future, and look forward to exciting opportunities in 2009 and beyond
to build on Analogic’s long-term success as The World Resource for
Health and Security Technology.”

Use of Non-GAAP Financial Measures

This presentation includes 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 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 measures 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.

Conference Call

Analogic will conduct an investor conference call on Thursday,
September 25, at 11:00 a.m. ET to discuss the fourth-quarter and
fiscal year 2008 results and recent developments. To participate in
the conference call dial 1-866-823-6992 (toll free), or 1-334-323-7225
for international callers, approximately five to ten minutes before
the conference call is scheduled to begin. Inform the operator that
you wish to join the Analogic conference call, passcode 03391. You
will then be asked for your name, organization, and telephone number
and be connected to the conference call. Presentation materials with
quarterly and fiscal year financial information will be posted on the
Company’s website at www.analogic.com. To listen to the live audio
webcast, visit www.analogic.com approximately five to ten minutes
before the conference is scheduled to begin.

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 Thursday, October
16, 2008.

A telephone digital replay will be available approximately two
hours after the call is completed through midnight (ET) Thursday,
October 16, 2008. To access the digital replay, dial 1-877-919-4059
(toll free), or 1-334-323-7226 for international callers. The
conference ID number is 36252325. For more information on the
conference call, visit www.analogic.com, call Paul M. Roberts,
Director of Communications & Investor Relations, at 978-326-4213, or
email proberts@analogic.com.

Analogic Corporation is a leading designer and manufacturer of
advanced health and security systems and subsystems sold primarily to
Original Equipment Manufacturers (OEMs). 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), Patient Monitoring, and
Advanced Signal Processing.

Forward-Looking Statements

This press release contains the Company’s or management’s
intentions, hopes, beliefs, expectations or predictions. These are
considered “forward-looking statements” within the meaning of the
Private Securities Litigation Act of 1995. Forward-looking statements
(statements that are not historical facts) in this presentation are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements, including statements about product
development, market and industry trends, strategic initiatives,
regulatory approvals, sales, profits, expenses, price trends, research
and development expenses and trends, and capital expenditures involve
risk and uncertainties. Actual results may differ materially from
those indicated by such statements as a result of various factors,
including those discussed in the Company’s periodic reports filed with
the SEC under the heading “Risk Factors.” In addition, the
forward-looking statements included in this press release represent
the Company’s views as of September 25, 2008. The Company anticipates
that subsequent events and developments will cause the Company’s views
to change. However, while the Company may elect to update these
forward-looking statements at some point in the future, the Company
specifically disclaims any obligation to do so. These forward-looking
statements should not be relied upon as representing the Company’s
views as of any date subsequent to September 25, 2008.

Consolidated Statements of Operations (GAAP) (in thousands, except
 per share data)

                               Three Months Ended Twelve Months Ended
                                    July 31,           July 31,
                               --------------------------------------
                                  (Unaudited)          (Audited)
                                 2008      2007     2008      2007
                               --------------------------------------
Net revenue:
   Products                    $110,797  $83,070  $388,506  $312,921
   Engineering                    3,362    6,722    14,089    17,182
   Other                          2,981    3,141    10,914    10,679
                               --------------------------------------
Total net revenue               117,140   92,933   413,509   340,782
                               --------------------------------------
Cost of sales:
   Products                      70,908   50,928   240,657   192,572
   Engineering                    3,686    6,450    14,480    15,736
   Other                          1,937    1,797     7,274     6,634
   Asset impairment charges          --       --        --     8,625
                               --------------------------------------
Total cost of sales              76,531   59,175   262,411   223,567
                               --------------------------------------
Gross margin                     40,609   33,758   151,098   117,215
                               --------------------------------------
Operating expenses:
    Research and product
     development                 13,544   11,186    48,947    46,955
    Selling and marketing        10,319    8,622    34,528    30,066
    General and administrative   10,282   11,098    39,296    36,789
    Voluntary retirement and
     other restructuring costs    4,016       --     4,016        --
    Asset impairment charges         --       --        --     1,080
                               --------------------------------------
Total operating expenses         38,161   30,906   126,787   114,890
                               --------------------------------------
Income from operations            2,448    2,852    24,311     2,325
                               --------------------------------------
Other (income) expense:
    Interest income, net         (1,108)  (3,223)   (7,935)  (12,755)
    Equity loss in
     unconsolidated affiliates       --       80        --       667
    Gain on sale of other
     investments                 (2,000)  (4,036)   (2,084)   (4,036)
    Other, net                      291      (32)     (715)     (226)
                               --------------------------------------
Total other income               (2,817)  (7,211)  (10,734)  (16,350)
                               --------------------------------------
Income before income taxes        5,265   10,063    35,045    18,675
Provision for income taxes        1,993    1,741    11,559     3,295
                               --------------------------------------
Net income                     $  3,272  $ 8,322  $ 23,486  $ 15,380
                               ======================================
Net income per share:
    Basic                      $   0.24  $  0.60  $   1.78  $   1.11
                               ======================================
    Diluted                        0.25     0.60      1.77      1.10
                               ======================================
Dividends declared per share   $   0.10  $  0.10  $   0.40  $   0.40
Weighted-average shares
 outstanding:
    Basic                        13,234   13,670    13,180    13,814
    Diluted                      13,352   13,842    13,290    13,946
     Condensed Consolidated Balance Sheets (GAAP) (in thousands)

