Analogic Corporation Reports Results for Its Third Quarter 2008
Analogic Corporation Reports Results for Its Third Quarter 2008
PEABODY, Mass.–(BUSINESS WIRE)–June 5, 2008–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, 2008.
Highlights of the quarter and recent events include:
--Revenues were $102,768,000, up $18,879,000, or 23%, over the prior
year's third quarter
--Income from Operations was $7,669,000, up 25% over the prior year's
third quarter
--Net Income was $6,679,000, down 5% from the prior quarter, driven by
lower interest rates and a higher tax rate
--Earnings Per Share
--GAAP: $0.50 per diluted share, flat with the prior year's third
quarter
--Non-GAAP: $0.59 per diluted share, up 9% from the prior year's
third quarter
--Medical Technology segment continued revenue growth
--Security Technology segment continued modest profit growth
--Completed acquisition of Copley Controls Corporation
--Received $6.9 million contract from L-3 to ready the XLB security
imaging system for production
Revenues for the third quarter ended April 30, 2008, were
$102,768,000, compared with the prior year’s $83,889,000, an increase
of 23%. Income from operations was $7,669,000, up 25% from a year
earlier. Net income for the third quarter was $6,679,000, or $0.50 per
diluted share, remaining flat to the prior year due primarily to lower
interest income and a 36% higher tax rate.
Non-GAAP income from operations for the quarter ended April 30,
2008, was $9,401,000, up 37% from last year. Non-GAAP net income was
$7,821,000, or $0.59 per diluted share, compared to $7,574,000, or
$0.54 per diluted share, last year.
Revenues for the nine months ended April 30, 2008, were
$296,369,000, compared to the prior year’s nine-month revenues of
$247,849,000, an increase of 20%. Income from operations was
$21,863,000, up from a loss of $527,000 a year earlier. Net income was
$20,214,000, or $1.52 per diluted share, compared to $7,058,000, or
$0.50 per diluted share, last year. During the nine-month period ended
April 30, 2007, the Company recorded pretax restructuring and asset
impairment charges of $9,705,000.
Non-GAAP income from operations for the nine months ended April
30, 2008, was $26,233,000, up 123% from a year earlier. Non-GAAP net
income for the nine months ended April 30, 2008, was $22,711,000, or
$1.71 per diluted share, compared to non-GAAP net income of
$15,639,000, or $1.12 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.
President and CEO Jim Green said, “Our medical business exhibited
solid growth in the third quarter despite continued slowness in the
U.S. Computed Tomography (CT) market. Sales of medical technology
products were $89,919,000, up 29% over the prior year, and up 7% from
the second quarter of this year. Security technology product revenues
were down 10% from a year earlier due primarily to a decrease in
customer-funded projects.”
Medical imaging product revenues for the third quarter were
$58,550,000, up 25% over the prior year’s third quarter. Digital
radiography product revenues were $8,693,000, up significantly from
last year due to the increasing shipments of amorphous Selenium,
direct digital mammography flat-panel detectors. Revenues for B-K
Medical’s clinical ultrasound systems were $22,676,000, up 17%.
Approximately one third of the increase was organic growth; the
remainder was due to the favorable impact of foreign exchange rates.
During the quarter the Company began production ramp of a new
320-slice CT DAS, a new 16 slice CT DMS System, and a new family of
high-precision 3.0T radio frequency amplifiers for major OEM
customers. Our Copley group is similarly ramping up production of a
new family of 1.5T and very-high-field 3.0T gradient amplifiers for a
major OEM.
Security technology product revenues were down 10% for the quarter
due primarily to a decrease in customer funding. The Company shipped
15 EXplosive Assessment Computed Tomography (EXACT) systems to L-3
Communications, the same number shipped during the prior year’s third
quarter. During the quarter the Company announced an expanded
relationship with L-3 Communications, awarding worldwide rights to
sell and service the KING COBRA® and XLB™1100 automatic
Explosives Detection Systems (EDSs) to L-3, who will market them as
the eXaminer SX and eXaminer XLB respectively for air carrier
checked-baggage applications.
Green announced that the Board of Directors will present a
director majority voting proposal for approval at the January 2009
Stockholders Meeting.
