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adobe pdf icon Analogic Corporation Reports Results for Its Third Quarter 2006

Analogic Corporation Reports Results for Its Third Quarter 2006

Analogic Corporation Reports Results for Its Third Quarter 2006

PEABODY, Mass.–(BUSINESS WIRE)–June 7, 2006–Analogic
Corporation (NASDAQ: ALOG), a leading designer and manufacturer of
high-precision health and security imaging equipment, announced today
results for its third quarter ended April 30, 2006.

Revenues from continuing operations for the third quarter ended
April 30, 2006, were $81,306,000, compared with the prior year’s
third-quarter revenues from continuing operations of $84,582,000, a
decrease of 4%. Net income from continuing operations for the third
quarter was $2,510,000, or $0.18 per diluted share, compared to
$28,989,000, or $2.14 per diluted share, from continuing operations a
year earlier.

During the prior third quarter, the Company recorded earnings of
$1.92 per diluted share as a result of a gain on the sale of
marketable securities and a loss on asset writedowns. The sale of the
Company’s 14.6% interest in Cedara Software Corp. of Mississauga,
Ontario, Canada resulted in a pretax gain of $43,829,000. The net
income from continuing operations attributable to the sale of these
marketable securities was $27,388,000, or $2.01 per diluted share. The
Company also recorded pretax asset writedowns from continuing
operations of $1,988,000 during the prior third quarter, which
resulted in a net loss from continuing operations of $1,201,000, or
$0.09 per diluted share.

Net income for the third quarter ended April 30, 2006, was
$2,510,000, or $0.18 per diluted share, compared with a net income of
$28,120,000, or $2.07 per diluted share, for the prior year’s third
quarter.

Revenues from continuing operations for the nine months ended
April 30, 2006, were $267,727,000, compared to the prior year’s
nine-month revenues from continuing operations of $235,822,000, an
increase of 14%. Net income from continuing operations for the
nine-month period was $12,670,000, or $0.92 per diluted share,
compared to $28,421,000, or $2.10 per diluted share, for the same
period a year earlier.

During the nine-month period ended April 30, 2006, the Company
recorded pretax restructuring and asset impairment charges of
$1,612,000, which resulted in a net loss from continuing operations of
$1,022,000, or $0.07 per diluted share. During the prior nine-month
period, the Company recorded earnings of $1.88 per diluted share as a
result of a gain on the sale of marketable securities and a loss on
asset impairment charges. The sale of the Company’s 14.6% interest in
Cedara Software Corp. of Mississauga, Ontario, Canada resulted in a
pretax gain of $43,829,000. The net income from continuing operations
attributable to the sale of those marketable securities was
$27,388,000, or $2.01 per diluted share. Pretax asset impairment
charges totaled $2,935,000 during the prior year’s nine-month period
resulting in a net loss from continuing operations of $1,774,000, or
$0.13 per diluted share.

Net income attributable to discontinued operations, the cumulative
effect of a change in accounting principle, and the gain on disposal
of discontinued operations for the nine months ended April 30, 2006,
was $20,919,000, or $1.52 per diluted share. This compares to a net
loss from discontinued operations of $3,846,000, or a loss of $0.29
per diluted share, for the prior year’s first nine months. During the
first nine months of this year the Company realized a net gain of
$20,640,000, or $1.50 per diluted share, from the sale of our
Camtronics Medical Systems subsidiary to Emageon, Inc. of Birmingham,
Alabama, on November 1, 2005. As a result of the sale, the Company
classified the Camtronics business as a discontinued operation and
recast its financial statements accordingly to represent the operation
as discontinued.

Net income for the nine months ended April 30, 2006, was
$33,589,000, or $2.44 per diluted share, compared with a net income of
$24,575,000, or $1.81 per diluted share, for the same period a year
earlier.

Sales of the Company’s medical technology products were up 6% for
the quarter, led by increased shipments of clinical ultrasound
systems, ultrasound subsystems, digital radiography subsystems, and
patient monitors. Sales of advanced multi-slice Data Acquisition
Systems (DASs) for Computed Tomography (CT) remained near the same
high level of the previous third quarter. Security technology product
sales were down 37% from a year earlier. This was expected as our
customer had requested that some shipments originally scheduled for Q3
be accelerated into Q2 to meet their customers’ needs. Sales of power
amplifiers for Magnetic Resonance Imaging (MRI) were also down from a
strong quarter a year earlier.

John Wood, President and CEO, commented, “Revenue and income were
down from our strong second quarter this year due primarily to the
expected decrease in the shipment of EXplosive Assessment Computed
Tomography (EXACT) systems. In the second quarter we shipped 44
units, accelerating shipments to meet our customer requirements. In
the third quarter we shipped 17 units, with a backlog of 11 units for
the remainder of the fiscal year. The lower volume of EXACT shipments
resulted in lower income overall for the quarter. We expect that new
orders will be forthcoming as the upgraded EXACT system, known as the
AN6400, completes inline field trials later this calendar year. We
also expect to be able to market the separate upgrade kit later this
year, which should improve revenue and income in fiscal 2007.”