                                                   July 31,  July 31,
                                                     2008      2007
                                                   --------- ---------
                                                   (Audited) (Audited)
Assets:
   Cash, cash equivalents, and marketable
    securities                                      $186,442  $228,545
   Accounts receivable, net                           66,573    58,926
   Inventories                                        79,197    54,413
   Other current assets                               28,714    23,558
                                                   --------- ---------
       Total current assets                          360,926   365,442
   Property, plant, and equipment, net                90,405    80,482
   Other assets                                       59,834    13,217
                                                   --------- ---------
       Total Assets                                 $511,165  $459,141
                                                   ========= =========
Liabilities and Stockholders' Equity:
   Accounts payable                                 $ 28,329  $ 21,734
   Accrued liabilities                                34,552    26,570
   Advance payments and deferred revenue              10,785    11,517
   Accrued income taxes                                   --     5,507
                                                   --------- ---------
       Total current liabilities                      73,666    65,328
                                                   --------- ---------
       Total long-term liabilities                     8,993       456
                                                   --------- ---------
   Stockholders' equity                              428,506   393,357
                                                   --------- ---------
       Total Liabilities and Stockholders' Equity  $ 511,165 $ 459,141
                                                   ========= =========


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

The Company provides non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP other (income) expense, non-GAAP income before
taxes, non-GAAP net income and 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, and
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. 123R,
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 non-GAAP
financial measures that exclude share-based compensation.

Asset impairment charges. As a result of continuing losses in its
Digital Radiography systems business and the related business outlook,
the Company evaluated the net realizability of all of the related
assets at October 31, 2006. As a result, the Company recorded an asset
impairment charge of $9,705,000 associated with the write-down of the
Company’s Digital Radiography systems business assets to their
estimated fair values as a group based upon the present value of
estimated future cash flows of the business. Management believes these
charges should be excluded in the non-GAAP results because they are
one-time items not associated with the ongoing operations of the
business.

Voluntary retirement and other restructuring costs. The Company
continuously strives to improve its operating efficiency. During the
three months ended July 31, 2008, the Company offered a one-time
voluntary retirement program to certain eligible U.S. employees. In
addition, the Company terminated 32 employees in its Peabody,
Massachusetts facility. Total cost of these activities was $4,016,000
in the three and twelve months ended July 31, 2008. Management
believes that exclusion of these expenses allows for comparisons of
operating results that are consistent over time.

Executive transition expenses. In November 2006, John W. Wood Jr.
resigned as President of the Company and was temporarily replaced by
Bernard M. Gordon, who was appointed as our Executive Chairman, in
which capacity he served as both our principal executive officer and
Chairman of the Board. James W. Green was appointed as our President
and CEO on May 21, 2007, replacing Mr. Gordon as our principal
executive officer. Since his arrival Mr. Green has made and is
continuing to make a number of changes in the senior leadership team
reporting to him. As such, the Company has incurred charges for
severance, executive search, relocation and other related expenses.
Management believes these charges should be excluded from the non-GAAP
results because they are one-time items not associated with the
ongoing operations of the business.

Acquisition related expenses. The Company incurs amortization of
intangibles and other expenses related to acquisitions, including the
recent acquisition of Copley Controls Corporation. 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.

Gain on sale of investments and other. During the three months
ended October 31, 2007, the Company received $84,000 as an initial
escrow payment related to the sale of its interest in Bio-Imaging
Research (“BIR”) during the three months ended July 31, 2007, which it
recorded as other income in the twelve months ended July 31, 2008. On
December 7, 2007, the Company received $555,000 from its insurance
company as reimbursement for legal fees incurred in relation to an
indemnification matter related to the Company’s sale of its wholly
owned subsidiary Camtronics Medical Systems, Ltd. in November 2005.
The $555,000 gain was recorded as other income during the twelve
months ended April 30, 2008. On January 30, 2008, the Company agreed
to sell to Chonqing Anke Medical Equipment Co., 20% of its existing
45% equity interest (for a remaining interest of 25%) in Shenzhen Anke
High Tech Co. ltd (“SAHCO”) for aggregate compensation of $2,000,000.
The Company recognized a $2,000,000 gain in other (income) expense
during the three months ended July 31, 2008 when the cash was
received. On November 1, 2006, the Company sold certain assets of
AnaSky and its obligation to service sold products for a purchase
price of $405,000. The $405,000 includes $225,000 in cash paid at
closing, $150,000 in cash paid after the closing for additional
inventory, and the assumption of $30,000 in liabilities. The Company
recorded a gain of $205,000 from the sale in the twelve months ended
July 31, 2007. During May 2007, the Company received a dividend from
BIR and sold its entire ownership interest in BIR. The Company
recorded income before taxes on the dividend and sale of $4,036,000 in
the three and twelve months ended July 31, 2007. These gains have been
presented as a non-GAAP item for the related periods as management
believes they are one-time items not associated with the on-going
operations of the business.

