GENERAL

3 Months Ended

Jun. 30, 2011

GENERAL

GENERAL

1.   GENERAL

The condensed consolidated financial statements include the accounts of American Science and Engineering, Inc. and its wholly owned subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated.

The unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required by Form 10-K. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011, as filed with the Securities and Exchange Commission on June 9, 2011.

The unaudited condensed consolidated financial statements, in the opinion of management, include all necessary adjustments, consisting solely of normal recurring adjustments, to present fairly the Company’s financial position, results of operations and cash flows.  These quarterly results are not necessarily indicative of the results to be expected for the entire year.

Nature of Operations

The Company is engaged in the development and manufacture of sophisticated X-ray inspection systems for critical detection and security screening solutions for sale primarily to U.S. and foreign government agencies.  The Company has only one reporting segment, X-ray screening products.

Significant Accounting Policies

For systems that are produced in a standard manufacturing operation and have shorter order to delivery cycles, the Company recognizes sales when title passes and when other revenue recognition criteria (such as transfer of risk and customer acceptance) are met.  Revenues on cost reimbursable and custom long-term fixed price contracts are generally recorded as costs are incurred using the percentage of completion method.

Occasionally, the Company receives requests from customers to hold product being purchased for a valid business purpose. The Company recognizes revenue for such arrangements provided the transaction meets, at a minimum, the following criteria: a valid business purpose for the arrangement exists; risk of ownership of the purchased product has transferred to the buyer; there is a fixed delivery date that is reasonable and consistent with the buyer’s business purpose; the product is ready for shipment; the Company has no continuing performance obligation in regards to the product and the product has been segregated from its inventories and cannot be used to fill other orders received.  At June 30, 2011, the Company had 27 systems held onsite under such an arrangement with the U.S. Government for which $5,806,000 in revenue was recognized.  The receivable for this product was invoiced and has subsequently been collected.  Delivery of this equipment is currently anticipated to occur in the second quarter of fiscal 2012.  There was no product being held under these arrangements at March 31, 2011.

The other significant accounting policies followed by the Company and its subsidiaries in preparing its consolidated financial statements are set forth in Note 1 to the consolidated financial statements included in its Form 10-K for the year ended March 31, 2011.  There have been no changes to our critical accounting policies during the three months ended June 30, 2011.

Comprehensive Income

Comprehensive income is comprised of the following:

	Three months ended
(In thousands)	June 30, 2011			June 30, 2010
Net income	$	5,693		$	6,801
Other comprehensive loss	(20		)	(32		)
Comprehensive income	$	5,673		$	6,769

Stock Repurchase Program

The Board of Directors previously approved a Stock Repurchase Program which authorized the Company to repurchase up to $35.0 million of shares of its common stock from time to time on the open market.  During the three months ended June 30, 2011, a total of 301 shares were repurchased at an average price of $75.00 per share.  As of June 30, 2011, the maximum dollar value of shares that may still be purchased under the program is $20,045,000.

Dividends

	Three Months Ended
(In thousands)	June 30, 2011		June 30, 2010
Dividends declared	$	0.30	$	0.30
Dividends paid	$	0.30	$	0.30

On August 4, 2011, the Company declared a cash dividend of $0.30 per share. The dividend will be paid on September 1, 2011 to all shareholders of record at the close of business on August 22, 2011.  Future dividends will be declared at the discretion of the Board of Directors and will depend upon such factors as the Board of Directors deems relevant.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, short-term investments and accounts and unbilled receivables.  At times, the Company maintains cash balances in excess of insured limits. The Company maintains its cash and cash equivalents with major financial institutions.  The Company’s credit risk is managed by investing its cash in investment grade corporate debentures / bonds, commercial paper, U.S. Government agency bonds, high quality U.S. treasury bills, high quality money market funds, and certificates of deposit.

Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-14, Revenue Recognition (Topic 605)—Applicability of AICPA Statement of Position 97-2 to Certain Arrangements That Include Software Elements (ASU 2009-14). ASU 2009-14 excludes tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of FASB Accounting Standards Codification (“ASC”) 605-985, Software-Revenue Recognition. ASU 2009-14 is to be applied on a prospective basis to revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company adopted the provisions of ASU 2009-14 effective April 1, 2011.  This adoption had no impact on the Company’s consolidated financial statements.