“We are pleased with the growth in medical revenues and are
committed to driving further profitable growth,” Green concluded. “The
integration of Copley is proceeding to plan and our security group is
preparing to put major new systems into production over the course of
the next year. We remain well positioned to take advantage of
opportunities for significant growth and to ensure our future 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,
June 5, at 11:00 a.m. ET to discuss results for the third quarter
ended April 30, 2008, and recent developments.
Call 1-866-823-6992, or 1-334-323-7225 for international callers,
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 Thursday, June 26.
A telephone digital replay will be available approximately two hours
after the call is completed through midnight (ET), Thursday, June 26.
To access the digital replay, dial 1-877-919-4059, or 1-334-323-7226
for international callers. The conference ID number is 64461773. 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 “Risk Factors.” In addition, the
forward-looking statements included in this press release represent
the Company’s views as of June 5, 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 June 5, 2008.
Consolidated Statements of Operations (GAAP) (in thousands, except per
share data)
Three Months Ended Nine Months Ended
April 30, April 30,
--------------------------------------
(Unaudited) (Unaudited)
2008 2007 2008 2007
--------------------------------------
Net revenue:
Products $ 98,167 $76,541 $277,709 $229,851
Engineering 2,483 5,075 10,727 10,460
Other 2,118 2,273 7,933 7,538
--------------------------------------
Total net revenue 102,768 83,889 296,369 247,849
--------------------------------------
Cost of sales:
Products 60,525 46,369 169,749 141,644
Engineering 2,218 2,988 10,794 9,286
Other 1,693 1,755 5,337 4,837
Asset impairment charges -- -- -- 8,625
--------------------------------------
Total cost of sales 64,436 51,112 185,880 164,392
--------------------------------------
Gross margin 38,332 32,777 110,489 83,457
--------------------------------------
Operating expenses:
Research and product
development 12,363 11,511 35,403 35,769
Selling and marketing 8,422 6,948 24,209 21,444
General and administrative 9,878 8,201 29,014 25,691
Asset impairment charges -- -- -- 1,080
--------------------------------------
Total operating expenses 30,663 26,660 88,626 83,984
--------------------------------------
Income (loss) from operations 7,669 6,117 21,863 (527)
--------------------------------------
Other (income) expense:
Interest income, net (1,640) (3,163) (6,827) (9,532)
Equity loss in
unconsolidated affiliates -- 456 -- 587
Other, net (230) (161) (1,090) (194)
--------------------------------------
Total other income (1,870) (2,868) (7,917) (9,139)
--------------------------------------
Income before income taxes 9,539 8,985 29,780 8,612
Provision for income taxes 2,860 1,987 9,566 1,554
--------------------------------------
Net income $ 6,679 $ 6,998 $ 20,214 $ 7,058
======================================
Net income per share:
Basic $ 0.51 $ 0.51 $ 1.54 $ 0.51
Diluted 0.50 0.50 1.52 0.50
Dividends declared per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
Weighted-average shares
outstanding:
Basic 13,222 13,874 13,162 13,862
Diluted 13,318 14,003 13,269 13,981
Condensed Consolidated Balance Sheets (GAAP) (in thousands)
April 30, July 31,
2008 2007
----------- ---------
(Unaudited) (Audited)
Assets:
Cash, cash equivalents and marketable
securities $176,011 $228,545
Accounts receivable, net 71,525 58,926
Inventories 81,618 54,413
Other current assets 16,793 23,558
----------- ---------
Total current assets 345,947 365,442
Property, plant and equipment, net 89,376 80,482
Intangible assets, net 45,811 413
Goodwill 3,515 --
Other assets 21,728 12,804
----------- ---------
Total Assets $506,377 $459,141
=========== =========
Liabilities and Stockholders' Equity:
Accounts payable, trade $ 31,268 $ 21,734
Accrued liabilities 29,247 26,570
Advance payments and deferred revenue 10,529 11,517
Accrued income taxes 2,230 5,507
----------- ---------
Total current liabilities 73,274 65,328
----------- ---------
Other long-term liabilities 8,010 --
Deferred income taxes 659 456
----------- ---------
Total long-term liabilities 8,669 456
----------- ---------
Stockholders' equity 424,434 393,357
----------- ---------
Total Liabilities and Stockholders'
Equity $506,377 $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,
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, 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.