Wood noted that sales of medical technology products had improved,
due primarily to strong showings by several of the Company’s
subsidiaries. B-K Medical’s shipments of ultrasound systems were up
over a year ago, as were sales of ultrasound transducers by the
Company’s Sound Technology, Inc. subsidiary. Flat-panel direct digital
radiography detector plate shipments by the Company’s Anrad subsidiary
were up strongly over a year ago, reflecting continuing improvement in
production of these leading-edge subsystems. Patient monitor shipments
also increased, as the Company has been expanding the number of
parameters measured non-invasively by its growing LIFEGARD® family
of patient and fetal monitors.

Shipments of data acquisition systems for computed tomography were
about level with a very strong quarter a year earlier, but power
systems, or Radio Frequency (RF) amplifiers, for MRI were down from a
strong quarter a year earlier, and orders for medical CT systems were
also lower.

Research and product development costs for the third quarter were
$12,382,000, or 15% of total revenue, down from $13,540,000, or 16% of
total revenue, for the prior year’s third quarter. Engineering
revenues for the quarter were $3,415,000, down from $5,221,000 a year
earlier, due primarily to a large, funded security project that was
completed in the prior year.

A number of major engineering projects are progressing.
Development continues on the COBRA advanced checkpoint security
system, which the Company expects to provide to the U.S.
Transportation Security Administration (TSA) early next fiscal year
for testing under its CAMBRIA program. The Company is also developing
a new generation of Explosives Detection Systems (EDSs) under the
TSA’s Phoenix Program. The new system, with a larger bore and higher
throughput, should be submitted to the TSA for certification testing
by the middle of next fiscal year. Major medical development projects
in process include the heart of a new CT system for an Original
Equipment Manufacturer (OEM); a Positron Emission Tomography (PET)
system being developed by PhotoDetection Systems, in which we have an
equity interest; and new generations of multi-slice CT data
acquisition systems and liquid-cooled RF amplifiers for MRI. Analogic
has also generated considerable interest in a new brushless technique
for delivering power to and data from a rotating CT gantry.

“The breadth of our technological capabilities and the importance
of applying those capabilities to both health and security
applications were clearly evident this quarter,” said Wood. “While
shipments of security systems were down over several very strong
recent quarters, and we await approval to market several innovative
new security systems for airports domestically and abroad, several
segments of our medical business demonstrated solid growth. We are
working to extend that growth over both major application areas to
better ensure our future as ‘The World Resource for Health and
Security Technology.'”

Analogic will conduct an investor conference call on Wednesday,
June 7, at 11:00 a.m. ET to discuss results for the third quarter
ended April 30, 2006, and recent developments.

Call 1-866-823-6992 approximately five to ten minutes before the
conference is scheduled to begin. Inform the operator that you wish to
join the Analogic conference, Pass Code 03391. You will then be asked
for your name, organization, and telephone number and be connected to
the conference. 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 Wednesday, June
28. A telephone digital replay will be available approximately two
hours after the call is completed through midnight, Friday, June 9. To
access the digital replay, dial 1-877-919-4059. The conference ID
number is 37496664. For more information on the conference call, visit
www.analogic.com, call 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 Computed Tomography
(CT), Digital Radiography (DR), Ultrasound, Magnetic Resonance Imaging
(MRI), Patient Monitoring, and Embedded Multiprocessing.

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 “Business Environment and Risk Factors.” In
addition, the forward-looking statements included in this press
release represent the Company’s views as of June 7, 2006. 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 June 7, 2006.