Adjustments for related tax impact. For purposes of calculating
non-GAAP net income and non-GAAP diluted earnings (losses) 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).

Management excludes the above-described expenses and their related
tax impact 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 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, however these non-GAAP financial measures 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.

(in thousands, except per share data)

                                Three Months Ended Twelve Months Ended
                                     July 31,           July 31,
                                  2008      2007     2008      2007
                                --------------------------------------

GAAP Gross Margin                $40,609  $33,758  $151,098  $117,215
     Share-based compensation         78       41       213       157
     Acquisition related
      expense                      2,614       --     3,136        --
     Asset impairment charges         --       --        --     8,625
                                --------------------------------------
Non-GAAP Gross Margin            $43,301  $33,799  $154,447  $125,997
                                ======================================
     Percent of Total Revenue       37.0%    36.4%     37.4%     37.0%
GAAP Operating Expenses          $38,161  $30,906  $126,787  $114,890
     Share-based compensation       (982)    (670)   (3,138)   (1,556)
     Executive transition             --     (762)   (1,053)   (1,299)
     Acquisition related
      expense                       (542)    (848)   (1,046)   (1,919)
     Voluntary retirement and
      other restructuring costs   (4,016)      --    (4,016)       --
     Asset impairment charges         --       --        --    (1,080)
                                --------------------------------------
Non-GAAP Operating Expenses       32,621   28,626   117,534   109,036
                                ======================================
     Percent of Total Revenue       27.8%    30.8%     28.4%     32.0%
GAAP Income (Loss) from
 Operations                      $ 2,448  $ 2,852  $ 24,311  $  2,325
     Share-based compensation      1,060      711     3,351     1,713
     Executive transition             --      762     1,053     1,299
     Acquisition related
      expense                      3,156      848     4,182     1,919
     Voluntary retirement and
      other restructuring costs    4,016       --     4,016        --
     Asset impairment charges         --       --        --     9,705
                                --------------------------------------
Non-GAAP Income from Operations   10,680    5,173    36,913    16,961
                                ======================================
     Percent of Total Revenue        9.1%     5.6%      8.9%      5.0%
GAAP Other (Income) Expense      $(2,817) $(7,211) $(10,734) $(16,350)
     Gain on sale of other
      investments                  2,000    4,036     2,639     4,241
                                --------------------------------------
Non-GAAP Other (Income) Expense     (817)  (3,175)   (8,095)  (12,109)
                                ======================================
GAAP Income Before Income Taxes  $ 5,265  $10,063  $ 35,045  $ 18,675
     Share-based compensation      1,060      711     3,351     1,713
     Executive transition             --      762     1,053     1,299
     Acquisition related
      expense                      3,156      848     4,182     1,919
     Voluntary retirement and
      other restructuring costs    4,016       --     4,016        --
     Asset impairment charges         --       --        --     9,705
     Gain on sale of other
      investments                 (2,000)  (4,036)   (2,639)   (4,241)
                                --------------------------------------
Non-GAAP Income Before Income
 Taxes                            11,497    8,348    45,008    29,070
                                ======================================
     Percent of Total Revenue        9.8%     9.0%     10.9%      8.5%
GAAP Net Income                  $ 3,272  $ 8,322  $ 23,486  $ 15,380
     Share-based compensation        711      338     2,299     1,084
     Executive transition             --      482       665       846
     Acquisition related
      expense                      1,990      535     2,637     1,210
     Voluntary retirement and
      other restructuring costs    2,533       --     2,533        --
     Asset impairment charges         --       --        --     6,156
     Gain on sale of other
      investments                 (1,261)  (3,065)   (1,664)   (2,500)
                                --------------------------------------
Non-GAAP Net Income                7,245    6,612    29,956    22,176
                                ======================================
     Percent of Total Revenue        6.2%     7.1%      7.2%      6.5%
GAAP Diluted EPS                 $  0.25  $  0.60  $   1.77  $   1.10
     Effect of non-GAAP
      adjustments                   0.30    (0.12)     0.49      0.50
                                --------------------------------------
Non-GAAP Diluted EPS             $  0.55  $  0.48  $   2.26  $   1.60
                                ======================================

CONTACT: Analogic Corporation
John J. Millerick, 978-326-4000
Senior Vice President, CFO & Treasurer
or
Paul M. Roberts, 978-326-4213
Director of Communications &
Investor Relations
proberts@analogic.com

SOURCE: Analogic Corporation