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.
Asset impairment charges. As a result of continuing losses in its
Digital Radiography 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 system business assets to their
estimated fair values as a group based upon the present value of
estimated future cash flows of the business. Of the $9,705,000 asset
impairment charges, $8,625,000 was recorded to cost of sales and
$1,080,000 was recorded to operating 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.
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 Q4 2007 sale of its interest in
Bio-Imaging Research, which it recorded as other income. 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 nine months
ended April 30, 2008. On November 1, 2006, the Company sold certain
assets of SKY 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 nine
months ended April 30, 2007. These gains have been presented as a
non-GAAP item for that period.
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.
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.
(in thousands, except per share data)
Three Months Ended Nine Months Ended
April 30, April 30,
2008 2007 2008 2007
-------------------------------------
GAAP Gross Margin $38,332 $32,777 $110,489 $83,457
Share-based compensation 40 37 135 116
Acquisition related expense 522 -- 522 --
Asset impairment charges -- -- -- 8,625
-------------------------------------
Non-GAAP Gross Margin $38,894 $32,814 $111,146 $92,198
=====================================
Percent of Total Revenue 37.8% 39.1% 37.5% 37.2%
GAAP Operating Expenses $30,663 $26,660 $ 88,626 $83,984
Share-based compensation (784) (183) (2,156) (886)
Executive transition (209) (162) (1,053) (537)
Acquisition related expense (177) (357) (504) (1,071)
Restructuring and asset
impairment charges -- -- -- (1,080)
-------------------------------------
Non-GAAP Operating Expenses 29,493 25,958 84,913 80,410
=====================================
Percent of Total Revenue 28.7% 30.9% 28.7% 32.4%
GAAP Income (Loss) from
Operations $ 7,669 $ 6,117 $ 21,863 $ (527)
Share-based compensation 824 220 2,291 1,002
Executive transition 209 162 1,053 537
Acquisition related expense 699 357 1,026 1,071
Restructuring and asset
impairment charges -- -- -- 9,705
-------------------------------------
Non-GAAP Income from Operations 9,401 6,856 26,233 11,788
=====================================
Percent of Total Revenue 9.1% 8.2% 8.9% 4.8%
GAAP Other (Income) Expense $(1,870) $(2,868) $ (7,917) $(9,139)
Gain (loss) on sale of
marketable securities -- -- 639 205
-------------------------------------
Non-GAAP Other (Income) Expense (1,870) (2,868) (7,278) (8,934)
=====================================
GAAP Income Before Income Taxes $ 9,539 $ 8,985 $ 29,780 $ 8,612
Share-based compensation 824 220 2,291 1,002
Executive transition 209 162 1,053 537
Acquisition related expense 699 357 1,026 1,071
Restructuring and asset
impairment charges -- -- -- 9,705
(Gain) on sale of
marketable securities -- -- (639) (205)
-------------------------------------
Non-GAAP Income Before Income
Taxes 11,271 9,724 33,511 20,722
=====================================
Percent of Total Revenue 11.0% 11.6% 11.3% 8.4%
GAAP Net Income $ 6,679 $ 6,998 $ 20,214 $ 7,058
Share-based compensation 569 172 1,588 743
Executive transition 132 126 665 389
Acquisition related expense 441 278 647 728
Restructuring and asset
impairment charges -- -- -- 6,156
(Gain) on sale of
marketable securities -- -- (403) 565
-------------------------------------
Non-GAAP Net Income 7,821 7,574 22,711 15,639
=====================================
Percent of Total Revenue 7.6% 9.0% 7.7% 6.3%
GAAP Diluted EPS $ 0.50 $ 0.50 $ 1.52 $ 0.50
Effect of non-GAAP
adjustments 0.09 0.04 0.19 0.62
-------------------------------------
Non-GAAP Diluted EPS $ 0.59 $ 0.54 $ 1.71 $ 1.12
=====================================
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