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

                                Three Months Ended  Nine Months Ended
                                    April 30,           April 30,
                                ------------------ -------------------
                                    (Unaudited)        (Unaudited)
                                   2006      2005     2006      2005
                                 -------  --------  --------  --------
Net Revenue:
Products                        $75,670  $ 77,646  $247,355  $215,766
Engineering                       3,415     5,221    13,346    13,630
Other                             2,221     1,715     7,026     6,426
                                 -------  --------  --------  --------
Total net revenue                81,306    84,582   267,727   235,822
                                 -------  --------  --------  --------
Cost of sales:
Products                         46,606    47,543   149,282   132,607
Engineering                       4,222     3,817    14,064    11,359
Other                             1,348     1,256     3,926     3,974
                                 -------  --------  --------  --------
Total cost of sales              52,176    52,616   167,272   147,940
                                 -------  --------  --------  --------
Gross margin                     29,130    31,966   100,455    87,882
                                 -------  --------  --------  --------
Operating expenses:
Research and product
 development                     12,382    13,540    39,558    38,433
Selling and marketing             6,972     7,172    21,600    21,694
General and administrative        8,757     9,968    27,058    28,488
Restructuring and asset
 impairment charges                  84     1,988     1,612     2,935
                                 -------  --------  --------  --------
Total operating expenses         28,195    32,668    89,828    91,550
                                 -------  --------  --------  --------
Income (loss) from operations       935      (702)   10,627    (3,668)
                                 -------  --------  --------  --------
Other (income) expense:
Interest income                  (2,653)   (1,484)   (7,155)   (3,369)
Interest expense                     43        --        43         2
Equity (gain) loss in
 unconsolidated affiliates          332      (972)      787      (749)
Gain on sale of marketable
 securities                          --   (43,829)       --   (43,829)
Other                              (116)      312      (158)     (292)
                                 -------  --------  --------  --------
Total other (income) expense     (2,394)  (45,973)   (6,483)  (48,237)
                                 -------  --------  --------  --------
Income from continuing
 operations before income taxes
 and cumulative effect of
 change in accounting principle   3,329    45,271    17,110    44,569
Provision for income taxes          819    16,282     4,440    16,148
                                 -------  --------  --------  --------
Income from continuing
 operations before discontinued
 operations and cumulative
 effect of change in accounting
 principle                        2,510    28,989    12,670    28,421
Income (loss) from discontinued
 operations (net of income tax
 benefit of $3,664 and $3,805
 for the three and nine months
 ended April 30, 2005, and
 income tax provision of $126
 for the nine months ended
 April 30, 2006)                     --      (869)      159    (3,846)
Gain on disposal of
 discontinued operations (net
 of income tax of $9,104)            --        --    20,640        --
Cumulative effect of change in
 accounting principle (net of
 income tax of $61)                  --        --       120        --
                                 -------  --------  --------  --------
Net income                      $ 2,510  $ 28,120  $ 33,589  $ 24,575
                                 -------  --------  --------  --------
Basic earnings (loss) per
 share:
Income from continuing
 operations                     $  0.18  $   2.14  $   0.93  $   2.19
Income (loss) from discontinued
 operations, net of tax              --     (0.07)     0.01     (0.29)
Gain on disposal of
 discontinued operations, net
 of tax                              --        --      1.51        --
Cumulative effect of change in
 accounting principle, net of
 tax                                 --        --      0.01        --
                                 -------  --------  --------  --------
Net income                      $  0.18  $   2.07  $   2.46  $   1.81
                                 -------  --------  --------  --------
Diluted earnings (loss) per
 share:
Income from continuing
 operations                     $  0.18  $   2.14  $   0.92  $   2.10
                                 -------  --------  --------  --------
Income (loss) from discontinued
 operations, net of tax              --     (0.07)     0.01     (0.29)
Gain on disposal of
 discontinued operations, net
 of tax                              --        --      1.50        --
Cumulative effect of change in
 accounting principle, net of
 tax                                 --        --      0.01        --
                                 -------  --------  --------  --------
Net income                      $  0.18  $   2.07  $   2.44  $   1.81
                                 -------  --------  --------  --------
Dividends declared per share    $  0.10  $   0.08  $   0.28  $   0.24
Shares outstanding:
Basic                            13,732    13,573    13,667    13,546
Diluted                          13,956    13,614    13,834    13,588



         Condensed Consolidated Balance Sheets (in thousands)

                                                   April 30,  July 31,
                                                     2006       2005
                                                   --------- ---------
                                                  (Unaudited)(Audited)
Assets:
Cash, cash equivalents and marketable securities   $257,701  $220,454
Accounts and notes receivable, net                   51,634    50,978
Inventories                                          69,624    64,290
Other current assets                                 20,775    19,000
Current assets of discontinued operations                --    41,939
                                                    --------  --------
Total current assets                                399,734   396,661
Property, plant and equipment, net                   81,481    79,442
Other assets                                         19,513    20,602
                                                    --------  --------
Total Assets                                       $500,728  $496,705
                                                    --------  --------
Liabilities and Stockholders' Equity:
Accounts payable                                   $ 21,189  $ 20,833
Accrued liabilities                                  22,230    19,802
Advance payments and deferred revenue                 7,775    14,387
Accrued income taxes                                  8,499    11,167
Current liabilities of discontinued operations           --    30,445
                                                    --------  --------
Total current liabilities                            59,693    96,634
                                                    --------  --------
Deferred income taxes                                 1,391       914
                                                    --------  --------
Total long-term liabilities                           1,391       914
                                                    --------  --------
Stockholders' Equity                                439,644   399,157
                                                    --------  --------
Total Liabilities and Stockholders' Equity         $500,728  $496,705
                                                    --------  --------

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

SOURCE: Analogic Corporation